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Exhibit 2.1
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is made as of March 2,
2000, by and between FIDELITY NATIONAL FINANCIAL, INC., a Delaware corporation
and/or its nominee ("Buyer"), and NORTHWEST MORTGAGE SERVICES, INC., a Minnesota
corporation ("Seller").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Seller is engaged in the business of providing outsourcing
services to the financial services industry by managing foreclosures,
bankruptcies, replevins and related matters on a nationwide basis through a
network of attorneys and trustees (the "Business"); and
WHEREAS, subject to the terms and conditions of this Agreement, Buyer
desires to purchase and Seller desires to sell and transfer to Buyer, the
assets, operations and business that constitute the Business as described
herein;
NOW, THEREFORE, in consideration of the terms, covenants, and conditions
hereinafter set forth, the parties hereto agree as follows:
1. ASSETS AND LIABILITIES BEING PURCHASED AND ASSUMED.
1.1 PURCHASED ASSETS. Subject to the terms and conditions of this
Agreement, Buyer hereby agrees to purchase from Seller, and Seller hereby agrees
to sell, convey, transfer and assign to Buyer, on the Closing Date (as
hereinafter defined), all of Seller's right, title and interest in and to the
assets, whether tangible, intangible, real, personal or mixed, and wherever
located, which are used in connection with the Business (collectively referred
to herein as the "Purchased Assets"), free and clear of any and all mortgages,
security interests, liens, options, pledges, equities, claims, charges,
restrictions, conditions, conditional sale contracts and any other adverse
interests or other encumbrances of any kind whatsoever (hereinafter,
collectively "Liens or Encumbrances"). The Purchased Assets shall include,
without limitation, the following:
(a) All of Seller's supplies, computers, printers, equipment,
furniture, fixtures and other similar assets or tangible personal property owned
by Seller and used in connection with the Business, including, without
limitation, those which are identified on Schedule 1.1(a) attached hereto
(collectively, the "Fixed Assets");
(b) All of Seller's rights and benefits under the agreements,
contracts, licenses, instruments, commitments and understandings, written or
oral, that relate to the Business, including, without limitation, those listed
(or, in the case of oral agreements or understandings, described) on Schedule
1.1(b) attached hereto (the "Assigned Contracts");
(c) The trade names, trademarks, trade styles, logos and service
marks (including registrations, licenses and applications pertaining thereto)
used in connection with the Business, including, without limitation, the name
"Northwest Mortgage Services, Inc." and those identified on Schedule 1.1(c)
hereto, together with all goodwill associated therewith (the "Trademarks");
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(d) All rights of Seller in and to (i) the customer and client
lists, vendor lists, catalogues, data relating to vendors, promotion lists and
marketing data and other compilations of names and requirements relating to the
Business; (ii) the telephone numbers, internet addresses and web sites used in
the conduct of the Business; (iii) the computer programs, designs, processes,
drawings, schematics, blueprints, copyrights, copyright applications,
inventions, processes, know-how, or trade secrets or proprietary information,
patents and patent applications related to the Business, including, without
limitation, those described on Schedule 1.1(d) hereto, (collectively with the
Trademarks, the "Intangible Property Rights");
(e) All open orders, work-in-process and finished goods
inventories, materials and supplies of the Seller relating to the Business,
including, without limitation, those described on Schedule 1.1(e) hereto (the
"Inventory");
(f) All rights of Seller as tenant under the real property leases
described in Schedule 1.1(f) hereto (the "Real Property Leases");
(g) All rights of Seller in and to all account receivables, open
service account receivables, note receivables and other rights to payment
relating to the Business, including, but not limited to, those described on
Schedule 1.1(g) hereto(the "Receivables");
(h) All cash and cash equivalents, whether on hand, in banks or
other depository accounts, advanced payments, claims for refunds and deposits
and other prepaid items of Seller, including, but not limited to, those
described on Schedule 1.1(h) hereto;
(i) All financial books and accounting records and all files,
lists, publications, and other records and data of Seller used in or relating to
the Business, regardless of the medium on which such information is stored or
maintained;
(j) Any cause of action, claim, suit, proceeding, judgment or
demand, of any nature, of or held by Seller against any third parties arising
out of the Business;
(k) All goodwill associated with the Business and the Purchased
Assets, including all of the Intangible Property Rights; and
(l) All rights in and to any governmental and private permits,
licenses, certificates of occupancy, franchises and authorizations, to the
extent assignable, used in or relating to the Business or the Purchased Assets.
2. OBLIGATIONS BEING ASSUMED; LIABILITIES NOT BEING ASSUMED.
2.1 ASSUMED OBLIGATIONS. Buyer hereby agrees to assume only: (i)
those liabilities and obligations specifically set forth in Schedule 2.1 hereto;
and (ii) those executory obligations arising after the Closing Date under the
Assigned Contracts and the Assumed Leases (collectively, the "Assumed
Obligations"). The Assumed Obligations shall not include any obligations or
liabilities arising out of any act or omission or default of Seller under any
Assigned Contract or Assumed Lease, regardless of when such liability or
obligation is asserted. Seller represents and warrants that Seller is not in
default of any Assumed Obligation, and Buyer shall not be obligated to assume
any Assumed Obligation which is in default as of the Closing Date.
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2.2 LIABILITIES NOT BEING ASSUMED. Except for the Assumed
Obligations, Seller agrees that Buyer shall not be obligated to assume or
perform and is not assuming or performing, and Seller shall remain responsible
for, any liabilities or obligations of Seller, whether known or unknown, fixed
or contingent, certain or uncertain, and regardless of when such liabilities or
obligations may arise or may have arisen or when they are or were asserted (the
"Retained Liabilities"). The Retained Liabilities include, without limitation,
any and all of the following obligations or liabilities of Seller:
(a) Any compensation or benefits payable to present or past
employees of Seller, including without limitation, any liabilities arising under
any employee pension or profit sharing plan or other employee benefit plan and
any of Seller's obligations for vacation, holiday or sick pay;
(b) All federal, state, local, foreign or other taxes (i) that
have arisen prior to the Closing Date or may arise thereafter out of the
Business either prior to or after the Closing Date, (ii) for which Seller is or,
at any time hereafter, may become liable; provided, however, that the Retained
Liabilities shall not include any taxes arising out of the conduct by Buyer,
after the Closing Date, of the Business, or (iii) which arise from the
consummation of the transactions contemplated hereby;
(c) Any Liens or Encumbrances on any of the Purchased Assets and
all obligations and liabilities secured thereby that are not set forth on
Schedule 2.1 hereto;
(d) All obligations of Seller, either for borrowed money or
incurred in connection with the purchase, lease or acquisition of any assets,
that are not set forth on Schedule 2.1 hereto;
(e) Any accounts or notes payable of Seller, that are not set
forth on Schedule 2.1 hereto;
(f) Any claims, demands, actions, suits or legal proceedings
against Seller, the Business or the Purchased Assets that arise in any way from
or in connection with (i) Seller's operation of the Business prior to the
Closing Date, or (ii) any other business or non-business activities of Seller
conducted prior hereto or hereafter, including, but not limited to, those legal
actions or other proceedings set forth in Schedule 4.15 hereto; and
(g) Any obligations under any employment, consulting or
non-competition agreement, whether written or oral, that are not listed on
Schedule 2.1 and any liabilities or obligations arising out of the termination
by Seller of any of its employees in anticipation or as a consequence of, or
following, consummation of the transactions contemplated hereby.
3. PURCHASE PRICE. Subject to adjustment, as provided for in Section
3.3 below, as consideration for the sale to Buyer of the Purchased Assets, Buyer
shall deliver to Seller at the Closing an aggregate purchase price equal to Five
Million Six Hundred Fifty Thousand and Thirty Dollars ($5,650,030) (the
"Purchase Price"), which shall be paid to Seller as follows:
3.1 CASH PAYMENT. At the Closing, Seller shall receive One Million
Five Hundred Thousand Dollars in cash ($1,500,000) (the "Cash Payment"); and
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3.2 THE SHARES. On or before May 10, 2000, subject to Section 3.3
below, shares of the common stock, par value $0.0001, of Fidelity National
Financial, Inc. (the "Shares") with an aggregate value of Four Million One
Hundred Fifty Thousand Thirty Dollars ($4,150,030). For purposes of this
Section, each of the Shares shall be valued at the greater of: (a) Sixteen
Dollars ($16.00) per Share, or (b) the average closing price of a Share as
reported on the New York Stock Exchange for the ten (10) trading day period
ending two (2) days prior to the Closing Date (the "Ten Day Average").
3.3 ADJUSTMENT TO PURCHASE PRICE.
(a) No later than fifteen (15) days after the Closing Date, Seller
will deliver to Buyer and to PriceWaterhouse Coopers LLP ("Seller's Accounting
Firm") a balance sheet for Seller as of the Closing Date (the "Closing Date
Balance Sheet") prepared in accordance with generally accepted accounting
principals, applied on a consistent basis ("GAAP").
