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EXHIBIT 2.1
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AGREEMENT AND PLAN OF MERGER
AMONG
INTUIT INC.,
MERGER SUB 1, INC.
MERGER SUB 2, INC.
AND
ROCK FINANCIAL CORPORATION
AND
TITLE SOURCE, INC.
OCTOBER 6, 1999
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "AGREEMENT") is made and
entered into as of October 6, 1999 among Intuit Inc., a Delaware corporation
("PARENT"), Merger Sub 1, Inc., a Michigan corporation and a wholly-owned
subsidiary of Parent ("MERGER SUB 1"), Merger Sub 2, Inc., a Michigan
corporation and a wholly-owned subsidiary of Parent ("MERGER SUB 2"), Rock
Financial Corporation, a Michigan corporation ("COMPANY") and Title Source,
Inc., a Michigan corporation ("TITLE").
RECITALS
A. Upon the terms and subject to the conditions of this Agreement and
in accordance with the Michigan Business Corporation Act ("MICHIGAN LAW"),
Parent, Merger Sub 1, Merger Sub 2, the Company and Title intend to enter into a
business combination transaction in which the Company and Title become
wholly-owned subsidiaries of Parent.
B. The Mergers (as defined in Section 1.1) are intended to be treated
as tax-deferred reorganizations pursuant to the provisions of Section 368 of the
Internal Revenue Code of 1986, as amended (the "CODE"). The parties also intend
for each of the Mergers to qualify as "pooling of interest" transactions for
accounting and financial reporting purposes.
C. As of the date of this Agreement, the Board of Directors of Company
(i) has determined that the Company Merger (as defined below) is advisable and
fair to, and in the best interests of, Company and its shareholders, (ii) has
approved this Agreement, the Company Merger and the other transactions
contemplated by this Agreement and (iii) subject to the terms and conditions of
Section 6.2(c) below, has determined to recommend that the shareholders of
Company approve this Agreement and the Company Merger.
D. Concurrently with the execution of this Agreement, and as a
condition and inducement to Parent's willingness to enter into this Agreement,
Company shall execute and deliver a Stock Option Agreement in favor of Parent in
substantially the form attached hereto as Exhibit A (the "STOCK OPTION
AGREEMENT"). The Board of Directors of Company has approved the Stock Option
Agreement.
E. Concurrently with the execution of this Agreement, and as a
condition and inducement to Parent's willingness to enter into this Agreement,
certain shareholders of Company and certain shareholders of Title are entering
into Voting Agreements in substantially the form attached hereto as Exhibit B
(the "VOTING AGREEMENTS"). The Board of Directors of Company and Title have
approved the Voting Agreements.
F. Concurrently with the execution of this Agreement, and as a
condition and inducement to Parent's willingness to enter into this Agreement,
the chief executive officer of Company is entering into a noncompetition
agreement with Parent, effective upon the Effective Time ( the "NONCOMPETITION
AGREEMENT").
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G. As of the date of this Agreement, the Board of Directors of Title
(i) has determined that the Title Merger is advisable and fair to, and in the
best interests of, Title and its shareholders, (ii) has approved this Agreement,
the Title Merger and the other transactions contemplated by this Agreement and
(iii) subject to the terms and conditions of Section 6.2(c) below, has
determined to recommend that the shareholders of Title approve this Agreement
and the Title Merger.
H. The Board of Directors of Parent and the Board of Directors and
shareholder of Merger Sub 1 (i) have determined that the Company Merger (as
defined below) is advisable and fair to, and in the best interests of, Parent
and Merger Sub 1 and (ii) have approved this Agreement, the Company Merger and
the other transactions contemplated by this Agreement.
I. The Board of Directors of Parent and the Board of Directors and
shareholder of Merger Sub 2 (i) have determined that the Title Merger (as
defined below) is advisable and fair to, and in the best interests of, Parent
and Merger Sub 2 and (ii) have approved this Agreement, the Company Merger and
the other transactions contemplated by this Agreement.
In consideration of the foregoing and the representations, warranties,
covenants and agreements set forth in this Agreement, the parties agree as
follows:
ARTICLE I
THE MERGERS
1.1 The Mergers. At the Effective Time and subject to and upon the
terms and conditions of this Agreement, Merger Sub 1 shall be merged with and
into Company in a merger in accordance with the applicable provisions of
Michigan Law,(the "COMPANY MERGER"), the separate corporate existence of Merger
Sub 1 shall cease and Company shall continue as the surviving corporation. At
the Effective Time and subject to and upon the terms and conditions of this
Agreement, Merger Sub 2 shall be merged with and into Title in a merger in
accordance with the applicable provisions of Michigan Law (the "TITLE MERGER"),
the separate corporate existence of Merger Sub 2 shall cease and Title shall
continue as the surviving corporation. The Company Merger and the Title Merger
are hereinafter sometimes referred to as the "MERGERS."
1.2 Effective Time; Closing. Subject to the provisions of this
Agreement, the parties hereto shall cause the Mergers to be consummated by
filing certificates of merger, in such appropriate form as determined by the
parties, with the Department of Consumer and Industry Services of Michigan in
accordance with the relevant provisions of Michigan Law (the "ARTICLES OF
MERGER") (the time of such filing (or such later time as may be agreed in
writing by Company, Title and Parent, as applicable, and specified in the
Articles of Merger) being the "EFFECTIVE TIME") as soon as practicable on or
after the Closing Date (as herein defined). The closing of the Mergers (the
"CLOSING") shall take place at the offices of Fenwick & West LLP, Two Palo Alto
Square, Palo Alto, California, at a time and date to be specified by the
parties, which shall be no later than the second business day after the
satisfaction or waiver of the conditions set forth in
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Article VI, or at such other time, date and location as the parties hereto agree
in writing (the "CLOSING DATE").
1.3 Effect of the Mergers. At the Effective Time, the effect of the
Mergers shall be as provided in this Agreement and the applicable provisions of
Michigan Law. Without limiting the generality of the foregoing, (i) at the
Effective Time all the property, rights, privileges, powers and franchises of
Company and Merger Sub 1 shall vest in Company as the surviving corporation
without reversion or impairment, and all debts, liabilities and duties of
Company and Merger Sub 1 shall become the debts, liabilities and duties of
Company as the surviving corporation and (ii) at the Effective Time all the
property, rights, privileges, powers and franchises of Title and Merger Sub 2
shall vest in Title as the surviving corporation without reversion or
impairment, and all debts, liabilities and duties of Title and Merger Sub 2
shall become the debts, liabilities and duties of Title as the surviving
corporation.
1.4 Articles of Incorporation; Bylaws.
(a) At the Effective Time, (i) the Articles of Incorporation of
Merger Sub 1, as in effect immediately prior to the Effective Time, shall be the
Articles of Incorporation of Company as the surviving corporation until
thereafter amended as provided by law and such Articles of Incorporation of the
surviving corporation; provided, however, that at the Effective Time, Article I
of the Articles of Incorporation of Company as the surviving corporation shall
be amended to read: "The name of the corporation is Rock Financial Corporation"
and (ii) the Articles of Incorporation of Merger Sub 2, as in effect immediately
prior to the Effective Time, shall be the Articles of Incorporation of Title as
the surviving corporation until thereafter amended as provided by law and such
Articles of Incorporation of the surviving corporation; provided, however, that
at the Effective Time, Article I of the Articles of Incorporation of Title as
the surviving corporation shall be amended to read: "The name of the corporation
is Title Source, Inc."
(b) At the Effective Time, (i) the Bylaws of Merger Sub 1, as in
effect immediately prior to the Effective Time, shall be the Bylaws of Company
as the surviving corporation until thereafter amended and (ii) the Bylaws of
Merger Sub 2, as in effect immediately prior to the Effective Time, shall be the
Bylaws of Title as the surviving corporation until thereafter amended.
1.5 Directors and Officers.
(i) The directors of Company immediately following the Effective
Time shall be the persons who were non-employee directors of Company and not
greater than 10% shareholders of the Company and the persons who were the
directors of Merger Sub 1 immediately prior to the Effective Time, until their
respective successors are duly elected or appointed and qualified and the size
of Company's Board shall be appropriately adjusted to reflect the new number of
directors as of the Effective Time. The officers of Company immediately
following the Effective Time shall be the persons who were the officers of
Merger
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Sub 1 immediately prior to the Effective Time, until their respective successors
are duly appointed.
(ii) The directors of Title immediately following the
Effective Time shall be the persons who were the directors of Merger Sub 2
immediately prior to the Effective Time, until their respective successors are
duly elected or appointed and qualified. The officers of Title immediately
following the Effective Time shall be the persons who were the officers of
Merger Sub 2 immediately prior to the Effective Time, until their respective
successors are duly appointed.
1.6 Effect on Capital Stock. Subject to the terms and conditions of
this Agreement, at the Effective Time, by virtue of the Mergers and without any
action on the part of Merger Sub 1, Merger Sub 2, Company, Title or the holders
of any of the following securities:
(a) Conversion of Company Common Stock; Title Common Stock; and
Title Option.
(i) Each common share, par value $0.01 per share, of Company
("COMPANY COMMON Stock") issued and outstanding immediately prior to the
Effective Time, other than any shares of Company Common Stock to be canceled
pursuant to Section 1.6(b), will be canceled and extinguished and automatically
converted (subject to Sections 1.6(d) and (e)) into the right to receive a
number of shares of Common Stock, par value $0.01 per share, of Parent ("PARENT
COMMON STOCK") equal to the Company Exchange Ratio (as defined below), upon
surrender of the certificate representing such share of Company Common Stock in
the manner provided in Section 1.7. The "COMPANY EXCHANGE RATIO" shall equal a
fraction whose numerator equals $23.00 and whose denominator equals the average
of the closing prices of Parent Common Stock on the Nasdaq Stock Market over the
twenty (20) trading days ending on the third trading day before the date of the
meeting of the Company's shareholders at which the Company Merger is approved
(the "PARENT AVERAGE PRICE PER SHARE"); provided that if such fraction is less
than 0.579832, the Company Exchange Ratio shall be 0.579832 and if such fraction
is more than 0.841463, the Company Exchange Ratio shall be 0.841463.
(ii) Each common share, no par value per share, of Title
("TITLE COMMON STOCK") issued and outstanding immediately prior to the Effective
Time, other than any shares of Title Common Stock to be canceled pursuant to
Section 1.6(b), will be canceled and extinguished and automatically converted
(subject to Sections 1.6(d) and (e)) into the right to receive a number of
shares of Parent Common Stock equal to the Title Exchange Ratio (as defined
below), upon surrender of the certificate representing such share of Title
Common Stock in the manner provided in Section 1.7. The "TITLE EXCHANGE RATIO"
shall equal a fraction whose numerator equals the Title Price Per Share (as
defined below) and whose denominator equals the Parent Average Price Per Share;
provided, that if the Parent Average Price Per Share is less than Twenty Seven
and One-Third Dollars ($271/3), the Parent Average Price Per Share shall be
Twenty Seven and One-Third Dollars ($271/3) and if the Parent Average Price Per
Share is more than Thirty Nine and Two-Thirds Dollars ($392/3), the Parent
Average Price Per Share shall be
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Thirty Nine and Two-Thirds Dollars ($39 2/3). The "TITLE PRICE PER SHARE" shall
be the quotient that results from dividing (i) Five Million Two Hundred Thousand
Dollars ($5,200,000) by (ii) the number of shares of capital stock of Title that
are issued and outstanding as of immediately prior to the Effective Time.
(iii) The Title Option (as defined in Section 3.2(a)) issued
and outstanding immediately prior to the Effective Time will be canceled and
extinguished and automatically converted (subject to Sections 1.6(d) and (e))
into the right to receive a number of shares of Parent Common Stock equal to the
Title Option Amount (as defined below), upon surrender of the agreement
representing such Title Option in the manner provided in Section 1.7. The "TITLE
OPTION AMOUNT" shall equal a fraction whose numerator equals Eight Hundred
Thousand Dollars ($800,000) and whose denominator equals the Parent Average
Price Per Share; provided, that if the Parent Average Price Per Share is less
than Twenty Seven and One-Third Dollars ($27 1/3) the Parent Average Price Per
Share shall be Twenty Seven and One-Third Dollars ($27 1/3) and if the Parent
Average Price Per Share is more than Thirty Nine and Two-Thirds Dollars
($39 2/3), the Parent Average Price Per Share shall be Thirty Nine and Two-
Thirds Dollars ($39 2/3).
(b) Cancellation of Company-Owned, Title-Owned and Parent-Owned
Stock.
(i) Each share of Company Common Stock held by Company or owned
by Merger Sub 1, Parent or any direct or indirect wholly-owned subsidiary of
Company or of Parent immediately prior to the Effective Time shall be canceled
and extinguished without any conversion thereof.
(ii) Each share of Title Common Stock held by Title or owned by
Merger Sub 2, Parent or any direct or indirect wholly-owned subsidiary of Title
or of Parent immediately prior to the Effective Time shall be canceled and
extinguished without any conversion thereof.
(c) Capital Stock of Merger Sub 1 and Merger Sub 2.
(i) Each common share, no par value, of Merger Sub 1 issued and
outstanding immediately prior to the Effective Time shall be converted into one
validly issued, fully paid and nonassessable common share, no par value, of
Company as the surviving corporation. Each certificate evidencing ownership of
common shares of Merger Sub 1 shall evidence ownership of such common shares of
Company as the surviving corporation.
(ii) Each common share, no par value, of Merger Sub 2 issued
and outstanding immediately prior to the Effective Time shall be converted into
one validly issued, fully paid and nonassessable common share, no par value, of
Title as the surviving corporation. Each certificate evidencing ownership of
common shares of Merger Sub 2 shall evidence ownership of such common shares of
Title as the surviving corporation.
(d) Adjustments to Exchange Ratios and Title Option Amount.
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(i) The Company Exchange Ratio shall be adjusted to reflect
appropriately the effect of any stock split, reverse stock split, stock dividend
(including any dividend or distribution of securities convertible into, or
exercisable to purchase, Parent Common Stock or Company Common Stock),
reorganization, recapitalization, reclassification or other like change with
respect to Parent Common Stock or Company Common Stock occurring on or after the
date hereof and prior to the Effective Time.
(ii) The Title Exchange Ratio and the Title Option Amount shall
be adjusted to reflect appropriately the effect of any stock split, reverse
stock split, stock dividend (including any dividend or distribution of
securities convertible into, or exercisable to purchase, Parent Common Stock or
Title Common Stock), reorganization, recapitalization, reclassification or other
like change with respect to Parent Common Stock or Title Common Stock occurring
on or after the date hereof and prior to the Effective Time.
(e) Fractional Shares. No fraction of a share of Parent Common
Stock will be issued by virtue of the Mergers, but in lieu thereof:
(i) each holder of shares of Company Common Stock who would
otherwise be entitled to a fraction of a share of Parent Common Stock (after
aggregating all fractional shares of Parent Common Stock that otherwise would be
received by such holder pursuant to the Company Merger) shall receive from
Parent an amount of cash (rounded to the nearest whole cent) equal to the
product of (i) such fraction, multiplied by (ii) the Parent Average Price Per
Share.
(ii) each holder of shares of Title Common Stock and each
holder of the Title Option who would otherwise be entitled to a fraction of a
share of Parent Common Stock (after aggregating all fractional shares of Parent
Common Stock that otherwise would be received by such holder pursuant to the
Title Merger) shall receive from Parent an amount of cash (rounded to the
nearest whole cent) equal to the product of (i) such fraction, multiplied by
(ii) the Parent Average Price Per Share.
(f) Stock Options. At the Effective Time, all options to purchase
Company Common Stock then outstanding under the Company's Amended and Restated
1996 Stock Option Plan ( the "COMPANY STOCK OPTION Plan") shall be assumed by
Parent in accordance with Section 6.8 of this Agreement.
1.7 Surrender of Certificates.
(a) Exchange Agent. Parent shall select a bank or trust company
acceptable to Company to act as the exchange agent (the "EXCHANGE AGENT") in the
Mergers.
(b) Provision of Common Stock. Promptly after the Effective Time,
Parent shall make available to the Exchange Agent for exchange in accordance
with this Article I, the shares of Parent Common Stock issuable pursuant to
Section 1.6 in exchange for outstanding shares of Company Common Stock, Title
Common Stock and the Title Option, and cash in an
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amount sufficient for payment in lieu of fractional shares pursuant to Section
1.6(e) and any dividends or distributions to which holders of shares of Company
Common Stock, Title Common Stock or the Title Option may be entitled pursuant to
Section 1.7(d).
(c) Exchange Procedures. Promptly after the Effective Time, Parent
shall cause the Exchange Agent to mail to each holder of record (as of the
Effective Time) of a certificate or certificates ("CERTIFICATES"), which
immediately prior to the Effective Time represented outstanding shares of
Company Common Stock or Title Common Stock and to the holder of the Title Option
whose shares, or option in the case of the Title Option, were converted into
shares of Parent Common Stock pursuant to Section 1.6, (i) a letter of
transmittal in customary form (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates or the Title Options as
applicable, shall pass, only upon delivery of the Certificates or the stock
option agreement relating to the Title Option ("OPTION AGREEMENT"), as
applicable, to the Exchange Agent and shall contain such other provisions as
Parent may reasonably specify) and (ii) instructions for use in effecting the
surrender of the Certificates or Option Agreement, as applicable, in exchange
for certificates representing shares of Parent Common Stock, cash in lieu of any
fractional shares pursuant to Section 1.6(e) and any dividends or other
distributions pursuant to Section 1.7(d). Upon surrender of Certificates or the
Option Agreement for cancellation to the Exchange Agent or to such other agent
or agents as may be appointed by Parent, together with such letter of
transmittal, duly completed and validly executed in accordance with the
instructions thereto, the holders of such Certificates or Option Agreement shall
be entitled to receive in exchange therefor certificates representing the number
of whole shares of Parent Common Stock into which their shares of Company Common
Stock, shares of Title Common Stock and/or Title Option were converted at the
Effective Time, payment in lieu of fractional shares which such holders have the
right to receive pursuant to Section 1.6(e) and any dividends or distributions
payable pursuant to Section 1.7(d), and the Certificates and Option Agreement so
surrendered shall forthwith be canceled. Until so surrendered, outstanding
Certificates and the outstanding Option Agreement will be deemed from and after
the Effective Time, for all corporate purposes, to evidence only the ownership
of the number of full shares of Parent Common Stock into which such shares of
Company Common Stock, shares of Title Common Stock and/or Title Option shall
have been so converted and the right to receive an amount in cash in lieu of the
issuance of any fractional shares in accordance with Section 1.6(e) and any
dividends or distributions payable pursuant to Section 1.7(d).
(d) Distributions With Respect to Unexchanged Shares or the Title
Option. No dividends or other distributions declared or made after the date of
this Agreement with respect to Parent Common Stock with a record date after the
Effective Time will be paid to the holders of any unsurrendered Certificates or
Option Agreement with respect to the shares of Parent Common Stock represented
thereby until the holders of record of such Certificates or Option Agreement
shall surrender such Certificates or Option Agreement, as applicable. Subject to
applicable law, following surrender of any such Certificates or Option
Agreement, the Exchange Agent shall deliver to the record holders thereof,
without interest, certificates representing whole shares of Parent Common Stock
issued in exchange therefor along with payment in lieu of fractional shares
pursuant to Section 1.6(e) hereof and the amount of any such dividends or other
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distributions with a record date after the Effective Time payable with respect
to such whole shares of Parent Common Stock.
(e) Transfers of Ownership. If certificates representing shares of
Parent Common Stock are to be issued in a name other than that in which the
Certificates surrendered in exchange therefor are registered, it will be a
condition of the issuance thereof that the Certificates so surrendered will be
properly endorsed and otherwise in proper form for transfer and that the persons
requesting such exchange will have paid to Parent or any agent designated by it
any transfer or other taxes required by reason of the issuance of certificates
representing shares of Parent Common Stock in any name other than that of the
registered holder of the Certificates surrendered, or established to the
satisfaction of Parent or any agent designated by it that such tax has been paid
or is not payable.
(f) No Liability. Notwithstanding anything to the contrary in this
Section 1.7, neither the Exchange Agent, Parent, Company as the surviving
corporation of the Company Merger, Title as the surviving corporation of the
Title Merger, nor any party hereto shall be liable to a holder of shares of
Parent Common Stock, Company Common Stock, Title Common Stock or Title Option
for any amount properly paid to a public official pursuant to any applicable
abandoned property, escheat or similar law.
1.8 No Further Ownership Rights in Company Common Stock, Title Common
Stock or Title Option.
(i) All shares of Parent Common Stock issued in accordance with the
terms hereof in the Company Merger (including any cash paid in respect thereof
pursuant to Section 1.6(e) and 1.7(d)) shall be deemed to have been issued in
full satisfaction of all rights pertaining to the shares of Company Common Stock
outstanding as of immediately prior to the Effective Time with respect to which
the shares of Parent Common Stock were so issued, and there shall be no further
registration of transfers on the records of Company as the surviving corporation
of the Company Merger of shares of Company Common Stock which were outstanding
immediately prior to the Effective Time. If after the Effective Time,
Certificates are presented to Company as the surviving corporation of the
Company Merger for any reason, they shall be canceled and exchanged as provided
in this Article I. Notwithstanding anything herein to the contrary, except to
the extent waived in writing by Parent, any Certificate that is not properly
submitted to the Exchange Agent for exchange and cancellation within two years
after the Effective Time shall no longer evidence ownership of or any right to
receive shares of Parent Common Stock and all rights of the holder of such
Certificate, with respect to the shares previously evidenced by such
Certificate, shall cease.
(ii) All shares of Parent Common Stock issued in accordance with
the terms hereof in the Title Merger (including any cash paid in respect thereof
pursuant to Section 1.6(e) and 1.7(d)) shall be deemed to have been issued in
full satisfaction of all rights pertaining to the shares of Title Common Stock
and the Title Option outstanding as of immediately prior to the Effective Time
with respect to which the shares of Parent Common Stock were so issued, and
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there shall be no further registration of transfers on the records of Title as
the surviving corporation of the Title Merger of shares of Title Common Stock or
the Title Option which were outstanding immediately prior to the Effective Time.
If after the Effective Time, Certificates or Option Agreement (relating to the
Title Option outstanding immediately before the Effective Time) are presented to
Title as the surviving corporation of the Title Merger for any reason, they
shall be canceled and exchanged as provided in this Article I. Notwithstanding
anything herein to the contrary, except to the extent waived in writing by
Parent, any Certificate or Option Agreement (relating to the Title Option
outstanding immediately before the Effective Time) that is not properly
submitted to the Exchange Agent for exchange and cancellation within two years
after the Effective Time shall no longer evidence ownership of or any right to
receive shares of Parent Common Stock and all rights of the holder of such
Certificate or Option Agreement , with respect to the shares or Title Option
previously evidenced by such Certificate or Option Agreement, shall cease.
1.9 Lost, Stolen or Destroyed Certificates. In the event that any
Certificates shall have been lost, stolen or destroyed, the Exchange Agent shall
issue in exchange for such lost, stolen or destroyed Certificates, upon the
making of an affidavit of that fact by the holder thereof, certificates
representing the shares of Parent Common Stock into which the shares of Company
Common Stock or Title Common Stock, as applicable, represented by such
Certificates were converted pursuant to Section 1.6, cash for fractional shares,
if any, as may be required pursuant to Section 1.6(e) and any dividends or
distributions payable pursuant to Section 1.7(d); provided, however, that Parent
may, in its discretion and as a condition precedent to the issuance of such
certificates representing shares of Parent Common Stock, cash and other
distributions, require the owner of such lost, stolen or destroyed Certificates
to deliver a bond in such sum as it may reasonably direct as indemnity against
any claim that may be made against Parent, Company as the surviving corporation
of the Company Merger, Title as the surviving corporation of the Title Merger,
or the Exchange Agent with respect to the Certificates alleged to have been
lost, stolen or destroyed.
1.11 Tax and Accounting Consequences.
(a) It is intended by the parties hereto that each of the Mergers
shall constitute a reorganization within the meaning of Section 368 of the Code.
The parties hereto adopt this Agreement as a "plan of reorganization" within the
meaning of Sections 354(a) and 361(a) of the Code and Treas. Reg. Sections
1.368-2(g) and 1.368-3(a).
(b) It is intended by the parties hereto that each of the Mergers
shall qualify for accounting treatment as "pooling of interest" transactions for
accounting and financial reporting purposes.
1.12 Taking of Necessary Action; Further Action. If, at any time after
the Effective Time, any further action is necessary or desirable to carry out
the purposes of this Agreement and to vest Company as the surviving corporation
of the Company Merger with full right, title and possession to all assets,
property, rights, privileges, powers and franchises of Company and
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Merger Sub 1 and to vest Title as the surviving corporation of the Title Merger
with full right, title and possession to all assets, property, rights,
privileges, powers and franchises of Title and Merger Sub 2, the officers and
directors of Company, Title, Merger Sub 1 and Merger Sub 2 will take all such
lawful and necessary action. Parent shall cause Merger Sub 1 and Merger Sub 2 to
perform all of their obligations relating to this Agreement and the transactions
contemplated hereby.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF COMPANY
As of the date of this Agreement and as of the Closing Date, Company
represents and warrants to Parent and Merger Sub 1, subject to the exceptions
specifically disclosed in writing in the disclosure letter and referencing a
specific representation delivered by Company to Parent dated as of the date
hereof and certified on behalf of the Company by a duly authorized officer of
Company (the "COMPANY SCHEDULES") which Company Schedules shall be deemed, for
all purposes of this Agreement (including without limitation Article VII), to be
part of the representations and warranties made and given by Company under this
Article II, as follows:
2.1 Organization; Subsidiaries
(a) Company and each of its subsidiaries (i) is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized; (ii) has the corporate or other
applicable entity power and authority to own, lease and operate its assets and
properties and to carry on its business as now being conducted; and (iii) except
as would not be material to Company, is duly qualified or licensed to do
business in each jurisdiction where the character of the properties owned,
leased or operated by it or the nature of its activities makes such
qualification or licensing necessary.
(b) Other than the corporations or other entities identified in
Part 2.1 of the Company Schedules, neither Company nor any of the other
corporations or other entities identified in Part 2.1 of the Company Schedules
owns any capital stock of, or any equity interest of any nature in, any
corporation, partnership, joint venture arrangement or other business entity,
other than the entities identified in Part 2.1 of the Company Schedules, except
for passive investments in equity interests of public companies as part of the
cash management program of the Company. Neither Company nor any of its
subsidiaries has agreed or is obligated to make, or is bound by any written,
oral or other agreement, contract, subcontract, lease, binding understanding,
instrument, note, option, warranty, purchase order, license, sublicense,
insurance policy, benefit plan or legally binding commitment or undertaking of
any nature, as in effect as of the date hereof or as may hereinafter be in
effect under which it may become obligated to make any future investment in or
capital contribution to any other entity. Neither Company nor any of its
subsidiaries, has, at any time, been a general partner of any general
partnership, limited partnership or other entity. Part 2.1 of the Company
Schedules indicates the jurisdiction of organization of each entity listed
therein and Company's direct or indirect equity interest therein.
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(c) Company has delivered or made available to Parent a true and
correct copy of the Articles of Incorporation and Bylaws of Company and similar
governing instruments of each of its subsidiaries, each as amended to date, and
each such instrument is in full force and effect. Neither Company nor any of its
subsidiaries is in violation of any of the provisions of its Articles of
Incorporation or Bylaws or equivalent governing instruments.
2.2 Company Capital Structure.
(a) The authorized capital stock of Company consists of 50,000,000
shares of Company Common Stock, of which there were 14,851,454 shares issued and
outstanding as of September 24, 1999 and 1,000,000 preferred shares, par value
$0.01 per share, none of which are issued or outstanding. Each outstanding share
of Company Common Stock is entitled to one vote on each matter submitted to its
shareholders for a vote. All outstanding shares of Company Common Stock are duly
authorized, validly issued, fully paid and nonassessable and are not subject to
(i) preemptive rights created by statute, the Articles of Incorporation or
Bylaws of Company or any agreement or document to which Company is a party or by
which it is bound, (ii) rights of first refusal created by statute, the Articles
of Incorporation or Bylaws of Company, or (iii) with respect to shares held or
beneficially owned by officers, directors or greater than 5% shareholders of
Company only, rights of first refusal created by any agreement or document to
which Company is a party or by which it is bound. No shares of Company Common
Stock have been issued without certificates. As of September 24, 1999, Company
had reserved an aggregate of 4,500,000 shares of Company Common Stock for
issuance pursuant to the Company Stock Option Plan. Stock options granted under
the Company Stock Option Plan are collectively referred to in this Agreement as
"COMPANY OPTIONS." As of September 24, 1999, there were Company Options
outstanding to purchase an aggregate of 2,171,930 shares of Company Common
Stock. All shares of Company Common Stock subject to issuance as aforesaid, upon
issuance on the terms and conditions specified in the instruments pursuant to
which they are issuable, will be duly authorized, validly issued, fully paid and
nonassessable. Part 2.2 of the Company Schedules list for each person who held
Company Options as of September 24, 1999, the name of the holder of such option,
the Company Stock Option Plan under which such option was granted, the exercise
price of such option, the number of shares as to which such option had vested at
such date, the vesting schedule for such option and whether the exercisability
of such option will be accelerated in any way by the transactions contemplated
by this Agreement, and indicates the extent of acceleration, if any. The terms
of the Company Options permit the assumption of the Company Options as provided
by Section 6.8 of this Agreement without the consent or approval of the holders
of the Company Options, Company's shareholders or otherwise and without any
acceleration of the exercise schedule or vesting provisions of such Company
Options.
(b) All outstanding shares of Company Common Stock or other capital
stock of Company, all outstanding Company Options, and all outstanding shares of
capital stock of each subsidiary of the Company have been issued and granted in
compliance, in all material respects, with (i) all applicable securities laws
and other applicable Legal Requirements (as defined below) and (ii) all material
requirements set forth in applicable agreements or
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instruments. No shareholder of Company has the right to rescind the purchase of
any shares of Company Common Stock from Company. For the purposes of this
Agreement, "LEGAL REQUIREMENTS" means any federal, state, local, municipal,
foreign or other law, statute, constitution, principle of common law,
resolution, ordinance, code, edict, decree, rule, regulation, ruling or
requirement issued, enacted, adopted, promulgated, implemented or otherwise put
into effect by or under the authority of any Governmental Entity (as defined
below).
