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EXHIBIT 10.52
FIDELITY NATIONAL FINANCIAL, INC.
Liquid Yield Option Notes
Due 2009
(Zero Coupon - Subordinated)
EXCHANGE AGREEMENT
October 17, 1997
Xxxxxxx Xxxxx & Co.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
Ladies and Gentlemen:
In furtherance of and as contemplated in that certain letter, dated
October 3, 1997, from Xxxx Xxxx of Xxxxxxx Lynch, Xxxxxx, Xxxxxx & Xxxxx
Incorporated ("Holder") to Xxxx X. Xxxxxx of Fidelity National Financial, Inc.,
a Delaware corporation (the "Company"), the Company hereby agrees with Holder as
follows:
1. Certain Definitions. Unless otherwise defined herein or the context
requires otherwise, capitalized terms appearing in this Agreement shall have the
respective meanings ascribed to such terms in the Indenture. As used herein, the
following terms shall have the following meanings:
"Adjusted Minimum Price" shall mean $19.625 per share of Common
Stock of the Company.
"Additional Shares" shall mean the aggregate number of shares of
Common Stock (rounded to the nearest whole share), if any, to which Holder may
become entitled to receive pursuant to the provisions of Section 2(d)(ii),
Section 2(d)(iv) and Section 2(e) below.
"Agreements and Instruments" shall mean any contract, indenture,
mortgage, deed of trust, loan or credit agreement, note, lease or other
agreement or instrument to which the Company or any of its Subsidiaries is a
party or by which it or any of them may be bound, or to which any of the
property or assets of the Company or any Subsidiary is subject.
"Applicable Margin" shall mean 1.50% per annum during the first
nine (9) months of the Holding Period and 0.50% per annum thereafter; provided,
however, that from and after the occurrence of a Credit Downgrade the Applicable
Margin shall be 0.50% per annum.
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"Applicable Rate" shall mean, for any date of determination, the
quotient obtained by dividing (i) the sum of LIBOR plus the Applicable Margin,
by (ii) 360.
"Calculation Agent" shall mean Xxxxxxx Xxxxx, Xxxxxx, Xxxxxx &
Xxxxx Incorporated.
"Closing Date" shall mean Wednesday, October 22, 1997, or as soon
thereafter upon satisfaction of all conditions to closing set forth in Sections
6 and 7 below as is practicable, or such other date and time upon which the
Company and the Holder may mutually agree.
"Common Stock" shall mean the common stock, par value $.0001 per
share, of the Company.
"Cost of Carry" shall mean, for any date of determination during
the Holding Period, the Net Carry Amount multiplied by the Applicable Rate.
"Credit Downgrade" shall mean the XXXXx are downgraded one notch
by either Standard & Poor's, a division of the XxXxxx-Xxxx Companies (from B+ to
B), or Xxxxx'x Investors Services, Inc. (from Ba3 to B1).
"DTC" shall mean the Depository Trust Company.
"Exchange Shares" shall mean the Initial Shares and the
Additional Shares, if any, issued pursuant to Section 2(d) and Section 2(e)
below.
"Exchange Value" shall mean the product of the aggregate number
of Initial Shares multiplied by the Initial Price.
"Execution Price" of the Common Stock shall mean the amount of
gross proceeds to Holder (or any Affiliate of Holder) from the sale or other
disposition of one Exchange Share, reduced by $0.025 (representing the
commission on such Exchange Share).
"Extended Holding Period" shall mean an additional period
commencing on the first day after the expiration of the Initial Holding Period
and ending on the earliest to occur of (i) the date on which Holder shall have
sold or otherwise disposed of all of the Initial Shares and the Additional
Shares, (ii) the date on which Holder shall have received aggregate Proceeds to
Holder in an amount equal to or in excess of the Net Exchange Value, or (iii)
the date which is six (6) months following the expiration of the Initial Holding
Period.
"Holder XXXXx" shall mean $45,000,000 aggregate Principal Amount
at Maturity of XXXXx owned by Holder for its own account.
"Holding Period" shall mean the period commencing on the Closing
Date and expiring as of the expiration of the Initial Holding Period or, if
extended pursuant to Section 2(d)(ii) below, the Extended Holding Period.
"Indenture" shall mean that certain Indenture, dated as of
February 1, 1994, by and between the Company and the Trustee, and any and all
amendments and indentures supplemental thereto.
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"Initial Holding Period" shall mean the period commencing on the
Closing Date and ending on the earliest to occur of (i) the date on which Holder
or its Affiliates shall have sold or otherwise disposed of all of the Initial
Shares, (ii) the date on which Holder shall have received aggregate Proceeds to
Holder in an amount equal to or in excess of the Net Exchange Value, (iii) the
first date on which a Credit Downgrade shall have occurred or (iv) the first
anniversary date of the Closing Date.
"Initial Price" shall mean $23.625 per share of Common Stock.
"Initial Shares" shall mean 1,152,381 shares of Common Stock
(which number of shares of Common Stock is determined by (a) multiplying
$45,000,000 Principal Amount at Maturity of Holder XXXXX by .605 and (b)
dividing such amount by the Initial Price).