(b) Seller will engage Seller's Accounting Firm, at Seller's
expense, to (i) audit the Closing Date Balance Sheet in accordance with GAAP and
(ii) deliver to Seller, Buyer and KPMG, LLP ("Buyer's Accounting Firm"), within
30 days after Seller's delivery of the Closing Date Balance Sheet pursuant to
Section 3.3(a), a certificate signed by Seller's Accounting Firm (the "Auditors
Report") together with the Closing Date Balance Sheet. The Auditors Report will
report, without qualification or other limitation arising out of the scope of
the audit, that the Closing Date Balance Sheet presents fairly, as of the
Closing Date, the Tangible Net Worth of Seller in conformity with GAAP. As used
herein and in Sections 3.3(e) and 3.3(f) below, the term "Tangible Net Worth"
shall mean the sum of the cash, the accounts receivable, inventory and other
assets acquired by Buyer pursuant to this Agreement which are set forth on
Schedule 3.3(e) hereto less the sum of the accounts payable and other
liabilities assumed by Buyer pursuant to this Agreement which are set forth on
Schedule 3.3(e) hereto.
(c) Within 15 days after the receipt of the Auditors Report, Buyer
will deliver written notice to Seller of any objections thereto, and attempt in
good faith to reach an agreement with Seller as to any matters in dispute. If
Buyer and Seller, notwithstanding such good faith effort, fail to resolve all
matters in dispute within ten days after Buyer advises Seller of its objections,
then any remaining disputed matters will be finally and conclusively determined
by an independent auditing firm of recognized national standing (the "Arbiter"),
selected by Buyer and Seller no later than thirty days after Buyer advises
Seller of its objections. Promptly, but not later than 30 days after its
acceptance of its appointment, the Arbiter will determine (based solely on
presentations by Seller and Buyer and not by independent review) only those
matters in dispute and will render a written report as to the disputed matters
and the resulting calculation of the Closing Date Balance Sheet, which report
will be conclusive and binding upon the parties. The fees and expenses of the
Arbiter, and any reasonable attorneys fees or costs will be paid by the
non-prevailing party with respect to the determination of the Arbiter as set
forth in the Arbiter's report.
(d) For purposes of complying with the terms set forth herein,
each party will cooperate with and make available to the other party and its
auditors and representatives all information, records, data and auditors'
working papers, and will permit access to its facilities and personnel, as may
be reasonably required in connection with the preparation and analysis of the
Closing Date Balance Sheet and the resolution of any disputes pertaining
thereto. Without limiting the generality of the foregoing, Seller will cause
Seller's Accounting Firm to make available at its office to Buyer and Buyer's
Accounting Firm within three business days after delivery of the
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Auditors Report pursuant to Section 3.3(b) the workpapers therefor. After the
Closing, Buyer's auditors and/or Buyer's Accounting Firm will also have access
to Seller's Accounting Firm's workpapers for the Closing Date Balance Sheet as
necessary for the purpose of providing regular auditing services to the
Companies.
(e) Buyer and Seller agree that the Tangible Net Worth of Seller
as of December 31, 1999 was negative One Million Nine Hundred Twenty-One
Thousand Seven Hundred Eighteen Dollars (-$1,921,718) (the "December Value"), as
set forth on Schedule 3.3(e) attached hereto. Buyer and Seller agree that the
Purchase Price provided for hereto was based upon the December Value. In the
event that the Tangible Net Worth of the Seller, as of the Closing Date, as
finally determined pursuant to this Section 3.3, is less than the December Value
(the "Shortfall"), the value of the Shares to be received by Seller pursuant to
Section 3.2 above shall be reduced by the amount of the Shortfall. In the event
that the Tangible Net Worth of the Seller, as of the Closing Date, as finally
determined pursuant to this Section 3.3, is greater than the December Value (the
"Increase"), the value of the Shares to be received by Seller pursuant to
Section 3.2 above shall be increased by the amount of the Increase.
4. REPRESENTATIONS AND WARRANTIES OF SELLER.
Subject to the disclosures and exceptions set forth in the disclosure
schedules delivered by Seller to Buyer on or prior to the Closing Date, (the
"Seller's Disclosure Schedules"), Seller hereby represents and warrants to the
Buyer as follows:
4.1 AUTHORITY AND BINDING EFFECT.
(a) Seller has the full corporate power and authority to execute
and deliver this Agreement, the Registration Rights Agreement (as hereinafter
defined) and the Xxxx of Sale (as hereinafter defined). This Agreement, the
Registration Rights Agreement and the Xxxx of Sale, and the consummation by
Seller of its obligations contained herein and therein, have been duly
authorized by all necessary corporate action of Seller and such agreements have
been duly executed and delivered by Seller.
(b) This Agreement is, and, when executed and delivered at the
Closing, the Registration Rights Agreement and the Xxxx of Sale will be, a valid
and binding agreement of Seller, enforceable against Seller in accordance with
its terms except as enforceability may be limited by (i) bankruptcy, insolvency,
moratorium or other similar laws affecting creditors' rights generally, and (ii)
general principles of equity relating to the availability of equitable remedies
(whether such agreements are sought to be enforced in a proceeding at law or a
proceeding in equity).
(c) Other than the Stockholder Approval (as hereinafter defined),
it is not necessary for the Seller to take any action or to obtain any approval,
consent or release by or from any third person, governmental or other, to enable
Seller to enter into or perform its obligations under this Agreement, the
Registration Rights Agreement or the Xxxx of Sale. The term "Stockholder
Approval", as used herein, shall mean the vote of the holders of a majority of
the outstanding shares of common stock of Seller.
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4.2 ORGANIZATION AND STANDING.
(a) Seller is a corporation duly organized, validly existing and
in good standing under the laws of Minnesota.
(b) Seller is qualified to do business as a foreign corporation
in each jurisdiction in which the character of the Business operated, or the
properties owned or leased, by it makes such authorization necessary, except
where the failure to be so qualified would not have a Material Adverse Effect
(as hereinafter defined) on Seller.
(c) Seller has the requisite corporate power and authority to
conduct the Business as now conducted and to own or lease the Purchased Assets,
and to use such Purchased Assets in the conduct of the Business.
When used in this Agreement, the phrases "Material Adverse Effect" shall mean a
circumstance, state of facts, event, consequence or result that materially and
adversely affects, or could reasonably be expected to materially and adversely
affect, the Purchased Assets or the Business or the ability of Seller to
consummate the transactions contemplated by this Agreement.
4.3 CAPITALIZATION.
(a) The authorized capital stock of the Seller consists of
9,825,000 shares, 8,005,000 shares of which have been designated Common Stock,
no par value, of which 2,318,078 shares are issued and outstanding, 1,320,000
shares of which have been designated Series B Convertible Preferred Stock, no
par value, of which 972,670 shares are issued and outstanding, and 500,000
shares of which have been designated Series C Preferred Stock, no par value, of
which 500,000 shares are issued and outstanding.
(b) All issued and outstanding shares of the Company's capital
stock have been duly authorized and validly issued in compliance with all
applicable federal and state securities laws, and are fully paid and
nonassessable. There are no shareholder agreements, voting trusts or other
arrangements or understandings applicable to the exercise of voting rights with
respect to any of the issued and outstanding shares, or any unissued shares, of
the capital stock of Seller.
4.4 FINANCIAL STATEMENTS. Seller has delivered to Buyer financial
statements of Seller relating to the Business, consisting of the audited balance
sheets, statements of income and statements of cash flow and shareholders'
equity as of and for the periods ending December 31, 1997 and December 31, 1998
(the "Year End Statements") and the unaudited detailed trial balance sheets as
of November 30, 1999 and December 31, 1999 (the "Trial Balance Sheets" and,
collectively with the Year End Statements, the "Financial Statements"). True and
correct copies of the Financial Statements are attached as Schedule 4.4 hereto.
The Financial Statements were prepared in accordance with GAAP, consistently
applied, and fairly present, on an accrual basis, the financial condition of
Seller relating to the Business, and the results of operations of the Business
as at the relevant dates thereof and for the respective periods covered thereby.
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4.5 ABSENCE OF CERTAIN CHANGES. Since December 31, 1999, there has
not been:
(a) Any default or breach, or anticipated default or breach
under, or any amendment, termination or revocation or, to the knowledge of
Seller, any threatened termination or revocation of, any of the Assigned
Contracts;
(b) Any actual or threatened amendment, termination or revocation
of any license, permit or franchise required for the continued operation by
Seller of any material portion of the Business;
(c) Any sale, transfer, or other disposition of, or the
incurrence or imposition of any Lien or Encumbrance of any kind on or affecting,
any assets or properties used in connection with the operation of the Business
except (i) sales or other dispositions of obsolete equipment in the ordinary
course of the Business and consistent with past practices of Seller and (ii)
Liens for current taxes not yet due and payable;
(d) Any damage, destruction or loss, whether or not covered by
insurance, of any of the Purchased Assets in an amount that exceeds $5,000 or
which adversely affects Seller's or Buyer's ability to continue to conduct the
Business in any material respect as the Business was conducted during the twelve
(12) month period ended December 31, 1999;
(e) The occurrence of any other event or circumstance which has
had or could reasonably be expected to have a Material Adverse Effect.