(c) No shares of the Company Common Stock that are outstanding
immediately prior to the Effective Time are unvested or are subject to a
repurchase option, risk of forfeiture or other condition providing that such
shares ("COMPANY STOCK SUBJECT TO FORFEITURE") may be forfeited or repurchased
by Company upon any termination of the shareholders' employment, directorship or
other relationship with Company (and/or any affiliate of Company) under the
terms of any restricted stock purchase agreement or other agreement with Company
that does not by its terms provide that such repurchase option, risk of
forfeiture or other condition lapses upon consummation of the Company Merger.
2.3 Obligations With Respect to Capital Stock. Except as set forth in
Section 2.2(a) or in Part 2.3 of the Company Schedules, there are no Company
equity securities or similar ownership interests of any class of Company equity
security, or any securities exchangeable or convertible into or exercisable for
such equity securities or similar ownership interests, issued, reserved for
issuance or outstanding. Except for securities Company owns free and clear of
all Encumbrances (as defined herein), directly or indirectly through one or more
subsidiaries, as of the date of this Agreement, there are no equity securities,
partnership interests or similar ownership interests of any class of equity
security of any subsidiary of Company, or any security exchangeable or
convertible into or exercisable for such equity securities, partnership
interests or similar ownership interests, issued, reserved for issuance or
outstanding. Except as set forth in Section 2.2(a) or in Part 2.2 or Part 2.3 of
the Company Schedules and except for the Stock Option Agreement, there are no
subscriptions, options, warrants, equity securities, partnership interests or
similar ownership interests, calls, rights (including preemptive rights),
commitments or agreements of any character to which Company or any of its
subsidiaries is a party or by which it is bound obligating Company or any of its
subsidiaries to issue, deliver or sell, or cause to be issued, delivered or
sold, or repurchase, redeem or otherwise acquire, or cause the repurchase,
redemption or acquisition of, any shares of capital stock, partnership interests
or similar ownership interests of Company or any of its subsidiaries or
obligating Company or any of its subsidiaries to grant, extend, accelerate the
vesting of or enter into any such subscription, option, warrant, equity
security, call, right, commitment or agreement. Except as set forth in Part 2.3
of the Company Schedules, there are no registration rights and there is no
voting trust, proxy, rights plan, or other agreement or understanding to which
Company is a party or by which it is bound with respect to any equity security
of any class of Company or with respect to any equity security, partnership
interest or similar ownership interest of any class of any of its subsidiaries.
Shareholders of Company will not be entitled to dissenters' or appraisal rights
under applicable state law (including under Section 761 et seq. of Michigan Law)
in connection with the Company Merger. For purposes of this Agreement,
"ENCUMBRANCES" means any lien, pledge, hypothecation, charge, mortgage, security
interest, encumbrance, claim, infringement, option,
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right of first refusal, preemptive right, community property interest or
restriction of any nature (including any restriction on the voting of any
security, any restriction on the transfer of any security or other asset, any
restriction on the receipt of any income derived from any asset, any restriction
on the use of any asset and any restriction on the possession, exercise or
transfer of any other attribute of ownership of any asset).
2.4 Authority.
(a) Company has all requisite corporate power and authority to
enter into this Agreement and the Stock Option Agreement and to consummate the
transactions contemplated hereby and thereby, subject to the approval of its
shareholders. The execution and delivery of this Agreement and the Stock Option
Agreement and the consummation of the transactions contemplated hereby and
thereby have been duly authorized by all necessary corporate action on the part
of Company, subject only to the approval of this Agreement and the Company
Merger by Company's shareholders as contemplated by Section 6.2 and the filing
of the Articles of Merger pursuant to Michigan Law. An affirmative vote of the
holders of a majority of the outstanding shares of the Company is required for
Company's shareholders to approve this Agreement and the Company Merger. No
separate voting by a class of the Company's shareholders is or will be required
in connection with the approval of the Company Merger or the other transactions
contemplated hereby. This Agreement and the Stock Option Agreement have each
been duly executed and delivered by Company and, assuming the due execution and
delivery by Parent and Merger Sub 1, constitute the valid and binding
obligations of Company, enforceable against Company in accordance with their
terms, except as enforceability may be limited by bankruptcy and other similar
laws affecting the rights of creditors generally and general principles of
equity. Except as set forth in Part 2.4 of the Company Schedules and subject to
obtaining the approval of this Agreement and the Company Merger by the Company's
shareholders as contemplated by Section 6.2 and compliance with the requirements
set forth in Section 2.4(b) below, the execution and delivery of this Agreement
and the Stock Option Agreement by Company does not, and the performance of this
Agreement and the Stock Option Agreement by Company will not, (i) conflict with
or violate the Articles of Incorporation or Bylaws of Company or the equivalent
organizational documents of any of its subsidiaries, (ii) conflict with or
violate any law, rule, regulation, order, judgment or decree applicable to
Company or any of its subsidiaries or by which Company or any of its
subsidiaries or any of their respective properties is bound or affected, or
(iii) result in any material breach of or constitute a material default (or an
event that with notice or lapse of time or both would become a material default)
under, or impair Company's rights or alter the rights or obligations of any
third party under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of a material
Encumbrance on any of the material properties or assets of Company or any of its
subsidiaries pursuant to, any material note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise, concession, or other
instrument or obligation to which Company or any of its subsidiaries is a party
or by which Company or any of its subsidiaries or its or any of their respective
assets are bound or affected, except for such breaches or defaults which, in the
aggregate, would not result in a material loss of benefits to Company or any of
its subsidiaries, Parent, or Company as the surviving corporation. Part 2.4 of
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the Company Schedules list all consents, waivers and approvals under any of
Company's or any of its subsidiaries' agreements, contracts, licenses or leases
required to be obtained in connection with the consummation of the transactions
contemplated hereby, which, if individually or in the aggregate not obtained,
would result in a material loss of benefits to Company or any of its
subsidiaries, Parent, or Company as the surviving corporation.
(b) Except as set forth in Part 2.4 of the Company Schedules, no
consent, approval, order or authorization of, or registration, declaration or
filing with any court, administrative agency or commission or other governmental
authority or instrumentality, foreign or domestic ("GOVERNMENTAL ENTITY"), is
required to be obtained or made by Company in connection with the execution and
delivery of this Agreement and the Stock Option Agreement or the consummation of
the Company Merger, except for (i) the filing of the Articles of Merger with the
Department of Consumer and Industry Services of the State of Michigan and
appropriate documents with the relevant authorities of other states in which
Company is qualified to do business, (ii) the filing of the Proxy
Statement/Prospectus (as defined in Section 2.19) with the Securities and
Exchange Commission ("SEC") in accordance with the Securities Exchange Act of
1934, as amended (the "EXCHANGE ACT") and the effectiveness of the Registration
Statement (as defined in Section 2.19), (iii) such consents, approvals, orders,
authorizations, registrations, declarations and filings as may be required under
applicable federal, foreign and state securities (or related) laws and the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
ACT"), and the securities or antitrust laws of any foreign country, and (iv)
such other consents, authorizations, filings, approvals and registrations which
if not obtained or made would not be material to Company or Parent or have a
material adverse effect on the ability of the parties hereto to consummate the
Company Merger.
2.5 SEC Filings; Company Financial Statements.
(a) Company has filed all forms, reports and documents required to
be filed by Company with the SEC since May 1, 1998 and has made available to
Parent such forms, reports and documents in the form filed with the SEC. All
such required forms, reports and documents (including those that Company may
file subsequent to the date hereof) are referred to herein as the "COMPANY SEC
REPORTS." As of their respective dates, the Company SEC Reports (i) were
prepared in accordance with the requirements of the Securities Act of 1933, as
amended (the "SECURITIES ACT"), or the Exchange Act, as the case may be, and the
rules and regulations of the SEC thereunder applicable to such Company SEC
Reports and (ii) did not at the time they were filed (or if amended or
superseded by a filing prior to the date of this Agreement, then on the date of
such filing) contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, except to the extent corrected prior to the date of this
Agreement by a subsequently filed Company SEC Report. All documents required to
be filed as exhibits to the Company SEC Reports have been so filed. None of
Company's subsidiaries is required to file any forms, reports or other documents
with the SEC.
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(b) Each of the consolidated financial statements (including, in
each case, any related notes thereto) contained in the Company SEC Reports (the
"COMPANY FINANCIALS"), including each Company SEC Report filed after the date
hereof until the Closing, (i) complied as to form in all material respects with
the published rules and regulations of the SEC with respect thereto, (ii) was
prepared in accordance with United States generally accepted accounting
principles ("GAAP") applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto or, in the case of
unaudited interim financial statements, as may be permitted by the SEC on Form
10-Q, 8-K or any successor form under the Exchange Act) and (iii) fairly
presented the consolidated financial position of Company and its subsidiaries as
at the respective dates thereof and the consolidated results of Company's
operations and cash flows for the periods indicated, except that the unaudited
interim financial statements may not contain footnotes and were or are subject
to normal and recurring year-end adjustments. The unaudited balance sheet of
Company contained in the Company SEC Reports as of June 30, 1999 is hereinafter
referred to as the "COMPANY BALANCE SHEET." Except as disclosed in the Company
Financials, since the date of the Company Balance Sheet neither Company nor any
of its subsidiaries has any liabilities required under GAAP to be set forth on a
balance sheet (absolute, accrued, contingent or otherwise) which are,
individually or in the aggregate, material to the business, results of
operations or financial condition of Company and its subsidiaries taken as a
whole, except for liabilities incurred since the date of the Company Balance
Sheet in the ordinary course of business consistent with past practices and
liabilities incurred in connection with this Agreement.
(c) Company has heretofore furnished to Parent a complete and
correct copy of any amendments or modifications, which have not yet been filed
with the SEC but which are required to be filed, to agreements, documents or
other instruments which previously had been filed by Company with the SEC
pursuant to the Securities Act or the Exchange Act.
2.6 Absence of Changes. Since the date of the Company Balance Sheet
there has not been: (i) any Material Adverse Change (as defined in Section
9.3(c)) with respect to Company, Title and their subsidiaries, taken as a group,
(ii) any declaration, setting aside or payment of any dividend on, or other
distribution (whether in cash, stock or property) in respect of, or any issuance
of, any of Company's or any of its subsidiaries' capital stock, or any purchase,
redemption or other acquisition by Company of any of Company's capital stock or
any other securities of Company or its subsidiaries or any options, warrants,
calls or rights to acquire any such shares or other securities except for
repurchases from employees following their termination pursuant to the terms of
their pre-existing stock option or purchase agreements, (iii) any split,
combination or reclassification of any of Company's or any of its subsidiaries'
capital stock, (iv) up to the date of this Agreement, any granting by Company or
any of its subsidiaries of any increase in compensation or fringe benefits to
any of their executive officers, or any payment by Company or any of its
subsidiaries of any bonus to any of their executive officers, or any granting by
Company or any of its subsidiaries of any increase in severance or termination
pay to any executive officer or any entry by Company or any of its subsidiaries
into, or material modification or amendment of, any currently effective
employment, severance, termination or indemnification agreement with any
executive officer or any agreement with an executive officer
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the benefits of which are contingent or the terms of which are materially
altered upon the occurrence of a transaction involving Company of the nature
contemplated hereby, (v) up to the date of this Agreement, any granting by
Company or any of its subsidiaries of any increase in compensation or fringe
benefits to any of their non-executive officer employees, or any payment by
Company or any of its subsidiaries of any bonus to any of their non-executive
executive officer employees, or any granting by Company or any of its
subsidiaries of any increase in severance or termination pay to any
non-executive officer employee or any entry by Company or any of its
subsidiaries into, or material modification or amendment of, any currently
effective employment, severance, termination or indemnification agreement with
any non-executive officer employees or any agreement with a non-executive
officer employee the benefits of which are contingent or the terms of which are
materially altered upon the occurrence of a transaction involving Company of the
nature contemplated hereby, excluding any such increases, payments, grants or
other agreements which individually obligate the Company to pay less than
$50,000 annually to a non-executive officer employee and in the aggregate
obligate the Company to pay less than $500,000 at any time in the future, and
excluding any severance payments agreed to by the Company in connection with
branch closings occurring since the date of the Company Balance Sheet, (vi) any
material change or alteration in the policy of Company relating to the granting
of stock options to its employees and consultants, (vii) entry by Company or any
of its subsidiaries into, or material modification, amendment or cancellation
of, any material licensing, distribution, marketing, reseller, merchant
services, advertising, sponsorship or other similar agreement other than any
such agreement entered into in the ordinary course of Company's business which
is terminable by Company or its subsidiaries without penalty upon no more than
90 days prior notice and/or provides (or reasonably could provide) for payments
by or to Company or its subsidiaries in an amount in excess of $100,000 over the
term of the agreement (such excepted agreements, collectively, "ORDINARY COURSE
AGREEMENTS"), (viii) any acquisition, sale or transfer of any material asset of
Company or any of its subsidiaries other than in the ordinary course of business
and other than any such agreement to which Parent has consented in writing, (ix)
any material change by Company in its accounting methods, principles or
practices, except as required by concurrent changes in GAAP or applicable law,
or (x) any revaluation by Company of any of its assets, including, without
limitation, writing off notes or accounts receivable other than in the ordinary
course of business and other than revaluations or write offs of any amount, the
sum of which in the aggregate is equal to less than $100,000 more than reserved
in the Company Balance Sheet.
2.7 Taxes.
(a) Definition of Taxes. For the purposes of this Agreement
(including without limitation this Section 2.7 and Section 3.7), "TAX" or
"TAXES" refers to (i) any and all federal, state, local and foreign taxes,
assessments and other governmental charges, duties, impositions and liabilities
relating to taxes, including taxes based upon or measured by gross receipts,
income, profits, sales, use and occupation, and value added, ad valorem,
transfer, franchise, withholding, payroll, recapture, employment, excise and
property taxes, together with all interest, penalties and additions imposed with
respect to such amounts, (ii) any liability for payment of any amounts of the
type described in clause (i) as a result of being a member of an
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affiliated consolidated, combined or unitary group, and (iii) any liability for
amounts of the type described in clauses (i) and (ii) as a result of any express
or implied obligation to indemnify another person or as a result of any
obligations under any agreements or arrangements with any other person with
respect to such amounts and including any liability for taxes of a predecessor
entity.
(b) Tax Returns and Audits. Except as set forth in Part 2.7 of the
Company Schedules:
(i) Company and each of its subsidiaries have timely filed all
federal, state, local and foreign returns, estimates, information statements and
reports ("RETURNS") relating to Taxes required to be filed by or on behalf of
Company and each of its subsidiaries with any Tax authority, such Returns are
true, correct and complete in all material respects, and Company and each of its
subsidiaries have paid all Taxes shown to be due on such Returns.
(ii) Company and each of its subsidiaries with respect to its
employees, independent contractors, and others as appropriate have withheld and
paid over to the appropriate Tax Authority all appropriate federal and state
income taxes, employment or other Taxes, including but not limited to, Taxes
pursuant to the Federal Insurance Contribution Act ("FICA"), Taxes pursuant to
the Federal Unemployment Tax Act ("FUTA").
(iii) Neither Company nor any of its subsidiaries has been
delinquent in the payment of any Tax nor is there any Tax deficiency
outstanding, proposed or assessed against Company or any of its subsidiaries,
nor has Company or any of its subsidiaries executed any unexpired waiver of any
statute of limitations on or extending the period for the assessment or
collection of any Tax.
(iv) No audit or other examination of any Return of Company or
any of its subsidiaries by any Tax authority is presently in progress, nor has
Company or any of its subsidiaries been notified of any request for such an
audit or other examination.
(v) No adjustment relating to any Returns filed by Company or
any of its subsidiaries has been proposed in writing formally or informally by
any Tax authority to Company or any of its subsidiaries or any representative
thereof.
(vi) Neither Company nor any of its subsidiaries has any
liability for unpaid Taxes which have not been accrued for or reserved on the
Company Balance Sheet, whether asserted or unasserted, contingent or otherwise,
which is material to Company, other than any liability for unpaid Taxes that may
have accrued since the date of the Company Balance Sheet in connection with the
operation of the business of Company and its subsidiaries in the ordinary
course.
(vii) There is no contract, agreement, plan or arrangement to
which Company is a party, including but not limited to the provisions of this
Agreement and the agreements entered into in connection with this Agreement,
covering any employee or former
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employee of Company or any of its subsidiaries that, individually or
collectively, would be reasonably likely to give rise to the payment of any
amount that would not be deductible pursuant to Sections 280G, 404 or 162(m) of
the Code. There is no contract, agreement, plan or arrangement to which the
Company is a party or by which it is bound to compensate any individual for
excise taxes paid pursuant to Section 4999 of the Code.
(viii) Neither Company nor any of its subsidiaries has filed
any consent agreement under Section 341(f) of the Code or agreed to have Section
341(f)(2) of the Code apply to any disposition of a subsection (f) asset (as
defined in Section 341(f)(4) of the Code) owned by Company.
(ix) Neither Company nor any of its subsidiaries is party to or
has any obligation under any tax-sharing, tax indemnity or tax allocation
agreement or arrangement.
(x) Except as may be required as a result of the Company
Merger, Company and its subsidiaries have not been and will not be required to
include any adjustment in Taxable income for any Tax period (or portion thereof)
pursuant to Section 481 or Section 263A of the Code or any comparable provision
under state or foreign Tax laws as a result of transactions, events or
accounting methods employed prior to the Closing.
(xi) None of Company's or its subsidiaries' assets are tax
exempt use property within the meaning of Section 168(h) of the Code.
(xii) Company has made available to Parent or its legal or
accounting representatives copies of all foreign, federal and state income tax
and all state sales and use tax Returns for the Company and each of its
subsidiaries filed for all periods since December 31, 1995.
(xiii) There are no Encumbrances of any sort on the assets of
the Company or Subsidiary relating to or attributable to Taxes, other than liens
for Taxes not yet due and payable.
(xiv) Effective as of March 1, 1992, the Company made a valid
election under Section 1362 of the Code and any corresponding state or local tax
provision to be an S corporation within the meaning of Sections 1361 and 1362 of
the Code effective for all taxable periods beginning on or subsequent to March
1, 1992 and ending on May 5, 1998 (the "S-CORP. PERIOD"). Company and its
shareholders during the S-Corp. Period have at no time taken any action
inconsistent with the requirements of Company's S corporation status during the
S-Corp. Period, nor have Company or any of the Company shareholders during the
S-Corp. Period failed at any time to take any action required in order to
maintain Company's S Corporation status during the S-Corp. Period, and Company's
S corporation election was not terminated (whether inadvertently or otherwise)
at any time during the S-Corp. Period. During the S-Corp. Period, there were no
recognized built in gains as defined in Section 1374, or any other entity level
Tax liability not otherwise paid or provided for in the Company Balance Sheet.
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2.8 Title to Properties; Absence of Liens and Encumbrances.
(a) Part 2.8 of the Company Schedules list all real property leases
to which Company is a party and each amendment thereto that is in effect as of
the date of this Agreement. All such current leases are in full force and
effect, are valid and effective in accordance with their respective terms, and
there is not, under any of such leases, any existing default or event of default
(or event which with notice or lapse of time, or both, would constitute a
default) that could give rise to a claim against Company in an amount greater
than $100,000. Other than the leaseholds created under the real property leases
identified in Part 2.8 of the Company Schedules, the Company and its
subsidiaries own no interests in real property.
(b) Company has good and valid title to, or, in the case of leased
properties and assets, valid leasehold interests in, all of its tangible
properties and assets, real, personal and mixed, used or held for use in its
business, free and clear of any Encumbrances, except as (i) described in Part
2.8 of the Company Schedules, (ii) reflected in the Company Financials and
except for liens for Taxes not yet due and payable and (iii) such Encumbrances,
if any, which are not material in amount, and which do not materially interfere
with the present use of the property subject thereto or affected thereby.
2.9 Intellectual Property. For the purposes of this Agreement, the
following terms have the following definitions:
"INTELLECTUAL PROPERTY" shall mean any or all of the following and
all rights in, arising out of; or associated therewith: (i) all
United States, international and foreign patents and applications
therefor and all reissues, divisions, renewals, extensions,
provisionals, continuations and continuations-in-part thereof; (ii)
all inventions (whether patentable or not), invention disclosures,
proprietary improvements, trade secrets, proprietary information,
know how, technology, technical data and customer lists, and all
documentation relating to any of the foregoing; (iii) all
copyrights, copyrights registrations and applications therefor, and
all other rights corresponding thereto throughout the world; (iv)
all industrial designs and any registrations and applications
therefor throughout the world; (v) all trade names, URLs, logos,
common law trademarks and service marks, trademark and service xxxx
registrations and applications therefor throughout the world
(collectively, "TRADEMARKS"); (vi) all databases and data
collections and all rights therein throughout the world; (vii) all
moral and economic rights of authors and inventors, however
denominated, throughout the world, and (viii) any similar or
equivalent rights to any of the foregoing anywhere in the world.
"COMPANY INTELLECTUAL PROPERTY" shall mean any Intellectual
Property that is owned by, or exclusively licensed to, Company or
one of its subsidiaries and used or planned to be used in the
Company's or one of its subsidiaries' businesses as of the date of
this Agreement or thereafter.
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"REGISTERED INTELLECTUAL PROPERTY" means all United States,
international and foreign: (i) patents and patent applications
(including provisional applications); (ii) registered trademarks,
applications to register trademarks, intent-to-use applications, or
other registrations or applications related to trademarks; (iii)
registered copyrights and applications for copyright registration;
and (iv) any other Intellectual Property that is the subject of an
application, certificate, filing, registration or other document
issued, filed with, or recorded by any state, government or other
public legal authority.
"COMPANY REGISTERED INTELLECTUAL PROPERTY" means all of the
Registered Intellectual Property owned by, or filed in the name of,
Company or one of its subsidiaries and used or planned to be used
in the Company's or one of its subsidiaries' businesses as of the
date of this Agreement or thereafter.
(a) No material Company Intellectual Property or product or service
of Company is subject to any proceeding or outstanding decree, order, judgment,
agreement, or stipulation restricting in any manner the use, transfer, or
licensing thereof by Company, or which may affect the validity, use or
enforceability of such Company Intellectual Property.
(b) Each material item of Company Registered Intellectual Property
is valid and subsisting, all necessary registration, maintenance and renewal
fees currently due in connection with such Company Registered Intellectual
Property have been made and all necessary documents, recordations and
certificates in connection with such Company Registered Intellectual Property
have been filed with the relevant patent, copyright, trademark or other
authorities in the United States or foreign jurisdictions, as the case may be,
for the purposes of maintaining such Company Registered Intellectual Property.
(c) Company or one of its subsidiaries owns and has good and
exclusive title to, or has license (sufficient for the conduct of its business
as currently conducted and as proposed to be conducted) to, each material item
of Company Intellectual Property free and clear of any Encumbrance (excluding
licenses and related restrictions) except (i) as described in Part 2.9 of the
Company Schedules, (ii) as referred to in the Company Financials, (iii) for
liens for Taxes not yet due and payable, and (iv) such Encumbrances, if any,
which are not material in amount and which do not materially interfere with the
present or planned use of the Company Intellectual Property subject thereto; and
Company or one of its subsidiaries is the exclusive owner of all Trademarks used
in connection with the operation or conduct of the business of Company and its
subsidiaries, including the sale of any products or the provision of any
services by Company and its subsidiaries.
(d) Company or one of its subsidiaries owns exclusively, and has
good title to, all copyrighted works that are material Company products or which
Company otherwise expressly purports to own and are material to the operation of
its business.
(e) To the extent that any material Intellectual Property has been
developed or created by a third party for Company or any of its subsidiaries,
Company or its subsidiaries, as
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the case may be, has a written agreement with such third party with respect
thereto and Company or its subsidiary thereby either (i) has obtained ownership
of and is the exclusive owner of, or (ii) has obtained a license (sufficient for
the conduct of its business as currently conducted and as proposed to be
conducted) to all such third party's Intellectual Property in such work,
material or invention, to the extent it is legally possible to do so.
(f) Neither Company has nor any of its subsidiaries transferred
ownership of, or granted any exclusive license with respect to, any Intellectual
Property that is material Company Intellectual Property, to any third party.
(g) Part 2.9 of the Company Schedules list all material contracts,
licenses and agreements to which Company is a party (i) with respect to material
Company Intellectual Property licensed or transferred to any third party; or
(ii) pursuant to which a third party has licensed or transferred any material
Intellectual Property to Company.
(h) All material contracts, licenses and agreements relating to the
material Company Intellectual Property are in full force and effect. The
consummation of the transactions contemplated by this Agreement will neither
violate nor result in the breach, modification, cancellation, termination, or
suspension of such contracts, licenses and agreements. Company and each of its
subsidiaries are in material compliance with, and have not materially breached
any term of any of such contracts, licenses and agreements and, to the knowledge
of Company and its subsidiaries, all other parties to such contracts, licenses
and agreements are in compliance in all material respects with, and have not
materially breached any term of, such contracts, licenses and agreements.
Following the Closing Date, the Surviving Corporation will be permitted to
exercise all of Company's rights under such contracts, licenses and agreements
to the same extent Company would have been able to had the transactions
contemplated by this Agreement not occurred and without the payment of any
additional amounts or consideration other than ongoing fees, royalties or
payments which Company would otherwise be required to pay.
(i) The operation of the business of Company as such business
currently is conducted, including Company's design, development, marketing and
sale of the products or services of Company (including with respect to products
currently under development) has not, does not and will not infringe or
misappropriate the Intellectual Property of any third party or, to its
knowledge, constitute unfair competition or trade practices under the laws of
any jurisdiction.
(j) Company has not received notice from any third party that the
operation of the business of Company or any act, product or service of Company,
infringes or misappropriates the Intellectual Property of any third party or
constitutes unfair competition or trade practices under the laws of any
jurisdiction.
(k) To the knowledge of Company, no person has or is infringing or
misappropriating any Company Intellectual Property.
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(l) Company and its subsidiaries have taken reasonable and
appropriate steps to protect Company's and its subsidiaries' rights in Company's
and such subsidiaries' confidential information and trade secrets that they wish
to protect or any trade secrets or confidential information of third parties
provided to Company or such subsidiaries, and, without limiting the foregoing,
Company and its subsidiaries have and enforce a policy requiring each employee
and contractor to execute a proprietary information/confidentiality agreement
substantially in the form provided to Parent and all current and former
employees and contractors of Company and its subsidiaries have executed such an
agreement. All use, disclosure or appropriation of confidential information of
third parties provided to Company or its subsidiaries, or of Company or its
subsidiaries provided to third parties, has been pursuant to a written agreement
between Company or such subsidiary and such third party.
(m) None of Company's operating codes, programs, utilities,
development tools and other software, as well as all hardware and systems,
utilized by Company or any of its subsidiaries internally or to develop products
or to provide services to customers (collectively, "SYSTEMS") will, as a result
of processing data containing dates in the year 2000 and any preceding or
following years, fail to initiate or operate, or to correctly store, represent
and process (including sort) all dates (including single and multi-century
formulas and leap year calculations) or abnormally terminate such processing in
a manner materially adverse to the Company's business, operations, assets or
financial condition. Company's Systems operate and will operate in all material
respects substantially in accordance with their specifications prior to, during
and after the year 2000 or any leap years. Company's Systems have been developed
and tested to support numeric and date transitions from the twentieth century to
the twenty-first century, and back (including without limitation all
calculations, aging, reporting, printing, displays, reversals, disaster and
vital records recoveries) without material error, corruption or impact to
current and/or future operations. Since January 1, 1998, neither Company nor any
of its subsidiaries has given to customers any written representations or
warranties or indemnities with respect to year 2000 compliance or conformity,
except where Company's liability is limited to amounts paid to Company pursuant
to the contract in which such representation, warranty or indemnity appears and
lost profits and consequential damages are expressly excluded.
2.10 Compliance with Laws; Permits; Restrictions. Neither Company nor
any of its subsidiaries is, in any material respect, in conflict with, or in
default or in violation of (i) any law, rule, regulation, order, judgment or
decree applicable to Company or any of its subsidiaries or by which Company or
any of its subsidiaries or any of their respective properties is bound or
affected, or (ii) any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation to which
Company or any of its subsidiaries is a party or by which Company or any of its
subsidiaries or its or any of their respective properties is bound or affected,
except for conflicts, violations and defaults that (individually or in the
aggregate) would not cause Company to lose any material benefit or incur any
material liability. Other than with respect to routine and periodic examinations
conducted by Governmental Entities, which are performed in the ordinary course
of business, no investigation or review by any Governmental Entity is pending
or, to Company's knowledge, has been threatened in a writing delivered to
Company against Company or any of its subsidiaries, nor, to Company's
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knowledge, has any Governmental Entity indicated an intention to conduct an
investigation of Company or any of its subsidiaries. Neither Company nor any of
its subsidiaries is liable, either primarily or jointly and severally with any
other party, for any material fines, penalties or other any amounts payable to
any Governmental Entity. There is no agreement, judgment, injunction, order or
decree binding upon Company or any of its subsidiaries which has or could
reasonably be expected to have the effect of prohibiting or impairing any
business practice of Company or any of its subsidiaries, any acquisition of
property by Company or any of its subsidiaries, the conduct of business by
Company as currently conducted, or the Company Merger or other transactions
contemplated by this Agreement. Neither Company nor any of its subsidiaries is
subject to any reporting or filing requirement with or to any Governmental
Entity other than such requirements which are applicable to companies in
Company's line of business generally.
2.11 Compliance with Laws.
2.11.1 Compliance with Applicable Law. Company and each of its
subsidiaries has complied, and is now and at the Closing Date will be in
compliance with, in all material respects, all applicable federal, state, local
or foreign laws, ordinances, regulations, and rules, and all orders, writs,
injunctions, awards, judgments, and decrees applicable to it or to its assets,
properties, and business, including but not limited to its business of taking
applications for, originating, underwriting, processing and selling mortgage
loans (collectively, "APPLICABLE LAW").
