MERGER AGREEMENT
By this MERGER AGREEMENT dated as of September 1, 1998 (this
"Agreement"), CAPITAL TITLE GROUP, INC., a Delaware corporation ("Capital"), NEW
CENTURY TITLE COMPANY OF NORTHERN CALIFORNIA, a California corporation (the
"Merger Sub"), NORTHWESTERN CONSOLIDATED CORPORATION, a California corporation
("NCC"), and NORTHWESTERN TITLE COMPANY OF ALAMEDA COUNTY, NORTHWESTERN TITLE
SECURITY COMPANY, NORTHWESTERN ACCOMMODATION COMPANY, NW SERVICE CORPORATION,
XXXX CORPORATION, NORTHWESTERN TITLE INSURANCE COMPANY and RECON SERVICES
CORPORATION (each individually a "Subsidiary" and collectively the
"Subsidiaries"), hereby represent, warrant, covenant and agree as follows:
RECITALS
WHEREAS, Capital and NCC are parties to a letter of intent dated July
14, 1998 (the "Letter of Intent") which contemplates the acquisition by Capital
of all of the issued and outstanding capital stock of NCC;
WHEREAS, in order to effectuate the transactions contemplated by the
Letter of Intent, the respective boards of directors of Capital, NCC and the
Merger Sub have determined that it is advisable to consummate the merger
described in Article 1 (the "Merger"), as a result of which all of the
outstanding common stock, $1.08 stated value per share, of NCC ("NCC Common
Stock") will be converted into the consideration described herein and NCC will
be wholly owned directly or indirectly by Capital, all on the terms and subject
to the conditions set forth in this Agreement. As of the date of this Agreement,
there are 539,075 shares of NCC Common Stock issued and outstanding.
NOW, THEREFORE, in consideration of the mutual promises herein
contained, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties to this Agreement agree
as follows:
ARTICLE 1
THE MERGER
The respective boards of directors of Capital, the Merger Sub and NCC
have, by resolutions duly adopted, approved the following provisions of this
Article 1 as the plan of merger required by the laws of the state of California
in connection with the Merger:
1.1 THE MERGER. At the Effective Time (as defined in Section 1.3), in
accordance with this Agreement and applicable law, NCC shall be merged with and
into the Merger Sub, the separate existence of NCC (except as may be continued
by operation of law) shall cease, and the Merger Sub shall continue as the
surviving corporation under the name "New Century Title Company of Northern
California" as provided in the Amended Articles of Incorporation of the Merger
Sub pursuant to Section 1.4 of this Agreement. The Merger Sub, in its capacity
as the corporation surviving the Merger, sometimes is referred to herein as the
"Surviving Corporation."
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1.2 EFFECT OF THE MERGER. The Surviving Corporation shall possess all
the rights, privileges, licenses, immunities and franchises, of a public as well
as of a private nature, of each of the Merger Sub and NCC (collectively, the
"Constituent Corporations"); and all property, real, personal, and mixed, and
all debts due on whatever account, including subscriptions to shares, and all
other choses in action, and all and every other interest of or belonging to or
due to each of the Constituent Corporations, shall be taken and deemed to be
transferred to and vested in the Surviving Corporation without further act or
deed; and the Surviving Corporation shall be responsible and liable for all
liabilities and obligations of each of the Constituent Corporations.
1.3 CONSUMMATION OF THE MERGER. The consummation of the transactions
contemplated by this Agreement (the "Closing") shall take place at the offices
of Squire, Xxxxxxx & Xxxxxxx L.L.P., 00 Xxxxx Xxxxxxx Xxxxxx, Xxxxx 0000,
Xxxxxxx, Xxxxxxx 00000 at 10:00 a.m. on a date to be mutually agreed upon by
Capital and NCC, which date shall be no later than the third business day after
the NCC Shareholders Meeting (as hereinafter defined) (the "Scheduled Closing
Time"). The date on which the Closing actually takes place is referred to in
this Agreement as the "Closing Date". On the Closing Date, the parties hereto
will cause articles of merger relating to the Merger to be delivered to the
Secretary of State of the state of California in such form as required by, and
executed in accordance with, the relevant provisions of applicable law. The
Merger shall be effective at such time as such articles of merger are duly filed
with and accepted by the Secretary of State of the state of California in
accordance with applicable law (the "Effective Time").
1.4 ARTICLES OF INCORPORATION AND BYLAWS; DIRECTORS AND OFFICERS. The
Articles of Incorporation and Bylaws of the Merger Sub, as in effect immediately
prior to the Effective Time, shall be the Articles of Incorporation (except that
such Articles of Incorporation may be amended as set forth in Exhibit 1 attached
hereto) and Bylaws (except that such Bylaws may be amended as set forth in
Exhibit 2 attached hereto) of the Surviving Corporation immediately after the
Effective Time and shall thereafter continue to be its Articles of Incorporation
and Bylaws until amended as provided therein and under the applicable law. The
directors of the Merger Sub holding office immediately prior to the Effective
Time shall be the directors of the Surviving Corporation immediately after the
Effective Time. The officers of NCC holding office immediately prior to the
Effective Time shall be the officers (holding the same offices as they held with
NCC and serving at the pleasure of the board of directors as at-will employees)
of the Surviving Corporation immediately after the Effective Time.
1.5 PURCHASE PRICE. The Purchase Price contemplated by this Agreement
shall be $11.00 per share for each share of NCC Common Stock outstanding for a
total purchase price of $5,929,825, payable in cash, or cash and Capital Common
Stock (as hereinafter defined), in accordance with Section 1.6.
1.6 CONVERSION OF SECURITIES .
(a) Subject to the proration procedures and the other
provisions of this Article 1, each holder of NCC Common Stock issued
and outstanding immediately prior to the Effective Time (other than
shares of NCC Common Stock held of record by NCC or any other direct or
indirect subsidiary of NCC immediately prior to the Effective Time)
will be entitled to receive, as determined pursuant to subparagraph (c)
below, one of the following (the "Merger Consideration"):
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(i) for each share of NCC Common Stock, cash in an
amount equal to $11.00 per share as to the holders of shares
to which this subparagraph is applicable; or
(ii) for each share of NCC Common Stock, a
combination of cash and shares of the $.001 par value common
stock of Capital ("Capital Common Stock") determined as
follows:
(A) cash in an amount equal to (1) $6.00
multiplied by the number of shares of NCC Common
Stock outstanding as of the Closing Date MINUS the
aggregate amount of cash allocated to the Merger
Consideration described in subparagraph (i) above,
DIVIDED BY (2) the aggregate number of shares of NCC
Common Stock as to which this subparagraph (ii) is
applicable, and
(B) a number of shares of the common stock,
$.001 par value, of Capital (the "Capital Common
Stock") determined by (1) dividing the Purchase Price
LESS the aggregate amount of cash consideration set
forth in Sections 1.6(a)(i) and 1.6(b)(ii)(A) above
by the Assumed Capital Common Stock Price (as
hereinafter defined) and (2) dividing the resulting
amount by the number of shares of NCC Common Stock as
to which this subparagraph (ii) is applicable;
provided, that an aggregate of 150,000 shares of such
Capital Common Stock shall be subject to the escrow
arrangements described in Section 8.3 and shall be
deposited into escrow on the Closing Date as
contemplated thereby.
(b) For purposes of this Agreement, the Assumed Capital Common
Stock price shall be determined as follows:
(i) if the average of the last reported per share
sale price for Capital Common Stock (as reported by the OTC
Bulletin Board Market or such other market or exchange on
which the Capital Common Stock may be traded at the time of
determination) for the ten trading days immediately preceding
the Closing Date (the "Ten-Day Average") is $4.00 or greater
but less than or equal to $6.00, the Assumed Capital Common
Stock Price shall be $4.00; and
(ii) if the Ten-Day Average is greater than $6.00,
the Assumed Capital Common Stock Price shall be an amount
equal to $4.00 plus the amount by which the Ten-Day Average
exceeds $6.00.
Without limiting the foregoing, the parties acknowledge that if the
Ten-Day Average is less than $4.00, this Agreement may be terminated at
the sole discretion of the Board of Directors of NCC in accordance with
Section 9.2.
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(c) For purposes of determining the merger Consideration
described in Section 1.6(a), all shareholders holding less than 2,000
shares of NCC Common Stock as of the Closing Date will receive the cash
consideration described in Section 1.6(a)(i) and all shareholders
holding 2,000 or more shares of NCC Common Stock as of the Closing Date
will receive the consideration consisting of a combination of cash and
Capital Common Stock described in Section 1.6(a)(ii).
(d) The per-share amounts set forth in subparagraph (b) above
shall be appropriately adjusted to reflect any stock split, reverse
stock split, stock dividend, recapitalization, exchange, subdivision,
combination of, or other similar change in Capital Common Stock or NCC
Common Stock (a "Capital Structure Adjustment") following the date of
this Agreement. Neither Capital nor NCC currently contemplates
implementing any Capital Structure Adjustment prior to the Closing
Date, and each of Capital and NCC agrees to obtain the written consent
of the other party approving the adjustments in per-share amounts
resulting therefrom (such consent not to be unreasonably withheld)
prior to effectuating any such Capital Structure Adjustment.
(e) Each share of NCC Common Stock issued and outstanding
immediately prior to the Effective Time and held in the treasury of NCC
shall automatically be canceled and extinguished and no payment shall
be made with respect thereto.
(f) Each share of common stock, par value $.001 per share, of
the Merger Sub (the "Merger Sub Common Stock") issued and outstanding
immediately prior to the Effective Time shall automatically be
converted into and become one validly issued, fully paid and
nonassessable share of common stock, par value $.001 per share, of the
Surviving Corporation.