4.6 THE PURCHASED ASSETS.
(a) The Fixed Assets are in good working order and condition,
ordinary wear and tear excepted, have been properly maintained, are suitable for
the uses for which they are being utilized in the Business, do not require more
than regularly scheduled maintenance in the ordinary course, consistent with
Seller's established maintenance policies, to keep them in good operating
condition.
(b) Schedule 1.1(f) contains a complete and accurate list, and
Seller has furnished to Buyer accurate and complete copies, of all of the Real
Property Leases, as amended to date, including the names and addresses of the
landlords thereof. Seller is not in default, and no facts or circumstances have
occurred which, with the passage of time or the giving of notice, or both, would
constitute a default, under any of the Assumed Leases and the assignment by
Seller to Buyer of the Assumed Leases will not adversely affect Buyer's quiet
enjoyment and use, without disturbance, of the real properties that are the
subject of the Real Property Leases (the "Leased Property"). None of the Real
Property Leases contains any provisions which, after the date hereof, would (i)
hinder or prevent Buyer from continuing to use the Leased Property in the manner
in which it is currently used, or (ii) impose any additional costs (other than
scheduled increases) or burdensome requirements as a condition to its continued
use which is not currently in effect.
(c) All of the Inventory is of a quality and quantity usable in
the ordinary course of the Business, except for obsolete items, damaged items
and materials at below standard quality, which, in the aggregate are not
material in amount and have been written off or written down to net realizable
value in the Financial Statements.
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(d) Seller has, and on the Closing Date will convey and transfer
to Buyer, good, complete and marketable title to all of the Purchased Assets,
free and clear of all Liens and Encumbrances of any nature whatsoever. Except as
set forth on Schedule 4.6(d), all of the Purchased Assets are in the exclusive
possession and control of Seller and Seller has the unencumbered right to use,
and to sell to Buyer, in accordance with the terms and provisions of this
Agreement, all of the Purchased Assets without interference from and free of the
rights and claims of others. The Purchased Assets constitute all of the assets,
properties, rights, privileges and interests necessary for Buyer to own and
operate the Business.
4.7 THE ASSIGNED CONTRACTS AND OTHER AGREEMENTS. Schedule 4.7 hereto
contains an accurate and complete list of each contract, agreement, indenture,
note, lease, or other instrument or commitment, written or oral, which is
material to the Purchased Assets or material to the operation of the Business
(the "Material Contracts"). Accurate and complete copies of all of the Material
Contracts have been furnished by Seller to Buyer. The Material Contracts
include, without limitation, each contract, agreement, license, instrument,
commitment or understanding, written or oral, which:
(a) Provides for the sale, license, rental, or distribution
(through any channel of trade, whether domestic or international) of any
services, products, goods or equipment or other assets or properties to or by
Seller in connection with the Business;
(b) Provides for the licensing by or to Seller, or the use or
possession by Seller, of any Intangible Property Rights;
(c) Grants a security interest or permits or provides for the
imposition of any other Lien or Encumbrance on, any of the Purchased Assets;
(d) Requires the consent of any third party to, or would
terminate as a result of the consummation by Seller of, the transactions
contemplated by this Agreement;
(e) Restricts or would restrict the conduct of any aspect of the
Business or the use or disposition by Buyer after the date hereof of any of the
Purchased Assets;
(f) Governs or relates to any of the Assumed Obligations or which
evidences any other liability or obligation, whether for borrowed money or
otherwise, that would be accelerated by reason of the consummation of the
transactions contemplated hereby; or
(g) If terminated or breached would have a Material Adverse
Effect.
Except for the Material Contracts, there is no contract, lease, license or other
agreement, commitment or understanding that is material to the Business or the
breach, termination or loss of which would have a Material Adverse Effect. Each
of the Material Contracts is a valid and binding obligation of Seller and the
other parties thereto, enforceable in accordance with its terms, except as may
be affected by bankruptcy, insolvency, moratorium or similar laws affecting
creditors' rights generally and general principles of equity relating to the
availability of equitable remedies. There have not been any defaults by Seller
or, to the best knowledge of Seller, defaults or any claims of default or claims
of nonenforceability by the other party or parties under or with respect to any
of Material Contracts, and there are no facts or conditions that have occurred
or that are anticipated to occur which, with the passage of time or the giving
of notice, would constitute a default by Seller, or to the
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best knowledge of Seller, by the other party or parties under any of the
Material Contracts or would cause a creation or imposition of any Lien or
Encumbrance upon any of the Purchased Assets or otherwise would have a Material
Adverse Effect on the Business. None of the Material Contracts contains any
provisions which, after the date hereof, would (i) hinder or prevent Buyer from
continuing to use any of the assets or property, tangible or intangible, that
are the subject of the Material Contract in the manner in which they are
currently used, or (ii) impose any additional costs (other than scheduled fee
increases) or burdensome requirements as a condition to their continued use
which are not currently in effect.
4.8 RECEIVABLES. All Receivables of the Seller which either are
reflected on the Financial Statements, or were created subsequent to the date of
the Financial Statements, including, but not limited to, all Receivables listed
on Schedule 1.1(g), are bona fide, have arisen in the ordinary course of
business, and are free and clear of any Lien or Encumbrance. Subject to
allowances for uncollectible accounts, which are reflected in the Financial
Statements, all of such Receivables have been collected or are fully collectible
and, to the knowledge of Seller, are subject to no right of recourse, defense,
deduction, return of goods, counterclaim, offset or setoff on the part of the
obligor.
4.9 INTELLECTUAL PROPERTY.
(a) Except as set forth on Schedule 4.9 hereto:
(i) Seller owns all right, title and interest in and to all
patents, patent applications, copyrights, trademarks, trademark applications and
other trade secrets, know-how, intellectual property and other proprietary
rights included in the Intangible Property Rights (the "Intellectual Property
Rights") free and clear of all Liens or Encumbrances.
(ii) All of the Intellectual Property Rights which are used
in or are necessary for the conduct of the Business as presently conducted are
listed on Schedule 4.9 attached hereto.
(b) Except as set forth in Schedule 4.9, Seller has the exclusive
right to use, sell, license and dispose of, and has the right to bring actions
for infringement of, all Intellectual Property Rights.
(c) No claims have been asserted against Seller by any person
challenging Seller's use or distribution of any Intellectual Property Rights or
challenging or questioning the validity or effectiveness of any license or
agreement relating thereto. There is no valid basis for any claim of the type
specified in this Section 4.9(c).
(d) The execution, delivery and performance of this Agreement and
the transactions contemplated hereby will not (i) breach, violate or conflict
with any instrument, agreement or other right governing any of the Intellectual
Property Rights or portion thereof, (ii) cause the forfeiture or termination, or
give rise to a right of forfeiture or termination, of any Intellectual Property
Rights or portion thereof, (iii) in any way impair the right of Buyer to use any
Intellectual Property Rights or portion thereof, or (iv) give rise to any right
to bring any action for infringement of any Intellectual Property Rights or any
portion thereof.
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(e) Except as set forth on Schedule 4.9, there are no royalties,
fees or other payments that would be payable by Seller to any person by reason
of the ownership, use, license, sale, distribution, or disposition of any of the
Intellectual Property Rights.
(f) No Intellectual Property Rights and no use or prior use by
Seller of any Intellectual Property Rights in the Business violates any right of
any third party, including, without limitation, infringement of or
misappropriation of intellectual property.
(g) To the best knowledge of Seller, no third party is
violating, infringing, or misappropriating any Intellectual Property Right.
(h) To the best knowledge of Seller, no party to any contract,
commitment or restriction relating to any Intellectual Property Right intends to
cancel, withdraw, modify or amend such contract.
(i) Except as set forth in Schedule 4.9: (i) no third party has
any right to manufacture, reproduce, distribute, sell, sublicense, market or
exploit any of the Intellectual Property Rights or any adaptations,
translations, or derivative works based on the Intellectual Property Rights, or
any portion thereof; (ii) Seller has no agreements, contracts or commitments
that provide for the manufacture, reproduction, distribution, sale,
sublicensing, marketing, development, exploitation, or supply by Seller of any
Intellectual Property Right or any adaptation, translation, or derivative work
based on the Intellectual Property Rights, or any portion thereof or otherwise
material to the Business; (iii) Seller has not granted to any third party any
exclusive rights of any kind with respect to any of the Intellectual Property
Rights, including territorial exclusivity or exclusivity with respect to
particular versions, implementations or translations of any of the Intellectual
Property Rights; and (iv) Seller has not granted any third party any right to
market any product utilizing any Intellectual Property Right under any "private
label" arrangements pursuant to which Seller is not identified as the source of
such goods. Each document or instrument identified pursuant to this Section is
listed in Schedule 4.7 and true and correct copies of such documents or
instruments have been furnished to Buyer.
(j) All designs, drawings, specifications, source code, object
code, documentation, flow charts and diagrams incorporating, embodying or
reflecting any Intellectual Property Rights, at any stage of their development
were written, developed and created solely and exclusively by employees of
Seller without the assistance of any third party or entity.
