EXHIBIT 10.1
EXECUTION COPY
STOCK PURCHASE AGREEMENT
BETWEEN
FIDELITY NATIONAL INFORMATION SERVICES, INC.,
FIDELITY NATIONAL FINANCIAL, INC.
AND
THE PURCHASERS NAMED HEREIN
DATED AS OF DECEMBER 23, 2004
TABLE OF CONTENTS
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ARTICLE I DEFINITIONS........................................................ 2
1.1 Certain Definitions................................................ 2
1.2 Construction....................................................... 9
ARTICLE II PURCHASE OF SHARES................................................. 9
2.1 Purchase and Sale of the Shares.................................... 9
2.2 Closing Date....................................................... 10
2.3 Proceedings at Closing............................................. 10
2.4 Use of Proceeds.................................................... 10
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT........................... 11
3.1 Organization and Power............................................. 11
3.2 Authorization...................................................... 11
3.3 Consents and Approvals............................................. 12
3.4 No Conflicts....................................................... 12
3.5 Broker's Fees...................................................... 12
3.6 Capitalization..................................................... 12
3.7 Subsidiaries and Equity Investments; Joint Ventures................ 13
3.8 Authorization of Securities........................................ 14
3.9 Investment Company Act............................................. 14
3.10 Financial Statements............................................... 14
3.11 Absence of Undisclosed Liabilities, Indebtedness................... 15
3.12 Absence of Certain Changes......................................... 15
3.13 Litigation; Orders................................................. 15
3.14 Compliance with Laws............................................... 15
3.15 Permits............................................................ 16
3.16 Contracts.......................................................... 16
3.17 Intellectual Property.............................................. 16
3.18 Affiliate Transactions............................................. 18
3.19 Assets and Properties.............................................. 19
3.20 Insurance.......................................................... 19
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TABLE OF CONTENTS
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3.21 Tax Matters........................................................ 19
3.22 Employee Benefit Plans............................................. 21
3.23 Labor and Employment Matters....................................... 25
3.24 Real Property...................................................... 26
3.25 Environmental Matters.............................................. 26
3.26 Material Customers................................................. 27
3.27 Corporate Records.................................................. 28
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASERS....................... 28
4.1 Organization....................................................... 28
4.2 Authorization...................................................... 28
4.3 Consents and Approvals............................................. 29
4.4 No Conflicts....................................................... 29
4.5 Brokers' Fees...................................................... 29
4.6 Securities Law Matters; Valid Offering............................. 29
4.7 Sufficiency of Funds............................................... 30
ARTICLE V COVENANTS.......................................................... 30
5.1 Access to Information.............................................. 30
5.2 Conduct of the Business............................................ 30
5.3 Intercompany Agreements............................................ 33
5.4 All Reasonable Efforts; Further Assurances......................... 34
5.5 Approvals.......................................................... 34
5.6 Public Announcements............................................... 35
5.7 Notification....................................................... 35
5.8 Exclusivity........................................................ 35
5.9 Confidentiality.................................................... 36
5.10 Transfer Taxes..................................................... 36
5.11 Financial Statements............................................... 36
5.12 Parent Board Approval.............................................. 37
5.13 Non-Competition Agreements......................................... 37
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ARTICLE VI CONDITIONS PRECEDENT TO CLOSING.................................... 37
6.1 Conditions Precedent to the Company's Obligations.................. 37
6.2 Conditions Precedent to Purchasers' Obligations.................... 39
ARTICLE VII CLOSING DELIVERIES................................................. 42
7.1 Items to Be Delivered by the Company............................... 42
7.2 Items to Be Delivered by Purchasers................................ 42
ARTICLE VIII SURVIVAL AND INDEMNIFICATION....................................... 43
8.1 Survival of Representations, Warranties, and Covenants............. 43
8.2 Indemnification.................................................... 43
8.3 Deductible; Maximum Liability...................................... 45
8.4 Definitions........................................................ 45
8.5 Procedures for Third-Party Claims.................................. 46
8.6 Direct Claims...................................................... 47
8.7 Sole Remedy........................................................ 47
8.8 Certain Other Matters.............................................. 47
ARTICLE IX TERMINATION........................................................ 48
9.1 Termination........................................................ 48
9.2 Effect of Termination.............................................. 49
ARTICLE X MISCELLANEOUS...................................................... 49
10.1 Amendments......................................................... 49
10.2 Assignment......................................................... 49
10.3 Binding Effect..................................................... 49
10.4 Counterparts....................................................... 49
10.5 Entire Agreement................................................... 50
10.6 Fees and Expenses.................................................. 50
10.7 Governing Law...................................................... 50
10.8 Headings........................................................... 50
10.9 Jurisdiction....................................................... 50
10.10 Notices............................................................ 51
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10.11 No Recourse........................................................ 52
10.12 Severability....................................................... 52
10.13 Specific Performance............................................... 52
10.14 Third-Party Beneficiaries.......................................... 53
10.15 Waiver............................................................. 53
10.16 Purchaser Obligations.............................................. 53
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SCHEDULES
A Allocation of Purchase Price and Shares
EXHIBITS
A Non-competition and Non-solicitation Agreement
B Registration Rights Agreement
C 2005 Stock Incentive Plan
D Stockholders Agreement
E Financing Term Sheet
F Management Agreements
G Intentionally Left Blank
H Form of Director Indemnification Agreement
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is entered into as of
December 23, 2004, between Fidelity National Information Services, Inc., a
Delaware corporation (the "Company"), Fidelity National Financial, Inc., a
Delaware corporation ("Parent"), and each of the Persons listed on Schedule A
attached hereto (collectively, the "Purchasers").