2.11.2 Disclosures; Privacy. Each of the Company Websites and all
materials distributed or marketed by Company have at all times made all
disclosures to users or customers required by Applicable Law and none of such
disclosures made or contained in any Company Website or in any such materials
have been materially inaccurate, misleading or deceptive or in violation of
Applicable Law. Company and each of its subsidiaries has at all times been in
material compliance with Applicable Laws relating to the privacy of users of
each of the Company Websites. As used in this Agreement, "COMPANY WEBSITES"
means all websites or other sites accessed via the Internet or any other
electronic network, including without limitation any cable-based network or
private network, that are owned or operated by the Company and/or any of its
subsidiaries (either alone or jointly with others), either as of the date of
this Agreement or in the past, including without limitation those certain
websites accessible at the following URL addresses:
xxxx://xxx.XxxxXxxxx.xxx
xxxx://xxx.XxxxXxx.xxx
2.11.3 No Audit. Other than with respect to routine and periodic
examinations conducted by Governmental Entities, which are performed in the
ordinary course of business, neither Company nor any of its subsidiaries has
been the subject of any audit by any governmental agency or authority (other
than a Tax authority) for the purpose of determining whether Company or any of
its subsidiaries have complied with Applicable Law.
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2.11.4 Governmental Permits. Company and each of its subsidiaries
holds all permits, licenses, variances, exemptions, orders and approvals from,
and has made all filings with, Governmental Entities (and quasi-governmental
authorities), that are necessary for Company to conduct its present business
without any violation of Applicable Law ("GOVERNMENTAL PERMITS") and all such
Governmental Permits are in full force and effect. The Company and each of its
subsidiaries is in compliance in all material respects with the terms of all
Governmental Permits. Neither Company nor any of its subsidiaries has received
any notice or other communication from any Governmental Entity (or
quasi-governmental authority) regarding (a) any actual or possible violation of
law or any Governmental Permit or any failure to comply with any term or
requirement of any Governmental Permit, or (b) any actual or possible
revocation, withdrawal, suspension, cancellation, termination or modification of
any Governmental Permit.
2.11.5 Improper Payments. Neither Company nor any of its
subsidiaries, nor any director, officer, agent or employee of Company and/or any
of its subsidiaries, has, for or on behalf of Company or any of its
subsidiaries, (i) used any funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political activity, (ii)
made any unlawful payment to foreign or domestic government officials or
employees or to foreign or domestic political parties or campaigns or violated
any provision of the Foreign Corrupt Practices Act of 1977, as amended, or (iii)
made any other unlawful payment.
2.12 Certain Transactions and Agreements. None of the officers or
directors of the Company or any of its subsidiaries, nor any holders of at least
5% of the shares of Company Common Stock, nor any member of their immediate
families, has any direct or indirect ownership interest in any firm or
corporation that competes with, or does business with, or has any contractual
arrangement with, Company or any of its subsidiaries (except with respect to any
interest in less than one percent (1%) of the stock of any corporation whose
stock is publicly traded). None of said officers, directors, or shareholders or
any member of their immediate families, is a party to, or otherwise directly or
indirectly interested in, any contract or informal arrangement with Company,
except for normal compensation for services as an officer, director, employee or
consultant thereof that have been disclosed to Parent and except for agreements
related to the purchase of the stock of Company by, or the grant of Company
Options to, such persons. None of said officers, directors, shareholders or
family members has any interest in any property, real or personal, tangible or
intangible (including but not limited to any Company Intellectual Property or
any other Intellectual Property) that is used in, or that pertains to, the
business of Company, except for the normal rights of a shareholder.
2.13 Litigation.
(a) There are no claims, suits, actions or proceedings pending or,
to the knowledge of Company, threatened against, relating to or affecting
Company or any of its subsidiaries, before any court, governmental department,
commission, agency, instrumentality or authority, or any arbitrator that seeks
to restrain or enjoin the consummation of the transactions
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contemplated by this Agreement or which could reasonably be expected, either
singularly or in the aggregate with all such claims, actions or proceedings, to
be material to Company or, following the Company Merger, to Company as the
surviving corporation, or have a material adverse effect on the ability of the
parties hereto to consummate the Company Merger. No Governmental Entity has, at
any time within the twelve months prior to the date of this Agreement challenged
or questioned in a writing delivered to Company the legal right of Company to
design, offer or sell any of its products or services in the present manner or
style thereof. To the knowledge of Company, no event has occurred, and no claim,
dispute or other condition or circumstance exists, that will, or that would
reasonably be expected to, cause or provide a bona fide basis for a director or
executive officer of Company to seek indemnification from the Company.
(b) Company has never been subject to an audit, compliance review,
investigation or like contract review by the GSA office of the Inspector General
or other Governmental Entity or agent thereof in connection with any government
contract (a "GOVERNMENT AUDIT"), to the Company's knowledge no Government Audit
is threatened or reasonably anticipated, and in the event of such Government
Audit, to the knowledge of the Company no basis exists for a finding of
noncompliance with any material provision of any government contract or a refund
of any amounts paid or owed by any Governmental Entity pursuant to such
government contract. For each item disclosed in the Company Schedules pursuant
to this Section 2.13 a true and complete copy of all correspondence and
documentation with respect thereto has been provided to Parent.
2.14 Employee Benefit Plans
(a) Definitions. With the exception of the definition of
"Affiliate" set forth in Section 2.14(a)(i) below (which definition shall apply
only to this Section 2.14), for purposes of this Agreement, the following terms
shall have the meanings set forth below:
(i) "AFFILIATE" shall mean any other person or entity under
common control with Company within the meaning of Section 414(b), (c), (m) or
(o) of the Code and the regulations issued thereunder;
(ii) "COMPANY EMPLOYEE PLAN" shall mean any plan, program,
policy, practice, contract, agreement or other arrangement providing for
compensation, severance, termination pay, performance awards, stock or
stock-related awards, fringe benefits or other employee benefits or remuneration
of any kind, whether written or unwritten or otherwise, funded or unfunded,
including without limitation, each "employee benefit plan" within the meaning of
Section 3(3) of ERISA which is or has been maintained, contributed to, or
required to be contributed to, by Company or any Affiliate for the benefit of
any Employee;
(iii) "COBRA" shall mean the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended;
(iv) "DOL" shall mean the Department of Labor;
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(v) "EMPLOYEE" shall mean any current, former, or retired
employee, officer, or director of Company or any Affiliate;
(vi) "EMPLOYEE AGREEMENT" shall mean each management,
employment, severance, consulting, relocation, repatriation, expatriation,
visas, work permit or similar agreement or contract between Company or any
Affiliate and any Employee or consultant;
(vii) "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended;
(viii) "FMLA" shall mean the Family Medical Leave Act of 1993,
as amended;
(ix) "INTERNATIONAL EMPLOYEE PLAN" shall mean each Company
Employee Plan that has been adopted or maintained by Company, whether informally
or formally, for the benefit of Employees outside the United States;
(x) "IRS" shall mean the Internal Revenue Service;
(xi) "MULTIEMPLOYER PLAN" shall mean any "PENSION PLAN" (as
defined below) which is a "multiemployer plan," as defined in Section 3(37) of
ERISA;
(xii) "PBGC" shall mean the Pension Benefit Guaranty
Corporation; and
(xiii) "PENSION PLAN" shall mean each Company Employee Plan
which is an "employee pension benefit plan," within the meaning of Section 3(2)
of ERISA.
(b) Schedule. Part 2.14 of the Company Schedules contains an
accurate and complete list of each Company Employee Plan and each Employee
Agreement as of the date of this Agreement. Company does not have any plan or
commitment to establish any new Company Employee Plan, to modify any Company
Employee Plan or Employee Agreement (except to the extent required by law or to
conform any such Company Employee Plan or Employee Agreement to the requirements
of any applicable law, in each case as previously disclosed to Parent in
writing, or as required by this Agreement), or to enter into any Company
Employee Plan or Employee Agreement, nor does it have any intention or
commitment to do any of the foregoing.
(c) Documents. Company has provided to Parent: (i) correct and
complete copies of all documents embodying to each Company Employee Plan and
each Employee Agreement including all amendments thereto and written
interpretations thereof; (ii) the most recent annual actuarial valuations, if
any, prepared for each Company Employee Plan; (iii) the three (3) most recent
annual reports (Form Series 5500 and all schedules and financial statements
attached thereto), if any, required under ERISA or the Code in connection with
each Company
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Employee Plan or related trust; (iv) if the Company Employee Plan
is funded, the most recent annual and periodic accounting of Company Employee
Plan assets; (v) the most recent summary plan description together with the
summary of material modifications thereto, if any, required under ERISA with
respect to each Company Employee Plan; (vi) all IRS determination, opinion,
notification and advisory letters, and rulings relating to Company Employee
Plans and copies of all applications and correspondence to or from the IRS or
the DOL with respect to any Company Employee Plan; (vii) all material written
agreements and contracts relating to each Company Employee Plan, including, but
not limited to, administrative service agreements, group annuity contracts and
group insurance contracts; (viii) all communications material to any Employee or
Employees relating to any Company Employee Plan and any proposed Company
Employee Plans, in each case, relating to any amendments, terminations,
establishments, increases or decreases in benefits, acceleration of payments or
vesting schedules or other events which would result in any material liability
to Company; (ix) all COBRA forms and related notices; and (x) all registration
statements and prospectuses prepared in connection with each Company Employee
Plan.
(d) Employee Plan Compliance. (i) Company has performed in all
material respects all obligations required to be performed by it under, is not
in default or violation of; and has no knowledge of any default or violation by
any other party to each Company Employee Plan, and each Company Employee Plan
has been established and maintained in all material respects in accordance with
its terms and in compliance with all applicable laws, statutes, orders, rules
and regulations, including but not limited to ERISA or the Code; (ii) each
Company Employee Plan intended to qualify under Section 401(a) of the Code and
each trust intended to qualify under Section 501(a) of the Code has either
received a favorable determination letter from the IRS with respect to each such
Plan as to its qualified status under the Code or has remaining a period of time
under applicable Treasury regulations or IRS pronouncements in which to apply
for such a determination letter and make any amendments necessary to obtain a
favorable determination and no event has occurred which would adversely affect
the status of such determination letter or the qualified status of such Plan;
(iii) no "prohibited transaction," within the meaning of Section 4975 of the
Code or Sections 406 and 407 of ERISA, and not otherwise exempt under Section
408 of ERISA, has occurred with respect to any Company Employee Plan; (iv) there
are no actions, suits or claims pending, or, to the knowledge of Company,
threatened or reasonably anticipated (other than routine claims for benefits)
against any Company Employee Plan or against the assets of any Company Employee
Plan; (v) each Company Employee Plan can be amended, terminated or otherwise
discontinued after the Effective Time in accordance with its terms, without
liability to Parent, Company or any of its Affiliates (other than ordinary
administration expenses typically incurred in a termination event); (vi) there
are no audits, inquiries or proceedings pending or, to the knowledge of Company,
threatened by the IRS or DOL with respect to any Company Employee Plan; and
(vii) neither Company nor any Affiliate is subject to any penalty or tax with
respect to any Company Employee Plan under Section 402(i) of ERISA or Sections
4975 through 4980 of the Code. Company has made all required contributions to
each Company Employee Plan through the date hereof (and the Closing Date) or has
accrued such amounts on the Company Financials.
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(e) Pension Plans. Company does not now, nor has it ever,
maintained, established, sponsored, participated in, or contributed to, any
Pension Plan which is subject to Title IV of ERISA or Section 412 of the Code.
(f) Multiemployer Plans. At no time has Company contributed to or
been requested to contribute to any Multiemployer Plan.
(g) No Post-Employment Obligations. No Company Employee Plan
provides, or has any liability to provide, retiree life insurance, retiree
health or other retiree employee welfare benefits to any person for any reason,
except as may be required by COBRA or other applicable statute and except
pursuant to Employee Agreements disclosed in Part 2.14(g) of the Company
Schedules, and Company has never represented, promised or contracted (whether in
oral or written form) to any Employee (either individually or to Employees as a
group) or any other person that such Employee(s) or other person would be
provided with retiree life insurance, retiree health or other retiree employee
welfare benefit, except to the extent required by statute and except pursuant to
Employee Agreements disclosed in Part 2.14(g) of the Company Schedules.
(h) COBRA; FMLA. Neither Company nor any Affiliate has, prior to
the Effective Time, and in any material respect, violated any of the health care
continuation requirements of COBRA, the requirements of FMLA or any similar
provisions of state law applicable to its Employees.
(i) Effect of Transaction. Except as disclosed in Part 2.14(i) of
the Company Schedules:
(i) The execution of this Agreement and the consummation of the
transactions contemplated hereby will not (either alone or upon the occurrence
of any additional or subsequent events) constitute an event under any Company
Employee Plan, Employee Agreement, trust or loan that will or may result in any
payment (whether of severance pay or otherwise), acceleration, forgiveness of
indebtedness, vesting, distribution, increase in benefits or obligation to fund
benefits with respect to any Employee.
(ii) No payment or benefit which will or may be made by Company
or its Affiliates with respect to any Employee as a result of the transactions
contemplated by this Agreement will be characterized as an "excess parachute
payment," within the meaning of Section 280G(b)(1) of the Code or will be
treated as a nondeductible expense within the meaning of Section 162 of the
Code.
(j) Employment Matters. Company and each of its subsidiaries: (i)
is in compliance in all material respects with all applicable foreign, federal,
state and local laws, rules and regulations respecting employment, employment
practices, terms and conditions of employment and wages and hours, in each case,
with respect to Employees; (ii) has withheld all amounts required by law or by
agreement to be withheld from the wages, salaries and other payments to
Employees; (iii) has properly classified independent contractors for purposes of
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federal and applicable state tax laws, laws applicable to employee benefits and
other applicable laws; (iv) is not liable for any arrears of wages or any taxes
(other than taxes that are not yet due) or any penalty for failure to comply
with any of the foregoing; and (v) is not liable for any material payment to any
trust or other fund or to any governmental or administrative authority, with
respect to unemployment compensation benefits, social security or other benefits
or obligations for Employees (other than routine payments to be made in the
normal course of business and consistent with past practice). There are no
pending, or, to Company's knowledge, threatened or reasonably anticipated claims
or actions against Company under any worker's compensation policy or long-term
disability policy. To Company's knowledge, no Employee of Company has violated
any employment contract, nondisclosure agreement or noncompetition agreement by
which such Employee is bound due to such Employee being employed by Company and
disclosing to Company or using trade secrets or proprietary information of any
other person or entity.
(k) Labor. No material work stoppage or labor strike against
Company is pending or, to the Company's knowledge, threatened or reasonably
anticipated. Company does not know of any activities or proceedings of any labor
union to organize any Employees. There are no actions, suits, claims, labor
disputes or grievances pending, or, to the knowledge of Company, threatened or
reasonably anticipated relating to any labor, safety or discrimination matters
involving any Employee, including, without limitation, charges of unfair labor
practices or discrimination complaints, which, if adversely determined, would,
individually or in the aggregate, result in any material liability to Company.
Neither Company nor any of its subsidiaries has engaged in any unfair labor
practices within the meaning of the National Labor Relations Act. Company is not
presently, nor has it been in the past, a party to, or bound by, any collective
bargaining agreement or union contract with respect to Employees and no
collective bargaining agreement is being negotiated by Company.
(l) International Employee Plan. Each International Employee Plan
has been established, maintained and administered in material compliance with
its terms and conditions and with the requirements prescribed by any and all
statutory or regulatory laws that are applicable to such International Employee
Plan. Furthermore, no International Employee Plan has unfunded liabilities, that
as of the Effective Time, will not be offset by insurance or fully accrued.
Except as required by law, no condition exists that would prevent Company or
Parent from terminating or amending any International Employee Plan at any time
for any reason.
2.15 Environmental Matters.
(a) Hazardous Material. Except as would not result in material
liability to Company, no underground storage tanks and no amount of any
substance that has been designated by any Governmental Entity or by applicable
federal, state or local law to be radioactive, toxic, hazardous or otherwise a
danger to health or the environment, including, without limitation, PCBs,
asbestos, petroleum, urea-formaldehyde and all substances listed as hazardous
substances pursuant to the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980, as amended, or defined as a hazardous waste pursuant
to the United
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States Resource Conservation and Recovery Act of 1976, as amended, and the
regulations promulgated pursuant to said laws, but excluding office and
janitorial supplies, medicines and foods, (a "HAZARDOUS MATERIAL") are present,
as a result of the actions of Company or any of its subsidiaries or any
affiliate of Company, or, to Company's knowledge, as a result of any actions of
any third party or otherwise, in, on or under any property, including the land
and the improvements, ground water and surface water thereof that Company or any
of its subsidiaries has at any time owned, operated, occupied or leased.
(b) Hazardous Materials Activities. Except as would not result in a
material liability to Company (in any individual case or in the aggregate) (i)
neither Company nor any of its subsidiaries has transported, stored, used,
manufactured, disposed of released or exposed its employees or others to
Hazardous Materials in violation of any law in effect on or before the Closing
Date, and (ii) neither Company nor any of its subsidiaries has disposed of;
transported, sold, used, released, exposed its employees or others to or
manufactured any product containing a Hazardous Material (collectively
"HAZARDOUS MATERIALS ACTIVITIES") in violation of any rule, regulation, treaty
or statute promulgated by any Governmental Entity in effect prior to or as of
the date hereof to prohibit, regulate or control Hazardous Materials or any
Hazardous Material Activity.
(c) Permits. Company and its subsidiaries currently hold all
environmental approvals, permits, licenses, clearances and consents (the
"COMPANY ENVIRONMENTAL PERMITS") material to and necessary for the conduct of
Company's and its subsidiaries' Hazardous Material Activities and other
businesses of Company and its subsidiaries as such activities and businesses are
currently being conducted.
(d) Environmental Liabilities. No action, proceeding, revocation
proceeding, amendment procedure, writ or injunction is pending, and to Company's
knowledge, no action, proceeding, revocation proceeding, amendment procedure,
writ or injunction has been threatened by any Governmental Entity against
Company or any of its subsidiaries in a writing delivered to Company concerning
any Company Environmental Permit, Hazardous Material or any Hazardous Materials
Activity of Company or any of its subsidiaries. Company is not aware of any fact
or circumstance which could involve Company or any of its subsidiaries in any
environmental litigation or impose upon Company any material environmental
liability.
2.16 Agreements, Contracts and Commitments. Except as otherwise set
forth in Part 2.16 of the Company Schedules or except for any agreement filed as
an exhibit to a Company SEC Report, neither Company nor any of its subsidiaries
is a party to or is bound by:
(a) any employment or consulting agreement, contract or commitment
with any employee or member of Company's Board of Directors, other than (i)
those that are terminable by Company or any of its subsidiaries on no more than
thirty days notice without liability or financial obligation, except to the
extent general principles of wrongful termination law may limit Company's or any
of its subsidiaries' ability to terminate employees at will, (ii) those that are
implied by law, and (iii) those that would entail financial commitments by the
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Company or its subsidiaries (whether by way of cash payments, loans, forgiveness
of indebtedness, or delivery of other consideration) after the date of this
Agreement of less than $100,000 in the aggregate for all such agreements,
contracts or commitments;
(b) any employee, consultant or director agreement or plan,
including, without limitation, any stock option plan, stock appreciation right
plan or stock purchase plan, any of the benefits of which will be increased, or
the vesting of benefits of which will be accelerated, by the occurrence of the
Company Merger or the value of any of the benefits of which will be calculated
on the basis of the Company Merger;
(c) any agreement of indemnification, any guaranty or any
instrument evidencing indebtedness for borrowed money by way of direct loan,
sale of debt securities, purchase money obligation, conditional sale, or
otherwise where the Company's obligation is reasonably expected to exceed
$100,000;
(d) any agreement, obligation or commitment containing covenants
purporting to limit or which effectively limit the Company's or any of its
subsidiaries' freedom to compete in any line of business or in any geographic
area or which would so limit Company or Company as the surviving corporation or
any of its subsidiaries after the Effective Time or granting by the Company or
any of its subsidiaries of any exclusive distribution or other exclusive rights;
(e) any agreement, contract or commitment currently in force
relating to the disposition or acquisition by Company or any of its subsidiaries
after the date of this Agreement of more than $100,000 of assets not in the
ordinary course of business or pursuant to which Company has any material
ownership interest in any corporation, partnership, joint venture or other
business enterprise other than Company's subsidiaries;
(f) any licensing, distribution, marketing, reseller, merchant
services, advertising, sponsorship or other similar agreement other than
Ordinary Course Agreements;
(g) any agreement, contract or commitment currently in force to
provide source code to any third party for any product or technology; or
(h) any other agreement, contract or commitment currently in effect
that is material to Company's business as presently conducted and proposed to be
conducted.
Neither Company nor any of its subsidiaries, nor to Company's knowledge
any other party to a Company Contract (as defined below), is in breach,
violation or default under, and neither Company nor any of its subsidiaries has
received written notice that it has breached, violated or defaulted under, any
of the material terms or conditions of any of the agreements, contracts or
commitments to which Company or any of its subsidiaries is a party or by which
it is bound that are required to be disclosed in the Company Schedules pursuant
to clauses (a) through (h) above, pursuant to Section 2.9 hereof, or pursuant to
Item 601(b)(10) of Regulation S-K under the Exchange Act (any such agreement,
contract or commitment, a "COMPANY CONTRACT") in such a manner as would permit
any other party to cancel or terminate any such Company
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Contract, or would permit any other party to seek material damages or other
remedies (for any or all of such breaches, violations or defaults, in the
aggregate).
2.17 Change of Control Payments. Part 2.17 of the Company Schedules set
forth each plan or agreement pursuant to which any amounts may become payable
(whether currently or in the future) to current or former officers and directors
of Company as a result of or in connection with the Company Merger.
2.18 Insurance. Company and each of its subsidiaries have policies of
insurance and bonds of the type and in amounts customarily carried by persons
conducting business or owning assets similar to those of the Company and its
subsidiaries. There is no material claim pending under any of such policies or
bonds as to which coverage has been questioned, denied or disputed by the
underwriters of such policies or bonds. All premiums due and payable under all
such policies have been paid and the Company and its subsidiaries are otherwise
in compliance in all material respects with the terms of such policies and
bonds. To the knowledge of Company, there has been no threatened termination of,
or material premium increase with respect to, any of such policies.
2.19 Disclosure. The information supplied by Company for inclusion in
the Form S-4 (or any similar successor form thereto) Registration Statement to
be filed by Parent with the SEC in connection with the issuance of Parent Common
Stock in the Company Merger (the "REGISTRATION STATEMENT") shall not at the time
the Registration Statement becomes effective under the Securities Act contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The information supplied by Company for inclusion in the proxy
statement/prospectus to be sent to the shareholders of Company in connection
with the meeting of Company's shareholders to consider the approval of this
Agreement and the Company Merger (the "COMPANY SHAREHOLDERS' MEETING") and to
the shareholders of Title in connection with the meeting of Title's shareholders
to consider the approval of this Agreement and the Title Merger (the "TITLE
SHAREHOLDER'S MEETING") (such proxy statement/prospectus as amended or
supplemented is referred to herein as the "PROXY STATEMENT/PROSPECTUS") shall
not, on the date the Proxy Statement/Prospectus is mailed to Company's
shareholders and Title's shareholders, at the time of the Company Shareholders'
Meeting, or at the time of the Title Shareholders' Meeting, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not false or misleading; or omit to
state any material fact necessary to correct any statement in any earlier
communication with respect to the solicitation of proxies for the Company
Shareholders' Meeting which has become materially false or misleading. The Proxy
Statement/Prospectus will comply as to form in all material respects with the
provisions of the Securities Act, the Exchange Act and the rules and regulations
thereunder. If at any time prior to the Effective Time any event relating to
Company or any of its affiliates, officers or directors is discovered by Company
which is required to be set forth in an amendment to the Registration Statement
or a supplement to the Proxy Statement/Prospectus, Company shall promptly inform
Parent. Notwithstanding the
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foregoing, Company makes no representation or warranty with respect to any
information supplied by Parent, Merger Sub 1, or Merger Sub 2 which is contained
in any of the foregoing documents.
2.20 Board Approval. The Board of Directors of Company, at a meeting
duly held on October 5, 1999, unanimously determined that as of that date the
Company Merger is advisable and fair to, and in the best interests of, Company
and its shareholders, approved this Agreement, the Stock Option Agreement, the
Voting Agreements, the Company Merger and the other transactions contemplated by
this Agreement, and recommended that the shareholders of Company approve this
Agreement and the Company Merger. The only other meeting at which Company's
Board of Directors considered or acted on any proposed agreement, arrangement or
understanding with Parent with respect to the transactions contemplated by this
Agreement, the Stock Option Agreement, the Voting Agreements or the Company
Merger was on September 7, 1999.
2.21 Brokers' and Finders' Fees. Except for fees payable to Bear,
Xxxxxxx & Co., Inc. pursuant to an engagement letter dated September 2, 1999, a
copy of which has been provided to Parent, Company has not incurred, nor will it
incur, directly or indirectly, any liability for brokerage or finders' fees or
agents' commissions or any similar charges in connection with this Agreement or
any transaction contemplated hereby.
2.22 Fairness Opinion. Company's Board of Directors has received a
written opinion from Bear, Xxxxxxx & Co., Inc., dated as of the date that the
Company's Board of Directors approved this Agreement as described in Section
2.20, to the effect that, as of the date hereof, the Company Exchange Ratio is
fair to Company's public shareholders from a financial point of view, and has
delivered to Parent a copy of such opinion.
2.23 Michigan Law; Rights Agreement. The Board of Directors of Company,
at a meeting duly held on October 5, 1999, has unanimously taken all actions so
that the provisions of Section 790 et seq. of Michigan Law applicable to control
share acquisitions will not apply to the execution, delivery or performance of
this Agreement, the Stock Option Agreement or the Voting Agreements or to the
consummation of the Company Merger or the other transactions contemplated by
this Agreement, the Stock Option Agreement or the Voting Agreements. The Company
is not subject to Chapter 7A of Michigan Law. Neither Company nor any of its
subsidiaries has adopted, nor are any of them subject to, a shareholder rights
plan, "poison pill" or other anti-takeover or similar plan or arrangement, or
entered into a shareholder rights agreement or any similar agreement or
instrument with any entity (a "RIGHTS AGREEMENT").
2.24 Affiliates. Part 2.24 of the Company Schedules is a complete list
of those persons who may be deemed to be, in Company's reasonable judgment,
affiliates of Company within the meaning of Rule 145 promulgated under the
Securities Act (each, a "COMPANY AFFILIATE").
2.25 Pooling of Interests. To the knowledge of Company, based on
consultation with its independent accountants, neither Company nor any of its
directors, officers, affiliates or shareholders has taken or agreed to take any
action which would preclude Parent's ability to
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account for either of the Mergers as a pooling of interests.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF TITLE
As of the date of this Agreement and as of the Closing Date, Title
represents and warrants to Parent and Merger Sub 2, subject to the exceptions
specifically disclosed in writing in the disclosure letter and referencing a
specific representation delivered by Title to Parent and Merger Sub 2 dated as
of the date hereof and certified on behalf of Title by a duly authorized officer
of Title (the "TITLE SCHEDULES") which Title Schedules shall be deemed, for all
purposes of this Agreement (including without limitation Article VII), to be
part of the representations and warranties made and given by Title under this
Article III, as follows:
3.1 Organization; Subsidiaries
(a) Title and each of its subsidiaries (i) is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized; (ii) has the corporate or other
applicable entity power and authority to own, lease and operate its assets and
properties and to carry on its business as now being conducted; and (iii) except
as would not be material to Title, is duly qualified or licensed to do business
in each jurisdiction where the character of the properties owned, leased or
operated by it or the nature of its activities makes such qualification or
licensing necessary.
(b) Other than the corporations identified in Part 3.1 of the
Title Schedules, neither Title nor any of the other corporations or other
entities identified in Part 3.1 of the Title Schedules owns any capital stock
of, or any equity interest of any nature in, any corporation, partnership, joint
venture arrangement or other business entity, other than the entities identified
in Part 3.1 of the Title Schedules, except for passive investments in equity
interests of public companies as part of the cash management program of the
Title. Neither Title nor any of its subsidiaries has agreed or is obligated to
make, or is bound by any written, oral or other agreement, contract,
subcontract, lease, binding understanding, instrument, note, option, warranty,
purchase order, license, sublicense, insurance policy, benefit plan or legally
binding commitment or undertaking of any nature, as in effect as of the date
hereof or as may hereinafter be in effect under which it may become obligated to
make any future investment in or capital contribution to any other entity.
Neither Title nor any of its subsidiaries, has, at any time, been a general
partner of any general partnership, limited partnership or other entity. Part
3.1 of the Title Schedules indicates the jurisdiction of organization of each
entity listed therein and Title's direct or indirect equity interest therein.
(c) Title has delivered or made available to Parent a true and
correct copy of the Articles of Incorporation and Bylaws of Title and similar
governing instruments of each of its subsidiaries, each as amended to date, and
each such instrument is in full force and effect.
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Neither Title nor any of its subsidiaries is in violation of any of the
provisions of its Articles of Incorporation or Bylaws or equivalent governing
instruments.
3.2 Title Capital Structure.
(a) The authorized capital stock of Title consists of 60,000
shares of Title Common Stock, of which there are 3,000 shares issued and
outstanding as of the date of this Agreement. Each outstanding share of Title
Common Stock is entitled to one vote on each matter submitted to shareholders
for a vote. Part 3.2 of the Title Schedules lists each holder of outstanding
shares of Title Common Stock and the number of shares of Title Common Stock held
by such Title shareholder. All outstanding shares of Title Common Stock are duly
authorized, validly issued, fully paid and nonassessable and are not subject to
(i) preemptive rights created by statute, the Articles of Incorporation or
Bylaws of Title or any agreement or document to which Title is a party or by
which it is bound, (ii) rights of first refusal created by statute, the Articles
of Incorporation or Bylaws of Title, or (iii) with respect to shares held or
beneficially owned by officers, directors or greater than 5% shareholders of
Title only, rights of first refusal created by any agreement or document to
which Title is a party or by which it is bound. No shares of Title Common Stock
have been issued without certificates. Title has reserved an aggregate of 1,200
shares of Title Common Stock for issuance pursuant to the Title Stock Option
Plan. The only option outstanding under the Title Stock Option Plan is
exercisable for a maximum of 600 shares of Title Common Stock (the "TITLE
OPTION"). All shares of Title Common Stock subject to issuance upon exercise of
the Title Option, upon issuance on the terms and conditions specified in the
instruments pursuant to which they are issuable, will be duly authorized,
validly issued, fully paid and nonassessable. The holder of the Title Option has
entered into a binding, written agreement with Title (an accurate and complete
copy of which has been provided to Parent and its counsel) consenting to the
conversion of the Title Option into shares of Parent Common Stock in accordance
with the terms and conditions of Article I of this Agreement and releasing all
claims with respect to such Title Option except for the right to have it so
converted (the "TITLE OPTION AGREEMENT").