(k) No Seller shareholder, employee or contractor, nor any of
their respective affiliates, has any right, title or interest in or to any
Intellectual Property Right.
4.10 CONFLICTS. Except as described on Schedule 4.10 hereto, neither
the execution and delivery of, nor the consummation of the transactions
contemplated by, this Agreement, the Registration Rights Agreement or the Xxxx
of Sale will or could result in any of the following:
(a) A default or an event that, with notice or lapse of time, or
both, would be a default, breach or violation of the Articles of Incorporation,
bylaws or other governing instruments of Seller, or any Assigned Contract or
Real Property Lease;
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(b) The right to terminate any Assigned Contract or Real
Property Lease, or the acceleration of the maturity of any indebtedness or other
obligation of Seller relating to the Business;
(c) The creation or imposition of any Lien or Encumbrance on any
of the Purchased Assets;
(d) The violation or breach of any writ, injunction or decree
that would become or is now applicable to or binding on Seller or any of the
Purchased Assets or the Business;
(e) A loss or adverse modification of any license, franchise,
permit or other authorization or right (contractual or other) to operate the
Business or to own any of the Purchased Assets, granted to or otherwise held by
Seller or used in the Business;
(f) The right to cease or terminate any other business
relationship or arrangement between Seller and any third party; or
(g) Any other consequence that would have or reasonably could be
expected to have a Material Adverse Effect on the Business or the Purchased
Assets.
4.11 CUSTOMERS AND SUPPLIERS. Schedule 4.11 attached hereto contains
correct and current lists of (a) Seller's ten (10) largest customers, in terms
of the revenues generated from the conduct of the Business, in the twelve (12)
month period ended December 31, 1999, showing the approximate aggregate dollar
amount of revenues from each such customer during such period and the nature of
the products licensed or sold and the nature of the services rendered to each of
them that accounted for such revenues; and (b) the ten (10) largest suppliers of
Seller in terms of purchases made by Seller in connection with the Business
during the twelve (12) month period ended December 31, 1999, showing the
approximate aggregate dollar amounts of purchases by Seller from each such
supplier during such period. Except as described in Schedule 4.11, Seller has no
information nor is aware that any of such customers or suppliers intends to
cease, or of any event or circumstance that has occurred during the past twelve
(12) months which might reasonably be expected to cause or lead any such
customer or supplier to cease doing business with Seller, or alter materially
the amount of the business that any of them is presently doing with Seller, or
will require, as a condition to the continuation of its business relationship
with Seller, a change in the prices or any other material terms under which any
of such customers or suppliers has been doing business with Seller.
4.12 INSURANCE. Schedule 4.12 contains an accurate description
(including liability limits, deductibles and coverage exclusions) of all
policies of fire, general liability, worker's compensation, and other forms of
insurance maintained by or on behalf of Seller in connection with the Business
as protection for the Purchased Assets and the Business. Except as set forth in
Schedule 4.12 hereto, all of such policies are now in full force and effect and
policies covering the same risks and in substantially the same amounts have been
in full force and effect continuously for the past five (5) years. Seller has
not received any notice of cancellation or material amendment of any such
policies; no coverage thereunder is being disputed; and all material claims
thereunder have been filed in a timely fashion. Seller has furnished to Buyer a
schedule of all insurance claims filed by Seller relating to or arising out of
the Business within the past three (3) years and the disposition thereof. No
such claims have been denied by any of Seller's insurers and Seller has not
failed to
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comply with the requirements of any insurance policies which would provide any
insurers the right to deny any claim relating to or arising out of the Business.
4.13 COMPLIANCE WITH LAW/PERMITS.
(a) Seller is in compliance with all, and is not in violation of
any, law, ordinance, order, decree, rule or regulation of any governmental
agency or authority, the violation of or noncompliance with which could have a
Material Adverse Effect. No unresolved (i) charges of violations of laws or
regulations relating to the Business have been made or threatened, (ii)
proceedings or investigations relating to the Business are pending or have been
threatened, and (iii) citations or notices of deficiency have been issued or
have been threatened, against Seller relating to or arising out of the Business
by any governmental authorities; and, to the best knowledge of Seller, there are
no facts or circumstances upon which any such charges, proceedings,
investigations, or citations or deficiency notices, may be instituted, issued or
brought hereafter.
(b) Schedule 4.13(b) contains a true, correct and complete list
of all governmental licenses, permits, authorizations, franchises, or
certificates or rights (contractual or other) relating to the Business, that are
held by Seller (collectively, "Licenses and Permits"). All of such Licenses and
Permits are in full force and effect at the date hereof. There is no other
license, permit, authorization, franchise, certificate or right to operate the
absence of which has had, or could reasonably be expected to have, a Material
Adverse Effect. The Business is in compliance with the conditions and
requirements imposed by or in connection with such Licenses and Permits. Seller
has not received any notice, nor does Seller have any knowledge or reason to
believe, that any governmental authority intends to cancel, terminate or modify
any of such Licenses or Permits or that there are valid grounds for any such
cancellation, termination or modification. Seller has delivered or made
available to Buyer a true, correct and complete copy of the most recent safety
inspection and quality assurance reports, prepared by any employees or
consultants of Seller or by any governmental authorities relating to the
Business or the products licensed or sold or the services rendered by Seller in
the Business.
4.14 TAXES AND TAX RETURNS. For purposes of this Agreement, (i) the
term "Tax" or "Taxes" means any federal, state, local or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code Section
59A), customs duties, capital stock, franchise, profits, withholding, social
security, unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not; and (ii) the term "Tax Return"
means any return, declaration, report, claim for refund, or information return
or statement (including, but not limited to, information returns or reports
related to back-up withholding and any payments to third parties) relating to
any Taxes, including any schedule or attachment thereto, and including any
amendment thereof. Buyer shall have no liability or obligation whatsoever, and
shall not incur any loss, expense or cost, and none of the Purchased Assets, or
any assets of Buyer, shall be subjected to any Lien or Encumbrance, by reason of
any Taxes arising out of (x) the Business as conducted by Seller prior to the
consummation of the sale hereunder of the Purchased Assets to Buyer or (y) any
other operations or activities of Seller whether conducted prior to the date
hereof or hereafter. Seller further represents and warrants that it is relying
solely on its own accountants and advisors for advice as to the tax consequences
to it of the transactions contemplated hereby. Seller has provided to Buyer
copies of Seller's federal and state tax returns as filed for the last three (3)
years.
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4.15 LITIGATION AND PROCEEDINGS. Except as set forth in Schedule
4.15, there is no action, suit, proceeding or investigation, or any counter or
cross-claim in an action brought by or on behalf of Seller, whether at law or in
equity, or before or by any governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign, or before any arbitrator of any
kind, that is pending or, to the best knowledge of Seller, threatened, against
Seller, which (i) could reasonably be expected to affect adversely Seller's
ability to perform its obligations under this Agreement, the Registration Rights
Agreement or the Xxxx of Sale or complete any of the transactions contemplated
hereby or thereby, or (ii) involves the possibility of any judgment or
liability, or which may become a claim, against Buyer, the Business or the
Purchased Assets. Seller is not subject to any judgment, order, writ,
injunction, decree or award of any court, arbitrator or governmental department,
commission, board, bureau, agency or instrumentality having jurisdiction over
Seller, any of the Purchased Assets or the Business that affects, involves, or
relates to the Purchased Assets of the Business.
4.16 ENVIRONMENTAL AND SAFETY MATTERS. Except as set forth in
Schedule 4.16 Seller has complied with, and the operation of the Business and
the use and ownership of the Purchased Assets, are in compliance with all
federal, state, regional and local statutes, laws, ordinances, rules,
regulations and orders relating to the protection of human health and safety,
natural resources or the environment, including, but not limited to, air
pollution, water pollution, noise control, on-site or off-site hazardous
substance discharge, disposal or recovery, toxic or hazardous substances,
training, information and warning provisions relating to toxic or hazardous
substances, and employee safety relating to the Business or the Purchased Assets
(collectively the "Environmental Laws"); and no notice of violation of any
Environmental Laws or of any permit, license or other authorization relating
thereto has been received or threatened against Seller in connection with the
Business, and to the best knowledge of Seller, is there any factual basis for
the giving of any such notice. Seller has not received any notice or claim to
the effect that Seller or the Business is or may be liable to any governmental
authority or private party as a result of the release or threatened release of
any toxic or hazardous substances in connection with the conduct or operation of
the Business, and none of the operations of the Business or Seller and none of
the Purchased Assets is the subject of any federal, state or local investigation
evaluating whether any remedial action is needed to respond to a release or a
threatened release of any toxic or hazardous substances at any real properties
leased, used or operated by Seller in connection with the Business or any other
operations or activities of Seller. Seller has not, in connection with the
conduct or operation of the Business, disposed, or had disposed of on its
behalf, toxic or hazardous substances at any site other than a federal and state
licensed hazardous waste treatment, storage and disposal facility and, to the
best knowledge of Seller, each such facility is not currently listed, or
threatened to be listed, on any state or federal "superfund" list. For the
purposes of this Section 4.16, "toxic or hazardous substances" shall include any
material, substance or waste that, because of its quantity, concentration or
physical or chemical characteristics, is deemed under any federal, state, local
or regional statute, law, ordinance, regulation or order, or by any governmental
agency pursuant thereto, to pose a present or potential hazard to human health
or safety or the environment, including, but not limited to, (i) any material,
waste or substance which is defined as a "hazardous substance" pursuant to the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980
(42 U.S.C. Section 9601, et seq.), as amended, and its related state and local
counterparts, (ii) asbestos and asbestos containing materials and
polychlorinated biphenyls, and (iii) any petroleum hydrocarbon including oil,
gasoline (refined and unrefined) and their respective constituents and any
wastes associated with the exploration, development or production of crude oil,
natural gas or geothermal energy.