WHEREAS, on the terms and subject to the conditions set forth herein, the
Company desires to issue and sell to each Purchaser, and each such Purchaser
desires to purchase and acquire from the Company, that number of shares of
common stock, par value $0.0001 per share ("Common Stock"), of the Company, set
forth opposite its name on Schedule A attached hereto.
WHEREAS, Parent desires that the Company undertake such transactions.
WHEREAS, the shares of Common Stock to be issued to the Purchasers
hereunder are referred to collectively as the "Shares."
WHEREAS, prior to the consummation of the sale of the Shares (the
"Transaction"), the Company may be recapitalized in a transaction pursuant to
which, the Company will have borrowed up to $2.5 billion (the "Initial
Financing") on terms no worse to the Company than those set forth on the
financing term sheet attached hereto as Exhibit E (the "Financing Term Sheet")
of which up to $2 billion will be distributed by way of dividend from the
Company to Parent.
WHEREAS, immediately prior to the consummation of the Transaction, the
Company may be recapitalized in a transaction pursuant to which, immediately
prior to the Closing, the Company will have borrowed up to a total (including
the Initial Financing) of $3.2 billion (together with the Initial Financing, the
"Financing") on terms no worse to the Company than those set forth on the
Financing Term Sheet, and a total of $2.7 billion will have been distributed by
way of dividend from the Company to Parent.
WHEREAS, in the event that the Initial Financing shall not have been
consummated prior to the time immediately prior to the consummation of the
Transaction, then the Company will be recapitalized in a transaction pursuant to
which, immediately prior to the Closing, the Company will have borrowed an $3.2
billion (and in such event, such borrowing will be deemed hereunder to be the
"Financing") on terms no worse to the Company than those set forth on the
Financing Term Sheet, and $2.7 billion will be distributed by way of dividend
from the Company to Parent.
WHEREAS, the Company will use the remaining proceeds from the Transaction
and the Financing in the manner set forth herein.
NOW, THEREFORE, in consideration of the foregoing recitals and the
representations, warranties, covenants, and agreements herein contained, and
other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
ARTICLE I
Definitions
1.1 Certain Definitions. The following terms shall have the meanings set
forth below (and such meanings shall be equally applicable to both the singular
and plural form of the terms defined, as the context may require):
"Affiliate" means, in respect of any Person, any other Person that is
directly or indirectly controlling, controlled by, or under common control with
such Person or any of its Subsidiaries, and the term "control" (including the
terms "controlled by" and "under common control with") means having, directly or
indirectly, the power to direct or cause the direction of the management and
policies of a Person, whether through ownership of voting securities or by
contract or otherwise.
"Affiliated Group" has the meaning ascribed to it in Section 1504(a) of
the Code or any other of provision of Law pursuant to which Taxes or Tax Returns
are or may be paid or filed on a consolidated, combined or unitary basis.
"Audited Financial Statements" has the meaning ascribed to it in Section
3.10.
"Board of Directors" has the meaning ascribed to it in Section 6.2(h).
"Business Day" means any day other than a Saturday, Sunday, or other day
on which banking institutions in the State of New York are authorized or
required by Law to close.