(b) All outstanding shares of Title Common Stock or other
capital stock of Title, all outstanding Title Options, and all outstanding
shares of capital stock of each subsidiary of the Title have been issued and
granted in compliance, in all material respects, with (i) all applicable
securities laws and other applicable Legal Requirements and (ii) all material
requirements set forth in applicable agreements or instruments. No shareholder
of Title has the right to rescind the purchase of any shares of Title Common
Stock from Title.
(c) No shares of the Title Common Stock that are outstanding
immediately prior to the Effective Time are unvested or are subject to a
repurchase option, risk of forfeiture or other condition providing that such
shares ("TITLE STOCK SUBJECT TO FORFEITURE") may be forfeited or repurchased by
Title upon any termination of the shareholders' employment, directorship or
other relationship with Title (and/or any affiliate of Title) under the terms of
any restricted stock purchase agreement or other agreement with Title that does
not by its terms provide that such
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repurchase option, risk of forfeiture or other condition lapses upon
consummation of the Title Merger.
3.3 Obligations With Respect to Capital Stock. Except as set forth
in Section 3.2(a) or in Part 3.3 of the Title Schedules, there are no Title
equity securities or similar ownership interests of any class of Title equity
security, or any securities exchangeable or convertible into or exercisable for
such equity securities, interests or similar ownership interests, issued,
reserved for issuance or outstanding. Except for securities Title owns free and
clear of all Encumbrances, directly or indirectly through one or more
subsidiaries, as of the date of this Agreement, there are no equity securities,
partnership interests or similar ownership interests of any class of equity
security of any subsidiary of Title, or any security exchangeable or convertible
into or exercisable for such equity securities, partnership interests or similar
ownership interests, issued, reserved for issuance or outstanding. Except as set
forth in Section 3.2(a), Part 3.2 or Part 3.3 of the Title Schedules, there are
no subscriptions, options, warrants, equity securities, partnership interests or
similar ownership interests, calls, rights (including preemptive rights),
commitments or agreements of any character to which Title or any of its
subsidiaries is a party or by which it is bound obligating Title or any of its
subsidiaries to issue, deliver or sell, or cause to be issued, delivered or
sold, or repurchase, redeem or otherwise acquire, or cause the repurchase,
redemption or acquisition of, any shares of capital stock, partnership interests
or similar ownership interests of Title or any of its subsidiaries or obligating
Title or any of its subsidiaries to grant, extend, accelerate the vesting of or
enter into any such subscription, option, warrant, equity security, call, right,
commitment or agreement. There are no registration rights and there is no voting
trust, proxy or other agreement or understanding to which Title is a party or by
which it is bound with respect to any equity security of any class of Title or
with respect to any equity security, partnership interest or similar ownership
interest of any class of any of its subsidiaries. Shareholders of Title will not
be entitled to dissenters' or appraisal rights under applicable state law
(including under Section 761 et seq. of Michigan Law) in connection with the
Title Merger.
3.4 Authority.
(a) Title has all requisite corporate power and authority to
enter into this Agreement and to consummate the transactions contemplated hereby
and thereby, subject to the approval of its shareholders. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby and thereby have been duly authorized by all necessary corporate action
on the part of Title, subject only to the approval of this Agreement and the
Title Merger by Title's shareholders as contemplated by Section 6.2 and the
filing of the Articles of Merger pursuant to Michigan Law. An affirmative vote
of the holders of a majority of the outstanding shares of the Title is required
for Title's shareholders to approve this Agreement and the Title Merger. No
separate voting by a class of the Title's shareholders is or will be required in
connection with the approval of the Title Merger or the other transactions
contemplated hereby. This Agreement has been duly executed and delivered by
Title and, assuming the due execution and delivery by Parent and Merger Sub 1,
constitutes the valid and binding obligations of Title, enforceable against
Title in accordance with their terms, except as
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enforceability may be limited by bankruptcy and other similar laws affecting the
rights of creditors generally and general principles of equity. Except as set
forth in Part 3.4 of the Title Schedules and subject to obtaining the approval
of this Agreement and the Title Merger by the Title's shareholders as
contemplated by Section 6.2 and compliance with the requirements set forth in
Section 3.4(b) below, the execution and delivery of this Agreement by Title does
not, and the performance of this Agreement by Title will not, (i) conflict with
or violate the Articles of Incorporation or Bylaws of Title or the equivalent
organizational documents of any of its subsidiaries, (ii) conflict with or
violate any law, rule, regulation, order, judgment or decree applicable to Title
or any of its subsidiaries or by which Title or any of its subsidiaries or any
of their respective properties is bound or affected, or (iii) result in any
material breach of or constitute a material default (or an event that with
notice or lapse of time or both would become a material default) under, or
impair Title's rights or alter the rights or obligations of any third party
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of a material Encumbrance on any of
the material properties or assets of Title or any of its subsidiaries pursuant
to, any material note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise, concession, or other instrument or obligation to
which Title or any of its subsidiaries is a party or by which Title or any of
its subsidiaries or its or any of their respective assets are bound or affected
except for such breaches or defaults which, in the aggregate, would not result
in a material loss of benefits to Title or any of its subsidiaries, Parent, or
Title as the surviving corporation. Part 3.4 of the Title Schedules list all
consents, waivers and approvals under any of Title's or any of its subsidiaries'
agreements, contracts, licenses or leases required to be obtained in connection
with the consummation of the transactions contemplated hereby, which, if
individually or in the aggregate not obtained, would result in a material loss
of benefits to Title or any of its subsidiaries, Parent ,or Title as the
surviving corporation.
(b) No consent, approval, order or authorization of, or
registration, declaration or filing with any Governmental Entity, is required to
be obtained or made by Title in connection with the execution and delivery of
this Agreement or the consummation of the Title Merger, except for (i) the
filing of the Articles of Merger with the Department of Consumer and Industry
Services of the State of Michigan and appropriate documents with the relevant
authorities of other states in which the Title is qualified to do business, (ii)
the filing of the Proxy Statement/Prospectus with the SEC in accordance with
Exchange Act and the effectiveness of the Registration Statement, (iii) such
consents, approvals, orders, authorizations, registrations, declarations and
filings as may be required under applicable federal, foreign and state
securities (or related) laws and the HSR Act and the securities or antitrust
laws of any foreign country, and (iv) such other consents, authorizations,
filings, approvals and registrations which if not obtained or made would not be
material to the Title or Parent or have a material adverse effect on the ability
of the parties hereto to consummate the Title Merger.
3.5 Title Financial Statements.
(a) Title has delivered to Parent an audited balance sheet of
Title dated December 31, 1998, and an audited income statement and statement of
changes in cash flows of
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Title for its fiscal year ended December 31, 1998 and an unaudited balance sheet
of Title dated June 30, 1999 (the "BALANCE SHEET DATE") and an unaudited income
statement of Title for the six month period ended June 30, 1999 (all such
financial statements being collectively referred to herein as the "TITLE
FINANCIALS") Such Title Financials (i) were prepared in accordance with GAAP
applied on a consistent basis throughout the periods involved (except as may be
indicated in the notes thereto, except that unaudited interim financial
statements may not contain footnotes and were or are subject to normal year-end
adjustments, and (ii) fairly presented the consolidated financial position of
Title and its subsidiaries as at the respective dates thereof and the
consolidated results of Title's operations and cash flows for the periods
indicated, except that the unaudited interim financial statements may not
contain footnotes and were or are subject to normal year-end adjustments.
3.6 Absence of Changes. Since the date of the Title Balance Sheet
there has not been: (i) any Material Adverse Change (as defined in Section
9.3(c)) with respect to Title, Company and their subsidiaries, taken as a group,
(ii) any declaration, setting aside or payment of any dividend on, or other
distribution (whether in cash, stock or property) in respect of, or any issuance
of, any of Title's or any of its subsidiaries' capital stock, or any purchase,
redemption or other acquisition by Title of any of Title's capital stock or any
other securities of Title or its subsidiaries or any options, warrants, calls or
rights to acquire any such shares or other securities except for repurchases
from employees following their termination pursuant to the terms of their
pre-existing stock option or purchase agreements, (iii) any split, combination
or reclassification of any of Title's or any of its subsidiaries' capital stock,
(iv) up to the date of this Agreement, any granting by Title or any of its
subsidiaries of any increase in compensation or fringe benefits to any of their
executive officers, or any payment by Title or any of its subsidiaries of any
bonus to any of their executive officers, or any granting by Title or any of its
subsidiaries of any increase in severance or termination pay to any of their
executive officers or any entry by Title or any of its subsidiaries into, or
material modification or amendment of, any currently effective employment,
severance, termination or indemnification agreement with any executive officer
or any agreement with any executive officer the benefits of which are contingent
or the terms of which are materially altered upon the occurrence of a
transaction involving Title of the nature contemplated hereby, (v) up to the
date of this Agreement, any granting by Title or any of its subsidiaries of any
increase in compensation or fringe benefits to any of their non-executive
officer employees, or any payment by Title or any of its subsidiaries of any
bonus to any of their non-executive executive officer employees, or any granting
by Title or any of its subsidiaries of any increase in severance or termination
pay to any non-executive officer employee or any entry by Title or any of its
subsidiaries into, or material modification or amendment of, any currently
effective employment, severance, termination or indemnification agreement with
any non-executive officer employees or any agreement with a non-executive
officer employee the benefits of which are contingent or the terms of which are
materially altered upon the occurrence of a transaction involving Title of the
nature contemplated hereby, excluding any such increases, payments, grants or
other agreements which individually obligate Title to pay less than $10,000
annually to a non-executive officer employee and in the aggregate obligate Title
to pay less than $50,000 at any time in the future, (vi) any material change or
alteration in the policy of Title
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relating to the granting of stock options to its employees and consultants,
(vii) entry by Title or any of its subsidiaries into, or material modification,
amendment or cancellation of, any material licensing, distribution, marketing,
reseller, merchant services, advertising, sponsorship or other similar agreement
other than any such agreement entered into in the ordinary course of Title's
business or which is terminable by Title or its subsidiaries without penalty
upon no more than 90 days prior notice and/or provides (or reasonably could
provide) for payments by or to Title or its subsidiaries in an amount in excess
of $10,000 over the term of the agreement (such excepted agreements,
collectively, "TITLE ORDINARY COURSE AGREEMENTS"), (viii) any acquisition, sale
or transfer of any material asset of Title or any of its subsidiaries other than
in the ordinary course of business and other than any such agreement to which
Parent has consented in writing, (ix) any material change by Title in its
accounting methods, principles or practices, except as required by concurrent
changes in GAAP or applicable law, or (x) any revaluation by Title of any of its
assets, including, without limitation, writing off notes or accounts receivable
other than in the ordinary course of business and other than revaluations or
write offs of any amount, the sum of which in the aggregate is equal to less
than $10,000 more than reserved in the Title Balance Sheet.
3.7 Tax Returns and Audits .
(a) Title and each of its subsidiaries have timely filed all
Returns relating to Taxes required to be filed by or on behalf of Title and each
of its subsidiaries with any Tax authority, such Returns are true, correct and
complete in all material respects, and Title and each of its subsidiaries have
paid all Taxes shown to be due on such Returns.
(b) Title and each of its subsidiaries with respect to its
employees, independent contractors, and others as appropriate have withheld and
paid over to the appropriate Tax Authority all appropriate federal and state
income taxes, employment or other Taxes, including but not limited to Taxes
pursuant to FICA and Taxes pursuant to FUTA.
(c) Neither Title nor any of its subsidiaries has been
delinquent in the payment of any Tax nor is there any Tax deficiency
outstanding, proposed or assessed against Title or any of its subsidiaries, nor
has Title or any of its subsidiaries executed any unexpired waiver of any
statute of limitations on or extending the period for the assessment or
collection of any Tax.
(d) No audit or other examination of any Return of Title or
any of its subsidiaries by any Tax authority is presently in progress, nor has
Title or any of its subsidiaries been notified of any request for such an audit
or other examination.
(e) No adjustment relating to any Returns filed by Title or
any of its subsidiaries has been proposed in writing formally or informally by
any Tax authority to Title or any of its subsidiaries or any representative
thereof.
(f) Neither Title nor any of its subsidiaries has any
liability for unpaid Taxes which have not been accrued for or reserved on the
Title Balance Sheet, whether asserted or
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unasserted, contingent or otherwise, which is material to Title, other than any
liability for unpaid Taxes that may have accrued since the date of the Title
Balance Sheet in connection with the operation of the business of Title and its
subsidiaries in the ordinary course.
(g) There is no contract, agreement, plan or arrangement to
which Title is a party, including but not limited to the provisions of this
Agreement and the agreements entered into in connection with this Agreement,
covering any employee or former employee of Title or any of its subsidiaries
that, individually or collectively, would be reasonably likely to give rise to
the payment of any amount that would not be deductible pursuant to Sections
280G, 404 or 162(m) of the Code. There is no contract, agreement, plan or
arrangement to which the Title is a party or by which it is bound to compensate
any individual for excise taxes paid pursuant to Section 4999 of the Code.
(h) Neither Title nor any of its subsidiaries has filed any
consent agreement under Section 341(f) of the Code or agreed to have Section
341(f)(2) of the Code apply to any disposition of a subsection (f) asset (as
defined in Section 341(f)(4) of the Code) owned by Title.
(i) Neither Title nor any of its subsidiaries is party to or
has any obligation under any tax-sharing, tax indemnity or tax allocation
agreement or arrangement.
(j) Except as may be required as a result of the Title Merger,
Title and its subsidiaries have not been and will not be required to include any
adjustment in Taxable income for any Tax period (or portion thereof) pursuant to
Section 481 or Section 263A of the Code or any comparable provision under state
or foreign Tax laws as a result of transactions, events or accounting methods
employed prior to the Closing.
(k) None of Title's or its subsidiaries' assets are tax exempt
use property within the meaning of Section 168(h) of the Code.
(l) Title has made available to Parent or its legal or
accounting representatives copies of all foreign, federal and state income tax
and all state sales and use tax Returns for the Title and each of its
subsidiaries filed for all periods since December 31, 1989.
(m) There are no Encumbrances of any sort on the assets of the
Title or any subsidiary relating to or attributable to Taxes, other than liens
for Taxes not yet due and payable.
(n) Effective as of November 1, 1997, Title made a valid
election under Section 1362 of the Code and any corresponding state or local tax
provision to be an S corporation within the meaning of Sections 1361 and 1362 of
the Code effective for all taxable periods beginning on or subsequent to
November 1, 1997. At no time on or after November 1, 1997, including up through
and including the Effective Date, has or will Title experience any of the
following:(1) any corporate level Tax event under Section 1374 or any other
provision of the Code; or (2) any type or form of voluntary, involuntary or
inadvertent termination of its S corporation status. Title and its shareholders
since November 1, 1997 have at no time taken any action or Tax return position
inconsistent with the treatment of Title as an S corporation through
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the Effective Date. Similarly, neither Title or any of Title's shareholders from
November 1, 1997 through the Effective Date have failed at any time to take any
action required in order to maintain Title's S Corporation status.
3.8 Title to Properties; Absence of Liens and Encumbrances.
(a) Part 3.8 of the Title Schedules list all real property
leases to which Title is a party and each amendment thereto that is in effect as
of the date of this Agreement. All such current leases are in full force and
effect, are valid and effective in accordance with their respective terms, and
there is not, under any of such leases, any existing default or event of default
(or event which with notice or lapse of time, or both, would constitute a
default) that could give rise to a claim against Title in an amount greater than
$10,000. Other than the leaseholds created under the real property leases
identified in Part 3.8 of the Title Schedules, the Title and its subsidiaries
own no interests in real property.
(b) Title has good and valid title to, or, in the case of
leased properties and assets, valid leasehold interests in, all of its tangible
properties and assets, real, personal and mixed, used or held for use in its
business, free and clear of any Encumbrances, except as reflected in the Title
Financials and except for liens for Taxes not yet due and payable and such
Encumbrances, if any, which are not material in character, amount or extent, and
which do not materially detract from the value, or materially interfere with the
present use, of the property subject thereto or affected thereby.
3.9 Intellectual Property. For the purposes of this Agreement, the
following terms have the following definitions:
"TITLE INTELLECTUAL PROPERTY" shall mean any Intellectual
Property that is owned by, or exclusively licensed to, Title
or one of its subsidiaries and used or planned to be used in
Title's or one of its subsidiaries' businesses as of the date
of this Agreement or thereafter.
"REGISTERED INTELLECTUAL PROPERTY" means all United States,
international and foreign: (i) patents and patent applications
(including provisional applications); (ii) registered
trademarks, applications to register trademarks, intent-to-use
applications, or other registrations or applications related
to trademarks; (iii) registered copyrights and applications
for copyright registration; and (iv) any other Intellectual
Property that is the subject of an application, certificate,
filing, registration or other document issued, filed with, or
recorded by any state, government or other public legal
authority.
"TITLE REGISTERED INTELLECTUAL PROPERTY" means all of the
Registered Intellectual Property owned by, or filed in the
name of, Title or one of its subsidiaries and used or planned
to be used in Title's or one of its subsidiaries' businesses
as of the date of this Agreement or thereafter.
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(a) No material Title Intellectual Property or product or
service of Title is subject to any proceeding or outstanding decree, order,
judgment, agreement, or stipulation restricting in any manner the use, transfer,
or licensing thereof by Title, or which may affect the validity, use or
enforceability of such Title Intellectual Property.
(b) Each material item of Title Registered Intellectual
Property is valid and subsisting, all necessary registration, maintenance and
renewal fees currently due in connection with such Title Registered Intellectual
Property have been made and all necessary documents, recordations and
certificates in connection with such Title Registered Intellectual Property have
been filed with the relevant patent, copyright, trademark or other authorities
in the United States or foreign jurisdictions, as the case may be, for the
purposes of maintaining such Title Registered Intellectual Property.
(c) Title or one of its subsidiaries owns and has good and
exclusive title to, or has license (sufficient for the conduct of its business
as currently conducted and as proposed to be conducted) to, each material item
of Title Intellectual Property free and clear of any Encumbrance (excluding
licenses and related restrictions) except (i) as described in Part 3.9 of
Title's Schedules, (ii) as referred to in the Title Financials, (iii) for liens
for Taxes not yet due and payable, and (iv) such Encumbrances, if any, which are
not material in amount and which do not materially interfere with the present or
planned use of Title's Intellectual Property subject thereto; and Title or one
of its subsidiaries is the exclusive owner of all Trademarks used in connection
with the operation or conduct of the business of Title and its subsidiaries,
including the sale of any products or the provision of any services by Title and
its subsidiaries.
(d) Title or one of its subsidiaries owns exclusively, and has
good title to, all copyrighted works that are material Title products or which
Title otherwise expressly purports to own and are material to the operation of
its business.
(e) To the extent that any material Intellectual Property has
been developed or created by a third party for Title or any of its subsidiaries,
Title or its subsidiaries, as the case may be, has a written agreement with such
third party with respect thereto and Title or its subsidiary thereby either (i)
has obtained ownership of and is the exclusive owner of, or (ii) has obtained a
license (sufficient for the conduct of its business as currently conducted and
as proposed to be conducted) to all such third party's Intellectual Property in
such work, material or invention to the extent it is legally possible to do so.
(f) Neither Title has nor any of its subsidiaries transferred
ownership of, or granted any exclusive license with respect to, any Intellectual
Property that is material Title Intellectual Property, to any third party.
(g) Part 3.9 of the Title Schedules list all material
contracts, licenses and agreements to which Title is a party (i) with respect to
material Title Intellectual Property licensed or transferred to any third party;
or (ii) pursuant to which a third party has licensed or transferred any material
Intellectual Property to Title.
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(h) All material contracts, licenses and agreements relating
to the material Title Intellectual Property are in full force and effect. The
consummation of the transactions contemplated by this Agreement will neither
violate nor result in the breach, modification, cancellation, termination, or
suspension of such contracts, licenses and agreements. Title and each of its
subsidiaries are in material compliance with, and have not materially breached
any term of any of such contracts, licenses and agreements and, to the knowledge
of Title and its subsidiaries, all other parties to such contracts, licenses and
agreements are in compliance in all material respects with, and have not
materially breached any term of, such contracts, licenses and agreements.
Following the Closing Date, the Surviving Corporation will be permitted to
exercise all of Title's rights under such contracts, licenses and agreements to
the same extent Title would have been able to had the transactions contemplated
by this Agreement not occurred and without the payment of any additional amounts
or consideration other than ongoing fees, royalties or payments which Title
would otherwise be required to pay.
(i) The operation of the business of Title as such business
currently is conducted, including Title's design, development, marketing and
sale of the products or services of Title (including with respect to products
currently under development) has not, does not and will not infringe or
misappropriate the Intellectual Property of any third party or, to its
knowledge, constitute unfair competition or trade practices under the laws of
any jurisdiction.
(j) Title has not received notice from any third party that
the operation of the business of Title or any act, product or service of Title,
infringes or misappropriates the Intellectual Property of any third party or
constitutes unfair competition or trade practices under the laws of any
jurisdiction.
(k) To the knowledge of Title, no person has or is infringing
or misappropriating any Title Intellectual Property.
(l) Title and its subsidiaries have taken reasonable and
appropriate steps to protect Title's and its subsidiaries' rights in Title's and
such subsidiaries' confidential information and trade secrets that they wish to
protect or any trade secrets or confidential information of third parties
provided to Title or such subsidiaries, and, without limiting the foregoing,
Title and its subsidiaries have and enforce a policy requiring each employee and
contractor to execute a proprietary information/confidentiality agreement
substantially in the form provided to Parent and all current and former
employees and contractors of Title and its subsidiaries have executed such an
agreement. All use, disclosure or appropriation of confidential information of
third parties provided to Title or its subsidiaries, or of Title or its
subsidiaries provided to third parties, has been pursuant to a written agreement
between Title or such subsidiary and such third party.
(m) None of Title's operating codes, programs, utilities,
development tools and other software, as well as all hardware and systems,
utilized by Title or any of its subsidiaries internally or to develop products
or to provide services to customers, as well as all products of Title or any of
its subsidiaries sold to customers (collectively, "TITLE'S SYSTEMS") will, as a
result
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of processing data containing dates in the year 2000 and any preceding or
following years, fail to initiate or operate, or to correctly store, represent
and process (including sort) all dates (including single and multi-century
formulas and leap year calculations) or abnormally terminate such processing in
a manner materially adverse to Title's business, operations, assets or financial
condition. Title's Systems operate and will operate in all material respects
substantially in accordance with their specifications prior to, during and after
the year 2000 or any leap years. Title's Systems have been developed and tested
to support numeric and date transitions from the twentieth century to the
twenty-first century, and back (including without limitation all calculations,
aging, reporting, printing, displays, reversals, disaster and vital records
recoveries) without material error, corruption or impact to current and/or
future operations. Since January 1, 1998, neither Title nor any of its
subsidiaries has given to customers any written representations or warranties or
indemnities with respect to year 2000 compliance or conformity, except where
Title's liability is limited to amounts paid to Title pursuant to the contract
in which such representation, warranty or indemnity appears and lost profits and
consequential damages are expressly excluded.
3.10 Compliance with Laws; Permits; Restrictions. Neither Title nor
any of its subsidiaries is, in any material respect, in conflict with, or in
default or in violation of (i) any law, rule, regulation, order, judgment or
decree applicable to Title or any of its subsidiaries or by which Title or any
of its subsidiaries or any of their respective properties is bound or affected,
or (ii) any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which Title or
any of its subsidiaries is a party or by which Title or any of its subsidiaries
or its or any of their respective properties is bound or affected, except for
conflicts, violations and defaults that (individually or in the aggregate) would
not cause Title to lose any material benefit or incur any material liability. No
investigation or review by any Governmental Entity is pending or, to Title's
knowledge, has been threatened in a writing delivered to Title against Title or
any of its subsidiaries, nor, to Title's knowledge, has any Governmental Entity
indicated an intention to conduct an investigation of Title or any of its
subsidiaries. Neither Title nor any of its subsidiaries is liable, either
primarily or jointly and severally with any other party, for any material fines,
penalties or other any amounts payable to any Governmental Entity. There is no
agreement, judgment, injunction, order or decree binding upon Title or any of
its subsidiaries which has or could reasonably be expected to have the effect of
prohibiting or impairing any business practice of Title or any of its
subsidiaries, any acquisition of property by Title or any of its subsidiaries,
the conduct of business by Title as currently conducted, or the Title Merger or
other transactions contemplated by this Agreement. Neither Title nor any of its
subsidiaries is subject to any reporting or filing requirement with or to any
Governmental Entity other than such requirements which are applicable to
companies in Title's line of business generally.
3.11 Compliance with Laws.
3.11.1 Compliance with Title Applicable Law. Title and each of
its subsidiaries has complied, and is now and at the Closing Date will be in
compliance in all material respects
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with, all applicable federal, state, local or foreign laws, ordinances,
regulations, and rules, and all orders, writs, injunctions, awards, judgments,
and decrees applicable to it or to its assets, properties, and business,
including but not limited to its business of taking applications for,
originating, underwriting, processing and selling mortgage loans (collectively,
"TITLE APPLICABLE LAW").
3.11.2 Disclosures; Privacy. Each of the Title Websites and
all materials distributed or marketed by Title have at all times made all
disclosures to users or customers required by Title Applicable Law and none of
such disclosures made or contained in any Title Website or in any such materials
have been inaccurate, misleading or deceptive or in violation of Applicable Law.
Title and each of its subsidiaries has at all times been in compliance with
Applicable Laws relating to the privacy of users of each of the Title Websites.
As used in this Agreement, "TITLE WEBSITES" means all websites or other sites
accessed via the Internet or any other electronic network, including without
limitation any cable-based network or private network, that are owned or
operated by the Title and/or any of its subsidiaries (either alone or jointly
with others), either as of the date of this Agreement or in the past, including
without limitation those certain websites accessible at the following URL
addresses:
xxxx://xxx.xxxxxxxxxxxxxx.xxx
xxxx://xxx.xxxxxxxxxxxx.xxx
xxxx://xxx.xxxxxxxxxxxxxxxx.xxx
xxxx://xxx.xxxxxxxxxx.xxx
xxxx://xxx.xxxxxxxxxxxx.xxx
xxxx://xxx.xxxxxxxxxxxxx.xxx
3.11.3 No Audit. Neither Title nor any of its subsidiaries has
been the subject of any audit by any governmental agency or authority (other
than a Tax authority) for the purpose of determining whether Title or any of its
subsidiaries have complied with Applicable Law.
3.11.4 Title Governmental Permits. Title and each of its
subsidiaries holds all permits, licenses, variances, exemptions, orders and
approvals from, and has made all filings with, Governmental Entities (and
quasi-governmental authorities), that are necessary for Title to conduct its
present business without any violation of Title Applicable Law ("TITLE
GOVERNMENTAL PERMITS") and all such Title Governmental Permits are in full force
and effect. Title and each of its subsidiaries is in compliance in all material
respects with the terms of the Title Governmental Permits. Neither Title nor any
of its subsidiaries has received any notice or other communication from any
Governmental Entity (or quasi-governmental authority) regarding (a) any actual
or possible violation of law or any Title Governmental Permit or any failure to
comply with any term or requirement of any Title Governmental Permit, or (b) any
actual or possible revocation, withdrawal, suspension, cancellation, termination
or modification of any Title Governmental Permit.
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3.11.5 Improper Payments. Neither Title nor any of its
subsidiaries, nor any director, officer, agent or employee of Title and/or any
of its subsidiaries, has, for or on behalf of Title or any of its subsidiaries,
(i) used any funds for unlawful contributions, gifts, entertainment or other
unlawful expenses relating to political activity, (ii) made any unlawful payment
to foreign or domestic government officials or employees or to foreign or
domestic political parties or campaigns or violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended, or (iii) made any other unlawful
payment.
3.12 Certain Transactions and Agreements. None of the officers or
directors of Title or any of its subsidiaries, nor any holders of at least 5% of
the Title Common Stock, nor any member of their immediate families, has any
direct or indirect ownership interest in any firm or corporation that competes
with, or does business with, or has any contractual arrangement with, Title or
any of its subsidiaries (except with respect to any interest in less than one
percent (1%) of the stock of any corporation whose stock is publicly traded).
None of said officers, directors, shareholders or any member of their immediate
families, is a party to, or otherwise directly or indirectly interested in, any
contract or informal arrangement with Title, except for normal compensation for
services as an officer, director, employee or consultant thereof that have been
disclosed to Parent and except for agreements related to the purchase of the
stock of Title by , or the grant of Title Option to, such persons. None of said
officers, directors, shareholders or family members has any interest in any
property, real or personal, tangible or intangible (including but not limited to
any Title Intellectual Property or any other Intellectual Property) that is used
in, or that pertains to, the business of Title, except for the normal rights of
a shareholder.
3.13 Litigation.
(a) There are no claims, suits, actions or proceedings pending
or, to the knowledge of Title, threatened against, relating to or affecting
Title or any of its subsidiaries, before any court, governmental department,
commission, agency, instrumentality or authority, or any arbitrator that seeks
to restrain or enjoin the consummation of the transactions contemplated by this
Agreement or which could reasonably be expected, either singularly or in the
aggregate with all such claims, actions or proceedings, to be material to Title
or, following the Title Merger, to Title as the surviving corporation, or have a
material adverse effect on the ability of the parties hereto to consummate the
Title Merger. No Title Governmental Entity has at any time during the twelve
months prior to the date of this Agreement challenged or questioned in a writing
delivered to Title the legal right of Title to design, offer or sell any of its
products or services in the present manner or style thereof. To the knowledge of
Title, no event has occurred, and no claim, dispute or other condition or
circumstance exists, that will, or that would reasonably be expected to, cause
or provide a bona fide basis for a director or executive officer of Title to
seek indemnification from the Title.
(b) Title has never been subject to a Government Audit, to the
Title's knowledge no Government Audit is threatened or reasonably anticipated,
and in the event of
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such Government Audit, to the knowledge of the Title no basis exists for a
finding of noncompliance with any material provision of any government contract
or a refund of any amounts paid or owed by any Governmental Entity pursuant to
such government contract. For each item disclosed in the Title Schedules
pursuant to this Section 3.13 a true and complete copy of all correspondence and
documentation with respect thereto has been provided to Parent.