"LIBOR" shall be calculated by the Calculation Agent in
accordance with the following provisions:
(i) After the Closing Date, on which LIBOR shall initially be
calculated, LIBOR will be calculated on the first date of each calendar month
during which this Agreement is in effect, or if such rate is not available on
such date, the next date on which such rate is available, and will be the rate
for deposits in U.S. dollars having a maturity of one (1) month, commencing on
the second London Banking Day immediately following such determination date,
that appears on Telerate Page 3750 as of 11:00 A.M., London time, on such
determination date ("LIBOR Telerate"). "Telerate Page 3750" means the display
designated as page "3750" on the Telerate Service (or such other page as may
replace the 3750 page on that service or such other service or services as may
be nominated by the British Bankers' Association for the purpose of displaying
London interbank offered rates for U.S. dollar deposits). If no rate appears on
Telerate Page 3750, LIBOR in respect of such determination date will be
determined as if the parties had specified the rate described in (ii) below.
(ii) With respect to a LIBOR determination date on which no rate
appears on Telerate Page 3750, LIBOR will be determined on the basis of the
rates at which deposits in U.S. dollars having a maturity of one (1) month are
offered at approximately 11:00 A.M., London time, on such determination date by
four major banks in the London interbank market selected by the Holder (the
"Reference Banks") to prime banks in the London interbank market, commencing on
the second London Banking Day immediately following such determination date and
in a principal amount equal to an amount of not less than U.S. $1 million that
is representative for a single transaction in such market at such time. The
Holder will request the principal London office of each of the Reference Banks
to provide a quotation of its rates. If at least two such quotations are
provided, LIBOR for such determination date will be the arithmetic mean of such
quotations. If fewer than two quotations are provided, LIBOR for such
determination date will be the arithmetic mean of the rates quoted by 11:00
A.M., New York City time, on such determination date by three major banks in The
City of New York selected by the Holder for loans in U.S. dollars to leading
European banks, having a maturity of one (1) month, commencing on the second
London Banking Day immediately following such determination date and in a
principal amount equal to an amount of not less than U.S. $1 million that is
representative for a single transaction in such market at such time; provided,
however, that if the banks selected as aforesaid by the Holder are not quoting
as mentioned in this sentence, LIBOR will be LIBOR in effect on such
determination date.
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"XXXXx" shall mean $235,750,000 aggregate Principal Amount at
Maturity of Liquid Yield Option Notes due February 15, 2009 issued and sold by
the Company pursuant to the Indenture.
"Material Adverse Effect" shall mean the occurrence of any event
or circumstance which has a material adverse effect on the condition, financial
or otherwise, or in the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise.
"Minimum Price" shall mean $21.625 per share of Common Stock of
the Company.
"Net Carry Amount" shall mean, for any date of determination, an
amount equal to the number of Exchange Shares (excluding the number of shares of
Common Stock representing Holder's Short Position on the Closing Date) held
(including shares of Common Stock traded but not yet settled) by Holder as of
6:00 p.m. Pacific time on the day prior to such date, multiplied by the Initial
Price.
"Net Exchange Value" shall mean the product of (a) the aggregate
number of Initial Shares, reduced by the number of shares of Common Stock
representing Holder's Short Position on the Closing Date, multiplied by (b) the
Initial Price.
"NYSE" shall mean the New York Stock Exchange.
"Proceeds to Holder" shall mean the aggregate amount of gross
proceeds to Holder (or any Affiliate of Holder) from sales or other dispositions
of Exchange Shares, reduced by $0.025 for each Exchange Share (representing the
commission on such Exchange Shares); provided, however, that gross proceeds
received or deemed to have been received by Holder by reason of delivering
Exchange Shares to close Holder's Short Position pursuant to Section 5(a) below
shall not constitute Proceeds to Holder, and no commissions shall be payable by
the Company to Holder in respect of Exchange Shares delivered by Holder to close
its Short Position; and provided further, however, that the gross proceeds to
Holder for any sale or other disposition of Exchange Shares in violation of the
minimum resale price provisions of Section 2(e) below shall be deemed to be the
Minimum Price or the Adjusted Minimum Price, as the case may be.
"Repayment Event" shall mean any event or condition which gives
the holder of any note, debenture or other evidence of indebtedness (or any
person acting on such holder's behalf) the right to require the repurchase,
redemption or repayment of all or a portion of such indebtedness by the Company
or any Subsidiary.
"Sale Price" of the Common Stock on any date means the closing
per share sale price for the Common Stock (or, if no closing sale price is
reported, the average of the bid and ask prices or, if more than one in either
case, the average of the average bid and average ask prices) on the NYSE
Composite Tape or, in the event the Common Stock is not listed on the NYSE, such
other national or regional securities exchange upon which the Common Stock is
listed, as reported in the composite transactions for the principal United
States securities exchange on which the Common Stock is traded or, if the Common
Stock is not listed on a United States national or regional securities exchange,
as reported by NASDAQ, or, if the Common Stock is not reported by NASDAQ, the
high per share bid price for the Common Stock in the over-the-counter market as
reported by the National Quotation Bureau or similar organization, or, if such
bid price is not available, the per share market value of the Common Stock on
such date shall be determined by the Company on such basis as it deems
appropriate.