"Capital Leases" means, in respect of any Person, leases of (or other
agreements conveying the right to use) any property (whether real, personal, or
mixed) by such Person as lessee that, in accordance with GAAP, either would be
required to be classified and accounted for as capital leases on a balance sheet
of such Person or otherwise be disclosed as such in a note to such balance
sheet.
"Capital Stock" means, in respect of any Person, any shares or other
equivalents (however designated) of any class of corporate stock, partnership
interests, or membership interests in a limited liability company or any other
participations, rights, warrants, options, or other interests in the nature of
an equity interest in such Person, including preferred stock.
"Closing" has the meaning ascribed to it in Section 2.3.
"Closing Date" has the meaning ascribed to it in Section 2.3.
"Code" means the Internal Revenue Code of 1986, as amended.
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"Common Stock" has the meaning ascribed to it in the recitals to this
Agreement.
"Company" has the meaning ascribed to it in the preamble to this
Agreement.
"Company Documents" has the meaning ascribed to it in Section 3.2.
"Contractor" means all "preferred" agents, consultants, contractors, and
subcontractors, as tracked by the Company's Contractor Management Office, which
are involved in the development, support, customization, installation,
maintenance or modification of any Intellectual Property of the Company or its
Subsidiaries.
"Contractor Agreement" means any written agreement between any Contractor
and the Company or its Subsidiaries.
"Contracts" means oral or written contracts, agreements, indentures,
notes, bonds, loans, instruments, leases, commitments, or other equivalent
arrangements or commitments.
"Copyrights" means unexpired registrations for copyrighted material duly
issued by the U.S. Copyright Office.
"Default" has the meaning ascribed to it in Section 3.4.
"DGCL" means the General Corporation Law of the State of Delaware.
"Direct Claim" has the meaning ascribed to it in Section 8.5.
"Director Indemnification Agreements" mean the indemnification agreements
to be entered into by the Company and each member of the Company's Board of
Directors, in substantially the form attached hereto as Exhibit H.
"EBITDA" means the combined earnings of the Company and its Subsidiaries
before deduction for interest, income taxes, depreciation and amortization, with
each determined in accordance with GAAP applied consistent with the Company's
past practice.
"Employee Benefit Plans" has the meaning ascribed to it in Section
3.22(a).
"Encumbrance" means any security interest, lien, pledge, claim, charge,
encumbrance, right of first offer, right of first refusal, preemptive right,
mortgage, indenture, security agreement or other equivalent agreement,
arrangement, contract, commitment, understanding, or obligation, whether written
or oral, and whether or not relating in any way to credit or the borrowing of
money, other than as imposed by the Transaction Documents.
"Environmental Costs and Liabilities" means, in respect of any Person, all
Liabilities, obligations, responsibilities, Remedial Actions, Losses, damages,
punitive
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damages, consequential damages, treble damages, costs, and expenses (including
all reasonable fees, disbursements, and expenses of counsel, experts, and
consultants and costs of investigation and feasibility studies), fines,
penalties, sanctions, and interest incurred as a result of any claim or demand
by any other Person or in response to any violation of Environmental Law,
whether known or unknown, accrued or contingent, whether based in contract,
tort, implied or express warranty, strict liability, criminal or civil statute,
to the extent based upon, related to, or arising under or pursuant to any
Environmental Law, Environmental Permit, Order, or Contract with any
Governmental Entity or other Person, that relates to any environmental, health
or safety condition, violation of Environmental Law, or a Release or threatened
Release of Hazardous Materials.
"Environmental Law" means any Law in any way relating to the protection of
human health and safety, the environment or natural resources including, the
Comprehensive Environmental Response, Compensation and Liability Act (42
U.S.C.Section 9601 et seq.), the Hazardous Materials Transportation Act (49
U.S.C. App.Section 1801 et seq.), the Resource Conservation and Recovery Act (42
U.S.C.Section 6901 et seq.), the Clean Water Act (33 U.S.C. Section 1251 et
seq.), the Clean Air Act (42 U.S.C.Section 7401 et seq.), the Toxic Substances
Control Act (15 U.S.C.Section 2601 et seq.), the Federal Insecticide, Fungicide,
and Rodenticide Act (7 U.S.C.Section 136 et seq.), and the Occupational Safety
and Health Act (29 U.S.C.Section 651 et seq.), as each has been amended.
"Environmental Permits" has the meaning ascribed to it in Section 3.25(a).
"ERISA" has the meaning ascribed to it in Section 3.22(a).