(g) If any shares of NCC Common Stock outstanding immediately
prior to the Effective Time are unvested or are subject to a repurchase
option, risk of forfeiture or other condition under any applicable
restricted stock purchase agreement or other agreement with NCC, then
the shares of Capital Common Stock issued in exchange for such shares
of NCC Common Stock will also be unvested and subject to the same
repurchase option, risk of forfeiture or other condition, and the
certificates representing such shares of Capital Common Stock may
accordingly be marked with appropriate legends.
(h) NCC acknowledges that the shares of Capital Common Stock
to be issued pursuant to Section 1.6(a)(ii) of this Agreement have not
been, and will not be, registered under the Securities Act of 1933, as
amended, and that such shares may not be sold, assigned or otherwise
transferred except pursuant to a valid exemption from the registration
requirements of the Securities Act of 1933, as amended, and such shares
shall bear appropriate legends reflecting such unregistered status.
1.7 CLOSING OF COMPANY TRANSFER BOOKS. At the Effective Time, holders
of certificates representing shares of NCC Common Stock that were outstanding
immediately prior to the Effective Time shall cease to have any rights as
shareholders of NCC, and the stock transfer books of NCC shall be closed and no
transfer of shares of NCC Common Stock issued and outstanding immediately prior
to the Effective Time shall thereafter be made. If, after the Effective Time,
valid certificates previously representing such shares are presented to the
Surviving Corporation or the Disbursing Agent (as defined in Section 1.8), they
shall be exchanged as provided in Section 1.8.
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1.8 EXCHANGE OF CERTIFICATES.
(a) After the Effective Time, a disbursing agent mutually
acceptable to Capital and NCC (which may not be Capital or NCC or a
subsidiary of Capital or NCC) shall act as disbursing agent (the
"Disbursing Agent") in effecting the exchange of Capital Common Stock
for certificates which, immediately prior to the Effective Time,
represented shares of NCC Common Stock. As soon as practicable after
the Effective Time, the Disbursing Agent shall mail a transmittal form
to each holder of certificates theretofore representing such shares
advising such holder of the procedure for surrendering such
certificates to the Disbursing Agent. If a certificate for Capital
Common Stock issued pursuant to Section 1.6(a) is to be issued in the
name of a person other than the person in whose name the certificates
for shares surrendered for exchange are registered, it shall be a
condition of the exchange that the person requesting such exchange
shall pay to the Disbursing Agent any transfer or other taxes required
by reason of the issuance of such certificate in the name of a person
other than the registered owner of the certificates surrendered, or
shall establish to the satisfaction of the Disbursing Agent that such
tax has been paid or is not applicable. Notwithstanding the foregoing,
neither the Disbursing Agent nor any party hereto shall be liable to a
holder of certificates theretofore representing shares of NCC Common
Stock for any amount paid to a public official pursuant to any
applicable abandoned property, escheat or similar law. Upon the
surrender and exchange of a certificate theretofore representing shares
of NCC Common Stock, the holder shall be issued the Merger
Consideration to which such person is entitled pursuant to Section
1.6(a) (subject to the escrow arrangement to be established pursuant to
Section 8.3) and the certificate theretofore representing shares of NCC
Common Stock shall forthwith be canceled. Until so surrendered and
exchanged, each Certificate theretofore representing shares of NCC
Common Stock shall represent solely the right to receive the Merger
Consideration into which the shares it theretofore represented shall
have been converted pursuant to Section 1.5(a), and the Surviving
Corporation shall not be required to pay the holder thereof the Merger
Consideration to which such holder otherwise would be entitled;
provided that procedures allowing for payment against lost or destroyed
certificates against receipt of customary and appropriate
certifications and indemnities shall be provided.
(b) No fractional shares of Capital Common Stock shall be
issued in connection with the Merger, and no certificates for any such
fractional shares shall be issued. In lieu of such fractional shares,
any fractional share interest in Capital Common Stock which a holder of
NCC Common Stock would otherwise be entitled to receive in the Merger
(after aggregating all fractional shares of Capital Common Stock that
would otherwise be issuable to such holder) shall be rounded up to the
nearest whole share if such fraction is 0.5 or greater and shall be
rounded down to the nearest whole share if such fraction is less than
0.5.
(c) Notwithstanding the foregoing provisions of this Section
1.8, an aggregate of 150,000 shares of the Capital Common Stock to be
issued as Merger Consideration pursuant to Section 1.6(a)(ii) shall be
subject to the escrow arrangement to be established pursuant to Section
8.3 and shall be placed in escrow on the Closing Date. Upon
satisfaction of the conditions for release of shares from such escrow,
any and all shares of Capital Common Stock remaining and available for
distribution therefrom shall be distributed PRO RATA to the former
holders of NCC Common Stock entitled to receive such shares pursuant to
Section 1.6(a)(ii).
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1.9 TAX CONSEQUENCES. For federal income tax purposes, the Merger is
intended to constitute a reorganization within the meaning of Section 368 of the
Internal Revenue Code of 1986, as amended (the "Code"). The parties to this
Agreement hereby adopt this Agreement as a "plan of reorganization" within the
meaning of Sections 1.368-2(g) and 1.368-3(a) of the United States Treasury
Regulations.
1.10 TAKING OF NECESSARY ACTION; FURTHER ACTION. Capital and the Merger
Sub, on the one hand, and NCC, on the other hand, shall use all reasonable
efforts to take all such action (including without limitation action to cause
the satisfaction of the conditions of the other to effect the Merger) as may be
necessary or appropriate in order to effectuate the Merger as promptly as
possible. If, at any time after the Effective Time, any further action is
necessary or desirable to carry out the purposes of this Agreement and to vest
the Surviving Corporation and Capital with full possession of all the rights,
privileges, immunities and franchises of the Constituent Corporations, the
officers and directors of the Surviving Corporation and Capital are fully
authorized in the name of the Constituent Corporations or otherwise to take, and
shall take, all such action.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF NCC AND SUBSIDIARIES
NCC and each Subsidiary hereby represents and warrants to Capital as
follows:
2.1 DUE EXECUTION. This Agreement has been duly executed and delivered
by NCC and each Subsidiary and constitutes the valid and binding agreement of
each of them in accordance with its terms. NCC and each Subsidiary has full
power and authority to execute, deliver and perform this Agreement. No
authorization, consent or approval of, or filing with, any public body, court or
authority is necessary on the part of NCC or any Subsidiary for the consummation
by NCC and the Subsidiaries of the transactions contemplated by this Agreement
and their respective obligations hereunder.
2.2 NO VIOLATION OF OTHER INSTRUMENTS. The execution and delivery of
this Agreement do not, and the consummation of the transactions contemplated
hereby will not, violate any provisions (including provisions requiring any
consent or approval) of any charter, bylaw, mortgage, lien, order, judgment,
decree, or of any material lease, agreement or instrument to which NCC or any
Subsidiary is a party or by which NCC or any Subsidiary is bound, and will not
violate any other material restriction of any kind or character to which NCC or
any Subsidiary is subject.
2.3 CORPORATE STATUS OF NCC. NCC is a corporation duly organized,
validly existing and in good standing under the laws of the State of California
and is duly qualified to do business in California and in each jurisdiction in
which its owning, leasing, utilization of property or conduct of business makes
such qualification necessary. NCC has all requisite corporate power and all
governmental licenses, authorizations, consents and approvals required for it to
own, lease and operate its properties and assets as now owned, leased and
operated and to carry on its business as now being conducted.
2.4 CORPORATE RECORDS. The corporate minute books of NCC and each
Subsidiary have been made available to Capital and are complete, including
therein the articles or certificate of incorporation and bylaws (or the
equivalent documents or copies thereof) together with any amendments thereto;
the minutes contained therein accurately reflect the actions and proceedings of
the board of directors and any committee thereof and of the shareholders of NCC
and each Subsidiary; and
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the signatures appearing on all documents contained therein are the true
signatures of the persons purporting to have signed the same.
2.5 THE NCC COMMON STOCK. SCHEDULE 2.5 sets forth a true, correct and
complete list of all holders of NCC Common Stock, and the NCC Common Stock
constitutes all the issued and outstanding capital stock of NCC. The NCC Common
Stock is validly issued, fully paid and nonassessable and is owned of record
and, to the best knowledge of NCC, beneficially by the shareholders identified
on SCHEDULE 2.5. Any and all liens, security interests and other encumbrances,
stockholders' agreements and voting trusts affecting any shares of NCC Common
Stock and of which NCC is aware are identified on SCHEDULE 2.5. Except as
described on SCHEDULE 2.5 to this Agreement, there is no (i) outstanding
subscription, option, call, warrant or right (whether or not currently
exercisable) to acquire any shares of the capital stock or other securities of
NCC; (ii) outstanding security, instrument or obligation that is or may become
convertible into or exchangeable for any shares of the capital stock or other
securities of NCC; (iii) contract or agreement under which NCC is or may become
obligated to sell or otherwise issue any shares or its capital stock or any
other securities; or (iv) condition or circumstance of which NCC is aware that
may give rise to or provide a basis for the assertion of a claim by any person
or entity to the effect that such person or entity is entitled to acquire or
receive any shares of capital stock or other securities of NCC. To the best of
NCC's knowledge, all outstanding shares of NCC Common Stock have been issued in
compliance with (i) all applicable securities laws and other applicable laws and
regulations, and (ii) all requirements set forth in applicable contracts and
agreements.
2.6 SUBSIDIARIES. Except for the Subsidiaries, NCC does not, directly
or indirectly, own any stock of, or any other interest in, any other corporation
or business entity, and NCC has not agreed and is not obligated to make any
future investment in, or capital contribution to, any such corporation,
organization or entity. Each Subsidiary is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation, which jurisdiction accurately set forth with each Subsidiary's
name on the signature page to this Agreement. Each Subsidiary has all requisite
corporate power and all governmental licenses, authorizations, consents and
approvals required for it to own, lease and operate its properties and assets as
now owned, leased and operated and to carry on its business as now being
conducted.