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4.17 OPERATIONAL RESTRICTIONS. The Business is not subject to (i) any
restrictions under any applicable laws or regulations or (ii) any charter or
other corporate or contractual restriction or (iii) any judgment, order, writ,
injunction, decree, or order, which has had or could reasonably be expected to
have a Material Adverse Effect on Buyer, any of the Purchased Assets or the
Business. Seller does not know of any facts, circumstances or events which has
had, or with the passage of time may have, a Material Adverse Effect, any of the
Purchased Assets or on the Business.
4.18 NO BROKER. Seller has not retained or used the services of an
agent, finder or broker in connection with the transactions contemplated by this
Agreement. Seller shall pay, and shall indemnify, hold harmless and defend Buyer
from and against, all commissions, finder's and other fees and expenses charged
or asserted by any agent, finder or broker, by reason of any such retention or
use of the services of any such agent, finder or broker by Seller.
4.19 INVESTMENT REPRESENTATIONS. Seller represents that with respect
to the Shares it shall receive hereunder:
(a) It is acquiring the Shares for its own account, not as
nominee or agent, for investment and not with a view to, or for resale in
connection with, any distribution or public offering thereof within the meaning
of the Securities Act of 1933, as amended (the "Securities Act");
(b) It understands that (i) the Shares have not been registered
under the Securities Act by reason of a specific exemption therefrom, that they
must be held by it indefinitely, and that it must, therefore, bear the economic
risk of such investment indefinitely, unless a subsequent disposition thereof is
registered under the Securities Act or is exempt from such registration; (ii)
the certificate, or certificates, representing the Shares will be endorsed with
the following legend:
"THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY
NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS PURSUANT TO
SEC RULE 144 OR RULE 144A OR THERE IS AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT COVERING SUCH SECURITIES OR THE
COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THESE
SECURITIES REASONABLY SATISFACTORY TO THE COMPANY, STATING THAT SUCH
SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE
REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF THE SECURITIES
ACT."
and (iii) the Buyer will instruct any transfer agent not to register the
transfer of any of the Shares unless the conditions specified in the foregoing
legend are satisfied; provided, however, that no such opinion of counsel shall
be necessary if the sale, transfer or assignment is made pursuant to SEC Rule
144 or Rule 144A and Seller provides the Buyer with evidence reasonably
satisfactory to the Buyer and its counsel that the proposed transaction
satisfies the requirements of Rule 144 or Rule 144A. The Buyer agrees to remove
the foregoing legend from any securities if the requirements of
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SEC Rule 144(k) (or any successor rule or regulation) apply with respect to such
securities and the Buyer and its counsel are provided with reasonably
satisfactory evidence that the requirements of Rule 144(k) apply.
(c) It acknowledges that it is able to fend for itself, can bear
the economic risk of its investment and has such knowledge and experience in
financial or business matters that it is capable of evaluating the merits and
risks of the investment in the Shares;
(d) It understands that the Shares it is acquiring are
characterized as "restricted securities" under the federal securities laws
inasmuch as they are being acquired from the Seller in a transaction not
involving a public offering and that under such laws and applicable regulations
such securities may be resold without registration under the Securities Act,
only in certain limited circumstances; and
(e) It was not formed for the specific purpose of acquiring the
Shares acquired hereunder.
4.20 REPRESENTATIONS AND WARRANTIES OF SELLER. The representations
and warranties of Seller contained herein, and the disclosures contained in
Seller's Disclosure Schedules do not contain any statement of a material fact
that was untrue when made or omits any information necessary to make any such
statement contained therein, in light of the circumstances under which such
statement was made, not misleading.
5. REPRESENTATIONS AND WARRANTIES OF BUYER.
Buyer hereby represents and warrants to Seller as follows:
5.1 ORGANIZATION. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
5.2 CORPORATE POWER. Buyer has the requisite corporate power and
authority to enter into and perform its obligations under this Agreement, the
Registration Rights Agreement and the Xxxx of Sale.
5.3 NECESSARY ACTIONS; BINDING EFFECT. Buyer has taken all corporate
action necessary to authorize the execution and delivery of, and the performance
of its obligations under this Agreement, the Registration Rights Agreement and
the Xxxx of Sale. This Agreement constitutes, and upon the execution and
delivery of the Registration Rights Agreement and the Xxxx of Sale, will
constitute, valid obligations of Buyer that are legally binding on and
enforceable against Buyer in accordance with their respective terms, except (in
each case) as such enforceability may be limited by (i) bankruptcy, insolvency,
moratorium or other similar laws affecting creditors' rights, and (ii) general
principles of equity relating to the availability of equitable remedies
(regardless of whether such agreements are sought to be enforced in a proceeding
at law or in equity).
5.4 NO CONFLICTS. Neither the execution and delivery nor the
performance of this Agreement, the Registration Rights Agreement nor the Xxxx of
Sale by Buyer will result in any of the following: (i) a violation of the
Certificate of Incorporation or Bylaws of Buyer, or (ii) a violation or breach
of any writ, injunction or decree of any court or governmental instrumentality
to which the
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Buyer is a party or by which any of its properties is bound or any laws or
regulations applicable to Buyer.
5.5 BROKER. Buyer has not retained or used the services of an agent,
finder or broker in connection with the transactions contemplated by this
Agreement. Buyer shall pay, and shall indemnify, hold harmless and defend Seller
from and against all commissions, finder's and other fees and expenses charged
or asserted by any agent, finder or broker, by reason of any such retention or
use of the services of any agent, finder or broker by Buyer.
5.6 VALID ISSUANCE; COMPLIANCE WITH SECURITIES LAWS. When issued and
delivered to Seller in compliance with the provisions of this Agreement and the
Buyer's Certificate of Incorporation, the Shares will be duly and validly
issued, fully paid and nonassessable and will be free of any liens,
encumbrances, and restrictions on transfer other than restrictions on transfer
under this Agreement and applicable state and federal securities laws. Assuming
the accuracy of the representations and warranties of the Seller set forth in
this Agreement, the offer, sale and issuance of the Shares as contemplated by
this Agreement are exempt from the registration requirements of the Securities
Act, and have been registered or qualified (or are exempt from registration or
qualification) under the registration, permit, or qualification requirements
under all applicable state securities laws.
5.7 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Buyer do not contain any statement of a material fact that was
untrue when made or omits any information necessary to make any statement of
material contained therein, in light of the circumstances under which such
statement was made, not misleading.
6. CONDUCT OF BUSINESS PENDING THE CLOSING. Between the date hereof and
the Closing, Seller covenants as follows:
6.1 ACCESS. Seller shall give to Buyer and its representatives, on
prior reasonable request therefor from Buyer or such representatives, such
access to the premises, employees, agents and consultants of Seller, and such
copies of the Financial Statements, books and records, and contracts and leases
and other documentation, so as to enable Buyer to inspect and evaluate all
aspects of the Business and operations, assets, operating results, financial
condition, capitalization, ownership, and legal affairs relating to the
Business.