"ERISA Affiliate" has the meaning ascribed to it in Section 3.22(a).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Financial Statements" has the meaning ascribed to it in Section 3.10.
"Filed SEC Reports" means the Registration Statement on Form S-1 dated May
26, 2004, as amended through the date hereof, as filed by the Company with the
SEC (but not including the information incorporated by reference therein).
"Financing" has the meaning ascribed to it in the recitals to this
Agreement.
"GAAP" has the meaning ascribed to it in Section 3.10.
"Governmental Entity" means any federal, state, or municipal court or
other governmental department, commission, board, bureau, agency, or
instrumentality, governmental or quasi-governmental, domestic or foreign.
"Guaranty" shall mean any guaranty of the payment or performance of any
Indebtedness or other obligation and any other equivalent arrangement whereby
credit is extended to one obligor on the basis of any promise of another Person,
whether that
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promise is expressed in terms of an obligation to pay the Indebtedness of such
obligor, or to purchase an obligation owed by such obligor, or to purchase goods
and services from such obligor pursuant to a take or pay contract, or to
maintain the capital, working capital, solvency, or general financial condition
of such obligor, whether or not any such arrangement is reflected on the balance
sheet of such other Person or referred to in a note thereto.
"Hazardous Material" means any substance, material, or waste that is
regulated, classified, or otherwise characterized under or pursuant to any
Environmental Law as "hazardous," "toxic," "pollutant," "contaminant,"
"radioactive," or words of equivalent meaning or effect, including petroleum and
its by-products, asbestos, polychlorinated biphenyls, radon, mold, and urea
formaldehyde insulation.
"HSR Act" has the meaning ascribed to it in Section 3.3.
"Indebtedness" means, for any Person at the time of any determination,
without duplication, all obligations, contingent or otherwise, of such Person
that, in accordance with GAAP, should be classified upon the balance sheet of
such Person as indebtedness.
"Indemnifiable Losses" has the meaning ascribed to it in Section 8.4.
"Indemnitee" has the meaning ascribed to it in Section 8.4.
"Indemnitor" has the meaning ascribed to it in Section 8.4.
"Indemnity Payment" has the meaning ascribed to it in Section 8.4.
"Interim Balance Sheet" has the meaning ascribed to it in Section 3.10.
"Interim Balance Sheet Date" has the meaning ascribed to it in Section
3.10.
"Intellectual Property" means Marks; Patents; Copyrights; internet domain
names that are registered with a domain name registrar; computer software;
databases; proprietary technology; trade secrets and other confidential
information; proprietary know-how; proprietary processes; formulae; algorithms;
customer lists; source codes; object codes; and, in respect of all of the
foregoing, related confidential data or information.
"IRS" means the Internal Revenue Service and any governmental body or
agency succeeding to the functions thereof.
"Law" means, the common law and all federal, state, local, and foreign
laws, rules and regulations, Orders, and other determinations of the United
States, any foreign country, or any domestic or foreign Governmental Entity.
"Leased Real Property" has the meaning ascribed to it in Section 3.24(a).
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"Liabilities" means all Indebtedness, obligations, and other liabilities
(or contingencies that have not yet become liabilities) of a Person, whether
absolute, accrued, contingent (or based upon any contingency), known or unknown,
fixed or otherwise, or whether due or to become due.
"Management Agreements" shall mean those Management Agreements to be
entered into at the Closing by and between the Company and each of THL Managers
V, LLC and TPG GenPar IV, L.P., each in substantially the form attached as
Exhibit F.
"Marks" means trademarks and service marks (whether registered or
unregistered), trade names and designs, together with all goodwill related to
the foregoing.
"Material Adverse Effect" means any material adverse effect on: (A) the
business, liabilities, operations or financial position of the Company and its
Subsidiaries, taken as a whole, other than any such effect to the extent it
results from (i) changes in general economic, market or political conditions or
any acts of war or terrorism, (ii) matters generally affecting any of the
industries in which the Company or its Subsidiaries operate, (iii) matters
resulting from the execution, delivery, performance or announcement of any of
the Transaction Documents and the transactions contemplated hereby and thereby,
or (iv) the actions of any of the Purchasers, or (B) the ability of the Company
to perform any of its material obligations under any of the Transaction
Documents.
"Material Contracts" has the meaning ascribed to it in Section 3.16.
"Multiemployer Plan" has the meaning ascribed to it in Section 3.22(a).
"Multiple Employer Plans" has the meaning ascribed to it in Section
3.22(a).