2.7 NO PARTNERSHIP. Except as set forth on SCHEDULE 2.7 to this
Agreement, neither NCC nor any Subsidiary is a party to any joint venture,
partnership or other profit or loss sharing agreement.
2.8 FINANCIAL STATEMENTS. NCC has heretofore delivered or caused to be
delivered to Capital (i) audited consolidated and consolidating balance sheets
of NCC as of December 31, 1997 and 1996, together with the related audited
consolidated and consolidating statements of income and retained earnings and
cash flows for the fiscal years ended on such dates, and the notes thereto,
certified by Xxxxxxx & Xxxxxxx LLP, and (ii) unaudited consolidated and
consolidating balance sheets of NCC as of June 30, 1998, together with the
related unaudited consolidated and consolidating statements of income for the
six-month period ended on such date, certified by the chief financial officer of
NCC (such financial statements are hereinafter collectively called the
"Financial Statements"). The Financial Statements are correct and complete,
present fairly the financial position, results of operations, and changes in
financial position of the consolidated business and operations of NCC as of the
dates or for the periods indicated, are consistent with the books and records of
the entities to which they relate and have been prepared in accordance with
generally accepted accounting principles consistently applied throughout the
periods involved.
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2.9 TITLE TO PROPERTIES AND ASSETS. NCC and the Subsidiaries have good
and marketable title to the properties and assets reflected in the consolidated
and consolidating balance sheets of NCC as of December 31, 1997 (the "12/97
Financials") and the Schedules to this Agreement, except properties and assets
(if any) disposed of since December 31, 1997 in the ordinary course of NCC's
business. The properties and assets of NCC and the Subsidiaries are not subject
to any mortgage, pledge, lien, security interest, lease, encumbrance or charge
other than those (i) disclosed in the 12/97 Financials, or (ii) disclosed in
SCHEDULE 2.9 to this Agreement. SCHEDULE 2.9 to this Agreement accurately sets
forth in summary form all real property owned, leased or used by NCC or any
Subsidiary and the nature of any mortgage, pledge, lien, security interest,
lease, encumbrance or charge materially affecting such real property.
2.10 LIABILITIES. Neither NCC nor any Subsidiary has any liabilities,
for borrowed money or otherwise, except (i) as disclosed in the 12/97
Financials; or (ii) as incurred in the ordinary course of business since
December 31, 1997 and identified in SCHEDULE 2.10 to this Agreement. Neither NCC
nor any Subsidiary is directly or indirectly liable upon or obligated in any
other way to provide funds to or to guarantee or assume any debt or obligation
of any individual or any legal entity other than of NCC or a Subsidiary, except
as a consequence of endorsements made in the ordinary course of business in
connection with the deposit of items for collection.
2.11 CONTRACTS AND AGREEMENTS. A true and complete schedule of all
contracts, agreements and other commitments of any kind whatsoever to which NCC
or any Subsidiary is a party or by which NCC or any Subsidiary is or may become
bound (collectively, the "Contracts") is attached to this Agreement as SCHEDULE
2.11. Each Contract is in full force and effect, is valid and binding upon the
parties thereto and is enforceable by them in accordance with its terms. Neither
NCC nor any Subsidiary is aware of any circumstance which could reasonably be
expected to adversely affect NCC or any Subsidiary in the performance of its
obligations under a Contract or in the realization of the benefits contemplated
by a Contract. Neither NCC nor any Subsidiary is bound by any Contract to
perform services or provide goods which, upon performance by NCC or such
Subsidiary, could reasonably be expected to result in a loss to NCC or such
Subsidiary, as applicable.
2.12 PENDING LITIGATION; CONTINGENCIES. Except as set forth on SCHEDULE
2.12 to this Agreement, to the best knowledge of NCC and the Subsidiaries, there
are no actions, suits, proceedings or formal inquiries before any court,
arbitration board, regulatory agency or governmental body pending or threatened
against or affecting NCC or any Subsidiary or any of their respective assets,
business operations, rights or prospects. None of such matters is reasonably
likely to result in a material adverse change in the business, operations,
assets or prospects of NCC or any Subsidiary.
2.13 NO DEFAULTS. No event has occurred and no condition exists which
constitutes, or with the giving of notice or lapse of time, or both, would
constitute, a default by NCC or any Subsidiary in the performance, observance or
fulfillment of any of the obligations, covenants or conditions contained in any
other Contract or any material permit or governmental authorization to which NCC
or any Subsidiary is a party or by which NCC or any Subsidiary or its business
or properties may be bound or adversely affected. Neither NCC nor any Subsidiary
is in default with respect to any order, writ, injunction or decree of any court
or in default under any order, material regulation or demand of any federal,
state, municipal or other governmental agency.
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2.14 COMPLIANCE WITH STATUTES AND REGULATIONS. To the best knowledge of
NCC and the Subsidiaries, NCC and each Subsidiary is in compliance in all
respects with, and has at all times complied in all respects with, all
applicable statutes, permit and licensing requirements, zoning and building
codes, land use regulations, health, safety and environmental standards and
orders of, and all restrictions imposed by, all governmental authorities having
jurisdiction over it or the conduct of its business and the ownership and
operation of its assets. Except as described on SCHEDULE 2.14 hereto, no
consent, approval or other order of any governmental or administrative board or
body is required as a condition to the validity of this Agreement or to the
consummation of the transactions contemplated hereby.
2.15 TAX MATTERS. NCC and each Subsidiary have timely filed all
federal, state, local and foreign tax returns for income taxes, sales taxes,
withholding and payroll taxes, property taxes and other taxes of every kind
whatsoever required by law to have been filed prior to the date of this
Agreement. For purposes of the preceding sentence, a return shall be deemed to
have been timely filed if it was filed after the date due but within any period
allowed in an extension granted by the responsible taxing authority. All such
tax returns were complete and accurate in all material respects as of their
filing dates. NCC and each Subsidiary has paid or caused to be paid all taxes
which have become due, together with any interest, if any, due thereon and any
penalties or late fees associated therewith, whether pursuant to such returns or
pursuant to any assessments or otherwise. The amounts established as provisions
for taxes in the Financial Statements are sufficient for the payment of all
unpaid federal, state, county, local and foreign taxes (including all
assessments and other governmental charges respecting income, receipts, assets
or franchises) applicable to the period ended on the date and for all years and
periods prior thereto to which each Financial Statement relates and for which
NCC or any Subsidiary may be liable in its own right or as transferee of the
assets of, or as successor to any other corporation, association, partnership,
joint venture or other entity. Neither the Merger nor any other transaction
contemplated by this Agreement will result in the imposition of any tax
liability (including any liability for stock transfer, stamp or similar taxes)
upon Capital, NCC or any Subsidiary.
2.16 EMPLOYMENT OF LABOR. NCC and each Subsidiary have complied in all
respects with applicable federal and state laws and regulations relating to the
employment of labor, including the provisions thereof relating to wages, hours,
safety, and fair employment practices. No employees of NCC or any Subsidiary are
represented by a collective bargaining unit. To the best knowledge of NCC and
the Subsidiaries, no such collective bargaining unit is attempting to represent
any employees of NCC or a Subsidiary. Except as otherwise specifically set forth
in SCHEDULE 2.16 to this Agreement, neither NCC nor any Subsidiary has any
obligation to or customary arrangement with employees for bonuses, incentive
compensation, vacations, severance pay, insurance or other benefits or
perquisites.
2.17 INSURANCE. There is in effect for NCC and the Subsidiaries such
insurance against loss or damage of the kinds customarily insured against by
corporations engaged in the same or similar business or having similar
properties, with reputable insurers, in such amounts and by such methods as is
customary in the case of such corporations; provided, that the parties
acknowledge that neither NCC nor its Subsidiaries carries errors and omissions
insurance.
2.18 EMPLOYEE BENEFIT PLANS. With respect to the employee benefits
provided to employees and former employees of NCC and the Subsidiaries:
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(a) Except as set forth on SCHEDULE 2.18, neither NCC nor any
Subsidiary currently maintains, nor has any such party maintained
within the last five years, any employee pension benefit plans, as
defined in Section 3(2) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA").
(b) Except as set forth on SCHEDULE 2.18, neither NCC nor any
Subsidiary currently maintains, nor has any such party maintained
within the last five years, any employee welfare benefit plans, as
defined in Section 3(1) of ERISA (including but not limited to, life
insurance, medical, hospitalization, holiday, vacation, disability
dental and vision plans).
(c) NCC and the Subsidiaries currently maintain, or have
entered into, only the compensation programs and/or employment
arrangements, (including but not limited to, incentive compensation,
bonus, severance, sick pay, salary continuation, deferred compensation,
supplemental executive compensation plans, and employment and
consulting agreements) as are listed in SCHEDULE 2.18 to this Agreement
(the "Compensation Programs").
(d) Neither NCC nor any Subsidiary contribute, nor has any
such party contributed within the last five years, to any multiemployer
plan, as defined by Section 3(37) of ERISA.
(e) All amounts required to be paid by NCC or any Subsidiary
with respect to each Compensation Program have been indefeasibly paid
in full.
(f) Neither NCC, any Subsidiary nor any party in interest or
disqualified person has engaged in any non-exempt "prohibited
transactions" as defined in Section 406 of ERISA or Section 4975 of the
Code.
(g) No "leased employee," as that term is defined in Section
414(n) of the Code, performs services for NCC or any Subsidiary.
(h) NCC and the Subsidiaries have furnished Capital with true,
correct and complete copies of each Compensation Program, together with
any trust agreements, summary plan descriptions, employee informational
material, financial statements relating thereto and participant
listings.