3.14 Title Employee Benefit Plans.
(a) Definitions. With the exception of the definition of
"Affiliate" set forth in Section 3.14(a)(i) below (which definition shall apply
only to this Section 3.14), for purposes of this Agreement, the following terms
shall have the meanings set forth below:
(i) "AFFILIATE" shall mean any other person or entity
under common control with Title within the meaning of Section 414(b),(c), (m) or
(o) of the Code and the regulations issued thereunder;
(ii) "TITLE EMPLOYEE PLAN" shall mean any plan, program,
policy, practice, contract, agreement or other arrangement providing for
compensation, severance, termination pay, performance awards, stock or
stock-related awards, fringe benefits or other employee benefits or remuneration
of any kind, whether written or unwritten or otherwise, funded or unfunded,
including without limitation, each "employee benefit plan" within the meaning of
Section 3(3) of ERISA which is or has been maintained, contributed to, or
required to be contributed to, by Title or any Affiliate for the benefit of any
Title Employee;
(iii) "TITLE EMPLOYEE" shall mean any current, former, or
retired employee, officer, or director of Title or any Affiliate;
(iv) "TITLE EMPLOYEE AGREEMENT" shall mean each
management, employment, severance, consulting, relocation, repatriation,
expatriation, visas, work permit or similar agreement or contract between Title
or any Affiliate and any Title Employee or consultant;
(v) "INTERNATIONAL TITLE EMPLOYEE PLAN" shall mean each
Title Employee Plan that has been adopted or maintained by Title, whether
informally or formally, for the benefit of Title Employees outside the United
States;
(vi) "TITLE PENSION PLAN" shall mean each Title Employee
Plan which is an "employee pension benefit plan," within the meaning of Section
3(2) of ERISA.
(b) Schedule. Part 3.14 of the Title Schedules contains an
accurate and complete list of each Title Employee Plan and each Title Employee
Agreement as of the date of this Agreement. Title does not have any plan or
commitment to establish any new Title Employee Plan, to modify any Title
Employee Plan or Title Employee Agreement (except to the extent required by law
or to conform any such Title Employee Plan or Title Employee Agreement to the
requirements of any applicable law, in each case as previously disclosed to
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Parent in writing, or as required by this Agreement), or to enter into any Title
Employee Plan or Title Employee Agreement, nor does it have any intention or
commitment to do any of the foregoing.
(c) Documents. Title has provided to Parent: (i) correct and
complete copies of all documents embodying to each Title Employee Plan and each
Title Employee Agreement including all amendments thereto and written
interpretations thereof; (ii) the most recent annual actuarial valuations, if
any, prepared for each Title Employee Plan; (iii) the three (3) most recent
annual reports (Form Series 5500 and all schedules and financial statements
attached thereto), if any, required under ERISA or the Code in connection with
each Title Employee Plan or related trust; (iv) if the Title Employee Plan is
funded, the most recent annual and periodic accounting of Title Employee Plan
assets; (v) the most recent summary plan description together with the summary
of material modifications thereto, if any, required under ERISA with respect to
each Title Employee Plan; (vi) all IRS determination, opinion, notification and
advisory letters, and rulings relating to Title Employee Plans and copies of all
applications and correspondence to or from the IRS or the DOL with respect to
any Title Employee Plan; (vii) all material written agreements and contracts
relating to each Title Employee Plan, including, but not limited to,
administrative service agreements, group annuity contracts and group insurance
contracts; (viii) all communications material to any Title Employee or Title
Employees relating to any Title Employee Plan and any proposed Title Employee
Plans, in each case, relating to any amendments, terminations, establishments,
increases or decreases in benefits, acceleration of payments or vesting
schedules or other events which would result in any material liability to Title;
(ix) all COBRA forms and related notices; and (x) all registration statements
and prospectuses prepared in connection with each Title Employee Plan.
(d) Title Employee Plan Compliance. (i) Title has performed in
all material respects all obligations required to be performed by it under, is
not in default or violation of; and has no knowledge of any default or violation
by any other party to each Title Employee Plan, and each Title Employee Plan has
been established and maintained in all material respects in accordance with its
terms and in compliance with all applicable laws, statutes, orders, rules and
regulations, including but not limited to ERISA or the Code; (ii) each Title
Employee Plan intended to qualify under Section 401(a) of the Code and each
trust intended to qualify under Section 501(a) of the Code has either received a
favorable determination letter from the IRS with respect to each such Plan as to
its qualified status under the Code or has remaining a period of time under
applicable Treasury regulations or IRS pronouncements in which to apply for such
a determination letter and make any amendments necessary to obtain a favorable
determination and no event has occurred which would adversely affect the status
of such determination letter or the qualified status of such Plan; (iii) no
"prohibited transaction," within the meaning of Section 4975 of the Code or
Sections 406 and 407 of ERISA, and not otherwise exempt under Section 408 of
ERISA, has occurred with respect to any Title Employee Plan; (iv) there are no
actions, suits or claims pending, or, to the knowledge of Title, threatened or
reasonably anticipated (other than routine claims for benefits) against any
Title Employee Plan or against the assets of any Title Employee Plan; (v) each
Title Employee Plan can be amended, terminated or otherwise discontinued after
the Effective Time in accordance with its terms, without liability to Parent,
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Title or any of its Affiliates (other than ordinary administration expenses
typically incurred in a termination event); (vi) there are no audits, inquiries
or proceedings pending or, to the knowledge of Title, threatened by the IRS or
DOL with respect to any Title Employee Plan; and (vii) neither Title nor any
Affiliate is subject to any penalty or tax with respect to any Title Employee
Plan under Section 402(i) of ERISA or Sections 4975 through 4980 of the Code.
Title has made all required contributions to each Title Employee Plan through
the date hereof (and the Closing Date) or has accrued such amounts on the Title
Financials.
(e) Pension Plans. Title does not now, nor has it ever,
maintained, established, sponsored, participated in, or contributed to, any
Pension Plan which is subject to Title IV of ERISA or Section 412 of the Code.
(f) Multiemployer Plans. At no time has Title contributed to
or been requested to contribute to any Multiemployer Plan.
(g) No Post-Employment Obligations. No Title Employee Plan
provides, or has any liability to provide, retiree life insurance, retiree
health or other retiree employee welfare benefits to any person for any reason,
except as may be required by COBRA or other applicable statute and except
pursuant to Title Employee Agreements disclosed in Part 3.14(g) of the Title
Schedules, and Title has never represented, promised or contracted (whether in
oral or written form) to any Title Employee (either individually or to Title
Employees as a group) or any other person that such Title Employee(s) or other
person would be provided with retiree life insurance, retiree health or other
retiree employee welfare benefit, except to the extent required by statute and
except pursuant to Title Employee Agreements disclosed in Part 3.14(g) of the
Title Schedules.
(h) COBRA; FMLA. Neither Title nor any Affiliate has, prior to
the Effective Time, and in any material respect, violated any of the health care
continuation requirements of COBRA, the requirements of FMLA or any similar
provisions of state law applicable to its Title Employees.
(i) Effect of Transaction. Except as disclosed in Part 3.14(i)
of the Title Schedules:
(i) The execution of this Agreement and the consummation
of the transactions contemplated hereby will not (either alone or upon the
occurrence of any additional or subsequent events) constitute an event under any
Title Employee Plan, Title Employee Agreement, trust or loan that will or may
result in any payment (whether of severance pay or otherwise), acceleration,
forgiveness of indebtedness, vesting, distribution, increase in benefits or
obligation to fund benefits with respect to any Title Employee.
(ii) No payment or benefit which will or may be made by
Title or its Affiliates with respect to any Title Employee as a result of the
transactions contemplated by this Agreement will be characterized as an "excess
parachute payment," within the meaning of
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Section 280G(b)(1) of the Code or will be treated as a nondeductible expense
within the meaning of Section 162 of the Code.
(j) Employment Matters. Title and each of its subsidiaries:
(i) is in compliance in all material respects with all applicable foreign,
federal, state and local laws, rules and regulations respecting employment,
employment practices, terms and conditions of employment and wages and hours, in
each case, with respect to Title Employees; (ii) has withheld all amounts
required by law or by agreement to be withheld from the wages, salaries and
other payments to Title Employees; (iii) has properly classified independent
contractors for purposes of federal and applicable state tax laws, laws
applicable to employee benefits and other applicable laws; (iv) is not liable
for any arrears of wages or any taxes (other than taxes that are not yet due) or
any penalty for failure to comply with any of the foregoing; and (v) is not
liable for any material payment to any trust or other fund or to any
governmental or administrative authority, with respect to unemployment
compensation benefits, social security or other benefits or obligations for
Title Employees (other than routine payments to be made in the normal course of
business and consistent with past practice). There are no pending, or, to
Title's knowledge, threatened or reasonably anticipated claims or actions
against Title under any worker's compensation policy or long-term disability
policy. To Title's knowledge, no Title Employee of Title has violated any
employment contract, nondisclosure agreement or noncompetition agreement by
which such Title Employee is bound due to such Title Employee being employed by
Title and disclosing to Title or using trade secrets or proprietary information
of any other person or entity.
(k) Labor. No work stoppage or labor strike against Title is
pending, threatened or reasonably anticipated. Title does not know of any
activities or proceedings of any labor union to organize any Title Employees.
There are no actions, suits, claims, labor disputes or grievances pending, or,
to the knowledge of Title, threatened or reasonably anticipated relating to any
labor, safety or discrimination matters involving any Title Employee, including,
without limitation, charges of unfair labor practices or discrimination
complaints, which, if adversely determined, would, individually or in the
aggregate, result in any material liability to Title. Neither Title nor any of
its subsidiaries has engaged in any unfair labor practices within the meaning of
the National Labor Relations Act. Title is not presently, nor has it been in the
past, a party to, or bound by, any collective bargaining agreement or union
contract with respect to Title Employees and no collective bargaining agreement
is being negotiated by Title.
(l) International Title Employee Plan. Each International
Title Employee Plan has been established, maintained and administered in
material compliance with its terms and conditions and with the requirements
prescribed by any and all statutory or regulatory laws that are applicable to
such International Title Employee Plan. Furthermore, no International Title
Employee Plan has unfunded liabilities, that as of the Effective Time, will not
be offset by insurance or fully accrued. Except as required by law, no condition
exists that would prevent Title or Parent from terminating or amending any
International Title Employee Plan at any time for any reason.
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3.15 Environmental Matters.
(a) Hazardous Material. Except as would not result in material
liability to Title, no underground storage tanks and no amount of any substance
that has been designated by any Governmental Entity or by applicable federal,
state or local law to be a Hazardous Material are present, as a result of the
actions of Title or any of its subsidiaries or any affiliate of Title, or, to
Title's knowledge, as a result of any actions of any third party or otherwise,
in, on or under any property, including the land and the improvements, ground
water and surface water thereof that Title or any of its subsidiaries has at any
time owned, operated, occupied or leased.
(b) Title Hazardous Materials Activities. Except as would not
result in a material liability to Title (in any individual case or in the
aggregate) (i) neither Title nor any of its subsidiaries has transported,
stored, used, manufactured, disposed of released or exposed its employees or
others to Hazardous Materials in violation of any law in effect on or before the
Closing Date, and (ii) neither Title nor any of its subsidiaries has disposed
of; transported, sold, used, released, exposed its employees or others to or
manufactured any product containing a Hazardous Material (collectively "TITLE
HAZARDOUS MATERIALS ACTIVITIES") in violation of any rule, regulation, treaty or
statute promulgated by any Governmental Entity in effect prior to or as of the
date hereof to prohibit, regulate or control Hazardous Materials or any Title
Hazardous Material Activity.
(c) Permits. Title and its subsidiaries currently hold all
environmental approvals, permits, licenses, clearances and consents (the "TITLE
ENVIRONMENTAL PERMITS") material to and necessary for the conduct of Title's and
its subsidiaries' Hazardous Material Activities and other businesses of Title
and its subsidiaries as such activities and businesses are currently being
conducted.
(d) Environmental Liabilities. No action, proceeding,
revocation proceeding, amendment procedure, writ or injunction is pending, and
to Title's knowledge, no action, proceeding, revocation proceeding, amendment
procedure, writ or injunction has been threatened by any Governmental Entity
against Title or any of its subsidiaries in a writing delivered to Title
concerning any Title Environmental Permit, Hazardous Material or any Title
Hazardous Materials Activity of Title or any of its subsidiaries. Title is not
aware of any fact or circumstance which could involve Title or any of its
subsidiaries in any environmental litigation or impose upon Title any material
environmental liability.
3.16 Agreements, Contracts and Commitments. Except as otherwise set
forth in Part 3.16 of the Title Schedules, neither Title nor any of its
subsidiaries is a party to or is bound by:
(a) any employment or consulting agreement, contract or
commitment with any employee or member of Title's Board of Directors, other than
those (i) that are terminable by Title or any of its subsidiaries on no more
than thirty days notice without liability or financial obligation, except to the
extent general principles of wrongful termination law may limit Title's or any
of its subsidiaries' ability to terminate employees at will, (ii) those that are
implied by law, and (iii) those that would entail financial commitments by Title
or its subsidiaries (whether
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by way of cash payments, loans, forgiveness of indebtedness, or delivery of
other consideration) after the date of this Agreement of less than $10,000 in
the aggregate for all such agreements, contracts or commitments;
(b) any employee, consultant or director agreement or plan,
including, without limitation, any stock option plan, stock appreciation right
plan or stock purchase plan, any of the benefits of which will be increased, or
the vesting of benefits of which will be accelerated, by the occurrence of any
of the Title Merger or the value of any of the benefits of which will be
calculated on the basis of the Title Merger;
(c) any agreement of indemnification, any guaranty or any
instrument evidencing indebtedness for borrowed money by way of direct loan,
sale of debt securities, purchase money obligation, conditional sale, or
otherwise where Title's obligation is reasonably expected to exceed $10,000;
(d) any agreement, obligation or commitment containing
covenants purporting to limit or which effectively limit the Title's or any of
its subsidiaries' freedom to compete in any line of business or in any
geographic area or which would so limit Title or Title as the surviving
corporation or any of its subsidiaries after the Effective Time or granting by
Title or any of its subsidiaries of any exclusive distribution or other
exclusive rights;
(e) any agreement, contract or commitment currently in force
relating to the disposition or acquisition by Title or any of its subsidiaries
after the date of this Agreement of more than $10,000 of assets not in the
ordinary course of business or pursuant to which Title has any material
ownership interest in any corporation, partnership, joint venture or other
business enterprise other than Title's subsidiaries;
(f) any licensing, distribution, marketing, reseller, merchant
services, advertising, sponsorship or other similar agreement other than Title
Ordinary Course Agreements;
(g) any agreement, contract or commitment currently in force
to provide source code to any third party for any product or technology; or
(h) any other agreement, contract or commitment currently in
effect that is material to Title's business as presently conducted and proposed
to be conducted.
Neither Title nor any of its subsidiaries, nor to Title's knowledge any
other party to a Title Contract (as defined below), is in breach, violation or
default under, and neither Title nor any of its subsidiaries has received
written notice that it has breached, violated or defaulted under, any of the
material terms or conditions of any of the agreements, contracts or commitments
to which Title or any of its subsidiaries is a party or by which it is bound
that are required to be disclosed in the Title Schedules pursuant to clauses (a)
through (h) above, pursuant to Section 3.9 hereof (any such agreement, contract
or commitment, a "TITLE CONTRACT") in such a manner as would permit any other
party to cancel or terminate any such Title Contract, or would
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permit any other party to seek material damages or other remedies (for any or
all of such breaches, violations or defaults, in the aggregate).
3.17 Change of Control Payments. Part 3.17 of the Title Schedules set
forth each plan or agreement pursuant to which any amounts may become payable
(whether currently or in the future) to current or former officers and directors
of Title as a result of or in connection with the Title Merger.
3.18 Insurance. Title and each of its subsidiaries have policies of
insurance and bonds of the type and in amounts customarily carried by persons
conducting business or owing assets similar to those of the Title and its
subsidiaries. There is no material claim pending under any of such policies or
bonds as to which coverage has been questioned, denied or disputed by the
underwriters of such policies or bonds. All premiums due and payable under all
such policies have been paid and the Title and its subsidiaries are otherwise in
compliance in all material respects with the terms of such policies and bonds.
To the knowledge of Title, there has been no threatened termination of, or
material premium increase with respect to, any of such policies.
3.19 Disclosure. The information supplied by Title for inclusion in the
Registration Statement shall not at the time the Registration Statement becomes
effective under the Securities Act contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading. The information supplied by Title for
inclusion in the Proxy Statement/Prospectus shall not, on the date the Proxy
Statement/Prospectus is mailed to Company's shareholders and Title's
shareholders, at the time of the Title Shareholders' Meeting, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not false or misleading; or omit to
state any material fact necessary to correct any statement in any earlier
communication with respect to solicitation of proxies for the Title
Shareholder's Meeting which has become materially false or misleading. The Proxy
Statement/Prospectus will comply as to form in all material respects with the
provisions of the Securities Act, the Exchange Act and the rules and regulations
thereunder. If at any time prior to the Effective Time any event relating to
Title or any of its affiliates, officers or directors is discovered by Title
which is required to be set forth in an amendment to the Registration Statement
or a supplement to the Proxy Statement/Prospectus, Title shall promptly inform
Parent. Notwithstanding the foregoing, Title makes no representation or warranty
with respect to any information supplied by Parent, Merger Sub 1 or Merger Sub 2
which is contained in any of the foregoing documents.
3.20 Board Approval. The Board of Directors of Title, at a meeting duly
held on, or by an action by unanimous written consent of the Board of Directors
of Title dated October 6, 1999, unanimously determined that as of that date the
Title Merger is advisable and fair to, and in the best interests of, Title and
its shareholders, approved this Agreement, the Voting Agreements, the Title
Merger and the other transactions contemplated by this Agreement, and
recommended that the shareholders of Title approve this Agreement and the Title
Merger. There was no prior
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meeting of the Board of Directors of Title at which the Board considered or
acted on any proposed agreement, arrangement or understanding with Parent with
respect to the transactions contemplated by this Agreement, the Voting
Agreements or the Title Merger.
3.21 Brokers' and Finders' Fees. Title has not incurred, nor will it
incur, directly or indirectly, any liability for brokerage or finders' fees or
agents' commissions or any similar charges in connection with this Agreement or
any transaction contemplated hereby.
3.22 Affiliates. Part 3.22 of the Title Schedules is a complete list of
those persons who may be deemed to be, in Title's reasonable judgment,
affiliates of Title within the meaning of Rule 145 promulgated under the
Securities Act (each, a "TITLE AFFILIATE").
3.23 Pooling of Interests. To the knowledge of Title, based on
consultation with its independent accountants, neither Title nor any of its
directors, officers, affiliates or shareholders has taken or agreed to take any
action which would preclude Parent's ability to account for either of the
Mergers as a pooling of interests.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT, MERGER SUB 1 AND MERGER SUB 2
As of the date of this Agreement and as of the Closing Date, Parent,
Merger Sub 1 and Merger Sub 2 represent and warrant to Company and Title,
subject to the exceptions specifically disclosed in writing in the disclosure
letter and referencing a specific representation delivered by Parent to Company
dated as of the date hereof and certified by a duly authorized officer of Parent
(the "PARENT SCHEDULES") which Parent Schedules shall be deemed, for all
purposes of this Agreement (including without limitation Article VII), to be
part of the representations and warranties made and given by Parent, Merger Sub
1 and Merger Sub 2 under this Article IV, as follows:
4.1 Organization of Parent, Merger Sub 1 and Merger Sub 2.
(a) Each of Parent, Merger Sub 1 and Merger Sub 2 (i) is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction in which it is organized; (ii) has the corporate or other
entity power and authority to own, lease and operate its assets and properties
and to carry on its business as now being conducted; and (iii) except as would
not be material to Parent, is duly qualified or licensed to do business in each
jurisdiction where the character of the properties owned, leased or operated by
it or the nature of its activities makes such qualification or licensing
necessary.
(b) Parent has delivered or made available to Company a true
and correct copy of the Certificate or Articles of Incorporation and Bylaws of
Parent, Merger Sub 1 and Merger Sub 2, each as amended to date, and each such
instrument is in full force and effect. Neither Parent nor any of its
subsidiaries is in violation of any of the provisions of its Certificate or
Articles of Incorporation or Bylaws or equivalent governing instruments.
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4.2 Parent and Merger Sub 1 and Merger Sub 2 Capital Structure.
(a) Stock. The authorized capital stock of Parent consists of
250,000,000 shares of Parent Common Stock, $0.01 par value per share, and
1,344,918 shares of Parent Preferred Stock, $0.01 par value per share, of which
(a) 144,918 shares are designated Series A Preferred Stock, (b) 200,000 shares
have been designated Series B Junior Participating Preferred Stock ("SERIES B
STOCK") and (c) 1,000,000 shares are undesignated, and, except as expressly
described above in this Section 4.2.(a), no other shares of any capital stock of
Parent are authorized. At the close of business on September 30, 1999, and as
adjusted to reflect a 3-for-1 stock split effective as of September 30, 1999,
188,782,911 shares of Parent Common Stock were issued and outstanding and an
additional 13,026 such shares were designated as treasury stock. Each
outstanding share of Parent Common Stock is entitled to one vote on each matter
submitted to the shareholders for a vote. As of the date of this Agreement, no
shares of Parent Preferred Stock were issued and outstanding. All of the issued
and outstanding shares of Parent Common Stock have been duly authorized and
validly issued and are fully paid and non-assessable. As of the date of this
Agreement, the authorized capital stock of Merger Sub 1 consists of 1,000 common
shares, no par value per share, of which 1,000 shares are duly authorized,
validly issued and outstanding, all of which shares have been fully paid and are
non-assessable and are owned by Parent. Each outstanding common share of Merger
Sub 1 is entitled to one vote on each matter submitted to shareholders for a
vote. As of the date of this Agreement, the authorized capital stock of Merger
Sub 2 consists of 1,000 common shares, no par value per share, of which 1,000
shares are duly authorized, validly issued and outstanding, all of which shares
have been fully paid and are non-assessable and are owned by Parent. Each
outstanding common share of Merger Sub 2 is entitled to one vote on each matter
submitted to shareholders for a vote. Each of Merger Sub 1 and Merger Sub 2 was
formed for the purpose of consummating the Mergers and has no material assets or
liabilities except as necessary for such purpose.
(b) Options. As of September 30, 1999 and as adjusted to
reflect a 3-for-1 stock split effective as of September 30, 1999, an aggregate
of 30,973,610 shares of Parent Common Stock were reserved for future issuance
pursuant to stock options granted by Parent and outstanding on September 30,
1999, and as of that date an additional 6,341,401 shares of Parent Common Stock
were reserved and available for the grant of future stock options under all
Parent's stock option or equity incentive plans. Except for (a) the
above-mentioned options to purchase shares of Parent Common Stock, (b)
outstanding rights to purchase shares of Parent Common Stock under Parent's 1996
Employee Stock Purchase Plan (under which, as of September 30, 1999, a total of
1,270,623 shares of Parent Common Stock remain available for purchase), and (c)
preferred share purchase rights to purchase 1/3000 of a share of Parent Series B
Stock (and potentially Parent Common Stock under certain terms) that are
outstanding under Parent's Amended and Restated Rights Agreement dated October
7, 1998 among Parent and American Stock Transfer and Trust Company as rights
agent (the "PARENT RIGHTS PLAN"), there were no options, warrants, convertible
securities or other securities, calls, commitments or conversion privileges
outstanding to purchase or otherwise acquire (whether directly or
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indirectly) from Parent any shares of Parent's authorized but unissued capital
stock or any securities convertible into or exchangeable for any shares of
Parent's capital stock. The Parent Rights Plan provides for the issuance of one
(1) such right with respect to each share of Parent Common Stock issued after
May 11, 1998, subject to the exceptions provided in the Parent Rights Agreement,
none of which currently applies to the Parent Common Stock issuable in the
Mergers or pursuant to the exercise of Company options assumed in the Company
Merger.
(c) The Parent Common Stock to be issued in the Mergers, when
issued in accordance with the provisions of this Agreement, will be validly
issued, fully paid and nonassessable and not subject to preemptive rights
created by statute, the Certificate of Incorporation or bylaws of Parent or any
agreement or document to which Parent is a party or by which it is bound.
4.3 Authority.
(a) Parent has all requisite corporate power and authority to
enter into this Agreement, the Stock Option Agreement and the Voting Agreements
and to consummate the transactions contemplated hereby and thereby. Merger Sub 1
and Merger Sub 2 have all requisite corporate power and authority to enter into
this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement, the Stock Option Agreement and the
Voting Agreements and the consummation of the transactions contemplated hereby
and thereby have been duly authorized by all necessary corporate action on the
part of Parent, Merger Sub 1 and Merger Sub 2, subject only to the filing of the
Articles of Merger pursuant to Michigan Law. No vote of Parent's shareholders is
required to approve this Agreement, the Mergers, the issuance of Parent Common
Stock pursuant to the Mergers or any other transaction described in this
Agreement. This Agreement, the Stock Option Agreement and the Voting Agreements
have each been duly executed and delivered by Parent and this Agreement has been
duly executed and delivered by each of Merger Sub 1 and Merger Sub 2 and,
assuming the due authorization, execution and delivery by Company and Title,
constitute the valid and binding obligations of Parent, Merger Sub 1 and Merger
Sub 2, respectively, enforceable against Parent, Merger Sub 1 and Merger Sub 2
in accordance with their terms, except as enforceability may be limited by
bankruptcy and other similar laws affecting the rights of creditors generally
and general principles of equity. The execution and delivery of this Agreement,
the Stock Option Agreement and the Voting Agreements by Parent and the execution
and delivery of this Agreement by each of Merger Sub 1 and Merger Sub 2 does
not, and the performance of this Agreement, the Stock Option Agreement and the
Voting Agreements by Parent and the performance of this Agreement by each of
Merger Sub 1 and Merger Sub 2 will not, (i) conflict with or violate the
Certificate of Incorporation, or Articles of Incorporation, as applicable, or
Bylaws of Parent, Merger Sub 1 or Merger Sub 2 or the equivalent organizational
documents of any of their subsidiaries, (ii) subject to compliance with the
requirements set forth in Section 4.3(b) below, conflict with or violate any
law, rule, regulation, order, judgment or decree applicable to Parent, Merger
Sub 1 or Merger Sub 2 or any of their subsidiaries or by which any of them or
their respective properties is bound or affected, or (iii) result in any
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material breach of or constitute a material default (or an event that with
notice or lapse of time or both would become a material default) under, or
impair Parent's rights or alter the rights or obligations of any third party
under, or give to others any rights of termination, amendment, acceleration or
cancellation of; or result in the creation of a material Encumbrance on any of
the material properties or assets of Parent, Merger Sub 1 or Merger Sub 2 or any
of their subsidiaries pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which Parent, Merger Sub 1 or Merger Sub 2 or any of their
subsidiaries is a party or by which Parent, Merger Sub 1 or Merger Sub 2 or any
of their subsidiaries or any of their respective properties are bound or
affected. Part 4.3 of the Parent Schedules list all consents, waivers and
approvals under any of Parent's or any of its subsidiaries' agreements,
contracts, licenses or leases required to be obtained in connection with the
consummation of the transactions contemplated hereby, which, if individually or
in the aggregate not obtained, would result in a material loss of benefits to
Parent as a result of the Mergers.
(b) No consent, approval, order or authorization of, or
registration, declaration or filing with any Governmental Entity is required to
be obtained or made by Parent, Merger Sub 1 or Merger Sub 2 in connection with
the execution and delivery of this Agreement, the Stock Option Agreement and the
Voting Agreements or the consummation of the Mergers, except for (i) the filing
of the Articles of Merger with the Department of Consumer and Industry Services
of the State of Michigan, (ii) the filing of the Registration Statement and a
Schedule 13D with regard to the Stock Option Agreement and the Voting Agreements
in accordance with the Securities Act and the Exchange Act, and the
effectiveness of the Registration Statement, (iii) such consents, approvals,
orders, authorizations, registrations, declarations and filings as may be
required under applicable federal, foreign and state securities (or related)
laws and the HSR Act and the securities or antitrust laws of any foreign
country, and (iv) such other consents, authorizations, filings, approvals and
registrations which if not obtained or made would not be material to Parent or
Company or have a material adverse effect on the ability of the parties hereto
to consummate the Mergers.
4.4 SEC Filings; Parent Financial Statements.
(a) Parent has filed all forms, reports and documents required
to be filed by Parent with the SEC since January 1, 1997, and has made available
to Company and Title such forms, reports and documents in the form filed with
the SEC. All such required forms, reports and documents (including those that
Parent may file subsequent to the date hereof) are referred to herein as the
"PARENT SEC REPORTS." As of their respective dates, the Parent SEC Reports (i)
were prepared in accordance with the requirements of the Securities Act or the
Exchange Act, as the case may be, and the rules and regulations of the SEC
thereunder applicable to such Parent SEC Reports, and (ii) did not at the time
they were filed (or if amended or superseded by a filing prior to the date of
this Agreement, then on the date of such filing) contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except to the extent
corrected prior to the date of this Agreement by a subsequently
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filed Parent SEC Report. All documents required to be filed as exhibits to the
Parent SEC Reports have been so filed. None of Parent's subsidiaries is required
to file any forms, reports or other documents with the SEC pursuant to the
Securities Act or the Exchange Act.