"Non-competition Agreement" shall mean that Non-competition and
Non-solicitation Agreement to be entered into at the Closing by and between the
Company and Parent, in substantially the form attached as Exhibit A.
"Non-Disclosure Agreements" shall mean the Non-Disclosure Agreements, by
and among Parent, Bear Xxxxxxx Merchant Manager II, LLC, and the Purchasers or
their affiliates, dated as of October 13, 2004.
"Order" has the meaning ascribed to it in Section 3.4.
"Owned Real Property" has the meaning ascribed to it in Section 3.24(a).
"Parent" has the meaning ascribed to it in the preamble.
"Parent Distribution" has the meaning ascribed to it in Section 2.4.
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"Parent's Knowledge" means the actual knowledge of Xxxxxxx X. Xxxxx, XX,
Xx Xxxxxxx, Xxxxx Xxxxxxx, Xxxxx Xxxxxxxx, Xxxx Xxxx, Xxx Xxxxxx, Xxxxx Xxxxxx,
Xxxxx Xxxxxxxxxxx, Xxxx Xxxxxxx, Xxxx Xxxxxxx, Xxxxxxx Xxxxxxxx, Xxx Xxxxxxxx,
Xxxx Xxxxxx, Xxxxx Xxxxx and Xxxxxxx Xxxxxxx.
"Patents" means unexpired patents duly issued by the U.S. Patent and
Trademark Office.
"PBGC" has the meaning ascribed to it in Section 3.22(e).
"Permits" has the meaning ascribed to it in Section 3.15.
"Permitted Encumbrances" means (i) Encumbrances for current Taxes not yet
due and payable (ii) any materialmen's, mechanics, workmen's, repairmen's,
contractor's, warehousemen's, carrier's, supplier's, vendor's, or equivalent
Encumbrances if payment is not yet due on the underlying obligation, (iii) liens
reflected in the financial statements contained in the Filed SEC Reports, (iv)
statutory or common law liens to secure landlords, lessors, or renters under
leases or rental agreements confined to the premises rented, and (v) deposits or
pledges made in connection with, or to secure payment of, worker's compensation,
unemployment insurance, old age pension, or other social security programs
mandated under applicable laws.
"Person" means any individual, partnership, limited partnership,
corporation, limited liability company, association, joint stock company, trust,
joint venture, unincorporated organization, or Governmental Entity.
"Plans" has the meaning ascribed to it in Section 3.22(a).
"Purchase Price" has the meaning ascribed to it in Section 2.2.
"Purchasers" has the meaning ascribed to it in the recitals to this
Agreement.
"Purchasers Representatives" means, in the case of the Purchasers
affiliated with Xxxxxx X. Xxx Equity Fund V, L.P. ("THL"), Xxxxxx X. Xxxxxxx,
and in the case of the Purchasers affiliated with TPG Partners IV, L.P. and TPG
Partners III, L.P. ("TPG"), Xxxxxxxx Xxxxxx, and in case either individual is
unable to serve, such other person as a majority in interest of the Purchasers
whom such person represents shall designate as a successor. It is acknowledged
by the parties that any required consent of the Purchasers Representatives
hereunder shall require the consent of both Xxxxxx X. Xxxxxxx and Xxxxxxxx
Xxxxxx and their respective successors, as the case may be.
"Purchaser Documents" has the meaning ascribed to it in Section 4.2.
"Purchaser Material Adverse Effect" shall mean a material adverse effect
on the Purchasers' ability to consummate the transactions contemplated hereby.
"Qualified Plans" has the meaning ascribed to it in Section 3.22(c).
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"Real Property" has the meaning ascribed to it in Section 3.24(a).
"Receiving Party" has the meaning ascribed to it in Section 5.7.
"Registration Rights Agreement" shall mean that Registration Rights
Agreement to be entered into at the Closing by and among the Company, the
Purchasers and Parent, in substantially the form attached as Exhibit B.
"Related Persons" has the meaning ascribed to it in Section 3.18.
"Release" means any release, spill, emission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, or leaching into the indoor or outdoor
environment, or into or out of any property.
"Remedial Action" means all actions to (i) clean up, remove, treat, or in
any other way address any Hazardous Material, (ii) prevent the Release of any
Hazardous Material so it does not endanger or threaten to endanger public health
or welfare or the indoor or outdoor environment, (iii) perform pre-remedial
studies and investigations or post-remedial monitoring and care, or (iv) correct
a condition of noncompliance with Environmental Laws.