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"SEC Filings" shall mean the Company's Annual Report on Form 10-K
for the year ended December 31, 1996, the Company's definitive proxy statement
relating to its annual meeting of stockholders held June 17, 1997, and the
Company's Quarterly Reports on Form 10-Q for the quarterly periods ended March
31, 1997 and June 30, 1997.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Short Position" shall mean 650,000 shares of Common Stock which
Holder is required (irrespective of the terms of Xxxxxx's contractual delivery
requirements in respect thereof) to deliver on the Closing Date in order to
eliminate its short position in the Common Stock.
"Subsidiary" shall mean each "significant subsidiary" of the
Company (as such term is defined in Rule 1-02 of Regulation S-X).
2. Exchange of Securities.
(a) Authorization of Exchange for XXXXx. As of the date of this
Agreement, $187,500,000 aggregate Principal Amount at Maturity of the XXXXx are
outstanding. The Company, upon the terms and subject to the conditions set forth
herein, has duly authorized the issuance of shares of its Common Stock in
exchange for the Holder XXXXx.
(b) Calculation Agent. The Calculation Agent shall be solely
responsible for determining all amounts to be paid or transferred pursuant to
the terms of this Agreement and the Calculation Agent's determinations shall be
final and binding in the absence of manifest error.
(c) Exchange. Upon the terms and subject to the conditions of
this Agreement, on the Closing Date the Company agrees to issue to Holder the
Initial Shares and the right to receive the Additional Shares, and Xxxxxx agrees
to surrender to the Company the Holder XXXXx in exchange therefore. The Initial
Shares are being offered and sold and will be issued to Holder without being
registered under the Securities Act in reliance upon the exemption therefrom
provided by Section 3(a)(9) of the Securities Act. The Exchange Shares will be
issued to the Holder in the manner set forth in this Agreement and the Initial
Shares will be and, upon the Effective Date (as defined below), the Additional
Shares will be free and clear of legend or transfer restrictions (other than
those imposed * pursuant to this Agreement).
(d) Adjustment Provisions.
(i) Upon the expiration of the Initial Holding Period, if
the aggregate amount of Proceeds to Holder arising from sales or other
dispositions of the Initial Shares during the Initial Holding Period is
determined to exceed the sum of the Net Exchange Value plus accrued and unpaid
Cost of Carry, the Holder shall surrender to the Company for cancellation and
assign to the Company, for no consideration to Holder, all of the Initial Shares
then held by Holder or, if Holder shall have sold or otherwise disposed of all
of the Initial Shares (including for purposes hereof Holder's surrender of its
Initial Shares pursuant to the immediately preceding clause) then Holder shall
acquire shares of Common Stock, and surrender to the Company for cancellation
and assign to the Company, for no consideration to Holder, a number of shares of
Common Stock (rounded to the nearest whole share) equal to the quotient obtained
by dividing the amount of such excess by the Sale Price of the Common Stock as
of the last Trading Day of the Initial Holding Period.
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(ii) Upon the expiration of the Initial Holding Period, if
the aggregate amount of Proceeds to Holder arising from sales or other
dispositions of the Initial Shares during the Initial Holding Period is
determined to be less than the sum of the Net Exchange Value plus accrued and
unpaid Cost of Carry, then Holder shall be entitled to receive from the Company,
and the Company shall issue to the book entry account maintained by Holder with
DTC, upon the instructions of Xxxxxx, without the payment by Holder of any
additional consideration other than the Holder XXXXx surrendered for exchange on
the Closing Date, a number of Additional Shares equal to (A) the quotient
obtained by dividing (1) the aggregate amount of such deficiency, by (2) the
Sale Price of the Common Stock as of last Trading Day of the Initial Holding
Period, reduced by (B) the number of Initial Shares, if any, held by Holder upon
the expiration of the Initial Holding Period. If the number of Additional Shares
to be delivered pursuant to this Section 2(d)(ii) exceeds 10,000, or if on any
day during the Initial Holding Period a Credit Downgrade shall have occurred,
then the Holding Period shall be extended for the Extended Holding Period.
(iii) Upon the expiration of the Extended Holding Period,
if the aggregate amount of Proceeds to Holder arising from sales or other
dispositions of Exchange Shares during the Extended Holding Period is determined
to exceed the sum of the Net Exchange Value plus accrued and unpaid Cost of
Carry, less the aggregate amount of Proceeds to Holder arising from sales or
other dispositions of Exchange Shares during the Initial Holding Period, the
Holder shall surrender to the Company for cancellation and assign to the
Company, for no consideration to Holder, all of the remaining Exchange Shares
then held by Holder or, if Holder shall have sold or otherwise disposed of all
of the Initial Shares and the Additional Shares (including for purposes hereof
Holder's surrender of its Initial Shares pursuant to the immediately preceding
clause) then Holder shall acquire shares of Common Stock, and surrender to the
Company for cancellation and assign to the Company, for no consideration to
Holder, a number of shares of Common Stock (rounded to the nearest whole share)
equal to the quotient obtained by dividing the amount of such excess by the Sale
Price of the Common Stock as of the last Trading Day of the Extended Holding
Period.