2.19 PROPRIETARY RIGHTS. Except as set forth on SCHEDULE 2.19, NCC does
not own, nor is it licensed under, any patent, patent application, trademark,
trademark application, trade name, service xxxx, copyright, franchise, corporate
name, trade secret or other proprietary right or asset (all of the foregoing are
hereinafter referred to as "Proprietary Rights"). NCC has not infringed,
misappropriated or otherwise conflicted with any Proprietary Rights or similar
rights or assets of any third parties, nor is NCC aware of any such
infringement, misappropriation or conflict which could occur in the operation of
the prior business of NCC by Capital.
2.20 DISCLOSURE MATERIALS; UNTRUE STATEMENTS. In connection with the
execution and delivery of this Agreement, NCC has provided or caused to be
provided to Capital (including its agents, advisors and representatives) various
documents and other materials relating to NCC, the Subsidiaries and the business
and affairs thereof. Such documents and other materials, together with the
representations and warranties of NCC contained in this Agreement, and the
schedules, exhibits and certificates furnished by NCC or the Subsidiaries to
Capital (including its agents, advisors and
10
representatives) in connection with the execution of this Agreement or in
connection with the transactions contemplated hereby are referred to herein as
the "Disclosure Materials." The Disclosure Materials, taken as a whole, contain
an accurate description of the current businesses and operations of NCC and its
Subsidiaries. NCC has not directly or indirectly made, in connection with the
negotiation and documentation of this Agreement, the Merger and the other
transactions contemplated hereby, (a) any statement which as of the date thereof
is false or misleading with respect to any material fact, or (b) an omission or
failure to state any material fact (i) necessary in order to make the statements
made in the light of the circumstances in which they were made, not false or
misleading, or (ii) necessary to correct an earlier statement which has
subsequently become false or misleading.
2.21 ABSENCE OF ADVERSE CHANGES. Other than as described in SCHEDULE
2.21 to this Agreement, since December 31, 1997, NCC and its Subsidiaries, taken
as a whole:
(a) have not suffered any material adverse change in their
businesses, assets, financial affairs or prospects;
(b) have not made any commitments, acquisitions, borrowings,
purchases, payments or sales, except in the ordinary course of business
consistent with past practice;
(c) have not suffered any damage, destruction, or loss,
whether or not covered by insurance, materially and adversely affecting
their properties, assets or business;
(d) have not made any declaration or setting aside or payment
of any dividend or other distribution in respect of the capital stock
of NCC or any Subsidiary, or any direct or indirect redemption,
purchase or other acquisition of any stock; and
(e) have not made or committed to make any change in
compensation (including bonus compensation) payable to or to become
payable to any of their officers, employees or agents or any changes in
employee fringe benefits.
2.22 BOARD APPROVAL. The board of directors of NCC has (i) approved the
Merger and the execution of this Agreement, (ii) determined that the Merger is
in the best interests of the shareholders of NCC and is on terms that are fair
to such shareholders, and (iii) recommended that holders of Company Common Stock
vote in favor of this Agreement and the Merger.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF CAPITAL
Capital represents and warrants to NCC as follows:
3.1 CORPORATE STATUS. Capital is a corporation duly organized and in
good standing under the laws of the State of Delaware. The execution and
delivery of this Agreement do not, and the consummation of the transactions
contemplated hereby will not, violate any material provision of any material
charter, bylaw, mortgage, lien, lease, agreement, instrument, order, judgment or
decree to which Capital is a party or by which Capital is bound, and will not
violate any other material restriction to which Capital is subject.
11
3.2 DUE AUTHORIZATION. The execution and delivery of this Agreement by
Capital has been duly and validly authorized and all requisite corporate actions
have been taken to make it valid and binding upon Capital in accordance with its
terms.
3.3 BOARD APPROVAL. The board of directors of each of Capital and the
Merger Sub has unanimously (i) approved this Agreement, the Merger and all other
transactions contemplated hereby and related thereto and (ii) determined that
the Merger is in the best interests of the stockholders of Capital and is on
terms that are fair to Capital.
3.4 NO VIOLATION OF OTHER INSTRUMENTS. The execution and delivery of
this Agreement does not, and the consummation of the transactions contemplated
hereby will not, violate any provisions (including provisions requiring any
consent or approval) of any charter, bylaw, mortgage, lien, order, judgment,
decree, or of any material lease, agreement or instrument to which Capital or
Merger Sub is a party or by which Capital or Merger Sub is bound, and will not
violate any other material restriction of any kind or character to which Capital
or Merger Sub is subject.
3.5 FINANCIAL STATEMENTS. Capital has heretofore delivered or caused to
be delivered to NCC (i) audited consolidated and consolidating balance sheets of
Capital as of December 31, 1997 and 1996, together with the related audited
consolidated and consolidating statements of income and retained earnings and
cash flows for the fiscal years ended on such dates, and the notes thereto,
certified by Ernst & Young LLP, and (ii) unaudited consolidated and
consolidating balance sheets of Capital as of June 30, 1998, together with the
related unaudited consolidated and consolidating statements of income for the
six-month period ended on such date (such financial statements are hereinafter
collectively called the "Capital Financial Statements"). The Capital Financial
Statements are correct and complete, present fairly the financial position,
results of operations, and changes in financial position of the consolidated
business and operations of Capital and its subsidiaries as of the dates or for
the periods indicated, are consistent with the books and records of the entities
to which they relate and have been prepared in accordance with generally
accepted accounting principles consistently applied throughout the periods
involved.
3.6 LIABILITIES. Neither Capital nor Merger Sub has any liabilities,
for borrowed money or otherwise, except (i) as disclosed in the Capital
Financial Statements; or (ii) as incurred in the ordinary course of business
since June 30, 1998 and identified in SCHEDULE 3.6 to this Agreement. Neither
Capital nor Merger Sub is directly or indirectly liable upon or obligated in any
other way to provide funds to or to guarantee or assume any debt or obligation
of any individual or any legal entity other than Capital or Merger Sub, except
as disclosed in the Capital Financial Statements or as a consequence of
endorsements made in the ordinary course of business in connection with the
deposit of items for collection.
3.7 TAX MATTERS. Capital has timely filed all federal, state, local and
foreign tax returns for income taxes, sales taxes, withholding and payroll
taxes, property taxes and other taxes of every kind whatsoever required by law
to have been filed prior to the date of this Agreement. For purposes of the
preceding sentence, a return shall be deemed to have been timely filed if it was
filed after the date due but within any period allowed in an extension granted
by the responsible taxing authority. All such tax returns were complete and
accurate in all material respects as of their filing dates. Capital has paid or
caused to be paid all taxes which have become due, together with any interest,
if any, due thereon and any penalties or late fees associated therewith, whether
pursuant to such returns or pursuant to any
12
assessments or otherwise. The amounts established as provisions for taxes in the
Capital Financial Statements are sufficient for the payment of all unpaid
federal, state, county, local and foreign taxes (including all assessments and
other governmental charges respecting income, receipts, assets or franchises)
applicable to the period ended on the date and for all years and periods prior
thereto to which each Capital Financial Statement relates and for which Capital
may be liable in its own right or as transferee of the assets of, or as
successor to any other corporation, association, partnership, joint venture or
other entity.
3.8 DISCLOSURE MATERIALS; UNTRUE STATEMENTS. In connection with the
execution and delivery of this Agreement, Capital has provided or caused to be
provided to NCC (including its agents, advisors and representatives) various
documents and other materials relating to Capital, the subsidiaries of Capital
and the business and affairs thereof, including (without limitation) its annual
report on Form 10-KSB for the fiscal year ended December 31, 1997, quarterly
reports on Form 10-QSB for the fiscal quarters ended March 31, 1998 and June 30,
1998, its information statement relating to its annual meeting of stockholders
held on May 15, 1998 and all other written information regarding Capital and its
business to be distributed to NCC's shareholders in connection with the Merger.
Such documents and other materials, together with the representations and
warranties of Capital contained in this Agreement, and the schedules, exhibits
and certificates furnished by Capital (including its agents, advisors and
representatives) to NCC in connection with the execution of this Agreement or in
connection with the transactions contemplated hereby are referred to herein as
the "Capital Disclosure Materials." The Capital Disclosure Materials, taken as a
whole, contain an accurate description of the current businesses and operations
of Capital and its subsidiaries. Capital has not directly or indirectly made, in
connection with the negotiation and documentation of this Agreement, the Merger
and the other transactions contemplated hereby, (a) any statement which as of
the date thereof is false or misleading with respect to any material fact, or
(b) an omission or failure to state any material fact (i) necessary in order to
make the statements made in the light of the circumstances in which they were
made, not false or misleading, or (ii) necessary to correct an earlier statement
which has subsequently become false or misleading.
3.9 ABSENCE OF ADVERSE CHANGES. Other than as described in SCHEDULE 3.9
to this Agreement or in the Capital Disclosure Materials, since December 31,
1997, Capital and its subsidiaries, taken as a whole:
(a) have not suffered any material adverse change in their
businesses, assets, financial affairs or prospects;
(b) have not made any commitments, acquisitions, borrowings,
purchases, payments or sales, except in the ordinary course of business
consistent with past practice;
(c) have not suffered any damage, destruction, or loss,
whether or not covered by insurance, materially and adversely affecting
their properties, assets or business;
(d) have not made any declaration or setting aside or payment
of any dividend or other distribution in respect of the capital stock
of Capital or any subsidiary of Capital, or any direct or indirect
redemption, purchase or other acquisition of any stock; and
13
(e) have not made or committed to make any change in
compensation (including bonus compensation) payable to or to become
payable to any of their officers, employees or agents or any changes in
employee fringe benefits.