"SEC" means the U.S. Securities and Exchange Commission and any
governmental body or agency succeeding to the functions thereof.
"Securities Act" means the Securities Act of 1933, as amended.
"Shares" has the meaning ascribed to it in the recitals to this Agreement.
"Sponsor Group" shall mean (i) Xxxxxx X. Xxx Equity Fund V, L.P., Xxxxxx
X. Xxx Parallel Fund V, L.P., Xxxxxx X. Xxx Cayman Fund V, L.P., Xxxxxx X. Xxx
Investors Limited Partnership, Xxxxxx Investments Holdings, LLC, Xxxxxx
Investments Employees' Securities Company I, LLC, and Xxxxxx Investments
Employees' Securities Company II, LLC, collectively, and (ii) TPG Partners III,
L.P., TPG Parallel III, L.P., TPG Investors III, L.P., FOF Partners III, L.P.,
FOF Partners III-B, L.P., TPG Dutch Parallel III, C.V. and TPG Partners IV,
L.P., collectively.
"Stock Incentive Plan" means the Company's 2005 Stock Incentive Plan, in
substantially the form attached as Exhibit C.
"Stockholders Agreement" shall mean that Stockholders Agreement to be
entered into at the Closing by and among the Company, the Purchasers and Parent,
in substantially the form attached as Exhibit D.
"Subsidiary" means, in respect of any Person, any Person in which such
first Person, directly or indirectly, beneficially owns more than 50% of either
the equity interest in, or the voting control of, such Person, whether or not
existing on the date hereof.
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"Tax Returns" means all returns, declarations, reports, estimates,
information returns and statements required to be filed or actually filed in
respect of any Taxes.
"Taxes" means (i) all federal, state, local, or foreign taxes, charges,
fees, imposts, levies, or other assessments, including, all net income, gross
receipts, capital, sales, use, ad valorem, value added, transfer, franchise,
profits, inventory, capital stock, license, withholding, payroll, employment,
social security, unemployment, excise, severance, stamp, occupation, property,
and estimated taxes, customs duties, fees, assessments, and charges of any kind
whatsoever, (ii) all interest, penalties, fines, additions to tax, or additional
amounts imposed by any taxing authority in connection with any item described in
clause (i), and (iii) any liability in respect of any items described in clauses
(i) and/or (ii) payable by reason of contract, assumption, transferee liability,
operation of Law, Treasury Regulation Section 1.1502-6(a) (or any predecessor or
successor thereof or any analogous or similar provision of Law) or otherwise.
"Third Party Claims" has the meaning ascribed to it in Section 8.3.
"Transaction Documents" means, collectively, this Agreement, the
Stockholders Agreement, the Registration Rights Agreement, the Intercompany
Agreements, the Non-Competition Agreement, the Management Agreements, the
Director Indemnification Agreements and each other document, instrument,
certificate, or agreement to be executed by the parties to effect the
transactions contemplated by this Agreement.
1.2 Construction.
(a) All References to "Articles," "Sections," "Schedules," and "Exhibits"
contained in this Agreement are, unless specifically indicated otherwise,
references to articles, sections, schedules, or exhibits of or to this
Agreement.
(b) As used in this Agreement, the following terms shall have the meanings
indicated: (i) "day" means a calendar day; (ii) "U.S." or "United States" means
the United States of America; (iii) "dollar" or "$" means lawful currency of the
United States; (iv) "including" or "include" means "including without
limitation"; and (v) references in this Agreement to specific Laws (such as the
DGCL, the Code, and ERISA), or to specific sections or provisions of Laws, apply
to the respective U.S. or state Laws that bear the names so specified and to any
succeeding Law (which now has a new section number, code number or other
designation that is different from that used herein and is in existence on the
date hereof), section, or provision corresponding thereto and the rules and
regulations promulgated thereunder.
ARTICLE II
Purchase of Shares
2.1 Purchase and Sale of the Shares. On the terms and subject to the
conditions set forth herein, on the Closing Date, the Company shall issue, sell,
and deliver to each Purchaser, and each Purchaser, severally and not jointly,
shall purchase
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and acquire from the Company, the number of Shares listed opposite its name on
Schedule A attached hereto for the consideration set forth opposite such
Purchaser's name on Schedule A attached hereto. The aggregate consideration to
be paid to the Company by the Purchasers for the Shares shall be equal to Five
Hundred Million Dollars ($500,000,000) (the "Purchase Price.") The Purchase
Price shall be paid by one or more wire transfers of immediately available funds
to the Company's account designated to the Purchasers in writing no later than
two (2) business days before the Closing.