(iv) Upon the expiration of the Extended Holding Period,
if the aggregate amount of Proceeds to Holder arising from sales or other
dispositions of Exchange Shares during the Extended Holding Period is determined
to be less than the sum of the Net Exchange Value plus accrued and unpaid Cost
of Carry, less the aggregate amount of Proceeds to Holder arising from sales or
other dispositions of Exchange Shares during the Initial Holding Period, then
Holder shall be entitled to receive from the Company, and the Company shall
issue to the book entry account maintained by Holder with the DTC, upon the
instructions of Holder, without the payment by Holder of any additional
consideration other than the Holder XXXXx surrendered for exchange on the
Closing Date, a number of Additional Shares equal to (A) the quotient obtained
by dividing (1) the aggregate amount of such deficiency, by (2) the Sale Price
of the Common Stock as of last Trading Day of the Extended Holding Period,
reduced by (B) the number of Exchange Shares, if any, held by Holder upon the
expiration of the Extended Holding Period.
(v) The Additional Shares, if any, to be delivered to
Holder pursuant to this Section 2(d) shall be issued at such date, time and
place as may be agreed upon by the Company and the Holder. In the event that
Additional Shares are delivered hereunder and the Holding Period is not extended
for the Extended Holding Period, then the Company shall compensate Holder in
cash for any decrease in the value of the Additional Shares between the dates on
which such number is determined and the later of (A) the date on which the
Additional Shares are delivered, or (B) the date on which the
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registration statement covering resales of such Additional Shares described in
paragraph (f) below shall have become effective under the Securities Act (the
"Effective Date"). Such amount shall be determined as the difference, if
negative, between the Sale Price of the Common Stock on the last day of the
Initial Holding Period and the Sale Price of the Common Stock on the later of
(A) the date on which the Additional Shares are delivered to Holder pursuant to
the terms of this Agreement, or (B) the Effective Date, and shall be paid
immediately after such calculation has been made by the Calculation Agent. In
the event such amount is positive, Holder shall compensate the Company in a like
manner.
(vi) The Company shall have the right, exercisable by
delivery of written notice to Holder within two Business Days following the
expiration of the Extended Holding Period, to purchase from Holder any or all
Exchange Shares held by Holder at the expiration of the Extended Holding Period
for an aggregate purchase price equal to the difference, if positive, of (1) the
sum of the Net Exchange Value plus accrued and unpaid Cost of Carry, reduced by
(2) the aggregate amount of Proceeds to Holder arising from sales or other
dispositions of Exchange Shares during the Holding Period. If the Company elects
not to or fails to exercise such right, Holder shall be entitled to sell or
otherwise dispose of all such remaining Exchange Shares either during the five
(5) Trading Day period commencing on either the expiration of the Extended
Holding Period or, if later, the Effective Date. Within two (2) Business Days
following the end of such five (5) Trading Day period, the Company shall
compensate Holder in cash (without duplication for any compensation paid
pursuant to Section 2(d)(v)) for any losses realized by Holder from such sales
or dispositions of Exchange Shares and the Cost of Carry accrued during such
period. Such amount shall be determined as the difference, if positive, between
the Sale Price of such Exchange Shares as of the Trading Day on which such
Additional Shares were delivered to Holder pursuant to Section 2(d)(iv) and the
Proceeds to Holder arising from the sale or disposition thereof. In the event
such amount is negative, Holder shall compensate the Company in a like manner.
(e) Cost of Carry. During the Holding Period, the Company agrees
to pay to the Holder the Cost of Carry for each day from (but excluding) the
Closing Date to the last Trading Day of the Holding Period; provided, however,
that the aggregate amount payable by the Company as the Cost of Carry shall be
reduced (not below zero) by the aggregate amount of dividends in respect of the
Exchange Shares which Holder shall have become entitled to receive by reason of
being a holder of Exchange Shares as of any record date for the payment of
dividends on the Common Stock which occurs during the Holding Period. The Cost
of Carry shall become due and payable within ten (10) days after the last
Trading Day of the Holding Period and may be paid, at the option of the Company,
either in (i) cash, (ii) in Additional Shares as provided in Section 2(d) above,
or (iii) any combination thereof. For purposes of subsection (d)(iv), the Cost
of Carry shall be calculated to include the five (5) Trading Day period
referenced therein.
(f) Registration of Additional Shares. Any Additional Shares
shall be issued pursuant to an effective registration statement or pursuant to
an available exemption from the registration requirements of Section 5 of the
Securities Act, the availability of which shall be confirmed by an opinion of
Xxxxxxxxx Xxxxx Xxxxxxx & Xxxxx, or other counsel reasonably satisfactory to
Holder, in form and substance reasonably satisfactory to Holder. Within six (6)
months following the Closing Date, the Company shall file a registration
statement with the Securities and Exchange Commission under the Securities Act,
for the purpose of registering the Additional Shares, and shall use its best
efforts to cause such registration statement to be declared effective under the
Securities Act.
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(g) Limitation on Resale Price. Holder agrees, for itself and on
behalf of its Affiliates, that (i) during the period commending on the Closing
Date and ending on the date which is five (5) calendar months after the Closing
Date, no Exchange Shares shall be sold or otherwise disposed of for a price per
share of Common Stock which is less than the Minimum Price, and (ii) during the
four (4) month period thereafter, no Exchange Shares shall be sold or otherwise
disposed of for a price per share of Common Stock which is less than the
Adjusted Minimum Price. The provision of this paragraph (g) shall terminate and
be of no further force or effect upon the occurrence of a Credit Downgrade.