ARTICLE 4
CONDITIONS PRECEDENT TO OBLIGATIONS OF CAPITAL
The obligations of Capital arising under this Agreement to be performed
at the Closing Date are subject to fulfillment at or prior to the Closing Date
of each of the following conditions:
4.1 REPRESENTATIONS AND WARRANTIES TRUE. Each of the representations
and warranties of NCC and the Subsidiaries contained in this Agreement shall
have been true and correct when made and shall be true and correct on and as of
the Closing Date.
4.2 FINANCIAL STATEMENTS. Capital shall have received and reviewed the
Financial Statements, which shall be acceptable to Capital and to Capital's
independent auditors.
4.3 APPROVALS. Capital shall have received evidence satisfactory to it
that the transactions contemplated by this Agreement have been unanimously
approved by the shareholders of NCC and by the Boards of Directors of NCC and
each Subsidiary, and by any lenders or creditors of NCC, any Subsidiary or any
other party or entity of which consent is required in order for NCC and the
Subsidiaries to enter into this Agreement, perform their respective obligations
hereunder and consummate the transactions contemplated hereby.
4.4 ACCESS TO PROPERTIES AND INFORMATION. NCC and the Subsidiaries
shall have permitted Capital and its representatives full access during normal
business hours to all of the properties, books, tax returns, contracts and
records of NCC and the Subsidiaries, and shall have provided all documents and
information with respect to its affairs, as may have been reasonably requested
by Capital or such representatives.
4.5 SATISFACTORY INVESTIGATION. Capital and its consultants and
representatives shall have completed their investigation and review of the
business and affairs of NCC and the Subsidiaries, and such investigation and
review shall have disclosed no event or condition which would, in the sole
discretion of Capital, make it inadvisable for Capital to consummate the
transactions contemplated by this Agreement.
4.6 NO LITIGATION. There shall be no action, proceeding or threatened,
pending or actual litigation to enjoin, restrain or prohibit the consummation of
the transactions contemplated by this Agreement or which would have the effect,
if successful, of imposing any liability upon Capital or impairing the Merger or
the right of Capital, following the Merger, to own all of the issued and
outstanding common stock of the Surviving Corporation or to continue the
business of NCC and the Subsidiaries as presently conducted.
4.7 COMPLIANCE WITH AGREEMENT. NCC and each Subsidiary shall have
complied with all agreements and covenants applicable to them and contained in
this Agreement.
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4.8 CALIFORNIA APPROVAL. The State of California and all required
subdivisions and agencies thereof shall have given full and unconditional
approval to the Merger, the other transactions contemplated by this Agreement
and the continuation (following consummation of such transactions) of NCC's
license to conduct title insurance and escrow operations in Alameda, Contra
Costa and Sonoma Counties as contemplated by this Agreement.
4.9 STATE TAX ASSESSMENTS. NCC shall have provided written evidence, in
form and substance satisfactory to Capital in its sole discretion, to the effect
that all liabilities and obligations of NCC in respect of California state
franchise, income or other taxes or assessments shall have been paid in full as
of the Closing Date.
4.10 AUDIT REQUIREMENTS. Capital shall be satisfied that all necessary
action shall have been taken, and all necessary conditions exist, to permit the
inclusion of NCC and the Subsidiaries in the audited consolidated financial
statements of Capital following the Closing Date, as determined by Capital's
independent auditors.
4.11 ARTICLES OF MERGER. Articles of merger relating to the Merger
shall have been delivered to, and filed with, the Secretary of State of the
state of California in such form as required by, and executed in accordance
with, the relevant provisions of applicable law.
4.12 CAPITAL COMMON STOCK PRICE. The Ten-Day Average shall be equal to
or greater than $4.00 per share.
4.13 ESCROW. NCC shall have executed an escrow agreement, in form and
substance satisfactory to Capital, in respect of the escrow arrangements
contemplated by Section 8.3.
4.14 LEGAL OPINION. Capital shall have received the opinion of NCC's
counsel as to the matters described in Section 7.1(f) and such other matters as
Capital may reasonably request.
4.15 SUBSCRIPTION DOCUMENTS. Each of the shareholders of NCC receiving
Capital Common Stock as a portion of their Merger Consideration shall have
executed and delivered to Capital such investor questionnaires, subscription
agreements and other related documents and instruments as Capital may require.
ARTICLE 5
CONDITIONS PRECEDENT TO OBLIGATIONS OF NCC
The obligations of NCC arising under this Agreement to be performed at
the Closing Date are subject to fulfillment at or prior to the Closing Date of
each of the following conditions:
5.1 TAX OPINION. NCC shall have received the opinion of its counsel to
the effect that the Transactions will be treated for federal income tax purposes
as a tax-free reorganization within the meaning of Section 368(a) of the
Internal Revenue Code.
5.2 REPRESENTATIONS AND WARRANTIES TRUE. Each of the representations
and warranties of Capital contained in this Agreement shall have been true and
correct when made and shall be true and correct on and as of the Closing Date.
15
5.3 COMPLIANCE WITH AGREEMENT. Capital shall have complied with all
agreements and covenants applicable to it and contained in this Agreement.
5.4 APPROVALS. NCC shall have received evidence satisfactory to it that
the transactions contemplated by this Agreement have been unanimously approved
by the shareholders of NCC.
ARTICLE 6
CONDUCT OF BUSINESS PENDING THE CLOSING
6.1 CONDUCT OF BUSINESS PENDING THE CLOSING. NCC and each Subsidiary
covenants and agrees that, prior to the Closing Date, unless Capital shall
otherwise consent in writing or as otherwise expressly contemplated or permitted
by this Agreement:
(a) The business of NCC and the Subsidiaries shall be
conducted only in, and neither NCC nor any Subsidiary shall take any
action except in, the ordinary course consistent with past practice, on
an arm's-length basis and in accordance in all material respects with
all applicable laws, rules and regulations and past custom and
practice; and NCC and each Subsidiary shall maintain its facilities in
good condition and repair and in accordance with NCC's policies and
procedures relating thereto as in effect prior to the execution of this
Agreement;
(b) Neither NCC nor any Subsidiary shall, directly or
indirectly, do or permit to occur any of the following: (i) issue,
sell, pledge, dispose of or encumber (A) any additional shares of, or
any options, warrants, conversion privileges or rights of any kind to
acquire any shares of, any of its capital stock, except for issuances
upon the exercise of options or warrants outstanding on the date
hereof, or (B) any of its assets, except for fair value in the ordinary
course of business; (ii) amend or propose to amend its articles or
certificate of incorporation or bylaws; (iii) split, combine or
reclassify any outstanding shares of its capital stock or other
securities, or declare, set aside or pay any dividend or other
distribution payable in cash, stock, property or otherwise with respect
to any of its capital stock or other securities; (iv) redeem, purchase
or acquire or offer to acquire any of its capital stock or other
securities; (v) acquire (by merger, exchange, consolidation,
acquisition of stock or assets or otherwise) any corporation,
partnership, joint venture or other business organization or division
or material assets thereof; (vi) incur or guarantee any indebtedness
for borrowed money or issue any debt securities; or (vii) enter into or
propose to enter into, or modify or propose to modify, any agreement,
arrangement or understanding with any party with respect to any matters
whatsoever;
(c) Neither NCC nor any Subsidiary shall, directly or
indirectly, (i) enter into or modify any contract, agreement or
understanding with any of its employees, officers, directors or
consultants; (ii) enter into or modify any employment, severance or
similar agreements or arrangements with, or grant any bonuses, salary
increases, severance or termination pay to, any employees, officers,
directors or consultants; or (iii) make any capital expenditures,
including any capitalizable lease obligations, other than those capital
expenditures specifically identified on SCHEDULE 6.1(C) to this
Agreement;
16
(d) Neither NCC nor any Subsidiary shall adopt or amend any
bonus, profit sharing, compensation, stock option, pension, retirement,
deferred compensation, employment or other employee benefit plan,
trust, fund or group arrangement for the benefit or welfare of any
employees or any bonus, profit sharing, compensation, stock option,
pension, retirement, deferred compensation, employment or other
employee benefit plan, agreement, trust, fund or arrangements for the
benefit or welfare of any director;
(e) NCC and each Subsidiary shall cause its current insurance
(or reinsurance) policies not to be canceled or terminated or reduced
in coverage amount or any of the coverage thereunder to lapse, unless
simultaneously with such termination, cancellation, reduction in
coverage amount or lapse, replacement policies providing coverage equal
to or greater than the coverage under the canceled, terminated, reduced
or lapsed policies for substantially similar premiums are in full force
and effect;
(f) NCC and each Subsidiary (i) shall use its best efforts to
preserve intact its assets, business organization and goodwill; (ii)
shall not take any action which would render, or which reasonably may
be expected to render, any representation or warranty made by it in
this Agreement or in any other agreement or instrument executed in
connection with the transactions contemplated hereby untrue at, or at
any time prior to, the Closing Date; (iv) shall notify Capital of any
emergency or other change in the normal course of its business (as
currently conducted) or in the operation of its properties and of any
governmental or third party complaints, investigations or hearings (or
communications indicating that the same may be contemplated) if such
emergency, change, complaint, investigation or hearing would be
material, individually or in the aggregate, to the business, operations
or financial condition of NCC and its Subsidiaries (taken as a whole)
or to NCC's, any Subsidiary's or Capital's ability to consummate the
transactions contemplated by this Agreement; and (v) shall notify
Capital if NCC or any Subsidiary shall discover that any representation
or warranty made by it in this Agreement was when made, or has
subsequently become, untrue;
(g) Neither NCC nor any Subsidiary shall change any of its
methods of accounting or accounting practices, or make any tax
election;
(h) Neither NCC nor any Subsidiary shall waive or agree to
waive any applicable statute of limitations or any similar statutory or
judicial doctrine benefiting NCC or any Subsidiary;
(i) Neither NCC nor any Subsidiary shall commence or settle
any legal action or proceeding without Capital's prior written consent
(such consent not to be unreasonably withheld or delayed), other than
claims or actions involving amounts in controversy not exceeding $5,000
individually or $25,000 in the aggregate;
17
(j) NCC and the Subsidiaries shall cooperate with Capital in
securing the full and unconditional approval of the State of California
to the Merger, the other transactions contemplated hereby and the
continuation, following consummation such transactions, of NCC's
license to conduct title insurance and escrow operations in Alameda,
Contra Costa and Sonoma Counties as contemplated by Section 4.8 of this
Agreement.