2.2 Closing Date. The closing of the Transaction (the "Closing") shall
take place at the offices of Weil, Gotshal & Xxxxxx LLP, 000 Xxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, at 10:00 a.m., local time, on the second Business Day
after the date on which all of the conditions contained in Article VI have been
satisfied or waived, as applicable, or at such other place, time, or date as may
be mutually agreed to in writing by Purchasers Representatives and the Company.
The date of the Closing is referred to herein as the "Closing Date."
2.3 Proceedings at Closing. All actions to be taken and all documents to
be executed and delivered by the Company in connection with the consummation of
the transactions contemplated at the Closing shall be reasonably satisfactory in
form and substance to Purchasers and their counsel, and all actions to be taken
and all documents to be executed and delivered by Purchasers in connection with
the consummation of the transactions contemplated at the Closing shall be
reasonably satisfactory in form and substance to the Company and its counsel.
All actions to be taken and all documents to be executed and delivered by all
parties hereto at the Closing shall be deemed to have been taken and executed
and delivered simultaneously, and no action shall be deemed taken nor any
document executed or delivered until all have been taken, executed, and
delivered. At the Closing, (i) the Company shall deliver to Purchasers the items
in Section 7.1 and (ii) Purchasers shall deliver to the Company the items
described in Section 7.2.
2.4 Use of Proceeds. The Company will use the proceeds received from the
Initial Financing and the Financing to (i) repay at or prior to the Closing, all
the Company's Indebtedness for borrowed money existing immediately prior to the
Initial Financing or the Financing, as the case may be (other than with respect
to Capital Leases), (ii) pay all expenses of the Company incurred in connection
with the negotiation and consummation of the Initial Financing and the Financing
(including the associated fees of the lenders), (iii) fund at least $30.0
million of additional cash to the Company's balance sheet, and (iv) distribute
to Parent up to $2 billion of proceeds from the Initial Financing and a total of
$2.7 billion of proceeds from the Financing. The Company will use the proceeds
received from the Transaction to (i) repay all the Company's Indebtedness for
borrowed money existing immediately prior to the Closing (other than with
respect to Capital Leases and $2.8 billion of the Financing), and (ii) pay all
expenses of the Company and the Purchasers incurred in connection with the
negotiation and consummation of the Transaction at the Closing (including the
amounts due under Section 2(a) of the Management Agreements), and (iii) fund at
least $40 million of additional cash to the Company's balance sheet.
11
ARTICLE III.
Representations and Warranties of Parent
Except as disclosed in (i) the Filed SEC Reports or (ii) the disclosure
letter delivered by Parent to the Purchasers concurrently with the execution of
this Agreement (the "Company Disclosure Letter) (it being agreed, that any
disclosure herein with respect to any particular section of the Agreement shall
not be deemed disclosure with respect to another section of the Agreement and no
disclosure in any SEC Filed Report shall be deemed disclosed for purposes
hereof, unless, in each case, the applicability of such disclosure to the
subject matter of such section is clear from a reasonable reading of such
disclosure or listing in such section), the Parent hereby makes the following
representations and warranties to the Purchasers, each of which is true and
correct as of the date hereof:
3.1 Organization and Power. Parent, the Company and each of the Company's
Subsidiaries is a corporation duly incorporated, validly existing, and in good
standing under the Laws of the jurisdiction of its incorporation. The Company
and each of its Subsidiaries has the requisite corporate power and authority to
own, lease, or otherwise hold the assets and properties owned, leased, or
otherwise held by it and necessary to carry on its business as presently
conducted. The Company and each of its Subsidiaries is in good standing and is
duly qualified to conduct business as a foreign corporation in each jurisdiction
in which the nature of its business or the ownership of property make such
qualification necessary, except where the failure to be so qualified would not
reasonably be expected to have a Material Adverse Effect.