(h) Closing. The closing of the exchange of XXXXx for Initial
Shares under this Agreement (the "Closing") shall take place on the Closing Date
by electronic book entry through DTC. At the Closing, the Holder XXXXx shall be
delivered by the Holder, and the Initial Shares by the Transfer Agent on behalf
of the Company, by book entry transfer through DTC. The exchange shall not be
deemed complete or the Closing to have been effected until a book entry
confirmation is received by the Company and the Holder confirming that the
Holder XXXXx, in the case of the Company, and the Initial Shares, in the case of
the Holder, have been transferred to the account of the Company (or its designee
or nominee), in the case of the Holder XXXXx, and the Holder (or its designee or
nominee), in the case of the Initial Shares, and such exchange shall take place
on the same Trading Day and as simultaneously as possible. The Company and the
Holder shall cooperate and coordinate their efforts, and those of their
respective agents, nominees and designees, with DTC, the Transfer Agent and the
Trustee to accomplish the foregoing objective; provided, however, that neither
the Company, the Holder nor the Transfer Agent, nor any designee or nominee of
the foregoing, shall have any liability for the performance by DTC or its
participants of their respective obligations under the rules and procedures
governing their operations.
(i) Cash Collateral. The Company agrees to pay to the Holder, on
the 15th and 30th day of each calendar month during the Holding Period, or if
there is no 30th day the last day of such calendar month (the "Deposit Date"),
for deposit to an account established by and for the benefit of holder (the
"Cash Collateral Account") an amount of cash, calculated by the Calculation
Agent as of the third Business Day immediately preceding the Deposit Date (the
"Calculation Date"), equal to:
(i) the amount, if any, of any accrued and unpaid Cost of
Carry; plus
(ii) an amount equal to (A) the number of Exchange Shares
sold or otherwise disposed of since the Closing Date multiplied by (B) the
difference, if positive, of the Initial Price and the Execution Price of the
Common Stock; plus
(iii) an amount equal to (A) the difference, if a positive
number, between (A) the Initial Price and (B) the Sale Price of the Common
Stock, multiplied by (B) the number of Exchange Shares then held by Holder;
minus
(iv) an amount equal to (A) the number of Exchange Shares
sold or otherwise disposed of since the Closing Date times (B) the difference,
if positive, of the Execution Price of the Common Stock and the Initial Price;
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provided, however, that the Company's obligation to pay cash into the Cash
Collateral Account shall initially arise only if the net amount, calculated
pursuant to this Section (i), is in excess of $500,000 and, thereafter, on each
Deposit Date if the amount, calculated pursuant to this Section (i), is $500,000
in excess of the amount in the Cash Collateral Account on the date immediately
preceding that Deposit Date.
Xxxxxx agrees to pay interest to the Company monthly on the
amount in the Cash Collateral Account at a rate equal to LIBOR.
The Company's obligation to maintain the Cash Collateral Account
shall continue until the Company has satisfied all of its obligations under this
Agreement whereupon the entire amount of cash then on deposit in the Cash
Collateral Account shall be released to the Company. The Company grants to
holder a continuing security interest in the Cash Collateral Account to secure
the Company's obligations under this Agreement; provided, however, that Holder
shall not liquidate or apply any amount on deposit in the Cash Collateral
Account unless or until (a) the Company shall have defaulted on any obligation
under this Agreement, including the obligation to make payments to the Cash
Collateral Account pursuant to this Section 2(i), and such default shall have
continued for a period of five (5) Business Days after the Company receives
written notice of such default from Holder, or (b) as of the expiration of the
Holding Period, either the Common Stock is not then listed on the NYSE, any
national or regional securities exchange or the NASDAQ Stock Market or trading
in the Common Stock shall have been suspended by the NYSE, such securities
exchange or NASDAQ for two (2) consecutive Trading Days. In the foregoing
events, Holder shall be entitled to liquidate or apply amounts on deposit in the
Cash Collateral Account only in an amount equal to the difference, if negative,
between (1) the aggregate amount of Proceeds to Holder arising from sales or
other dispositions of Exchange Shares, and (2) the sum of the Net Exchange Value
plus accrued and unpaid Cost of Carry. Immediately upon such liquidation or
application of the Cash Collateral Account, Holder shall (a) surrender to the
Company for cancellation and assign to the Company, for no consideration to
Holder, all Exchange Shares then held by Holder, (b) release to the Company the
remaining amounts, if any, on deposit in the Cash Collateral Account, and (c)
pay to the Company all accrued and unpaid interest on amounts theretofore held
in the Cash Collateral Account.
(j) Credit Downgrade. In the event of a Credit Downgrade, (i) the
aggregate net accrued and unpaid obligations of the Company and the Holder, as
the case may be, under Section 2(d) under this Agreement shall become due and
payable within ten (10) Business Days following the Credit Downgrade, (ii)
Holder shall be entitled to sell or otherwise dispose of its remaining Exchange
Shares without any minimum price restrictions; provided, however, that Holder
shall first offer the Company the right to purchase all or any part of such
remaining Exchange Shares for cash at a purchase price equal to the Initial
Price, and (iii) the Initial Holding Period shall terminate and the Extended
Holding Period shall commence.
3. Representations and Warranties of the Company. Except as set forth in
the SEC Filings or in the Disclosure Schedules attached hereto, the Company
represents and warrants to the Holder as follows:
(a) Organization and Standing of the Company. The Company has
been duly organized and is validly existing as a corporation in good standing
under the laws of the State of Delaware and has corporate power and authority to
own, lease and operate its properties and to
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conduct its business and to enter into and perform its obligations under this
Agreement; and the Company is duly qualified as a foreign corporation to
transact business and is in good standing in each other jurisdiction in which
such qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure so to qualify or
to be in good standing would not result in a Material Adverse Effect.