(b) Each of the consolidated financial statements (including,
in each case, any related notes thereto) contained in the Parent SEC Reports
(the "FILED PARENT FINANCIALS"), including any Parent SEC Reports filed after
the date hereof until the Closing, (i) complied as to form in all material
respects with the published rules and regulations of the SEC with respect
thereto, (ii) was prepared in accordance with GAAP applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes thereto
or, in the case of unaudited interim financial statements, as may be permitted
by the SEC on Form 1O-Q, 8-K or any successor form under the Exchange Act) and
(iii) fairly presented the consolidated financial position of Parent and its
subsidiaries as at the respective dates thereof and the consolidated results of
Parent's operations and cash flows for the periods indicated, except that the
unaudited interim financial statements may not contain footnotes and were or are
subject to normal and recurring year-end adjustments. By letter dated as of the
date of this Agreement, Parent has delivered to Company the consolidated
financial statements of Parent for its fiscal year ended July 31, 1999
(consisting of a consolidated balance sheet of Parent at July 31, 1999 (the
"PARENT BALANCE SHEET"), and a consolidated Statement of Operations, a
consolidated Statement of Stockholders' Equity and a consolidated Statement of
Cash Flows of Parent for the year ended July 31, 1999) (collectively, the
"UNAUDITED PARENT FISCAL 1999 FINANCIAL STATEMENTS"). The Unaudited Parent
Fiscal 1999 Financial Statements (a) are currently unaudited, and (b) were
prepared in accordance with GAAP applied on a consistent basis throughout the
period involved (except as may be indicated in the notes thereto or as may be
permitted by the SEC on Form 10-Q, 8-K or any successor form under the Exchange
Act) and (c) fairly presented the consolidated financial position of Parent and
its subsidiaries as at the respective dates thereof and the consolidated results
of Parent's operations and cash flows for the periods indicated, except for
normal and recurring year-end adjustments. The Unaudited Parent Fiscal 1999
Financial Statements do not yet comply as to form with published rules and
regulations of the SEC since they are unaudited. Except as disclosed in the
Filed Parent Financials or the Unaudited Parent Fiscal 1999 Financial
Statements, since the date of the Parent Balance Sheet neither Parent nor any of
its subsidiaries has any liabilities required under GAAP to be set forth on a
balance sheet (absolute, accrued, contingent or otherwise) which are,
individually or in the aggregate, material to the business, results of
operations or financial condition of Parent and its subsidiaries taken as a
whole, except for liabilities incurred since the date of the Parent Balance
Sheet in the ordinary course of business consistent with past practices and
liabilities incurred in connection with this Agreement.
(c) Parent has heretofore furnished to Company and Title a
complete and correct copy of any amendments or modifications, which have not yet
been filed with the SEC but which are required to be filed, to agreements,
documents or other instruments which previously had been filed by Parent with
the SEC pursuant to the Securities Act or the Exchange Act.
4.5 Absence of Changes. Since the date of the Parent Balance Sheet
there has not been: (i) any Material Adverse Change with respect to Parent, (ii)
any declaration, setting aside
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or payment of any dividend on, or other distribution (whether in cash, stock or
property) in respect of, any of Parent's or any of its subsidiaries' capital
stock, or any purchase, redemption or other acquisition by Parent of any of
Parent's capital stock or any other securities of Parent or its subsidiaries or
any options, warrants, calls or rights to acquire any such shares or other
securities except for repurchases from employees following their termination
pursuant to the terms of their pre-existing stock option or purchase agreements,
(iii) any split, combination or reclassification of any of Parent's or any of
its subsidiaries' capital stock, (iv) any material change by Parent in its
accounting methods, principles or practices, except as required by concurrent
changes in GAAP or applicable law, or (v) any revaluation by Parent of any of
its assets, including, without limitation, writing off notes or accounts
receivable other than in the ordinary course of business.
4.6 Litigation. There are no claims, suits, actions or proceedings
pending or, to the knowledge of Parent, threatened against, relating to or
affecting Parent or any of its subsidiaries, before any court, governmental
department, commission, agency, instrumentality or authority, or any arbitrator
that seeks to restrain or enjoin the consummation of the transactions
contemplated by this Agreement or which could reasonably be expected, either
singularly or in the aggregate with all such claims, actions or proceedings, to
be material to Parent or have a material adverse effect on the ability of the
parties hereto to consummate the Mergers.
4.7 Disclosure. The information supplied by Parent for inclusion in the
Registration Statement shall not at the time the Registration Statement becomes
effective under the Securities Act contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading. The information supplied by Parent
for inclusion in the Proxy Statement/Prospectus shall not, on the date the Proxy
Statement/Prospectus is mailed to Company's shareholders and to Title's
shareholders, at the time of the Company Shareholders' Meeting, or the Title
Shareholder's Meeting, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
are made, not false or misleading, or omit to state any material fact necessary
to correct any statement in any earlier communication with respect to the
solicitation of proxies for the Company Shareholders' Meeting which has become
materially false or misleading. The Registration Statement will comply as to
form in all material respects with the provisions of the Securities Act and the
rules and regulations thereunder. If at any time prior to the Effective Time,
any event relating to Parent or any of its affiliates, officers or directors is
discovered by Parent which is required to be set forth in an amendment to the
Registration Statement or a supplement to the Proxy Statement/Prospectus, Parent
shall promptly inform Company. Notwithstanding the foregoing, Parent makes no
representation or warranty with respect to any information supplied by Company
which is contained in any of the foregoing documents.
4.8 Pooling of Interests. To the knowledge of Parent, based on
consultation with its independent accountants, neither Parent nor any of its
directors, officers, affiliates or stockholders has taken or agreed to take any
action which would preclude Parent's ability to account for the Mergers as a
pooling of interests.
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4.9 Affiliates. Part 4.9 of the Parent Schedules is a complete list of
those persons who may be deemed to be, in Parent's reasonable judgment,
affiliates of Parent within the meaning of Rule 145 promulgated under the
Securities Act (each a "PARENT AFFILIATE").
ARTICLE V
CONDUCT PRIOR TO THE EFFECTIVE TIME
5.1 Conduct of Business by Company. During the period from the
date of this Agreement and continuing until the earlier of the termination of
this Agreement pursuant to its terms or the Effective Time, each of Company,
Title and each of its subsidiaries shall, except to the extent that Parent shall
otherwise consent in writing or as otherwise specifically required or permitted
by this Agreement or as set forth in Part 5.1 of the Company Schedules or Title
Schedules, carry on their business in all material respects in the usual,
regular and ordinary course, in substantially the same manner as heretofore
conducted and in compliance in all material respects with all applicable laws
and regulations, pay its debts and taxes when due subject to good faith disputes
over such debts or taxes, pay or perform other material obligations when due,
and use its commercially reasonable efforts consistent with past practices and
policies to (i) preserve intact their present business organization, (ii) keep
available the services of their present officers and employees and (iii)
preserve their relationships with customers, suppliers, licensors, licensees,
and others with which they have business dealings. In addition, Company and
Title will promptly notify Parent of any material event involving its business
or operations.
In addition, except as permitted by the terms of this Agreement or as
otherwise specifically required or permitted by this Agreement, and except as
provided in Part 5.1 of the Company Schedules or in Part 5.1 of the Title
Schedules, without the prior written consent of Parent, during the period from
the date of this Agreement and continuing until the earlier of the termination
of this Agreement pursuant to its terms or the Effective Time, Company and Title
shall not do any of the following and shall not permit their subsidiaries to do
any of the following:
(a) Waive any stock repurchase rights, accelerate, amend or
change the period of exercisability of options or repurchase of restricted stock
(including Company Stock Subject to Forfeiture and Title Stock Subject to
Forfeiture), or reprice options granted under any employee, consultant, director
or other stock plans or authorize cash payments in exchange for any options
granted under any of such plans;
(b) Grant any severance or termination pay to any officer or
employee or adopt any new severance plan, except pursuant to written agreements
in effect, or written plans or policies existing, except as otherwise disclosed
in writing to Parent before the dated of this Agreement and expressly approved
by Parent in writing in advance, or permitted by Section 5.1(k), and except for
making any severance or termination payments that do not exceed $10,000
individually or $200,000 in the aggregate between both Company and Title;
(c) Transfer or license to any person or entity or otherwise
extend, amend or modify in any material respect any rights to any material
Company Intellectual Property or Title
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Intellectual Property, other than non-exclusive licenses in the ordinary course
of business and consistent with past practice;
(d) Declare, set aside or pay any dividends on or make any
other distributions (whether in cash, stock, equity securities or property) in
respect of any capital stock (except for distributions by Title to its
shareholders of amounts equal to their tax obligations with respect to the
earnings of Title for the tax year beginning on January 1, 1999 (and to the
extent that the Title Merger is not consummated prior to January 1, 2000, for
the tax year beginning on January 1, 2000) in accordance with the terms of the
Title Source, Inc. Shareholders Agreement dated as of November 28, 1997 as to
which distributions have not already been made to them in an amount not to
exceed Five Hundred Thousand Dollars ($500,000) (the "PERMITTED TITLE
DISTRIBUTION")) or split, combine or reclassify any capital stock or issue or
authorize the issuance of any other securities in respect of, in lieu of or in
substitution for any capital stock;
(e) Purchase, redeem or otherwise acquire, directly or
indirectly, any shares of capital stock of Company or its subsidiaries or of
Title or its subsidiaries, except repurchases of unvested shares at cost in
connection with the termination of the employment relationship with any employee
pursuant to stock option or purchase agreements in effect on the date hereof;
(f) Issue, deliver, sell, authorize, pledge or otherwise
encumber any shares of capital stock or any securities convertible into shares
of capital stock, or subscriptions, rights, warrants or options to acquire any
shares of capital stock or any securities convertible into, or exercisable or
exchangeable for, shares of capital stock, or enter into other agreements or
commitments of any character obligating it to issue any such shares or
convertible, exercisable or exchangeable securities, other than (i) grants of
Company Options to newly hired employees and current employees, consistent with
Company's past practices regarding such grants, not to exceed Company Options in
respect of 100,000 shares of Company Common Stock in the aggregate, and (ii) the
issuance delivery and/or sale of shares of Company Common Stock pursuant to the
exercise of Company Options outstanding as of the date of this Agreement and
Company Options granted pursuant to the preceding clause (i);
(g) Cause, permit or propose any amendments to its Articles of
Incorporation, Bylaws or other charter documents (or similar governing
instruments of any of its subsidiaries);
(h) Acquire or agree to acquire by merging or consolidating
with, or by purchasing any equity interest in or a material portion of the
assets of, or by any other manner, any business or any corporation, partnership,
association or other business organization or division thereof; or otherwise
acquire or agree to acquire any assets which are material, individually or in
the aggregate, to the business of Company, Title and their subsidiaries, taken
as a whole, except in the ordinary course of business or enter into any material
joint ventures, strategic partnerships or alliances;
(i) Sell, lease, license, encumber or otherwise dispose of any
properties or assets which are, material, individually or in the aggregate, to
the business of Company, Title and their subsidiaries, taken as a whole except
in the ordinary course of business;
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(j) Incur any indebtedness for borrowed money or guarantee any
such indebtedness of another person, issue or sell any debt securities or
options, warrants, calls or other rights to acquire any debt securities of
Company or Title, enter into any "keep well" or other agreement to maintain any
financial statement condition or enter into any arrangement having the economic
effect of any of the foregoing except in the ordinary course of business or
pursuant to existing written loan agreements that constitute either a Company
Contract or a Title Contract;
(k) Adopt or amend any employee benefit plan or employee stock
purchase or employee stock option plan; enter into, amend, terminate or waive
any rights under any employment agreement or collective bargaining agreement
(other than offer letters and letter agreements entered into in the ordinary
course of business consistent with past practice with employees who are
terminable "at will"); pay any special bonus or special remuneration to any
director or employee; increase the salaries or wage rates or fringe benefits
(other than in the ordinary course of business, consistent with past practice or
as required by applicable law) of, or make any change with respect to the rights
to severance, indemnification, or acceleration of options for, its directors,
officers, employees or consultants; change in any material respect any
management policies or procedures; except pursuant to written plans, policies or
agreements existing as of the date of this Agreement, or except as otherwise
disclosed to Parent before the date of this Agreement and expressly approved by
Parent in writing in advance, and except for any bonuses (other than those
constituting severance or termination pay) to non-executive officer employees
that do not exceed $600,000 in the aggregate between both Company and Title; and
except for salary increases that, in the aggregate between both Company and
Title, do not exceed $100,000 calculated on an annualized basis;
(1) Except as set forth in Part 5.1(l) of the Company
Disclosure Schedules, make any payments outside of the ordinary course of
business, or any material capital expenditures, capital additions or capital
improvements outside of the ordinary course of business in excess of $100,000
individually or $500,000 in the aggregate between both Company and Title
(including for purposes of calculating such aggregate amount, any payments,
discharges or satisfactions outside of the ordinary course of business permitted
under Section 5.1(q) below);
(m) Modify, amend or terminate any material Company Contract
or Title Contract or other material contract or agreement to which Company or
any subsidiary thereof or Title or any subsidiary thereof is a party or waive,
release or assign any material rights or claims thereunder, outside the ordinary
course of business;
(n) Enter into (i) any licensing, distribution, marketing,
reseller, merchant services, advertising, sponsorship or other similar agreement
other than in the ordinary course of business, consistent with, as applicable,
Company's or Title's past practice, or (ii) any contracts, agreements, or
obligations granting any exclusive distribution or other exclusive rights;
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(o) Except as required by GAAP, materially revalue any of its
assets or make any change in accounting methods, principles or practices;
(p) Take any action that would be reasonably likely to prevent
Parent from accounting for each of the Mergers as a pooling of interests,
whether or not otherwise permitted by the provisions of this Article V;
(q) Pay, discharge or satisfy any material claim, liability or
obligation arising other than in the ordinary course of business, other than the
payment, discharge or satisfaction of liabilities (i) reflected or reserved
against in Company Financials as to Company and in the Title Financials as to
Title or (ii) not in excess of $25,000 individually or $200,000 in the aggregate
between both Company and Title (including for purposes of calculating such
aggregate amount, any payments of amounts outside of the ordinary course of
business permitted under Section 5.1(l) below);
(r) Enter into any Rights Agreement, or take or fail to take
any action which would, or could reasonably be expected to, cause the Company's
representations set forth in Section 2.23 to be or become untrue in any respect;
or
(s) Agree in writing or otherwise to take any of the actions
described in Section 5.1 (a) through (r) above.
5.2 Waiver Proposals. At any time after the date of this
Agreement and prior to the Effective Time, either of Company or Title may
deliver to Parent a written notice proposing a specific waiver of any of the
covenants contained in the following subsections of Section 5.1: (b), (c), (h),
(i), (j), (k), (l), (m), (n), (o), (q) or (s) (but as to (s) solely with respect
to subsections subsections (b), (c), (h), (i), (j), (k), (l), (m), (n), (o) or
(q)), and setting forth the reasons for such proposal (a "WAIVER PROPOSAL").
Each Waiver Proposal shall be delivered by facsimile transmission and email to
each of Xxx Xxxxxxxx (xxx_xxxxxxxx@xxxxxx.xxx), Xxxx Xxxxxx
(xxxx_xxxxxx@xxxxxx.xxx) and Xxxx Xxxxxxxx (xxxx_xxxxxxxx@xxxxxx.xxx) of Parent
(and to such other persons as Parent shall designate in writing from time to
time) and shall state prominently "PURSUANT TO SECTION 5.2 OF THE AGREEMENT AND
PLAN OF MERGER, FAILURE TO RESPOND TO THIS NOTICE WITHIN SEVEN CALENDAR DAYS
SHALL BE DEEMED CONSENT TO THE WAIVER PROPOSED HEREIN." In the event that Parent
does not respond to a Waiver Proposal within seven calendar days of its delivery
in accordance with this paragraph, the Waiver Proposal shall be deemed agreed to
by Parent for purposes of this Section 5.1. In the event that Parent responds to
a Waiver Proposal within such seven calendar period and Parent does not, in such
response, expressly consent to the Waiver Proposal, then the Waiver Proposal
shall not be deemed agreed to and the parties shall use reasonable commercial
efforts to thereafter discuss the contents of the Waiver Proposal. Nothing in
this Section 5.2 shall be deemed to require Parent to consent to any Waiver
Proposal.
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ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Proxy Statement/Prospectus; Registration Statement;
Antitrust and Other Filings. As promptly as practicable after the execution of
this Agreement, Company, Title and Parent will prepare and file with the SEC,
the Proxy Statement/Prospectus and Parent will prepare and file with the SEC the
Registration Statement in which the Proxy Statement/Prospectus will be included
as a prospectus. Each of Company, Title and Parent will promptly respond to any
comments of the SEC, will use its respective commercially reasonable efforts to
have the Registration Statement declared effective under the Securities Act as
promptly as practicable after such filing and each of Company and Title will
cause the Proxy Statement/Prospectus to be mailed to its respective shareholders
at the earliest practicable time after the Registration Statement is declared
effective by the SEC. As promptly as practicable after the date of this
Agreement, (i) each of Company, Xxxxxx Xxxxxxx, if required to do so in order to
receive shares of Parent Common Stock in compliance with the requirements of the
HSR Act and the regulations thereunder upon the consummation of either of the
Mergers, and Parent will prepare and file with the United States Federal Trade
Commission and the Antitrust Division of the United States Department of Justice
Notification and Report Forms relating to the transactions contemplated herein
as required by the HSR Act, as well as comparable pre-merger notification forms
required by the merger notification or control laws and regulations of any
applicable jurisdiction, as agreed to by the parties (the "ANTITRUST Filings")
and (ii) each of Company, Title and Parent will prepare and file any other
filings required to be filed by it under the Exchange Act, the Securities Act or
any other Federal, state or foreign laws relating to the Mergers and the
transactions contemplated by this Agreement (the "OTHER FILINGS"). Company,
Title and Parent each shall promptly supply the other with any information which
may be required in order to effectuate any filings pursuant to this Section 6.1.
Each of Company, Title and Parent will notify the other promptly upon the
receipt of any comments from the SEC or its staff or any other government
officials in connection with any filing made pursuant hereto and of any request
by the SEC or its staff or any other government officials for amendments or
supplements to the Registration Statement, the Proxy Statement/Prospectus or any
Antitrust Filings or Other Filings or for additional information and will supply
the other with copies of all correspondence between such party or any of its
representatives, on the one hand, and the SEC, or its staff or any other
government officials, on the other hand, with respect to the Registration
Statement, the Proxy Statement/Prospectus, the Mergers or any Antitrust Filing
or Other Filing. Each of Company, Title and Parent will cause all documents that
it is responsible for filing with the SEC or other regulatory authorities under
this Section 6.1 to comply in all material respects with all applicable
requirements of law and the rules and regulations promulgated thereunder.
Whenever any event occurs which is required to be set forth in an amendment or
supplement to the Proxy Statement/Prospectus, the Registration Statement or any
Antitrust Filing or Other Filing, Company, Title or Parent, as the case may be,
will promptly inform the others of such occurrence and cooperate in any required
filing with the SEC or its staff or any other government officials, and/or
mailing to shareholders of Company and Title, such amendment or supplement.
Neither Parent nor any of its affiliates shall be under any obligation to make
proposals, execute or carry out agreements or submit to orders providing for the
sale or other disposition or holding
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separate (through the establishment of a trust or otherwise) of any assets or
categories of assets of Parent, any of its affiliates, Company or Title or the
holding separate of the shares of Company Common Stock or Title Common Stock or
imposing or seeking to impose any limitation on the ability of Parent or any of
its subsidiaries or affiliates to conduct their business or own such assets or
to acquire, hold or exercise full rights of ownership of the shares of Company
Common Stock.
6.2 Meeting of Company Shareholders and Meeting of Title
Shareholders.
(a) (i) As promptly as practicable after the date hereof,
Company will take all action necessary in accordance with the Michigan Law and
its Articles of Incorporation and Bylaws to call, notice, convene and hold the
Company Shareholders' Meeting to be held as promptly as practicable, and in any
event (to the extent permissible under applicable law) within 45 days after the
declaration of effectiveness of the Registration Statement, for the purpose of
voting upon approval of this Agreement and the Company Merger. Subject to
Section 6.2(c), Company will solicit from its shareholders proxies with respect
to the approval of this Agreement and the Company Merger and will take all other
action necessary or advisable to collect proxies and convene and conduct a
meeting of Company's shareholders at which a quorum is present to consider and
act upon this Agreement and the transactions contemplated thereby.
Notwithstanding anything to the contrary contained in this Agreement, Company
may adjourn or postpone the Company Shareholders' Meeting to the extent
necessary to ensure that any necessary supplement or amendment to the Proxy
Statement/Prospectus is provided to Company's shareholders in advance of a vote
on the Company Merger and this Agreement or, if as of the time that Company
Shareholders' Meeting is originally scheduled (as set forth in the Proxy
Statement/Prospectus) there are insufficient shares of Company Common Stock
represented (either in person or by proxy) to constitute a quorum necessary to
conduct the business of the Company Shareholders' Meeting. Company shall ensure
that the Company Shareholders' Meeting is called, noticed, convened, held and
conducted prior to and separate from any meeting of Company's shareholders at
which any Acquisition Proposal or Acquisition Transaction is considered or voted
upon, and that all proxies solicited by Company in connection with the Company
Shareholders' Meeting are solicited in compliance with Michigan Law, its
Articles of Incorporation and Bylaws, the rules of Nasdaq and all other
applicable legal requirements. Company's obligation to call, give notice of,
convene, hold and conduct the Company Shareholders' Meeting in accordance with
this Section 6.2(a) shall not be limited to or otherwise affected by the
commencement, disclosure, announcement or submission to Company of any
Acquisition Proposal (as defined in Section 6.4) (including a Superior Offer (as
defined in Section 6.2(c)), or by any withdrawal, amendment or modification of
the recommendation of the Board of Directors of Company to Company's
shareholders to approve this Agreement and the Company Merger.
(ii) As promptly as practicable after the date
hereof, Title will take all action necessary in accordance with the Michigan Law
and its Articles of Incorporation and Bylaws to call, notice, convene and hold
the Title Shareholders' Meeting to be held as promptly as practicable, and in
any event (to the extent permissible under applicable law) within 45 days
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after the declaration of effectiveness of the Registration Statement, for the
purpose of voting upon approval of this Agreement and the Title Merger. Subject
to Section 6.2(c), Title will solicit from its shareholders proxies with respect
to the approval of this Agreement and the Title Merger and will take all other
action necessary or advisable to collect proxies and convene and conduct a
meeting of Title's shareholders at which a quorum is present to consider and act
upon this Agreement and the transactions contemplated thereby. Notwithstanding
anything to the contrary contained in this Agreement, Title may adjourn or
postpone the Title Shareholders' Meeting to the extent necessary to ensure that
any necessary supplement or amendment to the Proxy Statement/Prospectus is
provided to Title's shareholders in advance of a vote on the Title Merger and
this Agreement or, if as of the time that Title Shareholders' Meeting is
originally scheduled (as set forth in the Proxy Statement/Prospectus) there are
insufficient shares of Title Common Stock represented (either in person or by
proxy) to constitute a quorum necessary to conduct the business of the Title
Shareholders' Meeting. Title shall ensure that the Title Shareholders' Meeting
is called, noticed, convened, held and conducted prior to and separate from any
meeting of Title's shareholders at which any Acquisition Proposal or Acquisition
Transaction is considered or voted upon, and that all proxies solicited by Title
in connection with the Title Shareholders' Meeting are solicited in compliance
with Michigan Law, its Articles of Incorporation and Bylaws, and all other
applicable legal requirements. Title's obligation to call, give notice of,
convene, hold and conduct the Title Shareholders' Meeting in accordance with
this Section 6.2(a) shall not be limited to or otherwise affected by the
commencement, disclosure, announcement or submission to Title of any Acquisition
Proposal (as defined in Section 6.4) (including a Superior Offer (as defined in
Section 6.2(c)), or by any withdrawal, amendment or modification of the
recommendation of the Board of Directors of Title to Title's shareholders to
approve this Agreement and the Title Merger.
(b) (i) Subject to Section 6.2(c): (i) the Board of Directors
of Company shall recommend that Company's shareholders vote in favor of and
approve this Agreement and the Company Merger at the Company Shareholders'
Meeting; (ii) the Proxy Statement/Prospectus shall include a statement to the
effect that the Board of Directors of the Company has recommended that Company's
shareholders vote in favor of and approve this Agreement and the Company Merger
at the Company Shareholders' Meeting; and (iii) neither the Board of Directors
of Company nor any committee thereof shall withdraw, amend or modify, or propose
or resolve to withdraw, amend or modify in a manner adverse to Parent, the
recommendation of the Board of Directors of Company that Company's shareholders
vote in favor of and approve this Agreement and the Company Merger. For purposes
of this Agreement, said recommendation of the Board of Directors shall not be
deemed to have been modified in a manner adverse to Parent if said
recommendation shall no longer be unanimous, provided that, it is still approved
by a majority of the Company's directors then in office.
(ii) Subject to Section 6.2(c): (i) the Board of Directors
of Title shall recommend that Title's shareholders vote in favor of and approve
this Agreement and the Title Merger at the Title Shareholders' Meeting; (ii) the
Proxy Statement/Prospectus shall include a statement to the effect that the
Board of Directors of Title has recommended that Title's shareholders vote in
favor of and approve this Agreement and the Title Merger at the Title
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Shareholders' Meeting; and (iii) neither the Board of Directors of Title nor any
committee thereof shall withdraw, amend or modify, or propose or resolve to
withdraw, amend or modify in a manner adverse to Parent, the recommendation of
the Board of Directors of Title that Title's shareholders vote in favor of and
approve this Agreement and the Title Merger. For purposes of this Agreement,
said recommendation of the Board of Directors shall not be deemed to have been
modified in a manner adverse to Parent if said recommendation shall no longer be
unanimous, provided that, it is still approved by a majority of the Title's
directors then in office.
(c) (i) Nothing in this Agreement shall prevent the Board
of Directors of Company from withholding and withdrawing its recommendation in
favor of this Agreement and the Company Merger and substituting therefor a
statement to the shareholders of Company that, because of special circumstances,
the Board of Directors has determined that it can make no recommendation with
respect to this Agreement or the Company Merger (together with a description of
the basis for that determination) either at the same time that the Proxy
Statement/Prospectus is mailed by Company to Company's shareholders or
thereafter if prior to any such time each of the following shall have occurred
(a) a Superior Offer is made to Company and is not withdrawn, (b) Company shall
have provided written notice to Parent (a "NOTICE OF SUPERIOR OFFER") advising
Parent that Company has received a Superior Offer, specifying all of the
material terms and conditions of such Superior Offer and identifying the person
or entity making such Superior Offer, (c) Parent shall not have, within five
business days of Parent's receipt of the Notice of Superior Offer, made an offer
that Company's Board by a majority vote determines in its good faith judgment
(after consulting with its financial adviser) to be at least as favorable to
Company's shareholders as such Superior Offer (it being agreed that the Board of
Directors of Company shall convene a meeting to consider any such offer by
Parent promptly following the receipt thereof), (d) the Board of Directors of
Company concludes in good faith, after consultation with its outside counsel,
that, in light of such Superior Offer, the withholding and withdrawal of such
recommendation and the substitution therefor of a statement by the Board of
Directors to the shareholders of Company that it can make no recommendation with
respect to this Agreement or the Company Merger (together with a description of
the basis for that determination) is required in order for the Board of
Directors of Company to comply with its fiduciary obligations to Company's
shareholders under applicable law and (e) Company shall not have violated any of
the restrictions set forth in Section 6.4 or this Section 6.2. Company shall
provide Parent with at least three business days prior notice (or such lesser
prior notice as provided to the members of Company's Board of Directors) of any
meeting of Company's Board of Directors at which Company's Board of Directors is
reasonably expected to consider any Acquisition Proposal (as defined in Section
6.4) to determine whether such Acquisition Proposal is a Superior Offer. Nothing
contained in this Section 6.2 shall limit Company's obligation to hold and
convene the Company Shareholders' Meeting (regardless of whether the
recommendation of the Board of Directors of Company in favor of this Agreement
and the Company Merger shall have been withdrawn or withheld) and should such
recommendation be withdrawn or withheld the Board of Directors of Company shall
substitute therefor a statement to the shareholders of Company that, because of
special circumstances, the Board of Directors has determined that it can make no
recommendation with respect to this Agreement or the Company Merger (together
with a description of the basis for that determination). For purposes of this
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Agreement "SUPERIOR OFFER" shall mean an unsolicited, bona fide written proposal
made by a third party to consummate any of the following transactions: (i) a
merger, consolidation or statutory share exchange involving Company pursuant to
which the shareholders of Company immediately preceding such transaction hold
less than 50% of the equity interest in the surviving or resulting entity of
such transaction, (ii) the acquisition by any person or group (including by way
of a tender offer or an exchange offer or a two step transaction involving a
tender offer followed with reasonable promptness by a merger involving Company),
directly or indirectly, of ownership of 100% of the then outstanding shares of
capital stock of Company, or (iii) a sale of all or substantially all of
Company's assets on terms that the Board of Directors of Company determines by
majority vote, in its good faith judgment (after consulting with its financial
adviser) to be more favorable to Company's shareholders than the terms of the
Company Merger.
(ii) Nothing in this Agreement shall prevent the Board of
Directors of Title from withholding and withdrawing its recommendation in favor
of this Agreement and the Title Merger and substituting therefor a statement to
the shareholders of Title that, because of special circumstances, the Board of
Directors has determined that it can make no recommendation with respect to this
Agreement or the Title Merger (together with a description of the basis for that
determination) either at the same time that the Proxy Statement/Prospectus is
mailed by Title to Title's shareholders or thereafter if prior to any such time
each of the following shall have occurred (a) a Title Superior Offer is made to
Title and is not withdrawn, (b) Title shall have provided written notice to
Parent (a "NOTICE OF TITLE SUPERIOR OFFER") advising Parent that Title has
received a Title Superior Offer, specifying all of the material terms and
conditions of such Title Superior Offer and identifying the person or entity
making such Title Superior Offer, (c) Parent shall not have, within five
business days of Parent's receipt of the Notice of Title Superior Offer, made an
offer that the Title Board by a majority vote determines in its good faith
judgment (after consulting with its financial adviser) to be at least as
favorable to Title's shareholders as such Title Superior Offer (it being agreed
that the Board of Directors of Title shall convene a meeting to consider any
such offer by Parent promptly following the receipt thereof), (d) the Board of
Directors of Title concludes in good faith, after consultation with its outside
counsel, that, in light of such Title Superior Offer, the withholding and
withdrawal of such recommendation and the substitution therefor of a statement
by the Board of Directors to the shareholders of Title that it can make no
recommendation with respect to this Agreement or the Title Merger (together with
a description of the basis for that determination) is required in order for the
Board of Directors of Title to comply with its fiduciary obligations to Title's
shareholders under applicable law and (e) Title shall not have violated any of
the restrictions set forth in Section 6.4 or this Section 6.2. Title shall
provide Parent with at least three business days prior notice (or such lesser
prior notice as provided to the members of Title's Board of Directors) of any
meeting of Title's Board of Directors at which Title's Board of Directors is
reasonably expected to consider any Acquisition Proposal (as defined in Section
6.4) to determine whether such Acquisition Proposal is a Title Superior Offer.