6.2 NOTIFICATION.
(a) During the period subsequent to the execution of this
agreement and prior to the Closing Date (the "Pre-Closing Period"), NCC
shall promptly notify Capital in writing of:
(i) the discovery by NCC or any Subsidiary of any
event, condition, fact or circumstance that occurred or
existed on or prior to the date of this Agreement and that
caused or constitutes an inaccuracy in or breach of any
representation or warranty made by NCC or any Subsidiary in
this Agreement;
(ii) any event, condition, fact or circumstance that
occurs, arises or exists after the date of this Agreement and
that would cause or constitute an inaccuracy in or breach of
any representation or warranty made by NCC or any Subsidiary
in this Agreement if (i) such representation or warranty had
been made as of the time of the occurrence, existence or
discovery of such event, condition, fact or circumstance, or
(ii) such event, condition, fact or circumstance had occurred,
arisen or existed on or prior to the date of this Agreement;
(iii) any breach of any covenant or obligation of NCC
or any Subsidiary; and
(iv) any event, condition, fact or circumstance that
would make the timely satisfaction of any of the conditions
set forth in this Agreement impossible or unlikely.
(b) During the Pre-Closing Period, Capital shall promptly
notify NCC in writing of:
(i) the discovery by Capital of any event, condition,
fact or circumstance that occurred or existed on or prior to
the date of this Agreement and that caused or constitutes an
inaccuracy in or breach of any representation or warranty made
by Capital in this Agreement;
(ii) any event, condition, fact or circumstance that
occurs, arises or exists after the date of this Agreement and
that would cause or constitute an inaccuracy in or breach of
any representation or warranty made by Capital in this
Agreement if (i) such representation or warranty had been made
as of the time of the occurrence, existence or discovery
18
of such event, condition, fact or circumstance, or (ii) such
event, condition, fact or circumstance had occurred, arisen or
existed on or prior to the date of this Agreement;
(iii) any breach of any covenant or obligation of
Capital; and
(iv) any event, condition, fact or circumstance that
would make the timely satisfaction of any of the conditions
set forth in this Agreement impossible or unlikely.
6.3 COMPANY SHAREHOLDER APPROVAL. NCC will call a meeting of its
shareholders (the "NCC Shareholder Meeting") to submit this Agreement, the
Merger and related matters for the consideration and approval of NCC's
shareholders. Subject to the fiduciary obligations of NCC's directors, the proxy
statement relating to the NCC Shareholder Meeting will include statements to the
effect that NCC's board of directors has recommended that NCC's shareholders
vote in favor of the Merger. The NCC Shareholder Meeting will be called, held
and conducted, and any proxies will be solicited, in compliance with applicable
law. NCC shall provide to its shareholders all such information in connection
with the NCC Shareholder Meeting as Capital or its counsel may reasonably
request in order to satisfy the disclosure requirements of, or meet the
conditions of private placement exemptions under, applicable federal and state
securities laws as they relate to the issuance of Capital Common Stock
hereunder. NCC shall, if and to the extent requested by Capital, subject to the
fiduciary obligations of the directors of NCC as advised by counsel, use its
best efforts to solicit from shareholders of NCC proxies in favor of such
adoption and approval and shall take all other action necessary or, in the
opinion of Capital, helpful to secure a unanimous vote of NCC shareholders in
favor of the Merger. At the NCC Shareholder Meeting, NCC shall cause to be voted
all shares of Company Common Stock with respect to which proxies in the form
distributed by NCC shall have been given in favor of the Merger.
6.4 ACTION OF SHAREHOLDERS. NCC shall take all action necessary in
accordance with the California Law and its Articles of Incorporation and Bylaws
to convene NCC Shareholder Meeting as promptly as practicable to consider and
vote upon this Agreement (including, without limitation, the plan of merger
contained herein) and the Merger.
6.5 ADDITIONAL AGREEMENTS. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use all reasonable efforts to
take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable to consummate and make effective as
promptly as practicable the transactions contemplated by this Agreement,
including using reasonable efforts to obtain all necessary waivers, consents and
approvals and to effect all necessary registrations and filings, including, but
not limited to, any required filings under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act and submissions of information requested by governmental
authorities.
6.6 NO NEGOTIATIONS, ETC. NCC shall not (nor shall it permit any of the
Subsidiaries to), directly or indirectly, through any officer, director, agent
or otherwise, solicit, initiate or encourage submission of any inquiry, proposal
or offer from any person or entity (including any of its or their officers or
employees) other than Capital relating to any liquidation, dissolution,
recapitalization, merger, consolidation or acquisition or purchase of all or a
material portion of the assets of, or any equity interest in, NCC or any
Subsidiary or other similar transaction or business combination involving NCC or
any Subsidiary, or participate in any discussions or negotiations regarding, or
furnish
19
to any other person any information with respect to, or otherwise cooperate in
any way with, or assist or participate in, facilitate or encourage, any effort
or attempt by, or consider, entertain or accept any proposal or offer from, any
other person or entity to do or seek any of the foregoing. NCC shall promptly
notify Capital if any such proposal or offer, or any inquiry from or contact
with any person with respect thereto, is made and shall promptly provide Capital
with such information regarding such proposal, offer, inquiry or contact as
Capital may request.
6.7 NOTIFICATION OF CERTAIN MATTERS. Each party shall give prompt
notice to each other party of (a) the occurrence or failure to occur of any
event, conditions, fact or circumstance which occurrence or failure would be
likely to cause any representation or warranty on its part contained in this
Agreement to be untrue or inaccurate at, or at any time prior to, the Effective
Time, and (b) any material failure of such party, or any officer, director,
shareholder, employee or agent thereof, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder.
ARTICLE 7
CLOSING
7.1 ACTIONS BY NCC. At the Closing, NCC shall deliver or cause to be
delivered to Capital (and to the other parties to the instruments referred to
below as applicable), in form and substance reasonably acceptable to Capital,
each of the following instruments or materials, duly executed:
(a) A copy of the articles or certificate of incorporation of
NCC and each Subsidiary as in effect on the Closing Date, certified by
the secretary of state of the applicable state of incorporation as of a
date not more than 15 days prior to the Closing Date.
(b) A certificate executed by the Secretary and by the
President of NCC and each Subsidiary, dated the Closing Date, to the
effect that: (i) the copy of the bylaws of NCC or such Subsidiary, as
applicable, attached to such certificate is a true, correct and
complete copy of the Bylaws of such corporation as currently in effect;
(ii) NCC or such Subsidiary, as applicable, owns no shares of capital
stock of any other corporation; and (iii) a true copy of each consent
required by a Contract to which NCC or such Subsidiary, as applicable,
is a party is attached to such certificate and each such consent is in
full force and effect.
(c) A certificate executed by the President and by the Chief
Financial Officer of NCC, dated the Closing Date, to the effect that:
(i) NCC and the Subsidiaries are in compliance with all the terms,
covenants and conditions contained in this Agreement on their part to
be complied with; (ii) all representations and warranties of NCC and
the Subsidiaries contained in this Agreement were true and correct when
made and are true and correct as of the Closing Date except as to
changes required or contemplated by this Agreement; (iii) the Financial
Statements are correct and complete, present fairly the financial
position, results of operations, and changes in financial position of
the consolidated business and operations of NCC and its Subsidiaries
(taken as a whole) as of the dates or for the periods indicated, are
consistent with the books and records of the entities to which they
relate and have been prepared in accordance with generally accepted
accounting principles consistently
20
applied throughout the periods involved; and (iv) to the best knowledge
of such person, no shareholder of NCC, or member of the family of a
shareholder of NCC, has any unsatisfied claim against NCC or any
Subsidiary or any asset thereof, except as specifically set forth on a
Schedule to this Agreement.
(d) The resignation of all directors of NCC from all
directorships held by them with NCC or any Subsidiary.
(e) Such documentation relating to the Merger as Capital may
reasonably request or as may otherwise be required to effectuate the
Merger or contemplated hereby.
(f) The opinion of counsel to NCC and the Subsidiaries,
satisfactory in form and substance to Capital, dated the Closing Date,
to the effect that:
(i) NCC and each Subsidiary is duly organized,
validly existing and in good standing under the laws of its
jurisdiction of incorporation, is qualified as a foreign
corporation in each jurisdiction in which its owning, leasing
or licensing of property or conduct of business requires such
qualification and has all requisite power to own all of its
properties and to carry on its business as presently being
conducted;
(ii) The authorized capital of the Company consists
of shares of capital stock, designated "Common Stock," having
a stated value of $1.08 per share, of which the number of
shares indicated in such letter are outstanding, all of which
were duly and validly issued and are fully paid and
non-assessable.
(iii) Each of the Subsidiaries is a corporation
validly existing and in good standing under the laws of its
jurisdiction of incorporation.
(iv) NCC owns all of the outstanding capital stock of
each of the Subsidiaries, free and clear of any lien, claim or
encumbrance.
(v) NCC has the corporate power to consummate the
transactions on its part contemplated by this Agreement; the
Company has duly taken all requisite corporate action to
authorize this Agreement and the articles of merger
contemplated hereby; and this Agreement and such articles of
merger have been duly executed and delivered by NCC and
constitute valid and binding obligations of the Company.