6.2 CONDUCT OF SELLER'S BUSINESS. Seller shall operate and conduct
the Business diligently and only in the ordinary course, consistent with past
practices. In furtherance thereof, unless Buyer's prior consent to do otherwise
is obtained, Seller shall:
(a) Not, nor shall any of its representatives, agents, officers
or directors, solicit or accept offers from, provide information or assistance
to, or negotiate or enter into any agreement or understanding, oral or written,
with, any other person or entity regarding or relating to (i) the sale, merger,
or reorganization of Seller; (ii) the sale of any of Seller's assets; (iii) the
sale or other transfer of any of the outstanding shares of the capital stock of
Seller or (iv) any other transaction which could cause or result in any change,
other than of an immaterial nature, in the business of Seller, or which could
interfere in any manner with the consummation of the transactions contemplated
in this Agreement;
17
(b) Use its best efforts to preserve intact its organization and
use its commercially reasonable efforts to retain all of its employees involved
in the Business and the services of all vendors, suppliers, agents and
consultants to Seller;
(c) Not sell or otherwise dispose, or enter into any agreement
for the sale, or solicit or initiate any discussions with respect to the sale or
disposal, of any of its assets or properties, except for sales of inventory and
obsolete equipment in the ordinary course of business and consistent with past
practices, and shall not permit or allow, or enter into any agreements providing
for or permitting, any of its assets or properties to be subjected to any Lien
or Encumbrance other than liens or security interests in existence on the date
hereof and statutory liens to secure taxes that are not yet due and payable;
(d) Not pay or declare any dividends, redeem any securities or
cause any other distribution or transfer of properties or assets of any kind
whatsoever to any of its shareholders;
(e) Maintain the Purchased Assets in good working order and
condition, ordinary wear and tear excepted, and in compliance in all material
respects with all applicable laws and regulations;
(f) Maintain insurance consistent with past practices and, unless
comparable insurance is substituted therefor or is not generally available to
the Business, not take any action to terminate or modify, or permit the lapse or
termination of, the present insurance policies and coverages of Seller as set
forth in Schedule 4.12 hereto;
(g) Promptly notify Buyer of any lawsuit or other legal
proceeding that is commenced, or that is threatened, in writing, against Seller
and that (i) relates to or arises out of the Business and, if adversely
determined against Seller, would be expected to have a Material Adverse Effect,
or (ii) relates to any of the Purchased Assets or any of the transactions
contemplated by this Agreement;
(h) Not settle any action or proceeding on terms that are
expected to have a Material Adverse Effect on the Business; not release, settle,
compromise or relinquish any claims, causes of action or rights involving more
than $5,000 individually or $10,000 in the aggregate which Seller may have
against any other persons relating to the Business, including, without
limitation, claims or rights to reimbursement or payment for services rendered
by Seller;
(i) Use its best efforts to observe and perform all of its
obligations under the Assigned Contracts;
(j) Except as required by any existing contracts or agreements,
not enter into any new agreement that would constitute a Material Contract or
amend any Material Contract;
(k) Promptly notify Buyer in writing of the occurrence of any
breach or default of any Material Contract;
(l) Not encourage or incentivize any employee involved in the
Business to leave their current position or alter their responsibilities with
Seller;
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(m) Use its best efforts to obtain and maintain all consents,
assignments or approvals of, and licenses, permits and franchises and rights to
operate the Business granted by, governmental authorities;
(n) Not take any action which would be expected to result in a
violation of or in the noncompliance with any laws or regulations applicable to
the Business; and
(o) Pay, when due, and prior to the imposition or assessment of
any interest, penalties or liens by reason of the nonpayment of all Taxes due or
assessed against it except for any Taxes being contested in good faith and for
which reserves have been established by Seller.
7. OBLIGATIONS SURVIVING THE DATE OF THIS AGREEMENT AND THE CLOSING.
7.1 NAME CHANGE. At or within fifteen (15) days after the Closing,
Seller shall take all corporate action necessary to amend its Articles of
Incorporation to change its name from "Northwest Mortgage Services, Inc." to
"NMS Liquidation, Inc." and Seller shall not thereafter use (by assumed name or
otherwise) "Northwest Mortgage Services" or any variant thereof as its corporate
name.
7.2 TAXES.
(a) Seller shall pay all Taxes of any kind or nature arising from
(i) the conduct or operation of the Business up to the Closing Date and the
conduct or operation by Seller, prior to or after the Closing Date, of any other
business operations; and (ii) the consummation of the transactions contemplated
hereby, including, without limitation, all sales, use or similar Taxes, if any,
that may arise from or be assessed by reason of the sale of the Purchased Assets
by Seller to Buyer.
(b) If any Taxes required under this Section 7.2 to be borne by
Seller are assessed against Buyer or any of the Purchased Assets, Buyer shall
notify Seller in writing promptly thereafter and Seller shall be entitled to
contest, in good faith, such assessment or charge so long as such assessment
does not adversely affect Buyer or the Purchased Assets or the Business.
Notwithstanding the foregoing, Buyer may (but shall not be obligated to) pay any
such Taxes assessed against it, the Business or any of the Purchased Assets, but
which are payable by Seller pursuant hereto, if Buyer's failure to do so, in the
judgment of Buyer, could result in the imposition of a Lien or Encumbrance on
any of the Purchased Assets or any other assets of Buyer or would constitute a
violation of any agreement to which Buyer is subject, or if Seller fails to
contest such assessment or charge diligently and in good faith. If Buyer pays
any Taxes pursuant to this Section 7.2, Buyer shall be entitled to be reimbursed
by Seller within ten (10) days of notice to Seller of such payment.
8. SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND COVENANTS.
Notwithstanding any otherwise applicable statute of limitations, all of
the respective representations and warranties of Seller and Buyer set forth in
this Agreement or in any of such party's disclosure schedules, or in any
certificates delivered by such party on the Closing Date shall survive the
consummation of the transactions contemplated hereby for a period of three (3)
years; provided, however, that (i) any representation or warranty contained in
Sections 4.14, 4.18 and 5.5 shall survive the Closing until the expiration of
the applicable statute of limitations (including any waivers or extensions
thereof) with respect to such matters and (ii) the representations and
warranties
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contained in Sections 4.1, 4.2, 4.3, 5.1, 5.2 and 5.3 shall survive the Closing
indefinitely. The covenants and other agreements of any party hereto that cannot
be or are not fully performed by such party on or prior to the Closing Date
shall survive the Closing until fully and finally performed.
9. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE BUYER. The
obligation of the Buyer to consummate the purchase of the Purchased Assets from
Seller shall be subject to the fulfillment, or the waiver by the Buyer, at or
prior to the Closing, of each of the following conditions precedent:
9.1 CERTIFICATE OF SECRETARY. The Board of Directors of Seller and
the Shareholders of Seller shall have authorized the execution and performance
of this Agreement and all documents related hereto, and Seller shall have
delivered to Buyer a certificate of the Secretary of Seller, dated as of the
Closing Date and reasonably satisfactory in form and substance to Buyer,
certifying a copy of each of such resolutions and that such resolutions were
duly adopted and are in full force and effect.
9.2 CERTIFICATE OF OFFICERS. Each of the representations and
warranties made by Seller in this Agreement or in Seller's Disclosure Schedules
shall have been true and correct when made and as of the Closing Date, in each
case with the same effect as though such representations and warranties had been
made on and as of the Closing Date (except that representations and warranties
that are made as of a specific date need be true and correct only as of such
date); each of the covenants and agreements of Seller to be performed on or
prior to the Closing Date shall have been performed; all of the conditions
precedent to Buyer's obligations the satisfaction of which were the
responsibility of Seller shall have been satisfied, except to the extent waived
by Buyer; and Buyer shall have received at the Closing a certificate to the
foregoing effect, dated as of the Closing Date and executed on behalf of the
Seller by its President and Secretary.
9.3 ABSENCE OF MATERIAL LITIGATION. There shall be (i) no pending or
overtly threatened litigation, whether brought against Seller or the Buyer, that
seeks to enjoin the consummation of any of the transactions contemplated by this
Agreement, (ii) no order that has been issued by any court or governmental
agency having jurisdiction that restrains or prohibits the consummation of the
purchase and sale of the Purchased Assets hereunder and no proceedings pending
which are reasonably likely to result in the issuance of such an order; and
(iii) no pending or overtly threatened litigation, which has had or is expected
to have a Material Adverse Effect on the Business or the Purchased Assets.
9.4 NO MATERIAL ADVERSE CHANGE. Since December 31, 1999, there shall
not have been any change in or other event affecting the business or the
condition (financial or other) or operating results of Seller that has had or is
expected to have a Material Adverse Effect on the Business or the Purchased
Assets.
9.5 EMPLOYMENT AGREEMENTS. Each of the employees of Seller designated
on Schedule 9.5 hereto shall have entered into employment agreements with Buyer
which shall be effective immediately after the Closing Date, and shall contain
additional terms and conditions satisfactory to Buyer in its sole discretion.
9.6 SCHEDULES. The Seller's Disclosure Schedules shall have been
delivered to Buyer and all disclosures set forth in the Seller's Disclosure
Schedules shall be acceptable to Buyer in its sole and absolute discretion.
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9.7 DELIVERY OF ADDITIONAL INSTRUMENTS. On the Closing Date, unless
waived in writing by Buyer, Seller shall deliver, or cause to be delivered to
Buyer, the following documents and instruments, in form and substance
satisfactory to Buyer and its counsel:
(a) The Xxxx of Sale and Assumption Agreement in the form of
Exhibit A hereto, duly executed by Seller (the "Xxxx of Sale");
(b) The Registration Rights Agreement in the form of Exhibit B
hereto, duly executed by Seller (the "Registration Rights Agreement");
(c) Evidence of the receipt of all third party consents necessary
to enable Seller to consummate the transactions contemplated herein and to
utilize the Licenses and Permits referenced in Section 4.13(b) hereof;
(d) UCC Termination Statements, and such instruments and other
documents as Buyer may reasonably request, from all persons holding any security
interests or other Liens or Encumbrances or any other adverse interests in or on
any of the Purchased Assets, terminating and discharging all of such security
interests and Liens and Encumbrances;
(e) A legal opinion, substantially in the form attached hereto as
Exhibit C, of Xxxxxx XxXxxxxxx, Vice President and General Counsel of Seller;
(f) A good standing certificate for Seller, dated as of a date
that is not more than 10 days prior to the Closing Date, from the Secretary of
State of the State of Minnesota and any other state where Seller is qualified to
do business;
(g) Such other documents and instruments as Buyer or Buyer's
counsel may reasonably request to better evidence or effectuate the transactions
contemplated hereby.