(b) Organization and Standing of Subsidiaries. Each Subsidiary
has been duly organized and is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation, has corporate
power and authority to own, lease and operate its properties and to conduct its
business and is duly qualified as a foreign corporation to transact business and
is in good standing in each jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure so to qualify or to be in good
standing would not result in a Material Adverse Effect.
(c) Authorization of Agreement and Securities. This Agreement and
the transactions contemplated herein have been duly authorized, executed and
delivered by the Company. This Agreement is a legal, valid and binding agreement
of the Company, enforceable against the Company in accordance with its terms,
except as limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws or equitable principals relating to or limiting creditors' rights
generally. The Exchange Shares have been duly authorized for issuance and sale
to the Holder pursuant to this Agreement and, when issued and delivered by the
Company pursuant to this Agreement against payment of the consideration set
forth herein, will be validly issued, fully paid and non-assessable; no holder
of the Exchange Shares will be subject to personal liability by reason of being
such a holder; and the issuance of the Exchange Shares is not subject to the
preemptive or other similar rights of any securityholder of the Company.
(d) Reports and Financial Statements. The SEC Filings complied
when filed in all material respects with all applicable requirements of the
Securities Exchange Act of 1934, as amended. None of the SEC Filings, including,
without limitation, any financial statements or schedules included or
incorporated by reference therein, contained when filed any untrue statement of
a material fact, or omitted when filed to state a material fact required to be
stated or incorporated by reference therein or necessary in order to make the
statements therein, in light of the circumstances under which made, not
misleading. Since the dates as of which information is given in the SEC Filings,
except as otherwise stated therein, (i) there has been no material adverse
change in the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Company, whether or not arising in the
ordinary course of business, (ii) there have been no transactions entered into
by the Company, other than those in the ordinary course of business, which are
material with respect to the Company, and (iii) except by regular dividends
there has been no dividend or distribution of any kind declared, paid or made by
the Company on any class of its capital stock. The audited consolidated
financial statements of the Company included in its Annual Report on Form 10-K
referred to in the first sentence of this paragraph (d) fairly present, in
conformity with generally accepted accounting principles applied on a consistent
basis (except as may be indicated in the notes thereto), the consolidated
financial position of the Company and its consolidated subsidiaries as of the
dates thereof and their consolidated results of operations and changes in
financial position for the periods then ended.
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(e) Absence of Defaults and Conflicts. Neither the Company nor
any of its Subsidiaries is in violation of its charter or by-laws or in default
in the performance or observance of any obligation, agreement, covenant or
condition contained in any of the Agreements and Instruments, except for such
defaults that would not result in a Material Adverse Effect; and the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated herein and compliance by the Company with its
obligations hereunder have been duly authorized by all necessary corporate
action and do not and will not, whether with or without the giving of notice or
passage of time or both, conflict with or constitute a breach of, or default or
Repayment Event under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or any
Subsidiary pursuant to, the Agreements and Instruments (except for such
conflicts, breaches or defaults or liens, charges or encumbrances that would not
result in a Material Adverse Effect), nor will such action result in any
violation of the provisions of the charter or by-laws of the Company or any
Subsidiary or any applicable law, statute, rule, regulation, judgment, order,
writ or decree of any government, government instrumentality or court, domestic
or foreign, having jurisdiction over the Company or any Subsidiary or any of
their assets, properties or operations.
(f) Absence of Proceedings. There is no action, suit, proceeding,
inquiry or investigation before or brought by any court or governmental agency
or body, domestic or foreign, now pending, or, to the knowledge of the Company,
threatened, against or affecting the Company or any Subsidiary, or which might
reasonably be expected to result in a Material Adverse Effect, or which might
reasonably be expected to materially and adversely affect the properties or
assets thereof or the consummation of the transactions contemplated in this
Agreement or the performance by the Company of its obligations hereunder; the
aggregate of all pending legal or governmental proceedings to which the Company
or any Subsidiary is a party or of which any of their respective property or
assets is the subject, including ordinary routine litigation incidental to the
business, could not reasonably be expected to result in a Material Adverse
Effect.
(g) Absence of Further Requirements. Based upon the
representations and warranties of the Holder set forth in Section 4 below, no
filing with, or authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or agency is
necessary or required for the performance by the Company of its obligations
hereunder, in connection with the offering, issuance or sale of the Exchange
Shares hereunder or the consummation of the transactions contemplated by this
Agreement.
(h) No Investment Company. Neither the Company nor any of its
Subsidiaries is an investment company within the meaning of the Investment
Company Act of 1940, a amended.
(i) Section 3(a)(9). The Company represents that the issuance and
sale of the Initial Shares is exempt from the requirements of Section 5 of the
Securities Act by reason of the exemption from registration requirements
provided by Section 3(a)(9) thereunder.
(j) Free Shares. Other than restrictions on transfer, if any,
imposed by this Agreement, or restrictions under applicable securities laws
imposed on any Additional Shares, if such Additional Shares shall have been
issued pursuant to an exemption from the requirements of Section 5 of the
Securities Act, there are no restrictions on the transfer of the Exchange
Shares, and no legends or stop order instructions shall be placed against the
certificates or book entries representing the Exchange Shares.