Nothing contained in this Section 6.2 shall limit Title's obligation to hold and
convene the Title Shareholders' Meeting (regardless of whether the
recommendation of the Board of Directors of Title in favor of this Agreement and
the Title Merger shall have been withdrawn or withheld) and should such
recommendation be withdrawn or withheld the Board of Directors of Title shall
substitute therefor a statement to the
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shareholders of Title that, because of special circumstances, the Board of
Directors has determined that it can make no recommendation with respect to this
Agreement or the Title Merger (together with a description of the basis for that
determination). For purposes of this Agreement "TITLE SUPERIOR OFFER" shall mean
an unsolicited, bona fide written proposal made by a third party to consummate
any of the following transactions: (i) a merger, consolidation or statutory
share exchange involving Title pursuant to which the shareholders of Title
immediately preceding such transaction hold less than 50% of the equity interest
in the surviving or resulting entity of such transaction, (ii) the acquisition
by any person or group (including by way of a tender offer or an exchange offer
or a two step transaction involving a tender offer followed with reasonable
promptness by a merger involving Title), directly or indirectly, of ownership of
100% of the then outstanding shares of capital stock of Title, or (iii) a sale
of all or substantially all of Title's assets on terms that the Board of
Directors of Title determines by majority vote, in its good faith judgment
(after consulting with its financial adviser) to be more favorable to Title's
shareholders than the terms of the Title Merger.
(d) Nothing contained in this Agreement shall prohibit Company
or its Board of Directors from taking and disclosing to its shareholders a
position contemplated by Rules 14d-9 and 14e-2(a) promulgated under the Exchange
Act.
6.3 Confidentiality; Access to Information.
(a) The parties acknowledge that Company and Parent have
previously executed a Confidentiality Agreement, dated as of July 12, 1999 and
that Parent and Title have previously executed a Confidentiality Agreement,
dated as of [_________], 1999 (collectively, the "CONFIDENTIALITY AGREEMENTS"),
which Confidentiality Agreements will continue in full force and effect in
accordance with their terms.
(b) Access to Information. Company and Title will afford
Parent and its accountants, counsel and other representatives reasonable access
during normal business hours to the properties, books, records and personnel of
Company and Title, respectively, during the period prior to the Effective Time
to obtain all information concerning the business, including the status of
product development efforts, properties, results of operations and personnel of
Company and Title, respectively, as Parent may reasonably request, subject to
the recipients of such information, to the extent it is non-public and material,
agreeing to be bound by Company's applicable xxxxxxx xxxxxxx restrictions. No
information or knowledge obtained by Parent in any investigation pursuant to
this Section 6.3 will affect or be deemed to modify any representation or
warranty contained herein or the conditions to the obligations of the parties to
consummate either of the Mergers. Parent will afford Company and Title and their
accountants, counsel and other representatives reasonable access to executive
management personnel of Parent during the period prior to the Effective Time to
obtain all information concerning the business, including the status of product
development efforts, properties, results of operations and personnel of Parent,
as Company or Title may reasonably request, subject to the recipients of such
information, to the extent it is non-public and material, agreeing to be bound
by Parent's applicable xxxxxxx xxxxxxx restrictions. No information or knowledge
obtained by Company or
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Title in any investigation pursuant to this Section 6.3 will affect or be deemed
to modify any representation or warranty contained herein or the conditions to
the obligations of the parties to consummate either of the Mergers.
6.4 No Solicitation.
(a) From and after the date of this Agreement until the
Effective Time or termination of this Agreement pursuant to Article VIII,
Company and its subsidiaries will not, nor will they authorize or permit any of
their respective officers, directors, affiliates or employees or any investment
banker, attorney or other advisor or representative retained by any of them to,
directly or indirectly, (i) solicit, initiate, encourage or induce the making,
submission or announcement of any Acquisition Proposal (as hereinafter defined),
(ii) participate in any discussions or negotiations regarding, or furnish to any
person any non-public information with respect to, or take any other action to
facilitate any inquiries or the making of any proposal that constitutes or may
reasonably be expected to lead to, any Acquisition Proposal, (iii) engage in
discussions with any person with respect to any Acquisition Proposal, except as
to the existence and content of the provisions of this Section 6.4, (iv)
approve, endorse or (except as permitted by Section 6.2(c)) recommend any
Acquisition Proposal or (v) enter into any letter of intent or similar document
or any contract, agreement, agreement in principle or commitment contemplating
or otherwise relating to any Acquisition Transaction; provided, however, that
prior to the approval of this Agreement and the Company Merger at the Company
Shareholders' Meeting, this Section 6.4(a) shall not prohibit Company from
furnishing access and nonpublic information regarding Company, Title and their
subsidiaries to any person or entity making an unsolicited request therefor that
the Board of Directors of Company determines by majority vote in its good faith
judgment is reasonably likely to make a Superior Offer, or entering into
discussions and negotiations with, any person or group who has submitted (and
not withdrawn) to Company an unsolicited, written, bona fide Acquisition
Proposal that the Board of Directors of Company determines by a majority vote in
its good faith judgment (after consulting with its financial adviser) may
constitute a Superior Offer if (1) neither Company nor any representative of
Company or its subsidiaries shall have violated any of the restrictions set
forth in this Section 6.4 with respect to such Acquisition Proposal, (2) the
Board of Directors of Company by a majority vote determines in its good faith
judgment, after consultation with its outside legal counsel, that such action is
required in order for the Board of Directors of Company to comply with its
fiduciary obligations to Company's shareholders under applicable law, (3) prior
to furnishing any such nonpublic information to, or entering into any such
discussions with, such person or group, Company gives Parent prompt written
notice of the identity of such person or group and all of the material terms and
conditions of such Acquisition Proposal and of Company's intention to furnish
nonpublic information to, or enter into discussions with, such person or group,
and Company receives from such person or group an executed confidentiality
agreement containing terms at least as restrictive with regard to Company's
confidential information as the Confidentiality Agreements, (4) Company gives
Parent at least three business days advance notice of its intent to furnish such
nonpublic information or enter into such discussions, and (5) contemporaneously
with furnishing any such nonpublic information to such person or group, Company
furnishes such nonpublic information to Parent (to the extent such
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nonpublic information has not been previously furnished by the Company to
Parent). Company and its subsidiaries will immediately cease any and all
existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any Acquisition Proposal. Without limiting the
foregoing, it is understood that any violation of the restrictions set forth in
the preceding two sentences by any officer, director or employee of Company or
any of its subsidiaries or any investment banker, attorney or other advisor or
representative of Company or any of its subsidiaries shall be deemed to be a
breach of this Section 6.4 by Company.
For purposes of this Agreement, "ACQUISITION PROPOSAL" shall mean any
offer or proposal (other than an offer or proposal by Parent, Merger Sub 1,
Merger Sub 2 or any of their affiliates) relating to any Acquisition
Transaction. For the purposes of this Agreement, "ACQUISITION TRANSACTION" shall
mean any transaction or series of related transactions other than the
transactions contemplated by this Agreement involving: (A) any acquisition or
purchase from the Company by any person or "group" (as defined under Section
13(d) of the Exchange Act and the rules and regulations thereunder) of more than
a 20% interest in the total outstanding voting securities of the Company or any
of its subsidiaries or any tender offer or exchange offer that if consummated
would result in any person or "group" (as defined under Section 13(d) of the
Exchange Act and the rules and regulations thereunder) beneficially owning 20%
or more of the total outstanding voting securities of the Company, or any of its
subsidiaries or any merger, consolidation, statutory share exchange, business
combination or similar transaction involving the Company; (B) any sale, lease
(other than in the ordinary course of business), exchange, transfer, license
(other than in the ordinary course of business), acquisition or disposition of
more than 20% of the assets of the Company; or (C) any liquidation or
dissolution of the Company.
(b) In addition to the obligations of Company set forth in
paragraph (a) of this Section 6.4, Company as promptly as practicable shall
advise Parent orally and in writing of any request for non-public information or
any other inquiry which Company reasonably believes could lead to an Acquisition
Proposal or of any Acquisition Proposal, the material terms and conditions of
such request, inquiry or Acquisition Proposal, and the identity of the person or
group making any such request, inquiry or Acquisition Proposal. Company will
keep Parent informed as promptly as practicable in all material respects of the
status and details (including material amendments or proposed amendments) of any
such request, inquiry or Acquisition Proposal.
6.5 Public Disclosure. Parent, Company and Title will consult with
each other, and to the extent practicable, agree, before issuing any press
release or otherwise making any public statement with respect to either of the
Mergers, this Agreement or an Acquisition Proposal and will not issue any such
press release or make any such public statement prior to such consultation,
except as may be required by law or any listing agreement with a national
securities exchange or the rules of The Nasdaq Stock Market. The parties have
agreed to the text of the joint press release announcing the signing of this
Agreement.
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6.6 Reasonable Efforts; Notification.
(a) Upon the terms and subject to the conditions set forth in
this Agreement, including without limitation those set forth in Section 6.2(c),
each of the parties agrees to use all reasonable efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, and to assist and cooperate
with the other parties in doing, all things necessary, proper or advisable to
consummate and make effective in an expeditious manner, the Mergers and the
other transactions contemplated by this Agreement, including using reasonable
efforts to accomplish the following: (i) the taking of all reasonable acts
necessary to cause the conditions precedent set forth in Article VII to be
satisfied, (ii) the obtaining of all necessary actions or nonactions, waivers,
consents, approvals, orders and authorizations from Governmental Entities and
the making of all necessary registrations, declarations and filings (including
registrations, declarations and filings with Governmental Entities, if any) and
the taking of all reasonable steps as may be necessary to avoid any suit, claim,
action, investigation or proceeding by any Governmental Entity, (iii) the
obtaining of all necessary consents, approvals or waivers from third parties,
(iv) the defending of any suits, claims, actions, investigations or proceedings,
whether judicial or administrative, challenging this Agreement or the
consummation of the transactions contemplated hereby, including seeking to have
any stay or temporary restraining order entered by any court or other
Governmental Entity vacated or reversed and (v) the execution or delivery of any
additional instruments necessary to consummate the transactions contemplated by,
and to fully carry out the purposes of, this Agreement. Notwithstanding anything
in this Agreement to the contrary, neither Parent nor any of its affiliates
shall be under any obligation to make proposals, execute or carry out agreements
or submit to orders providing for the sale or other disposition or holding
separate (through the establishment of a trust or otherwise) of any assets or
categories of assets of Parent, any of its affiliates, Company or Title or the
holding separate of the shares of Company Common Stock or Title Common Stock or
imposing or seeking to impose any limitation on the ability of Parent or any of
its subsidiaries or affiliates to conduct their business or own such assets or
to acquire, hold or exercise full rights of ownership of the shares of Company
Common Stock or Title Common Stock.
(b) Each of Company, Title and Parent will give prompt notice
to the other of (i) any notice or other communication from any person alleging
that the consent of such person is or may be required in connection with either
of the Mergers, (ii) any notice or other communication from any Governmental
Entity in connection with either of the Mergers, (iii) any litigation relating
to, involving or otherwise affecting Company, Title, Parent or their respective
subsidiaries that relates to the consummation of either of the Mergers. Each of
Company and Title shall give prompt notice to Parent of any representation or
warranty made by it contained in this Agreement becoming untrue or inaccurate in
any material respect, or any failure of Company or Title to comply with or
satisfy in any material respect any covenant, condition or agreement to be
complied with or satisfied by it under this Agreement, in each case, such that
the conditions set forth in Section 7.3 would not be satisfied, provided,
however, that no such notification shall affect the representations, warranties,
covenants or agreements of the parties or the conditions to the obligations of
the parties under this Agreement. Parent shall give prompt notice to Company and
Title of any representation or warranty made by it or Merger Sub 1 or Merger Sub
2
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contained in this Agreement becoming untrue or inaccurate in any material
respect, or any failure of Parent or Merger Sub 1 or Merger Sub 2 to comply with
or satisfy in any material respect any covenant, condition or agreement to be
complied with or satisfied by it under this Agreement, in each case, such that
the conditions set forth in Section 7.2 would not be satisfied, provided,
however, that no such notification shall affect the representations, warranties,
covenants or agreements of the parties or the conditions to the obligations of
the parties under this Agreement.
6.7 Third Party Consents. As soon as practicable following the date
hereof, Parent, Company and Title will each use its commercially reasonable
efforts to obtain any consents, waivers and approvals under any of its or its
subsidiaries' respective agreements, contracts, licenses or leases required to
be obtained in connection with the consummation of the transactions contemplated
hereby.
6.8 Stock Options. At the Effective Time, each outstanding Company
Option, whether or not then exercisable, will be assumed by Parent. Each Company
Option so assumed by Parent under this Agreement will continue to have, and be
subject to, the same terms and conditions set forth in the Company Stock Option
Plan and in the applicable stock option agreement immediately prior to the
Effective Time (including any repurchase rights or vesting provisions), except
that (i) each Company Option will be exercisable (or will become exercisable in
accordance with its terms) for that number of whole shares of Parent Common
Stock equal to the product of the number of shares of Company Common Stock that
were issuable upon exercise of such Company Option immediately prior to the
Effective Time multiplied by the Company Exchange Ratio, rounded down to the
nearest whole number of shares of Parent Common Stock and (ii) the per share
exercise price for the shares of Parent Common Stock issuable upon exercise of
such assumed Company Option will be equal to the quotient determined by dividing
the exercise price per share of Company Common Stock at which such Company
Option was exercisable immediately prior to the Effective Time by the Company
Exchange Ratio, rounded up to the nearest whole cent. Continuous employment with
Company or its subsidiaries shall be credited to the optionee for purposes of
determining the vesting of all assumed Company Options after the Effective Time.
6.9 Form S-8. Parent agrees to file a registration statement on
Form S-8 for the shares of Parent Common Stock issuable with respect to assumed
Company Options as soon as is reasonably practicable after the Effective Time
and shall maintain the effectiveness of such registration statement thereafter
for so long as any of such options or other rights remain outstanding.
6.10 Indemnification.
(a) From and after the Effective Time, Parent will cause
Company and Title as surviving corporations of the Company Merger and Title
Merger, respectively, to fulfill and honor in all respects the obligations of
Company and Title, respectively pursuant to any indemnification agreements
between Company and Title, respectively, and their directors and officers as of
the Effective Time (the "INDEMNIFIED PARTIES") and any indemnification
provisions
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under Company's or Title's Articles of Incorporation or Bylaws as in effect on
the date hereof. The Articles of Incorporation and Bylaws of Company and of
Title, as the surviving corporations of the Mergers will contain provisions with
respect to exculpation and indemnification that are at least as favorable to the
Indemnified Parties as those contained in the Articles of Incorporation and
Bylaws of Company and Title, respectively as in effect on the date hereof, which
provisions will not be amended, repealed or otherwise modified for a period of
six years from the Effective Time in any manner that would adversely affect the
rights thereunder of individuals who, immediately prior to the Effective Time,
were directors, officers, employees or agents of Company, or Title,
respectively, unless such modification is required by law. This Section 6.10
shall survive the consummation of the Company Merger and the Title Merger, is
intended to benefit Company, Title, Company and Title as the surviving
corporations of the Mergers, respectively, and each Indemnified Party, shall be
binding on all successors and assigns of Company and Title as the surviving
corporations of the Mergers, respectively, and Parent, and shall be enforceable
by the Indemnified Parties.
(b) In the event the Company or Title, as the surviving
corporations of the Mergers, or Parent or any of their successors or assigns,
(i) consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger or
(ii) transfers all or substantially all of its properties and assets to any
person, then and in each such case, proper provisions shall be made so that the
successors and assigns of the Company, Title or Parent, as the case may be,
shall assume the obligations set forth in this Section 6.10.
(c) From and after the Effective Time until six years after
the Effective Time, Parent will cause Company to maintain in full force and
effect directors' and officers' liability insurance ("D&O INSURANCE") in at
least the same amounts and providing at least the same coverage as the Company's
directors' and officers' insurance in effect as of the date of this Agreement
(as such insurance has been disclosed to Parent and its attorneys in writing
prior to the date of the Agreement) and from established and reputable insurers.
Notwithstanding the foregoing, Parent and Company and Title, as the surviving
companies, shall have no obligation to obtain or maintain D&O Insurance if
Parent determines in good faith that such insurance is not reasonably available,
the premium costs for such insurance are disproportionate to the amount of
coverage provided, or the coverage provided by such insurance is limited by
exclusions so as to provide insufficient benefit.
(d) Between the date of this Agreement and the Closing Date,
the Company and Title may enter into indemnification agreements with any of
their directors and officers in the form provided to Parent and its counsel
before the date of this Agreement.
6.11 Nasdaq Listing. Parent agrees to authorize for listing on The
Nasdaq Stock Market the shares of Parent Common Stock issuable, and those
required to be reserved for issuance, in connection with the Company Merger, the
Title Merger, the Company Options and the Title Option, upon official notice of
issuance
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6.12 Affiliates; Restrictive Legend. Parent will give stop transfer
instructions to its transfer agent with respect to any Parent Common Stock (i)
received pursuant to the Company Merger by any shareholder of Company who is a
Company Affiliate and (ii) received pursuant to the Title Merger by any
shareholder of Title who is a Title Affiliate and in each such case under
clauses (i) or (ii) there will be placed on the certificates representing such
Parent Common Stock, or any substitutions therefor, a legend stating in
substance:
THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A TRANSACTION
TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, APPLIES AND MAY ONLY BE TRANSFERRED (A) IN CONFORMITY WITH
RULE 145(d) UNDER SUCH ACT, OR (B) IN ACCORDANCE WITH A WRITTEN OPINION
OF COUNSEL, REASONABLY ACCEPTABLE TO THE ISSUER IN FORM AND SUBSTANCE
THAT SUCH TRANSFER IS EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT
OF 1933, AS AMENDED.
6.13 Letter of Company's and Title's Accountants. Company and Title
shall use all reasonable efforts to cause to be delivered to Parent a letter of
KPMG LLP, dated no more than two business days before the date on which the
Registration Statement becomes effective (and reasonably satisfactory in form
and substance to Parent), that is customary in scope and substance for letters
delivered by independent public accountants in connection with registration
statements similar to the Registration Statement.
6.14 Takeover Statutes. If any "control share acquisition," "fair
price," "moratorium" or other similar anti-takeover statute or regulation is or
may become applicable to the Company Merger, the Title Merger or the other
transactions contemplated by this Agreement, each of Parent, Company and Title
and their respective Boards of Directors shall grant such approvals and take
such lawful actions as are necessary to ensure that such transactions may be
consummated as promptly as practicable on the terms contemplated by this
Agreement and otherwise act to eliminate or minimize the effects of such statute
and any regulations promulgated thereunder on such transactions.
6.15 Certain Employee Benefits. As soon as practicable after the
execution of this Agreement, Company, Title and Parent shall confer and work
together in good faith to agree upon mutually acceptable employee benefit and
compensation arrangements (and terminate Company Employee Plans and Title
Employee Plans immediately prior to the Effective Time if requested in writing
by Parent) so as to provide benefits to Company employees and Title employees
generally equivalent in the aggregate to those provided to similarly situated
employees of Parent. In addition, each of Company and Title agrees that it and
its subsidiaries shall terminate any and all severance, separation, retention
and salary continuation plans, programs or arrangements (other than contractual
agreements disclosed in Part 6.15 of the Company Schedules) prior to the
Effective Time.
6.16 Form 5500s. Prior to the Effective Time, Company shall file all
late Form 5500s for each Company Employee Plan with the Department of Labor
under the Delinquent Filer Voluntary Compliance Program sponsored by the
Department of Labor and shall file a
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"reasonable cause" letter with the Internal Revenue Service with respect to each
such Form 5500 filing.
6.17 Affiliate Agreements. Each of Company and Title will use its
commercially reasonable efforts to deliver or cause to be delivered to Parent,
as promptly as practicable on or following the date hereof, from each Company
Affiliate and each Title Affiliate an executed affiliate agreement in
substantially the form attached hereto as Exhibit C (the "COMPANY/TITLE
AFFILIATE AGREEMENT"), each of which will be in full force and effect as of the
Effective Time. Parent will use its commercially reasonable efforts to deliver
or cause to be delivered, as promptly as practicable following the date hereof,
from each Parent Affiliate an executed affiliate agreement in substantially the
form attached hereto as Exhibit D (the "PARENT AFFILIATE AGREEMENT"), each of
which will be in full force and effect as of the Effective Time. Parent will be
entitled to place appropriate legends on the certificates evidencing any Parent
Common Stock to be received by a Company Affiliate and by a Title Affiliate
pursuant to the terms of this Agreement, and to issue appropriate stop transfer
instructions to the transfer agent for the Parent Common Stock, consistent with
the terms of the Company/Title Affiliate Agreement.
6.18 Pooling Accounting. Each of Parent, Company and Title shall use
their commercially reasonable efforts to cause each of the Mergers to be
accounted for as a pooling of interests. Parent will use its commercially
reasonable efforts to have each person who is a Parent Affiliate not to take any
action that would prevent Parent from accounting for the Mergers as a pooling of
interests. Each of Company and Title will use its commercially reasonable
efforts to have each person who is a Company Affiliate or a Title Affiliate not
to take any action that would prevent Parent from accounting for the Mergers as
a pooling of interests.
6.19 Employee Matters. Prior to the Effective Time Company and Title
shall provide Parent with a listing that enumerates each individual that holds a
license or permit for the Company or Title, the license or permit and the
jurisdiction which issued such license or permit . To the extent that Company or
Title is a federal contractor which would require such entity to file certain
governmental reports, such as the EEO-1, or maintain an Affirmative Action Plan,
and any such required reports or Affirmative Action Plan have not been filed or
maintained, Company and Title shall take such steps as are necessary to timely
make such filings and establish an Affirmative Action Plan prior to the
Effective Time.
ARTICLE VII
CONDITIONS TO THE MERGER
7.1 Conditions to Obligations of Each Party to Effect the Mergers. The
respective obligations of each party to this Agreement to consummate and effect
each of the Mergers shall be subject to the satisfaction or waiver at or prior
to the Closing Date of the following conditions, any of which may be waived, in
writing, exclusively by Company (as to the obligations of Company to consummate
and effect the Company Merger), by Title (as to the obligations of Title to
consummate and effect the Title Merger), and by Parent (as to the obligations of
Parent,
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Merger Sub 1 and Merger Sub 2 to consummate and effect both Mergers) (it being
agreed by the parties hereto that Parent shall not have any obligation to
consummate either the Company Merger or the Title Merger unless the conditions
of both Mergers set forth in this Section 7.1 have been satisfied or waived in
accordance with the terms and conditions of this Agreement):
(a) Company and Title Shareholder Approval. (i) This Agreement
and the Company Merger shall have been approved by the requisite vote of the
shareholders of Company under applicable law and the governance documents of
Company; and (ii) this Agreement and the Title Merger shall have been approved
by the requisite vote of the shareholders of Title under applicable law and the
governance documents of Title.
(b) Registration Statement Effective; Proxy Statement. The SEC
shall have declared the Registration Statement effective. No stop order
suspending the effectiveness of the Registration Statement or any part thereof
shall have been issued and no proceeding for that purpose, and no similar
proceeding in respect of the Proxy Statement/Prospectus, shall have been
initiated or threatened in writing by the SEC.
(c) No Order; HSR Act. No Governmental Entity shall have
enacted, issued, promulgated, enforced or entered any statute, rule, regulation,
executive order, decree, injunction or other order (whether temporary,
preliminary or permanent) which is in effect and which has the effect of making
the Company Merger illegal or otherwise prohibiting consummation of the Mergers,
or prohibiting Parent's ownership or operation of, or compelling Parent to
dispose of or hold separate, all or a material portion of the business or assets
of Title, Company and their subsidiaries, taken as a whole. All waiting periods,
if any, under the HSR Act relating to the transactions contemplated hereby will
have expired or terminated early and all material foreign antitrust approvals
required to be obtained prior to the consummation of the Mergers in connection
with the transactions contemplated hereby shall have been obtained.
(d) Tax Opinions. Parent, Company and Title shall each have
received written opinions from their respective tax counsel (Fenwick & West LLP
and Xxxxxxxx Xxxxxx Xxxxxxxx and Xxxx, respectively), in form and substance
reasonably satisfactory to them, to the effect that each of the Mergers will
constitute a reorganization within the meaning of Section 368(a) of the Code and
such opinions shall not have been withdrawn; provided, however, that if the
counsel to either Parent, Company or Title does not render such opinion, this
condition shall nonetheless be deemed to be satisfied with respect to such party
if counsel to the other party renders such opinion to such party. The parties to
this Agreement agree to make such reasonable representations as requested by
such counsel for the purpose of rendering such opinions. The parties agree not
to take any position different from or inconsistent with the treatment of each
of the Mergers as a reorganization within the meaning of Section 368(a) of the
Code.
(e) Nasdaq Listing. The shares of Parent Common Stock to be
issued in each of the Mergers and pursuant to the Company Options shall have
been approved for listing on the Nasdaq Stock Market.
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7.2 Additional Conditions to Obligations of Company and Title. The
obligation of Company and Title to consummate and effect the Mergers shall be
subject to the satisfaction at or prior to the Closing Date of each of the
following conditions, any of which may be waived, in writing, exclusively by
Company (as to the obligations of Company to consummate and effect the Company
Merger) and by Title (as to the obligations of Title to consummate and effect
the Title Merger):
(a) Representations and Warranties. Each representation and
warranty of Parent, Merger Sub 1 and Merger Sub 2 contained in this Agreement
(as qualified by the Parent Schedules) (i) that are qualified as to materiality
shall be true and correct and (ii) that are not qualified as to materiality
shall be true and correct in all material respects, in each case on and as of
the Closing Date with the same force and effect as if they had been made at the
Closing Date (except for any such representations or warranties that, by their
terms, speak only as of a specific date or dates, in which case such
representations and warranties (x) that are qualified as to materiality shall be
true and correct and (y) that are not qualified as to materiality shall be true
and correct in all material respects, in each case on and as of such specified
date or dates (it being understood that, for purposes of determining the
accuracy of such representations and warranties, any update of or modification
to the Parent Schedules made or purported to have been made after the execution
of this Agreement shall be disregarded)); provided, however, that the foregoing
condition in this subsection (a) shall not apply to any failures of any
representations or warranties unless, in the aggregate, such failures reflect or
constitute (1) a Material Adverse Change to Parent, Merger Sub 1, Merger Sub 2
and their subsidiaries, taken as a group (except that, for purposes of
determining whether any failures of any representations and warranties, in the
aggregate, reflect or constitute a Material Adverse Change, all materiality
qualifiers in such representations and warranties shall be disregarded), (2)
facts that render either of the Company Merger or the Title Merger invalid, or
(3) facts that materially limit Company's or Title's ability to consummate the
Company Merger or the Title Merger, as applicable, on the material terms set
forth in this Agreement, and each of Company and Title will have received a
certificate to such effect executed on behalf of Parent, Merger Sub 1 and Merger
Sub 2 by an authorized officer of each such corporation.
(b) Agreements and Covenants. Parent, Merger Sub 1 and Merger
Sub 2 shall have performed or complied in all material respects with all
agreements and covenants required by this Agreement to be performed or complied
with by them on or prior to the Closing Date; provided, however, that the
foregoing condition in this subsection (b) shall not apply to any failures to
perform or comply with the agreements and covenants set forth in Sections 6.5,
6.6, and 6.15 unless, in the aggregate, such failures (1) result in a Material
Adverse Change to Parent, Merger Sub 1, Merger Sub 2 and their subsidiaries,
taken as a group (except that, for purposes of determining whether any failures,
in the aggregate, result in a Material Adverse Change, all materiality
qualifiers in such obligations to perform or comply shall be disregarded), (2)
render either of the Company Merger or the Title Merger invalid, or (3)
materially limit Company's or Title's ability to consummate the Company Merger
or the Title Merger, as applicable, on the material terms set forth in this
Agreement, and Company and Title shall have received a
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certificate to such effect on behalf of Parent, Merger Sub 1 and Merger Sub 2
executed by an authorized officer of each such corporation.
(c) Material Adverse Change. No Material Adverse Change with
respect to Parent shall have occurred since the date of this Agreement and be
continuing.
(d) Consents. Each of Parent, Merger Sub 1 and Merger Sub 2
shall have obtained all consents, waivers and approvals required in connection
with the consummation of the transactions contemplated hereby, the failure of
which to obtain, individually or in the aggregate, would result in a Material
Adverse Change to Parent, Merger Sub 1 and Merger Sub 2, taken as a whole.
(e) Opinions. Company and Title shall have received the
opinion(s) of Parent's, Merger Sub 1's and Merger Sub 2's outside counsel, in
form and substance reasonably satisfactory to Company and Title, regarding the
matters set forth on Exhibit E.
7.3 Additional Conditions to the Obligations of Parent, Merger Sub
1 and Merger Sub 2. The obligations of Parent, Merger Sub 1 and Merger Sub 2 to
consummate and effect the Mergers shall be subject to the satisfaction at or
prior to the Closing Date of each of the following conditions, any of which may
be waived, in writing, exclusively by Parent (it being agreed by the parties
hereto that Parent, Merger Sub 1 and Merger Sub 2 shall have no obligation to
consummate either the Company Merger or the Title Merger unless the conditions
of both Mergers set forth in this Section 7.3 have been satisfied or waived in
accordance with the terms and conditions of this Agreement):
(a) Representations and Warranties. Each representation and
warranty of Company contained in this Agreement (as qualified by the Company
Schedules) and each representation and warranty of Title contained in this
Agreement (as qualified by the Title Schedules) (i) that are qualified as to
materiality shall be true and correct and (ii) that are not qualified as to
materiality shall be true and correct in all material respects, in each case on
and as of the Closing Date with the same force and effect as if they had been
made at the Closing Date (except for any such representations or warranties
that, by their terms, speak only as of a specific date or dates, in which case
such representations and warranties (x) that are qualified as to materiality
shall be true and correct and (y) that are not qualified as to materiality shall
be true and correct in all material respects, in each case on and as of such
specified date or dates (it being understood that, for purposes of determining
the accuracy of such representations and warranties, any update of or
modification to the Company Schedules or Title Schedules made or purported to
have been made after the execution of this Agreement shall be disregarded));
provided, however, that the foregoing condition in this subsection (a) shall not
apply to any failures of any representations or warranties unless, in the
aggregate, such failures reflect or constitute (1) a Material Adverse Change to
Company, Title and their subsidiaries, taken as a group (except that, for
purposes of determining whether any failures of any representations and
warranties, in the aggregate, reflect or constitute a Material Adverse Change,
all materiality qualifiers in such representations and warranties shall be
disregarded), (2) facts that render either
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of the Company Merger or the Title Merger invalid, or (3) facts that materially
limit Parent's, Merger Sub 1's or Merger Sub 2's ability to consummate the
Company Merger or the Title Merger, as applicable, on the material terms set
forth in this Agreement (including without limitation Parent's ability to
account for each of the Mergers as a pooling of interests), and Parent will have
received a certificate to such effect executed on behalf of Company and Title by
an authorized officer of each corporation.