(vi) No actions are required to be taken in order to
make the Merger effective which have not been taken on or
prior to the delivery of such letter except the delivery of
the articles of merger contemplated hereby in Section 1.3 to
the Secretary of State of the State of California, and the
filing thereof by the Secretary of State of the State of
California, in accordance with Chapter 11 of the California
Law;
21
(vii) To the knowledge of such counsel after
reasonable inquiry, there are no outstanding subscriptions,
warrants or options for the purchase of shares of capital
stock or any securities convertible into or exchangeable for
shares of capital stock or any other commitments of any kind
for the issuance of additional shares of capital stock of NCC
or any Subsidiary;
(viii) Neither the execution and delivery of this
Agreement nor the performance of the transactions contemplated
hereby will constitute a breach or violation of the articles
or certificate of incorporation or bylaws (or the equivalent
instruments) of NCC or any Subsidiary or of any Contract, or
of any law, order, regulation or decree by which NCC or any
Subsidiary is bound;
(ix) Such counsel is not aware of any action, suit,
proceeding or claim pending or threatened against NCC, any
Subsidiary or any of their respective properties or
businesses, except as described on a Schedule to this
Agreement;
(x) Nothing has come to the attention of such counsel
which would give such counsel reasonable cause to believe that
any of the representations and warranties of NCC or any of the
Subsidiaries contained in this Agreement or in any certificate
delivered to Capital pursuant to this Agreement are false or
misleading.
With respect to any opinion of such counsel relating to the
enforceability of any agreement or contract, such opinion may be
qualified as to the application of bankruptcy, receivership or similar
laws of general application restricting the enforcement of contractual
rights, and no opinion need be expressed as to the ability to
specifically enforce any of the provisions, other than obligations to
pay money, of such agreements.
(g) Each of Xxxx XxXxxxxx, Marc Xxxxxxx, Xxxxxxx Ah Lan, X.X.
Xxxxxx, Xxxxxxxxx Xxxxx and Xxxxxx X. Xxxxx shall have entered into
employment or consulting arrangements with Capital in form and
substance mutually acceptable to Capital and Xxxx XxXxxxxx.
7.2 SIMULTANEOUS ACTION. All actions taken at the Closing shall be
deemed to occur simultaneously.
22
ARTICLE 8
INDEMNIFICATION
8.1 GENERAL. NCC shall indemnify, defend and hold Capital harmless from
and against any damage (including costs, fees of counsel and expenses reasonably
incurred), loss or reduction in value suffered by Capital by reason of the
incorrectness or breach of any of the representations or warranties of NCC or
any of the Subsidiaries contained in this Agreement or in any certificate
delivered to Capital at the Closing or otherwise in connection with the
transactions contemplated by this Agreement.
8.2 LIMITATIONS ON INDEMNIFICATION UNDER SECTION 8.1.
(a) Unless the indemnification right provided to Capital in
Section 8.1 shall arise by reason of fraud or fraudulent concealment on the part
of NCC or any Subsidiary, then (i) Capital shall be entitled to recover its
damages, losses or reductions in value resulting from all such breaches or
incorrectness; and (ii) excluding claims based on fraud, the indemnification
rights of Capital set forth in Section 8.1 shall expire on the first anniversary
of the Closing Date, except as to claims to an indemnification asserted by
Capital prior to such anniversary date which had not been satisfied or otherwise
resolved as of such date. The damages, losses and reductions in value that
Capital shall be entitled to recover hereunder shall include (without
limitation) any excess of amounts actually paid by or on behalf of NCC with
respect to liabilities over amounts accrued or reserved in the Financial
Statements with respect to such liabilities, whether or not such liabilities are
disclosed or referenced in this Agreement or on any Schedule or Exhibit hereto.
The indemnification rights of Capital with respect to claims based on fraud
shall not be subject to any time limits except as provided by the applicable
statute of limitations.
(b) The parties acknowledge and agree that the escrow to be
established pursuant to Section 8.3, and the right of Capital to set off any
indemnification obligation of NCC against shares of Capital Common Stock subject
to such escrow arrangements, is an exclusive remedy for indemnity claims not
based on fraud and that Capital's remedies for indemnity claims based on fraud
shall include the right to set off any such indemnification obligation of NCC
against shares of Capital Common Stock subject to such escrow arrangements as
well as any other remedies provided at law or in equity. For purposes of
determining the value of shares of Capital Common Stock to be offset pursuant to
any indemnification obligation hereunder, the per share value shall be deemed to
be equal to the average of the last reported per share sale price for Capital
Common Stock (as reported by the OTC Bulletin Board Market or such other market
or exchange on which the Capital Common Stock may be traded at the time of
determination) for the ten trading days immediately preceding the date Capital
is finally determined to be entitled to indemnity compensation.
8.3 ESCROW ARRANGEMENT AND RIGHT TO SETOFF. Simultaneously with the
Closing, a portion of the Merger Consideration consisting of 150,000 shares of
Capital Common Stock (the "Escrow Shares") will be deposited in escrow with
Capital, as escrow agent, pursuant to the terms and conditions of an Escrow
Agreement to be reasonably satisfactory to Capital and NCC and to be executed
and delivered at the Closing. The Escrow Agreement shall provide that the Escrow
Shares shall be held in and retained in the escrow account until the escrow
arrangement is terminated by its terms and will otherwise be subject to the
indemnity claims for which the escrow arrangement is being established. The
purpose of the escrow arrangement is to support the indemnity obligations of NCC
and to otherwise compensate the Capital in the event of any breach of any
representation, warranty or covenant of NCC or any Subsidiary set forth herein.
In the event Capital asserts or alleges, at any time
23
within the period commencing on the Closing Date and continuing until the date
that is one (1) year following the Closing Date, any claim for indemnity or
other form of liability or obligation of NCC or any Subsidiary under this
Agreement or any of the related transaction documents, the escrow agent shall
withhold a number of the Escrow Shares having a fair market value as of the time
of such determination equal to the amount of such liability or obligation and
maintain them in the escrow agent's possession pending resolution of the
applicable claim for indemnity. Such Escrow Shares shall be set off against and
applied to satisfy all such claims for indemnity or other liabilities or
obligations of NCC and the Subsidiaries hereunder, and the Escrow Agreement
shall contain appropriate provisions for the distribution of any remaining
Escrow Shares at the termination of the escrow period to the former holders of
NCC Common Stock entitled to receive such shares as Merger Consideration
hereunder.
8.4 REMEDIES. Notwithstanding any contrary terms or provisions set
forth herein, the parties acknowledge and agree that this Agreement shall not
limit the rights or remedies of any party that would otherwise be available at
law or in equity for claims based on or arising out of fraud. With respect to
any other claims, Capital's remedies and recourse are limited to the parties to
this Agreement and to setoff against the Escrow Shares pursuant to Section 8.3
above.
ARTICLE 9
TERMINATION, AMENDMENT AND WAIVER
9.1 TERMINATION. Subject to Section 9.5, this Agreement may be
terminated prior to the Effective Time:
(a) by Capital if there has been a material breach by NCC or
any Subsidiary of any covenant or agreement of NCC or such Subsidiary
set forth in this Agreement or in any other agreement or instrument
delivered to Capital, which breach has not been cured within 30 days of
the date on which written notice of such breach was first given to NCC
or which is not capable of being cured by the Scheduled Closing Time;
(b) by NCC if there has been a material breach by Capital of
any covenant or agreement of Capital in this Agreement, which breach
has not been cured within 30 days of the date on which written notice
of such breach was first given to Capital or which is not capable of
being cured by the Scheduled Closing Time;
(c) by Capital if Capital reasonably determines that the
timely satisfaction of any condition set forth in Article 4 by the
Scheduled Closing Time has become impossible (other than as a result of
any failure on the part of Capital or Merger Sub to comply with or
perform any covenant or obligation of Capital or Merger Sub set forth
in this Agreement);
(d) by NCC if NCC reasonably determines that the timely
satisfaction of any condition set forth in Article 5 by the Scheduled
Closing Time has become impossible (other than as a result of any
failure on the part of NCC or any Subsidiary to comply with or perform
any covenant or obligation set forth in this Agreement or in any other
agreement or instrument delivered to Capital);
(e) by Capital at or after the Scheduled Closing Time if any
condition set forth in Article 4 has not been satisfied by the
Scheduled Closing Time (other than as a result of any
24
failure on the part of Capital or Merger Sub to comply with or perform
any covenant or obligation of Capital or Merger Sub set forth in this
Agreement); or
(f) by NCC at or after the Scheduled Closing Time if any
condition set forth in Article 5 has not been satisfied by the
Scheduled Closing Time (other than as a result of any failure on the
part of NCC or any Subsidiary to comply with or perform any covenant or
obligation set forth in this Agreement or in any other agreement or
instrument delivered to Capital);
(g) by Capital if the Closing has not taken place on or before
the Final Date (as hereinafter defined) (other than as a result of any
failure on the part of Capital to comply with or perform any covenant
or obligation of Capital set forth in this Agreement);
(h) by NCC if the Closing has not taken place on or before the
Final Date (other than as a failure on the part of NCC or any
Subsidiary to comply with or perform any covenant or obligation set
forth in this Agreement or in any other agreement or instrument
delivered to Capital);
(i) by the mutual consent of Capital and NCC.
As used herein, the Final Date shall be November 1, 1998; provided,
however, that the Final Date may be extended up to an additional 30 days by
Capital or NCC giving written notice of such extension to the other prior to
November 1, 1998.