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4. Representations and Warranties of the Holder. The Holder hereby
represents and warrants to the Company as follows:
(a) Authorization of Agreement. This Agreement has been duly
authorized, executed and delivered by the Holder, and is a legal, valid and
binding agreement of the Holder enforceable against the Holder in accordance
with its terms, except as limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws or equitable principals relating to or limiting
creditors' rights generally.
(b) Ownership of XXXXx. Holder is the beneficial owner of the
Holder XXXXx and, upon the Closing, the Company will acquire good marketable and
unencumbered tile to the Holder XXXXx surrendered by the Holder for exchange,
free and clear of all security interests, liens, charges, encumbrances,
conditional sales agreements as other obligations relating to their sale or
transfer, and subject to no adverse claim.
(c) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration, qualification or
decree of, any court, governmental authority or agency or stock exchange is
necessary or required by Holder for the performance by the Holder of its
obligations hereunder or the consummation of the transactions contemplated by
this Agreement, other than filings with the NYSE necessary to list the Exchange
Shares on the NYSE.
5. Certain Covenants of the Holder.
(a) Holder's Short Position. Within three (3) Trading Days
following the Closing Date, Holder shall deliver that number of Initial Shares
which is necessary to eliminate Holder's Short Position in the Common Stock. For
purposes of this Agreement (specifically, for the purposes of determining
Proceeds to Holder), the delivery of shares of Common Stock by Holder pursuant
to this Section 5(a) shall be deemed to generate gross proceeds from sales or
other dispositions of Common Stock in an amount equal to the product of the
number of shares so delivered multiplied by the Initial Price. During the term
of this Agreement Holder agrees that, except in connection with its normal
market making activities in the XXXXx or in connection with transactions for or
on behalf of Holder's customers, Holder will not effect any short sales of the
Common Stock.
(b) Certain Information. Holder agrees to give notice to the
Company, to the attention of its Executive Vice President, Finance, by facsimile
transmission not later than 3:00 p.m. Pacific time on each Business Day during
the Holding Period, setting forth in reasonable detail (i) the number of
Exchange Shares sold or otherwise disposed of on the immediately preceding
Trading Day, (ii) the number of Exchange Shares delivered to close Holder's
Short Position in the Common Stock on the immediately preceding Trading Day,
(iii) the gross proceeds generated from sales or other dispositions of Exchange
Shares (including those described in (ii) above) on the immediately preceding
Trading Day, (iv) the number of Exchange Shares held by holder as of the close
of business on the immediately preceding Trading Day, and (v) LIBOR as of the
day of notice.
6. Conditions of Obligations of the Holder. The obligations of the
Holder hereunder are subject to the accuracy of the representations and
warranties of the Company contained in Section 3 hereof, to the performance by
the Company of its covenants and other obligations hereunder, and to the
satisfaction, at or before the delivery of the XXXXx and Initial Shares at the
Closing, of each of the following conditions:
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(a) Officers' Certificate. The Holder shall have received a
certificate of the President or an Executive Vice President of the Company and
the Chief Financial Officer of the Company, dated as of Closing Date, to the
effect that (i) the representations and warranties in Section 3 hereof are true
and correct with the same force and effect as though expressly made at and as of
Closing Date, and (ii) the Company has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied at or prior to
Closing Date.
(b) Approval of Listing. The Exchange Shares shall have been
approved for listing on the NYSE, subject only to official notice of issuance.
(c) No Legal Restraints. There shall not be in effect on the
Closing Date any order, law, rule or regulation restraining, enjoining or
otherwise prohibiting or making illegal the communication of the transaction
contemplated by this Agreement.
(d) Opinion of Counsel. Holder shall have received an opinion of
counsel for the Company, in form and substance reasonably satisfactory to the
Holder, to the effect set forth in Appendix I hereto.
(e) Additional Documents. Counsel for the Holder shall have been
furnished with such documents as they may require for the purpose of enabling
them to pass upon the exchange of securities as herein contemplated, or in order
to evidence the accuracy of any of the representations or warranties, or the
fulfillment of any of the conditions, herein contained.
7. Conditions of Obligations of the Company. The obligations of the
Company hereunder are subject to the accuracy of the representations and
warranties of the Holder contained in Section 4 hereof, to the performance by
the Holder of its covenants and other obligations hereunder, and to the
satisfaction, at or before the delivery of the XXXXx and the Initial Shares at
the Closing, of the following conditions:
(a) Officers' Certificate. The Company shall have received a
certificate of a duly authorized executive officer of the Holder, dated as of
Closing Date, to the effect that (i) the representations and warranties in
Section 4 hereof are true and correct with the same force and effect as though
expressly made at and as of Closing Date, and (ii) the Holder has complied with
all agreements and satisfied all conditions on its part to be performed or
satisfied at or prior to Closing Date.
(b) Approval of Listing. The Exchange Shares shall have been
approved for listing on the NYSE, subject only to official notice of issuance.
(c) No Legal Restraints. There shall not be in effect on the
Closing Date any order, law, rule or regulation restraining, enjoining or
otherwise prohibiting or making illegal the communication of the transaction
contemplated by this Agreement.