(b) Agreements and Covenants. Each of Company and Title shall
have performed or complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied with by it at
or prior to the Closing Date provided, however, that the foregoing condition in
this subsection (b) shall not apply to any failures to perform or comply with
the agreements and covenants set forth in the first paragraph of Section 5.1, or
in Sections 5.1(c), 5.1(i), 5.1(m), 5.1(n), 5.1(o), 5.1(q) or 5.1(s) (to the
extent that 5.1(s) applies to Sections 5.1(c), 5.1(i), 5.1(m), 5.1(n), 5.1(o),
5.1(q)), 6.3, 6.5, 6.6, 6.7, 6.15 or 6.19 unless, in the aggregate, such
failures (1) result in a Material Adverse Change to Company, Title and their
subsidiaries, taken as a group (except that, for purposes of determining whether
any failures, in the aggregate, result in a Material Adverse Change, all
materiality qualifiers in such obligations to perform or comply shall be
disregarded), (2) render either of the Company Merger or the Title Merger
invalid, or (3) materially limit Parent's, Merger Sub 1's or Merger Sub 2's
ability to consummate the Company Merger or the Title Merger, as applicable, on
the material terms set forth in this Agreement (including without limitation
Parent's ability to account for each of the Mergers as a pooling of interests),
and Parent shall have received a certificate to such effect signed on behalf of
Company and Title by an authorized officer of each such corporation.
(c) Material Adverse Change. No Material Adverse Change with
respect to Company, Title and their subsidiaries, taken as a group, shall have
occurred since the date of this Agreement and be continuing.
(d) Affiliate Agreements. Each of the Company Affiliates and
each of the Title Affiliates shall have entered into the Company/Title Affiliate
Agreement and each of such agreements will be in full force and effect as of the
Effective Time.
(e) Opinion of Accountants. Parent shall have received a
letter from KPMG LLP dated within two business days prior to the Effective Time,
regarding that firm's concurrence with Company's management's and Title's
management's conclusions as to the appropriateness of pooling of interest
accounting for Company and Title for each of the Mergers under Accounting
Principles Board Opinion No. 16, if the Mergers are consummated in accordance
with this Agreement; provided that this condition shall be deemed waived if KPMG
LLP is unable to deliver such letter as a result of actions taken by Parent,
Merger Sub 1, Merger Sub 2 or any of their subsidiaries after the date of this
Agreement.
(f) Consents. Each of Company and Title shall have obtained
all consents, waivers and approvals required in connection with the consummation
of the transactions
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contemplated hereby, the failure of which to obtain, individually or in the
aggregate, would have a Material Adverse Change on Company, Title and their
subsidiaries, taken as a group.
(g) Opinions. Parent shall have received the opinion(s) of
Company's and Title's outside counsel, in form and substance reasonably
satisfactory to Parent, regarding the matters set forth on Exhibit F.
(h) Noncompetition Agreement. The Noncompetition Agreement
shall be in full force and effect.
(i) Antitrust Filings. Xxxxxx Xxxxxxx and each other
shareholder of Company shall, if required to do so in order to receive shares of
Parent Common Stock in compliance with the requirements of the HSR Act and the
regulations thereunder upon the consummation of either of the Mergers, have made
all Antitrust Filings contemplated by Section 6.1 on the same terms as
applicable to Company and Parent thereunder.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.1 Termination. This Agreement may be terminated and the Mergers
may be abandoned at any time prior to the Effective Time, whether before or
after the requisite approval of Company's shareholders or Title's shareholders:
(a) by mutual written consent duly authorized by the Boards of
Directors of Parent, Company and Title;
(b) by either Company or Parent if the Company Merger shall
not have been consummated by March 31, 2000 for any reason; provided, however,
that the right to terminate this Agreement under this Section 8.1(b) shall not
be available to any party whose action or failure to act has been the principal
cause of or resulted in the failure of the Company Merger to occur on or before
such date and such action or failure to act constitutes a breach of this
Agreement;
(c) by either Title or Parent if the Title Merger shall not
have been consummated by March 31, 2000 for any reason; provided, however, that
the right to terminate this Agreement under this Section 8.1(c) shall not be
available to any party whose action or failure to act has been the principal
cause of or resulted in the failure of the Title Merger to occur on or before
such date and such action or failure to act constitutes a breach of this
Agreement;
(d) by either Company or Parent if a Governmental Entity shall
have issued an order, decree or ruling or taken any other action, in any case
having the effect of permanently restraining, enjoining or otherwise prohibiting
the Company Merger, which order, decree, ruling or other action is final and
nonappealable;
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(e) by either Title or Parent if a Governmental Entity shall
have issued an order, decree or ruling or taken any other action, in any case
having the effect of permanently restraining, enjoining or otherwise prohibiting
the Title Merger, which order, decree, ruling or other action is final and
nonappealable;
(f) by either Company or Parent if the required approval of
Company's shareholders contemplated by this Agreement shall not have been
obtained by reason of the failure to obtain the required vote at a meeting of
Company's shareholders duly convened therefor or at any adjournment thereof;
provided, however, that the right to terminate this Agreement under this Section
8.1(f) shall not be available to (i) a party where the failure to obtain the
Company shareholder approval shall have been caused by the action or failure to
act of such party and such action or failure to act constitutes a breach by such
party of this Agreement and (ii) to Company where the failure to obtain the
Company shareholder approval shall have been caused by a breach of any Voting
Agreement by the "Shareholder" (as defined in any such Voting Agreement);
(g) by either Title or Parent if the required approval of
Title's shareholders contemplated by this Agreement shall not have been obtained
by reason of the failure to obtain the required vote at a meeting of Title's
shareholders duly convened therefore or at any adjournment thereof; provided,
however, that the right to terminate this Agreement under this Section 8.1(g)
shall not be available to (i) a party where the failure to obtain the Title
shareholder approval shall have been caused by the action or failure to act of
such party and such action or failure to act constitutes a breach by such party
of this Agreement and (ii) to Title where the failure to obtain the Title
shareholder approval shall have been caused by a breach of any Voting Agreement
by the "Shareholder" (as defined in any such Voting Agreement);
(h) by Parent (at any time prior to the approval of this
Agreement and each of the Mergers by the required votes of the shareholders of
Company and Title, respectively) if a Triggering Event (as defined below) shall
have occurred.
(i) by Company, upon a breach of any representation, warranty,
covenant or agreement on the part of Parent, Merger Sub 1 or Merger Sub 2 set
forth in this Agreement, or if any representation or warranty of Parent, Merger
Sub 1 or Merger Sub 2 shall have become untrue, in either case such that the
conditions set forth in Section 7.2(a) or Section 7.2(b) would not be satisfied
as of the time of such breach or as of the time such representation or warranty
shall have become untrue, provided that if such inaccuracy in Parent's, Merger
Sub 1's or Merger Sub 2's representations and warranties or breach by Parent,
Merger Sub 1 or Merger Sub 2 is curable by Parent, Merger Sub 1 or Merger Sub 2
through the exercise of its commercially reasonable efforts (and, for purposes
of this Section 8.1(i) only, the parties agree that a covenant contained in
Section 6.1 or 6.2 that requires a party to act "promptly," "as promptly as
practicable," or at the "earliest practicable time" is curable through the
exercise of commercially reasonable efforts if it is performed within the cure
period provided below except to the extent that such cure period would extend
beyond a specific and express time limit imposed in either of such Sections for
the action in question to be taken), then Company may not terminate this
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Agreement under this Section 8.1(i) for 30 days after delivery of written notice
from Company to Parent of such breach or inaccuracy, provided Parent, Merger Sub
1 or Merger Sub 2 continues to exercise commercially reasonable efforts to cure
such breach or inaccuracy (it being understood that Company may not terminate
this Agreement pursuant to this paragraph (i) if such breach or inaccuracy by
Parent, Merger Sub 1 or Merger Sub 2 is cured during such 30-day period, or if
Company shall have materially breached this Agreement); or
(j) by Title, upon a breach of any representation, warranty,
covenant or agreement on the part of Parent, Merger Sub 1 or Merger Sub 2 set
forth in this Agreement, or if any representation or warranty of Parent, Merger
Sub 1 or Merger Sub 2 shall have become untrue, in either case such that the
conditions set forth in Section 7.2(a) or Section 7.2(b) would not be satisfied
as of the time of such breach or as of the time such representation or warranty
shall have become untrue, provided that if such inaccuracy in Parent's, Merger
Sub 1's or Merger Sub 2's representations and warranties or breach by Parent,
Merger Sub 1 or Merger Sub 2 is curable by Parent, Merger Sub 1 or Merger Sub 2
through the exercise of its commercially reasonable efforts (and, for purposes
of this Section 8.1(j) only, the parties agree that a covenant contained in
Section 6.1 or 6.2 that requires a party to act "promptly," "as promptly as
practicable," or at the "earliest practicable time" is curable through the
exercise of commercially reasonable efforts if it is performed within the cure
period provided below except to the extent that such cure period would extend
beyond a specific and express time limit imposed in either of such Sections for
the action in question to be taken), then Title may not terminate this Agreement
under this Section 8.1(j) for 30 days after delivery of written notice from
Title to Parent of such breach or inaccuracy, provided Parent, Merger Sub 1 or
Merger Sub 2 continues to exercise commercially reasonable efforts to cure such
breach or inaccuracy (it being understood that Title may not terminate this
Agreement pursuant to this paragraph (j) if such breach or inaccuracy by Parent,
Merger Sub 1 or Merger Sub 2 is cured during such 30-day period, or if Title
shall have materially breached this Agreement); or
(k) by Parent, upon a breach of any representation, warranty,
covenant or agreement on the part of Company or Title set forth in this
Agreement, or if any representation or warranty of Company or Title shall have
become untrue, in either case such that the conditions set forth in Section
7.3(a) or Section 7.3(b) would not be satisfied as of the time of such breach or
as of the time such representation or warranty shall have become untrue,
provided that if such inaccuracy in Company's or Title's representations and
warranties or breach by Company or Title is curable by Company or Title through
the exercise of its commercially reasonable efforts (and, for purposes of this
Section 8.1(k) only, the parties agree that a covenant contained in Section 6.1
or 6.2 that requires a party to act "promptly," "as promptly as practicable," or
at the "earliest practicable time" is curable through the exercise of
commercially reasonable efforts if it is performed within the cure period
provided below except to the extent that such cure period would extend beyond a
specific and express time limit imposed in either of such Sections for the
action in question to be taken), then Parent may not terminate this Agreement
under this Section 8.1(k) for 30 days after delivery of written notice from
Parent to Company and Title of such breach or inaccuracy, provided Company or
Title, as applicable continues to exercise commercially reasonable efforts to
cure such breach or inaccuracy (it being understood that
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Parent may not terminate this Agreement pursuant to this paragraph (k) if such
breach or inaccuracy by Company or Title, as applicable, is cured during such
30-day period, or if Parent shall have materially breached this Agreement).
For the purposes of this Agreement, a "TRIGGERING EVENT" shall
be deemed to have occurred if: (i) the Board of Directors of Company or Title or
any committee thereof shall for any reason have withdrawn or shall have amended
or modified in a manner adverse to Parent its recommendation in favor of the
approval of this Agreement or the Company Merger or the Title Merger, as
applicable; (ii) Company or Title shall have failed to include in the Proxy
Statement/Prospectus the recommendation of its Board of Directors in favor of
the approval of this Agreement and the Company Merger and the Title Merger, as
applicable; (iii) the Board of Directors of Company fails to reaffirm its
recommendation in favor of the adoption and approval of this Agreement and the
Company Merger within 10 business days after Parent requests in writing that
such recommendation be reaffirmed at any time following the public announcement
of an Acquisition Proposal; (iv) the Board of Directors of Company or any
committee thereof shall have approved or publicly recommended any Acquisition
Proposal; (v) Company shall have entered into any letter of intent of similar
document or any agreement, agreement in principle, contract or commitment
accepting any Acquisition Proposal; or (vi) a tender or exchange offer relating
to securities of Company shall have been commenced by a Person unaffiliated with
Parent, and Company shall not have sent to its shareholders pursuant to Rule
14e-2 promulgated under the Securities Act, within 10 business days after such
tender or exchange offer is first published sent or given, a statement
disclosing that Company recommends rejection of such tender or exchange offer.
8.2 Notice of Termination Effect of Termination. Any termination of
this Agreement under Section 8.1 above will be effective immediately upon the
delivery of written notice of the terminating party to the other parties hereto.
In the event of the termination of this Agreement as provided in Section 8.1,
this Agreement shall be of no further force or effect, except (i) as set forth
in this Section 8.2, Section 8.3 and Article 9, each of which shall survive the
termination of this Agreement, and (ii) nothing herein shall relieve any party
from liability for any willful breach of such party's representations,
warranties, covenants or agreements in this Agreement. No termination of this
Agreement shall affect the obligations of the parties contained in the
Confidentiality Agreements or the Stock Option Agreement, all of which
obligations shall survive termination of this Agreement in accordance with their
terms.
8.3 Fees and Expenses.
(a) General. Except as set forth in this Section 8.3, all fees
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses whether
or not either of the Mergers is consummated; provided, however, that Parent and
Company shall share equally all fees and expenses, other than attorneys' and
accountants fees and expenses, incurred in relation to the printing, filing
(with the SEC) and distribution of the Proxy Statement/Prospectus (including any
preliminary materials
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related thereto) and the Registration Statement (including financial statements
and exhibits) and any amendments or supplements thereto.
(b) Company Payments. In the event that this Agreement is
terminated by Parent, Company or Title, as applicable, pursuant to (i) any of
Section 8.1(f), Section 8.1(g), or Section 8.1(h) or (ii) pursuant to Section
8.1(k) to the extent that such termination arises from a willful breach of a
representation, warranty or covenant, Company shall promptly, but in no event
later than two business days after the date of such termination, pay Parent a
fee equal to Seven Million Four Hundred Thousand Dollars ($7,400,000) in
immediately available funds (the "TERMINATION FEE") and, in the event that,
within 12 months after any such termination, the Company consummates any Company
Acquisition (as defined below) or enters into an agreement providing for a
Company Acquisition, then within two business days after the consummation of
such Company Acquisition, the Company shall pay Parent (in addition to the
Termination Fee) an additional fee equal to the dollar amount of the Termination
Fee in immediately available funds (the "ADDITIONAL FEE"). For the purposes of
this Agreement, "COMPANY ACQUISITION" shall mean any of the following
transactions (other than the transactions contemplated by this Agreement); (i) a
merger, consolidation, statutory share exchange, business combination,
recapitalization, liquidation, dissolution or similar transaction involving the
Company pursuant to which the shareholders of the Company immediately preceding
such transaction hold less than 50% of the aggregate equity interests in the
surviving or resulting entity of such transaction, (ii) a sale or other
disposition by the Company of assets other than in the ordinary course of
business representing in excess of 50% of the aggregate fair market value of the
Company's business immediately prior to such sale or (iii) any purchase from the
Company or acquisition by any person or "group" (as defined under Section 13(d)
of the Exchange Act and the rules and regulations thereunder) of more than a 50%
interest in the total outstanding voting securities of the Company or any of its
subsidiaries, or any tender offer or exchange offer that if consummated would
result in any person or "group" (as defined under Section 13(d) of the Exchange
Act and the rules and regulations thereunder) beneficially owning 50% or more of
the total outstanding voting securities of the Company or any of its
subsidiaries, or any merger, consolidation, statutory share exchange, business
combination or similar transaction involving the Company (provided, however,
that none of the foregoing transactions or series of related transactions
described in this clause (iii) shall be deemed to occur solely by virtue of the
exercise by any person who is a shareholder of the Company as of the date of
this Agreement of any Company Options that are outstanding and held by such
shareholder as of the date of this Agreement). Company acknowledges that the
agreements contained in this Section 8.3(b) are an integral part of the
transactions contemplated by this Agreement, and that, without these agreements,
Parent would not enter into this Agreement; accordingly, if Company fails to pay
in a timely manner the amounts due pursuant to this Section 8.3(b) , and, in
order to obtain such payment, Parent makes a claim that results in a judgment
against Company for the amounts set forth in this Section 8.3(b), Company shall
pay to Parent its reasonable costs and expenses (including reasonable attorneys'
fees and expenses) in connection with such suit, together with interest on the
amounts set forth in this Section 8.3(b) at the prime rate of The Chase
Manhattan Bank in effect on the date such payment was required to be made.
Payment of the fees described in this Section 8.3(b) shall be liquidated damages
in lieu of any other liability
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or obligation to pay damages as a result of such termination, except for damages
arising from a willful breach of this Agreement.
In the event that this Agreement is terminated by Parent
pursuant to Section 8.1(k) and to the extent that such termination arises from a
non-willful breach of a representation, warranty or covenant, then Company shall
promptly, but in no event later than two business days after receipt of a
written notice from Parent setting forth the amount of fees and out-of-pocket
expenses incurred by Parent in connection with the due diligence review relating
to the transactions provided for in this Agreement, the negotiation, monitoring
and implementation of this Agreement and the agreements contemplated thereby
(including without limitation attorney's, accountant's, and banker's fees and
costs as well as travel and lodging expenses of Parent's personnel) ("PARENT
EXPENSES"), pay Parent a fee equal to the Parent Expenses in immediately
available funds.
In the event that this Agreement is terminated by Company or
Title pursuant to Section 8.1(i) or (j) and to the extent that such termination
arises from a non-willful breach of a representation, warranty or covenant, then
Parent shall promptly, but in no event later than two business days after
receipt of a written notice from Company and Title setting forth the combined
amount of fees and out-of-pocket expenses incurred by Company and Title and
Title in connection with the due diligence review relating to the transactions
provided for in this Agreement, the negotiation, monitoring and implementation
of this Agreement and the agreements contemplated thereby (including without
limitation attorney's, accountant's, and banker's fees and costs as well as
travel and lodging expenses of Company's and Title's personnel) ("COMPANY/TITLE
EXPENSES"), which notice shall pro rate the Company/Title Expenses between the
two corporations, pay to each of Company and Title a fee equal to its pro rata
share of the Company/Title Expenses.
8.4 Amendment. Subject to applicable law, this Agreement may be
amended by the parties hereto at any time by execution of an instrument in
writing signed on behalf of each of Parent, Company and Title.
8.5 Extension; Waiver. At any time prior to the Effective Time:
(a) either of Company and Parent may, to the extent legally
allowed, (i) extend the time for the performance of any of the obligations or
other acts of the other, (ii) waive any inaccuracies in the representations and
warranties made to such other party contained herein or in any document
delivered pursuant hereto and (iii) waive compliance with any of the agreements
or conditions for the benefit of such other party contained herein; and
(b) either of Title and Parent may, to the extent legally
allowed, (i) extend the time for the performance of any of the obligations or
other acts of the other, (ii) waive any inaccuracies in the representations and
warranties made to such other party contained herein or in
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any document delivered pursuant hereto and (iii) waive compliance with any of
the agreements or conditions for the benefit of such other party contained
herein.
Any agreement on the part of a party hereto to any such extension or waiver
shall be valid only if set forth in an instrument in writing signed on behalf of
such party. Delay in exercising any right under this Agreement shall not
constitute a waiver of such right.
ARTICLE IX
GENERAL PROVISIONS
9.1 Non-Survival of Representations and Warranties. Except as provided
in Section 1.7, with respect to the exchange of and payment for the Company
Common Stock and the Title Common Stock in connection with the Mergers, in
Section 6.10, with respect to directors' and officers' indemnification, or in
Section 6.3(a), with respect to confidential information, regardless of any
investigation at any time made by or on behalf of any party to this Agreement or
of any information any party may have in respect thereof, notwithstanding any
other term or condition of this Agreement, all representations, warranties,
covenants and agreements contained in this Agreement or made pursuant to, or in
connection with, this Agreement, the Voting Agreements, the Stock Option
Agreement, the Mergers or the other transactions contemplated by this Agreement
(including, without limitation, any certificates, instruments, or other
documents delivered at the Closing by or on behalf of the parties or any of
their directors, officers, employees, or agents, but not including any opinion
of the attorneys or accountants for any party, any Company, Title or Parent
Affiliate Agreement, or the Noncompetition Agreement) shall automatically
terminate (without further action) at and upon the Effective Time and they shall
have no effect after the Effective Time and no claim whatsoever may be brought
after the Effective Time alleging a breach of any representation or warranty or
any other failure to comply with the terms and provisions of this Agreement or
any of such other documents, other than any opinion of the attorneys or
accountants for any party, any Company, Title or Parent Affiliate Agreement or
the Noncompetition Agreement; provided, however, that nothing in this Section
9.1 shall preclude any claim from being made for fraud in connection with, this
Agreement, the Voting Agreements, the Stock Option Agreement, the Mergers or the
other transactions contemplated by this Agreement (including, without
limitation, any certificates, instruments, or other documents delivered at the
Closing by or on behalf of the parties or any of their directors, officers,
employees, or agents).
9.2 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given (1) when delivered personally, (2) on the date
delivery is made if sent by commercial delivery service, (3) five business days
after being mailed if mailed by registered or certified mail (postage prepaid,
return receipt requested, or (4) on the date sent if sent via facsimile,
telegraph or telex (receipt confirmed) to the parties at the following addresses
or facsimile numbers (or at such other address or facsimile numbers for a party
as shall be specified by like notice):
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(a) if to Parent, Merger Sub 1 or Merger Sub 2, to:
If sent by registered or certified mail, to:
Intuit Inc.
Attn: General Counsel
Xxxxx Xxxx.
X.X. Xxx 0000
Xxxxxxxx Xxxx, XX 00000-0000
Fax No. (000) 000-0000
If personally delivered or delivered by commercial
delivery service, to:
Intuit Inc.
Attn: General Counsel
Legal Dept.
0000 Xxxxxx Xxxxxx
Xxxxxxxx Xxxx, XX 00000
Fax No. (000)-000-0000
with a copy to:
Fenwick & West LLP
Xxx Xxxx Xxxx Xxxxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx
Xxxxxxx X. Xxxxxxx
Fax No. (000) 000-0000
(b) if to Company, to:
Rock Financial Corporation
00000 Xxxxxxxxx Xxxx, Xxxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
Attention: President
Fax No. (000) 000-0000
a copy to:
Honigman, Miller, Xxxxxxxx and Xxxx
0000 Xxxxx Xxxxxxxx Xxxxxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxx X. Xxxxxxxx and Xxxxxx X. Xxxxxxx
Fax No.(000) 000-0000
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(b) if to Title, to:
Title Source, Inc.
0000 Xxxx Xxx Xxxxxx Xxxx
Xxxx, XX 00000
Attention: President
Fax No._______________
with a copy to:
Honigman, Miller, Xxxxxxxx and Xxxx
0000 Xxxxx Xxxxxxxx Xxxxxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxx X. Xxxxxxxx and Xxxxxx X. Xxxxxxx
Fax No.(000) 000-0000
9.3 Interpretation; Certain Defined Terms.
(a) When a reference is made in this Agreement to Exhibits,
such reference shall be to an Exhibit to this Agreement unless otherwise
indicated. When a reference is made in this Agreement to Sections, such
reference shall be to a Section of this Agreement unless otherwise indicated.
When a reference is made in this Agreement to an Article, such reference shall
be to an Article in this Agreement unless otherwise indicated. The words
"INCLUDE," "INCLUDES" and "INCLUDING" when used herein shall be deemed in each
case to be followed by the words "WITHOUT LIMITATION." The table of contents and
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. When
reference is made herein to "THE BUSINESS OF" an entity, such reference shall be
deemed to include the business of all direct and indirect subsidiaries of such
entity. Reference to the subsidiaries of an entity shall be deemed to include
all direct and indirect subsidiaries of such entity. Reference to a statute,
regulation or agreement shall include all amendments thereto.
(b) For purposes of this Agreement, the term "KNOWLEDGE" as
applied to a party hereto, means, with respect to any matter in question, that
any of the executive officers or directors of such party has actual knowledge of
such matter.
(c) For purposes of this Agreement, the term "MATERIAL ADVERSE
CHANGE," when used with reference to any entity or group of related entities,
means any event, change or effect that is (or will with the passage of time be)
materially adverse to the financial condition, properties, assets, liabilities,
business, operations or results of operations of such entity or group, taken as
a whole; except for an event, change or effect that: (a) arises or results,
directly or indirectly, from general economic or financial, banking, capital or
mortgage market conditions; (b) arises or results, directly or indirectly, from
fluctuations in interest rates; (c) reflects seasonal fluctuations in business
or operating results for either Parent or Company or their respective
industries; (d) results from a written request by Parent to Company or Title
that it change its
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manner of operations or levels of spending; (e) is a change in the market price
of Parent Common Stock or Company Common Stock; (f) results from facts, events
or projections known to the other party before the date of signing this
Agreement; (g) results from any termination of the Company's Joint Venture
Agreement or Operating Agreement with Michigan National Bank, both dated
February 19, 1999 (the "JV AGREEMENTS") by the Company (or by mutual agreement
between the Company and Michigan National Bank), in each case with the written
consent of Parent, prior to the Effective Time; (h) results from any termination
or purported or attempted termination of any of the JV Agreements by Michigan
National Bank as a result of the announcement of this Agreement or the
transactions contemplated thereby (provided, that Company takes such reasonable
actions as are necessary to oppose any such termination or purported or
attempted termination) (i) is a letter or other indication of intent by Michigan
National Bank to terminate either of the JV Agreements after the Effective Time;
or (j) results from any distribution by Title of the Permitted Title
Distribution.
(d) For purposes of this Agreement, the term "PERSON" shall
mean any individual, corporation (including any non-profit corporation), general
partnership, limited partnership, limited liability partnership, joint venture,
estate, trust, company (including any limited liability company or joint stock
company), firm or other enterprise, association, organization, entity or
Governmental Entity.
(e) For purposes of this Agreement, "SUBSIDIARY" of a
specified entity will be any corporation, partnership, limited liability
company, joint venture or other legal entity of which the specified entity
(either alone or through or together with any other subsidiary) owns, directly
or indirectly, 50% or more of the stock or other equity or partnership interests
the holders of which are generally entitled to vote for the election of the
Board of Directors or other governing body of such corporation or other legal
entity.
9.4 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
9.5 Entire Agreement; Third Party Beneficiaries. This Agreement
and the documents and instruments and other agreements among the parties hereto
as contemplated by or referred to herein, including the Company Schedules, the
Title Schedules and the Parent Schedules (a) constitute the entire agreement
among the parties with respect to the subject matter hereof and supersede all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof, it being agreed that the
Confidentiality Agreements shall continue in full force and effect until the
Closing and shall survive any termination of this Agreement; and (b) are not
intended to confer upon any other person any rights or remedies hereunder,
except as specifically provided in Section 6.10.
9.6 Severability. In the event that any provision of this
Agreement or the application thereof, becomes or is declared by a court of
competent jurisdiction to be illegal, void or
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unenforceable, the remainder of this Agreement will continue in full force and
effect and the application of such provision to other persons or circumstances
will be interpreted so as reasonably to effect the intent of the parties hereto.
The parties further agree to replace such void or unenforceable provision of
this Agreement with a valid and enforceable provision that will achieve, to the
extent possible, the economic, business and other purposes of such void or
unenforceable provision.
9.7 Other Remedies; Specific Performance. Except as otherwise provided
herein, any and all remedies herein expressly conferred upon a party will be
deemed cumulative with and not exclusive of any other remedy conferred hereby,
or by law or equity upon such party, and the exercise by a party of any one
remedy will not preclude the exercise of any other remedy. The parties hereto
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to seek an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
hereof in any court of the United States or any state having jurisdiction, this
being in addition to any other remedy to which they are entitled at law or in
equity.
9.8 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California, regardless of the laws that
might otherwise govern under applicable principles of conflicts of law; provided
that issues involving the corporate governance of any of the parties hereto
shall be governed by their respective jurisdictions of incorporation, and issues
involving the consummation and effects of each of the Mergers shall be governed
by the laws of the State of Michigan.
9.9 Rules of Construction. The parties hereto agree that they have been
represented by counsel during the negotiation and execution of this Agreement
and, therefore, waive the application of any law, regulation, holding or rule of
construction providing that ambiguities in an agreement or other document will
be construed against the party drafting such agreement or document.
9.10 Assignment. No party may assign either this Agreement or any of
its rights, interests, or obligations hereunder without the prior written
approval of the other parties. Subject to the preceding sentence, this Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective successors and permitted assigns. Any purported assignment in
violation of this Section shall be void.
9.11 WAIVER OF JURY TRIAL. EACH OF PARENT, COMPANY, TITLE, MERGER SUB 1
AND MERGER SUB 2 HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR
OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF
PARENT, COMPANY, TITLE, MERGER SUB 1 OR MERGER SUB 2 IN THE NEGOTIATION,
ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized respective officers as of the date first
written above.
INTUIT INC.
By: _____________________________
Name: __________________________
Title: _________________________
MERGER SUB 1, INC.
By: _____________________________
Name: __________________________
Title: _________________________
MERGER SUB 2, INC.
By: _____________________________
Name: __________________________
Title: _________________________
ROCK FINANCIAL CORPORATION
By: _____________________________
Name: __________________________
Title: _________________________
TITLE SOURCE, INC.
By: _____________________________
Name: __________________________
Title: _________________________
[SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER]
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INDEX OF EXHIBITS
Exhibit A Form of Stock Option Agreement
Exhibit B Form of Voting Agreement
Exhibit C Form of Company/Title Affiliate Agreement
Exhibit D Form of Parent Affiliate Agreement
Exhibit E Matters to be Covered in the Opinion of Company's and Title's
Counsel
Exhibit F Matters to be Covered in the Opinion of Parent, Merger Sub 1
and Merger Sub 2's Counsel
i