9.2 TERMINATION PROCEDURES. If Capital wishes to terminate this
Agreement pursuant to Section 9.1(a), Section 9.1(c), Section 9.1(e) or Section
9.1(g), Capital shall deliver to NCC a written notice stating that Capital is
terminating this Agreement and setting forth a brief description of the basis on
which Capital is terminating this Agreement. If NCC wishes to terminate this
Agreement pursuant to Section 1.6(b), Section 9.1(b), Section 9.1(d), Section
9.1(f) or Section 9.1(h), NCC shall deliver to Capital a written notice stating
that NCC is terminating this Agreement and setting forth a brief description of
the basis on which NCC is terminating this Agreement.
9.3 EFFECT OF TERMINATION. If this Agreement is terminated pursuant to
Section 9.1, all further obligations of the parties under this Agreement shall
terminate; provided, however, that: (a) neither NCC nor Capital shall be
relieved of any obligation or liability arising from any prior breach by such
party of any provision of this Agreement. If this Agreement is terminated
pursuant to Section 9.1 as a result of the inaccuracy of any representation or
warranty of Capital or the Merger Sub or the inaccuracy of any representation or
warranty of NCC, the party making such inaccurate representation or warranty
shall be subject to liability for the termination of this Agreement as a result
thereof only if and to the extent that any Responsible Officer (as defined
below) of such party had actual knowledge of such inaccuracy. For purposes
hereof, "Responsible Officer" of any party shall mean the chairman of the board
of directors, the chief executive officer, the chief operating officer, the
chief financial officer, any executive vice president or the treasurer of such
party.
9.4 AMENDMENT. This Agreement may not be amended except by an
instrument in writing approved by the parties to this Agreement and signed on
behalf of each of the parties hereto; provided, however, that, after approval of
the Merger by the shareholders of NCC, no amendment may be made which changes
the Merger Consideration as to which each share of Company Common Stock will be
25
converted in the Merger or effects any change which would materially and
adversely affect the shareholders of NCC without the further approval of the
shareholders of NCC.
9.5 WAIVER. At any time prior to the Effective Time, any party hereto
may (a) extend the time for the performance of any of the obligations or other
acts of any other party hereto or (b) waive compliance with any of the agreement
of any other party or with any conditions to its own obligations, in each case
only to the extent such obligations, agreements and conditions are intended for
its benefit. No failure on the part of any party hereto to exercise any power,
right, privilege or remedy under this Agreement, and no delay on the part of any
party hereto in exercising any power, right, privilege or remedy under this
agreement, shall operate as a waiver of such power, right, privilege or remedy,
and no single or partial exercise of any such power, right, privilege or remedy
shall preclude any other or future exercise thereof or of any other power,
right, privilege or remedy. No party hereto shall be deemed to have waived any
claim arising out of this Agreement, or any power, right, privilege or remedy
under this Agreement, unless the waiver of such claim, power, right, privilege
or remedy is expressly set forth in a written instrument duly executed and
delivered on behalf of such party, and any such waiver shall not be applicable
or have any effect except in the specific instance in which it was given.
ARTICLE 10
MISCELLANEOUS
10.1 SURVIVAL. All covenants, agreements, representations and
warranties contained in this Agreement or any certificate or other document
delivered pursuant to this Agreement shall survive the Closing, the payment of
all amounts due hereunder and any investigation conducted by or on behalf of
Capital or NCC, as applicable.
10.2 FINDERS. Each of Capital, the Merger Sub, NCC and the Subsidiaries
represents and warrants to each other that it has no obligation to any third
party which might give rise to a claim for a brokerage commission, finder's fee
or similar payment to any person in connection with the transactions
contemplated by this Agreement, other than such obligation of Capital to Xxxxxx
Capital Corporation. Capital shall indemnify, defend and hold NCC harmless, and
NCC shall indemnify, defend and hold Capital, the Surviving Corporation and its
subsidiaries harmless, from and against all claims by their respective finder,
broker or similar person with respect to the consummation of this Agreement and
all transactions contemplated hereby, other than such obligation of Capital to
Xxxxxx Capital Corporation (as to which the indemnity of NCC shall not apply).
10.3 EXPENSES. All expenses incurred by Capital or NCC (including fees
of counsel and accountants) in connection with the preparation of this Agreement
and the transactions contemplated hereby shall be borne by the party incurring
the same.
10.4 ATTORNEYS' FEES. In the event either party hereto institutes an
action or other proceeding to enforce any rights arising under this Agreement,
the party prevailing in such action or other proceeding shall be paid all
reasonable costs and attorneys' fees by the other party, such fees to be set by
the court or arbitrators, as the case may be, and not by a jury and to be
included in any judgment entered in such proceeding.
26
10.5 FURTHER ACTIONS. Capital, the Merger Sub, NCC and the Subsidiaries
shall, without further consideration, execute and deliver any further or
additional instruments and perform any acts which may become reasonably
necessary in order to effectuate and carry out the purposes of this Agreement.
10.6 SEVERABILITY. In the event any term or provision of this Agreement
is declared to be invalid or illegal, for any reason, this Agreement shall
remain in full force and effect and the same shall be interpreted as though such
invalid and illegal provision were not a part hereof.
10.7 NOTICES. Any notice or communication to be given under the terms
of this Agreement ("Notice") shall be in writing and shall be personally
delivered or sent by mail or facsimile. Notice shall be effective (i) if
personally delivered, when delivered; (ii) if by facsimile, upon receipt of
confirmation of successful transmission; and (iii) if mailed, at midnight on the
fourth business day after deposit in the mail with airmail postage prepaid.
Notices shall be addressed as follows:
If to Capital: Xxxxxx X. Head, Chief Executive Officer
Capital Title Group, Inc.
00000 Xxxxx Xxxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
With copies to: Xxxx X. Head, Esq.
Capital Title Group, Inc.
00000 Xxxxx Xxxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
and
Xxxxxxxxxxx X. Xxxxxxx, Esq.
Squire, Xxxxxxx & Xxxxxxx L.L.P.
00 Xxxxx Xxxxxxx Xxx., Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
27
If to NCC: Xxxx XxXxxxxx, Chief Executive Officer
Northwestern Consolidated Corporation
000 Xxxxxxx Xxxxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
With copy to: Xxxxxx X. Xxxxx, Esq.
Northwestern Consolidated Corporation
000 Xxxxxxx Xxxxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
or at such other address as a party may from time to time designate by Notice
hereunder.
10.8 ENTIRE AGREEMENT. This Agreement, together with any other and
further documents executed and delivered at the Closing, constitutes and
embodies the full and complete understanding and agreement of the parties hereto
and supersedes all prior understandings or agreements whether oral or in
writing.
10.9 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Arizona (without reference to the
provisions thereof relating to conflicts of laws).
10.10 HEADINGS; INTERPRETATION. The Section headings and Article
headings used herein are for convenience and reference only and are not intended
to define, limit or describe the scope or intent of any provision of this
Agreement. When used in this Agreement, the term "including" shall mean without
limitation by reason of enumeration. The definition of a term in the plural form
shall include the singular form, and the singular the plural, as the context
requires. Any masculine personal pronoun shall be considered to mean the
corresponding feminine personal pronoun, as the context requires.
10.11 SUCCESSORS. This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective heirs, personal
representatives, successors or assigns, as the case may be. Capital may assign
any of its respective rights or obligations hereunder to a wholly owned
subsidiary of Capital, provided that as a condition to any such assignment,
Capital shall not be released from its liabilities and obligations arising under
this Agreement. Neither NCC nor any of the Subsidiaries may assign any of their
respective rights or obligations under to any party without the prior written
consent of Capital, and any such purported assignment in violation of this
provision shall be null and void.
10.12 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed a duplicate original.
10.13 SATISFACTION OF CONDITIONS PRECEDENT. Each party shall cooperate
with the other parties hereto and use its or his best efforts to satisfy each of
the conditions precedent to the accomplishment of the transactions contemplated
by this Agreement.
28
10.14 PUBLIC STATEMENTS. Except as required by applicable law, no party
shall make any public announcement or statement with respect to the Merger, this
Agreement or any related transaction without the approval of the other parties,
which approval will not be unreasonably withheld. Moreover, each party agrees to
consult with the other parties prior to issuing any such public announcement or
statement.
[signature page follows]
29
IN WITNESS WHEREOF, the parties hereto have caused this Merger
Agreement to be executed as of the 1st day of September, 1998.
CAPITAL TITLE GROUP, INC.
By /s/ Xxxxxx X. Head
--------------------------------------
Its Chief Executive Officer
-------------------------------------
"CAPITAL"
NEW CENTURY TITLE COMPANY OF
NORTHERN CALIFORNIA
By /s/ Xxxxxx X. Head
--------------------------------------
Its Chief Executive Officer
-------------------------------------
"MERGER SUB"
NORTHWESTERN CONSOLIDATED
CORPORATION
By /s/ Xxxx Xxxxxxxx
--------------------------------------
Its President
-------------------------------------
"NCC"
NORTHWESTERN TITLE COMPANY OF
ALAMEDA
By /s/ Xxxx Xxxxxxxx
--------------------------------------
Its President
-------------------------------------
NORTHWESTERN TITLE SECURITY COMPANY
By /s/ Xxxx Xxxxxxxx
--------------------------------------
Its President
-------------------------------------
NORTHWESTERN ACCOMMODATION
COMPANY
By /s/ Xxxx Xxxxxxxx
--------------------------------------
Its President
-------------------------------------
NW SERVICE COMPANY
By /s/ Xxxx Xxxxxxxx
--------------------------------------
Its President
-------------------------------------
XXXX CORPORATION
By /s/ Xxxx Xxxxxxxx
--------------------------------------
Its President
-------------------------------------
NORTHWESTERN TITLE INSURANCE COMPANY
By /s/ Xxxx Xxxxxxxx
--------------------------------------
Its President
-------------------------------------
RECON SERVICES CORPORATION
By /s/ Xxxx Xxxxxxxx
--------------------------------------
Its President
-------------------------------------
"SUBSIDIARIES"