9.8 DUE DILIGENCE. The results of Buyer's business, legal and
accounting due diligence with respect to the Business and the Purchased Assets,
including but not limited to the review and approval by Buyer of all of Seller's
existing outsourcing contracts or agreements, customer accounts and overall
customer relations, shall have been completed to Buyer's satisfaction in its
sole discretion.
10. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER. The obligation of
Seller to consummate the sale of the Purchased Assets to Buyer shall be subject
to the fulfillment, or the waiver by Seller, at or prior to the Closing, of each
of the following conditions precedent:
10.1 CERTIFICATE OF SECRETARY. The Board of Directors of Buyer shall
have authorized the execution and performance of this Agreement and all
documents related hereto, and Buyer shall have delivered to Seller a certificate
of the Secretary of Buyer, dated as of the Closing Date and reasonably
satisfactory in form and substance to Seller, certifying a copy of such
resolutions and that such resolutions were duly adopted and are in full force
and effect.
10.2 CERTIFICATE OF OFFICERS. Each of the representations and
warranties made by Buyer in this Agreement or in Buyer's Disclosure Schedules
shall have been true and correct when made and as of the Closing Date, in each
case with the same effect as though such representations and warranties had been
made on and as of the Closing Date (except that representations and warranties
that are made as of a specific date need be true and correct only as of such
date); each of
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the covenants and agreements of Buyer to be performed on or prior to the Closing
Date shall have been performed; and Seller shall have received at the Closing a
certificate to the foregoing effect, dated as of the Closing Date and executed
on behalf of the Buyer by its President and Secretary.
10.3 ABSENCE OF MATERIAL LITIGATION. There shall be (i) no pending or
overtly threatened litigation, whether brought against Seller or the Buyer, that
seeks to enjoin the consummation of any of the transactions contemplated by this
Agreement, (ii) no order that has been issued by any court or governmental
agency having jurisdiction that restrains or prohibits the consummation of the
purchase and sale of the Purchased Assets hereunder and no proceedings pending
which are reasonably likely to result in the issuance of such an order; and
(iii) no pending or overtly threatened litigation, which has had or is expected
to materially and adversely affect the ability of the parties to consummate the
transactions contemplated hereby.
10.4 DELIVERY OF ADDITIONAL INSTRUMENTS. On the Closing Date, unless
waived in writing by Seller, the Buyer shall deliver, or cause to be delivered
to Seller, the following documents and instruments, in form and substance
satisfactory to Seller and their counsel:
(a) The Xxxx of Sale duly executed by Buyer;
(b) The Registration Rights Agreement duly executed by Buyer; and
(c) Such other documents and instruments as Seller or Seller's
counsel may reasonably request to better evidence or effectuate the transactions
contemplated hereby.
11. THE CLOSING. The consummation of the transactions contemplated
hereby (the "Closing") shall take place at 10:00 a.m., local time, on March 8,
2000 at the offices of Buyer's counsel at 000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 0000,
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000, or at such other time, date and place as the
parties may agree. The term "Closing Date," as used in this Agreement, shall
mean the date on which such Closing takes place.
12. TERMINATION.
12.1 METHODS OF TERMINATION. This Agreement may be terminated and
the transactions herein contemplated may be abandoned at any time prior to the
Closing:
(a) By mutual written consent of Buyer and Seller;
(b) By the Buyer, if there has been a material breach by Seller
of any of its respective material representations, warranties, agreements or
covenants set forth herein, or a failure of any condition to which the
obligations of the Buyer are subject; or
(c) By Seller, if there has been a material breach by the Buyer
of any of its representations, warranties, agreements or covenants set forth
herein, or a failure of any condition to which the obligations of Seller are
subject.
12.2 PROCEDURE UPON TERMINATION. In the event of termination of this
Agreement by Buyer or Seller or by both Buyer and Seller pursuant to Section
12.1 hereof, written notice thereof shall forthwith be given to the other party
or parties hereto and the transactions contemplated herein shall be abandoned
without further action by Buyer or Seller. In addition, if this Agreement is
terminated as provided herein:
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(a) Each party will redeliver all documents, workpapers and
other material of any other party relating to the transactions contemplated
hereby, whether so obtained before or after the execution hereof, to the party
furnishing the same.
(b) All information of a confidential nature received by any
party hereto with respect to the business of any other party (other than
information which is a matter of public knowledge or which has heretofore been
or is hereafter published in any publication for public distribution or filed as
public information with any governmental authority) shall continue to be subject
to the provisions of that certain Mutual Confidentiality Agreement previously
executed by the parties.
(c) Upon any termination of this Agreement pursuant to this
Section 12, the respective obligations of the parties hereto under this
Agreement shall terminate and no party shall have any liability whatsoever to
any other party hereto by reason of such termination, irrespective of the cause
of such termination, except as set forth in this Section 12.
13. INDEMNIFICATION PROVISIONS.
13.1 INDEMNIFICATION BY BUYER. Buyer hereby agrees that it will
indemnify, hold harmless and defend Seller and each of its directors, officers,
stockholders, employees and agents and their respective successors and assigns
and such other persons (all of the foregoing, collectively, the "Seller
Indemnified Parties" or, individually, a "Seller Indemnified Party"), from and
against any and all Seller Liabilities (as hereinafter defined) that arise from
or are in connection with:
(a) Any facts, circumstances or events, the existence or
happening of which constitutes a breach of or inaccuracy in any of the
representations or warranties of Buyer contained in this Agreement or other
documents contemplated hereby;
(b) Any claim, lawsuit, action or other proceeding that is
brought against Seller as a result of or arising from any acts or omissions of
Buyer that occur after the Closing Date, whether or not the bringing or
assertion of any such claim, lawsuit, action or other proceeding constitutes a
breach of Buyer representations or warranties contained in the Agreement;
(c) Any violation of or non-compliance with any applicable laws
or regulations applicable to Buyer or the Business after the Closing;
(d) Any breach or default by Buyer of any of its covenants or
agreements contained in this Agreement, including, without limitation, any of
the covenants of Buyer set forth in Section 2.1 with respect to the Assumed
Obligations.
"Seller Liabilities," as used in this Agreement, shall mean: (x)
demands, claims, actions, suits, and any other legal or investigative
proceedings brought against any or all of the Seller Indemnified Parties, and
any judgments rendered therein or settlements thereof, and (y) all liabilities,
damages, losses, Taxes, costs and expenses, including, without limitation,
credits, refunds or exchanges, and reasonable attorneys' fees, incurred by any
of the Seller Indemnified Parties, whether or not they have arisen from or were
incurred in or as a result of any demand, claim, action, suit, assessment or
other proceeding or any settlement or judgment.
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13.2 INDEMNIFICATION BY SELLER. Seller hereby agrees that it will
indemnify, hold harmless and defend Buyer and each of its directors, officers,
stockholders, employees and agents and the respective successors and assigns of
Buyer and such other persons (all of the foregoing, collectively, the "Buyer
Indemnified Parties" or, individually, an "Buyer Indemnified Party"), from and
against any and all Buyer Liabilities (as hereinafter defined) that arise from
or are in connection with:
(a) Any facts, circumstances or events, the existence or
happening of which constitutes a breach of or inaccuracy in any of the
representations or warranties of Seller contained in this Agreement or in the
Seller's Disclosure Schedules or other documents contemplated hereby;
(b) Any breach or default by Seller of any of its covenants or
agreements contained in this Agreement, including, without limitation, any of
the covenants of Seller set forth in Section 2.2 with respect to the Retained
Liabilities;
(c) Any claim, lawsuit, action or other proceeding that (i) is
pending against Seller or to which the Business or any of the Purchased Assets
is subject on the Closing Date, or (ii) is brought against Buyer or to which the
Business or any of the Purchased Assets may become subject hereafter as a result
of or arising from any acts or omissions of Seller that have occurred on or
before the Closing Date or any acts or omissions of Seller that may occur after
the Closing Date, and whether or not the bringing or assertion of any such
claim, lawsuit, action or other proceeding constitutes a breach of Seller
representations or warranties contained in the Agreement or is disclosed in
Seller's Disclosure Schedules;
(d) Any violation of or non-compliance with any applicable laws
or regulations applicable to Seller or the Business prior to the Closing,
whether or not such violation or non-compliance constitutes a breach of the
representations or warranties contained in Section 4.13 hereof or is disclosed
in this Agreement or Seller's Disclosure Schedules;
(e) The presence on or in or the discharge from any real
properties owned or leased now or in the past by Seller of any toxic or
hazardous substances (as defined in Section 4.16 above) that originated or took
place prior to the Closing Date, whether or not the same constitutes a breach of
the representations or warranties contained in Section 4.16 hereof or is
disclosed in this Agreement or Seller's Disclosure Schedules hereto; and
(f) The failure to have paid or to pay, when due, any Taxes
that arose out of the operations of Seller or the consummation of the
transactions contemplated by this Agreement or the failure to have filed, when
due, any Tax Returns related to any such Taxes or any period up to the Closing
Date, whether or not such failure constitutes a breach of the representations or
warranties of Seller contained in Section 4.14 or is disclosed in this Agreement
or Seller's Disclosure Schedules.