(d) Additional Documents. Counsel for the Company shall have been
furnished with such documents as they may require for the purpose of enabling
them to pass upon the exchange of securities as herein contemplated, or in order
to evidence the accuracy of any of the representations or warranties, or the
fulfillment of any of the conditions, herein contained.
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8. Representations, Warranties and Agreements to Survive Delivery. All
representations, warranties and agreements contained in this Agreement shall
remain operative and in full force and effect, regardless of any investigation
made by or on behalf of the Holder or any controlling person, or by or on behalf
of the Company, and shall survive delivery of the Exchange Shares to the Holder.
9. Termination of Agreement.
(a) Termination; General. The Holder may terminate this
Agreement, by notice to the Company, at any time at or prior to Closing Date (i)
if there has been, since the time of execution of this Agreement, any material
adverse change in the condition, financial or otherwise, or in the earnings,
business affairs or business prospects of the Company and its Subsidiaries
considered as one enterprise, whether or not arising in the ordinary course of
business, or (ii) if there has occurred any material adverse change in the
financial markets in the United States or the international financial markets,
any outbreak of hostilities or escalation thereof or other calamity or crisis or
any change or development involving a prospective change in national or
international political, financial or economic conditions, in each case the
effect of which is such as to make it, in the judgment of the Holder,
impracticable to enforce contracts for the sale of securities, or (iii) if
trading in any securities of the Company has been suspended or materially
limited by the Securities and Exchange Commission or the NYSE, or if trading
generally on the American Stock Exchange or the NYSE or in the Nasdaq National
Market has been suspended or materially limited, or minimum or maximum prices
for trading have been fixed, or maximum ranges for prices have been required, by
any of said exchanges or by such system or by order of the Commission, the
National Association of Securities Dealers, Inc. or any other governmental
authority, or (iv) if a banking moratorium has been declared by either Federal
or New York authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this
Section 9, such termination shall be without liability of any party to any other
party; provided, that Section 12 shall survive such termination and remain in
full force and effect.
10. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if mailed or transmitted by
any standard form of telecommunication. Notices to the Holder shall be directed
to the Holder at North Tower, 5th Floor, World Financial Center, New York, New
York 10281-1201, to the attention of Xxxxxxx XxXxxxx, Xxxxxx Xxxx and Xxxx Xxxx,
and to Brown & Wood LLP, One World Trade Center, New York, New York 10048-0557,
to the attention of Xxxx X. Xxxxxxx; and notices to the Company shall be
directed to it at 0000 Xxxxx Xxxxxx, Xxxxx 000, Xxxxx Xxxxxxx, Xxxxxxxxxx 00000,
to the attention of Xxxx X. Xxxxxx, Executive Vice President, Finance, with
copies to M'Xxxx Xxxxx Xxxx, General Counsel, and to Xxxxxxxxx Xxxxx Xxxxxxx &
Xxxxx, a Professional Corporation, 000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx
Xxxxx, Xxxxxxxxxx 00000, to the attention of X. Xxxxx Xxxxxxx.
11. Parties. This Agreement shall each inure to the benefit of and be
binding upon the Holder and the Company and their respective successors. Nothing
expressed or mentioned in this Agreement is intended or shall be construed to
give any person, firm or corporation, other than the Holder and the Company and
their respective successors any legal or equitable right, remedy or claim under
or in respect of this Agreement or any provision herein contained. This
Agreement and all conditions and provisions hereof are intended to be for the
sole and exclusive benefit of the Holder and
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the Company and their respective successors, and for the benefit of no other
person, firm or corporation.
12. Expenses. Each of the parties to this Agreement shall bear its own
expenses in connection with the preparation and negotiation of this Agreement
and the consummation of the transactions contemplated hereby.
13. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
14. Effect of Headings. The Section headings herein are for convenience
only and shall not affect the construction hereof.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
between the Holder and the Company in accordance with its terms.
Very truly yours,
FIDELITY NATIONAL FINANCIAL, INC.
By: /s/ XXXX X. XXXXXX
---------------------------------
Name: Xxxx X. Xxxxxx
Title: Executive Vice President, Finance
CONFIRMED AND ACCEPTED,
as of the date first above written:
XXXXXXX XXXXX & CO.
XXXXXXX LYNCH, XXXXXX, XXXXXX & XXXXX
INCORPORATED
By:
--------------------------------
Name:
Title:
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the Company and their respective successors, and for the benefit of no other
person, firm or corporation.
12. Expenses. Each of the parties to this Agreement shall bear its own
expenses in connection with the preparation and negotiation of this Agreement
and the consummation of the transactions contemplated hereby.
13. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
14. Effect of Headings. The Section headings herein are for convenience
only and shall not affect the construction hereof.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
between the Holder and the Company in accordance with its terms.
Very truly yours,
FIDELITY NATIONAL FINANCIAL, INC.
By:
---------------------------------
Name: Xxxx X. Xxxxxx
Title: Executive Vice President, Finance
CONFIRMED AND ACCEPTED,
as of the date first above written:
XXXXXXX XXXXX & CO.
XXXXXXX LYNCH, XXXXXX, XXXXXX & XXXXX
INCORPORATED
By: /s/ XXXXX X. XXXXXXX
--------------------------------
Name: Xxxxx X. XxXxxxx
Title: Director
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