"Buyer Liabilities," as used in this Agreement, shall mean: (x) demands,
claims, actions, suits, and any other legal or investigative proceedings brought
against any or all of the Buyer Indemnified Parties, and any judgments rendered
therein or settlements thereof, and (y) all liabilities, damages, losses, Taxes,
costs and expenses, including, without limitation, credits, refunds or
exchanges, and reasonable attorneys' fees, incurred by any of the Buyer
Indemnified Parties, whether or not they have arisen from or were incurred in or
as a result of any demand, claim, action, suit, assessment or other proceeding
or any settlement or judgment.
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13.3 PROCEDURES APPLICABLE TO INDEMNIFICATION CLAIMS. To be
effective, any claim for indemnification under this Section 13 by any of the
Buyer Indemnified Parties or Seller Indemnified Parties (an "Indemnified Party")
must be made by a written notice (a "Notice of Claim") to Buyer or Seller, as
the case may be (the "Indemnifying Party") given in accordance with the
provisions of Section 14.9 hereof. Upon receipt of a Notice of Claim, the
Indemnifying Party shall have thirty (30) calendar days to contest its
indemnification obligation with respect to such claim, or the amount thereof, by
written notice to the Indemnified Party (a "Contest Notice"). Such Contest
Notice shall specify the reasons or bases for the objection of the Indemnifying
Party to the indemnification claim, and if the objection relates to the amount
of the Buyer Liability asserted or Seller Liability asserted, as the case may be
(the "Liability"), such Contest Notice shall also set forth the amount, if any,
which the Indemnifying Party believes is due the Indemnified Party. If a Contest
Notice is not given to the Indemnified Party within such 30-day period, the
obligation of the Indemnifying Party to pay to the Indemnified Party the amount
of the Liability arising out of the matters set forth in the Notice of Claim
shall be deemed established and accepted by the Indemnifying Party. If, on the
other hand, the Indemnifying Party contests a Notice of Claim within such 30-day
period, the Indemnifying Party and the Indemnified Party shall thereafter
attempt in good faith to resolve their dispute by agreement. If they are unable
to so resolve their dispute within the thirty (30) days following the date the
amount of the Liability has been established, such dispute shall be resolved by
binding arbitration, as provided in subsection 14.11 below. The award of the
arbitrator shall be final and binding on the parties and may be enforced in any
court of competent jurisdiction. Upon final determination of the amount of the
Liability that is the subject of an indemnification claim (whether such
determination is the result of the Indemnifying Party's acceptance of or failure
to contest a Notice of Claim, or of a resolution of any dispute with respect
thereto by agreement of the parties or binding arbitration), such amount shall
be paid, in cash by the Indemnifying Party to the Indemnified Party determined
to be entitled thereto within ten (10) business days of such final determination
of the amount of the Liability due by the Indemnifying Party. Notwithstanding
anything to the contrary contained elsewhere in the Section 13, if Indemnifying
Party is contesting only the amount of any Liability, then as a condition
precedent to the effectiveness of any Contest Notice, Indemnifying Party shall
pay to Indemnified Party concurrently with the delivery of such Contest Notice
the portion of the Liability which is not contested. Any amount that becomes due
hereunder and is not paid when due shall bear interest at a rate of ten percent
(10%) per annum until paid.
14. MISCELLANEOUS.
14.1 ASSIGNMENT. Seller may not assign any of its rights or
obligations hereunder without the prior written consent of Buyer. Buyer shall
have the right to assign its rights and delegate its duties hereunder to any
Affiliate of Buyer, provided that no such assignment shall relieve Buyer from
its obligations hereunder.
14.2 EXPENSES. Whether or not the transactions contemplated by this
Agreement are consummated, the parties hereto shall bear their own respective
expenses (including, but not limited to, all compensation and expenses of
counsel, financial advisors, consultants, actuaries and independent accountants)
incurred in connection with this Agreement and the transactions contemplated
hereby.
14.3 PROFESSIONAL ADVICE. Each party hereto acknowledges and agrees
that it has had the opportunity to obtain, and has obtained, the advice of
independent legal and tax counsel.
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14.4 SEVERABILITY. Any provision of this Agreement which is illegal,
invalid or unenforceable shall be ineffective to the extent of such illegality,
invalidity or unenforceability, without affecting in any way the remaining
provisions hereof.
14.5 GOVERNING LAW. This Agreement is deemed to have been made in
the State of California and its interpretation, its construction and the
remedies for its enforcement or breach are to be applied pursuant to, and in
accordance with, the laws of the State of California for contracts made and to
be performed in that state.
14.6 ENTIRE AGREEMENT; AMENDMENT. This Agreement, and the Exhibits
and Schedules hereto, constitute the entire agreement of the parties with
respect to, and supersede all prior agreements and understandings relating to
the subject matter of, this Agreement or the transactions contemplated by this
Agreement. This Agreement may not be modified or amended except by a written
instrument specifically referring to this Agreement signed by the parties
hereto.
14.7 WAIVER. No waiver by one party of the other party's
obligations, or of any breach or default hereunder by any other party, shall be
valid or effective, unless such waiver is set forth in writing and is signed by
the party giving such waiver; and no such waiver shall be deemed a waiver of any
subsequent breach or default of the same or similar nature or any other breach
or default by such other party.
14.8 INTERPRETATION; HEADINGS. This Agreement is the result of
arms'-length negotiations between the parties hereto and no provision hereof,
because of any ambiguity found to be contained therein or otherwise, shall be
construed against a party by reason of the fact that such party or its legal
counsel was the draftsman of that provision. The section, subsection and any
paragraph headings contained herein are for the purpose of convenience only and
are not intended to define or limit or affect, and shall not be considered in
connection with, the interpretation of any of the terms or provisions of this
Agreement.
14.9 NOTICES. All notices hereunder shall be deemed given if in
writing and delivered personally or sent by facsimile or by registered or
certified mail (return receipt requested) to the parties at the following
addresses (or at such other addresses as shall be specified by like notice):
(a) if to Buyer to:
Fidelity National Financial, Inc.
0000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxx Xxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxx
With a copy to:
Xxxxxxxxx Xxxxx Xxxxxxx & Xxxxx
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: C. Xxxxx Xxxxxxx
Facsimile: 000-000-0000
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(b) if to Seller to:
Northwest Mortgage Services, Inc.
0000 Xxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attn: General Counsel
With a copy to:
Faegre & Xxxxxx, LLP
0000 Xxxxxxx Xxxxxx
00 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
Attn: Xxxx Xxxxxx
14.10 COUNTERPARTS. This Agreement may be executed in separate
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
14.11 ARBITRATION; VENUE AND JURISDICTION. The parties hereto agree
that any dispute arising out of or relating to this Agreement or the breach,
termination or the validity hereof, shall be settled by binding arbitration in
accordance with the rules of the American Arbitration Association ("AAA") by a
neutral arbitrator who shall be a former superior court or appellate court judge
or justice with experience in resolving business disputes. The arbitration shall
be governed by the California Code of Civil Procedure Section 1280 et seq. and
the parties intend this procedure to be specifically enforceable in accordance
with such provisions. Judgment upon the award rendered by the arbitrator may be
entered by any court having jurisdiction thereof. The parties agree that the
judgment or decision of the arbitrator shall be final and binding. The parties
agree that the venue for the arbitration shall be in the County of Orange,
California. The arbitrator shall be required to follow the applicable law as set
forth in the governing law section of this Agreement. The arbitrator shall award
reasonable attorneys' fees and costs of arbitration to the prevailing party in
such arbitration. The parties hereto consent to the personal jurisdiction of any
court in the County of Orange, California for the enforcement of this agreement
to arbitrate and any award granted pursuant to said arbitration or settlement of
any dispute related hereto.
14.12 ATTORNEYS' FEES. In the event that any party to this Agreement
institutes any legal proceeding to enforce any of the provisions of this
Agreement, then the prevailing party in such proceeding shall be entitled to
collect and receive its reasonable attorneys' fees and costs, through and
including all appeals, and the other party shall pay for same.
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IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed by officers thereunto duly authorized, on the date first above stated.
FIDELITY NATIONAL FINANCIAL, INC.,
a Delaware corporation
/s/ XXXXX X. XXXXXX
----------------------------------------
Name: Xxxxx X. Xxxxxx
Title: President
NORTHWEST MORTGAGE SERVICES, INC.
a Minnesota corporation
/s/ XXXXXX X. XXXXXXXX
----------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: President