3.2 Authorization. Each of Parent and the Company has the requisite
corporate power to execute and deliver this Agreement and each other Transaction
Document to be executed by it in connection with the consummation of the
transactions contemplated hereby (the "Company Documents") and, subject to the
receipt of the Parent Board Approval, to perform its obligations hereunder and
thereunder. The execution and delivery by the Company and Parent of this
Agreement and each Company Document to which it is a party and, subject to the
receipt of the Parent Board Approval, the performance by each of them of its
obligations hereunder and thereunder have been (or at the time of execution will
be) duly authorized by all necessary corporate action on its part. This
Agreement has been (and each Company Document to which it is a party will be)
duly executed and delivered by duly authorized officers of each of the Company
and Parent and, assuming the due execution and delivery of this Agreement and
each Company Document by the other party or parties hereto or thereto, this
Agreement and each Company Document to which it is a party shall constitute
valid and binding obligations of the Company and Parent enforceable against the
Company and Parent in accordance with their respective terms, except as may be
limited by bankruptcy, insolvency, reorganization, moratorium, or other
equivalent Laws affecting the enforcement of creditors' rights in general and
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding at law or in equity).
12
3.3 Consents and Approvals. Except as would not reasonably be expected to
have a Material Adverse Effect, no consent, approval, waiver, order, or
authorization of, or registration, declaration, or filing with, or notice to,
any Governmental Entity (including any consent, approval, waiver, or
authorization in respect of any Contract or Permit) is required to be obtained
or made by or in respect of Parent, the Company or any of the Company's
Subsidiaries in connection with the execution and delivery of this Agreement or
any Company Document by the Company or Parent, the performance by the Company or
Parent of its obligations hereunder and thereunder or the consummation of the
transactions contemplated hereby or thereby, other than (i) if required, the
filing of a Form D with the SEC and any applicable state securities regulatory
authorities, (ii) the filing of premerger notification and report forms under
the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), or (iii) and any required filings with insurance authorities in New York
State.
3.4 No Conflicts. The execution and delivery of this Agreement does not
(and of each Company Document will not), and neither the performance by the
Company or Parent of its obligations hereunder and thereunder, nor the
consummation of the Financing or the transactions contemplated hereby and
thereby, will, (i) conflict with the Certificate of Incorporation or bylaws of
the Company or Parent, as the case may be, (ii) except as would not reasonably
be expected to have a Material Adverse Effect, conflict with, result in any
violation of, constitute a default (with or without notice, lapse of time, or
both (a "Default")) under, or give rise to a right of termination, cancellation,
or acceleration of, or any obligation or to loss of a benefit under, any
Contract, or any contract or agreement that is material to the business, assets,
financial condition or results of operation of the Company and its Subsidiaries,
taken as a whole (iii) violate, constitute a Default under, or cause the
forfeiture, impairment, non-renewal, revocation, or suspension of any Permit,
(iv) violate any citation, order, judgment, decree, writ, or injunction
("Order") of any Governmental Entity applicable to Parent, the Company or any of
the Company's Subsidiaries, (v) violate any Law applicable to Parent, the
Company or any of the Company's Subsidiaries, or (vi) except as would not
reasonably be expected to have a Material Adverse Effect, result in the creation
of any Encumbrance upon any of the assets or properties of Parent, the Company
or the Company's Subsidiaries.
3.5 Broker's Fees. No agent, broker, finder, investment banker, financial
advisor, or other equivalent Person will be entitled to any fee, commission, or
other compensation in connection with the transactions contemplated by this
Agreement on the basis of any act or statement made or alleged to have been made
by the Company, Parent or any of their respective Affiliates or Representatives,
except for the fees and expenses of Xxxxxxxx Inc., which fees and expenses will
be paid out of proceeds from this Transaction in accordance with Section 2.4
hereof.
3.6 Capitalization.
(a) The authorized Capital Stock of the Company consists of 400,000,000
shares of Common Stock, of which 1,000 are issued and outstanding as of the date
13
hereof. All of the issued and outstanding shares of Capital Stock of the Company
are duly authorized, validly issued, fully paid, and nonassessable, and were not
issued in violation of any preemptive rights or any federal or state securities
Laws, and are owned beneficially and of record by Parent. Immediately after the
Closing, but prior to the issuance of any shares of Common Stock under the Stock
Incentive Plan, the Shares will constitute 25% of the outstanding Common Stock
of the Company on a fully diluted basis.
(b) There are no outstanding options, warrants, and other equivalent
rights to purchase Capital Stock of the Company. There are (i) no authorized or
outstanding securities, rights (preemptive or other), subscriptions, calls,
commitments, warrants, options, or other agreements that give any Person the
right to purchase, subscribe for, or otherwise receive or be issued Capital
Stock of the Company or any security convertible into or exchangeable or
exercisable for Capital Stock of the Company, (ii) no outstanding debt or equity
securities of the Company that upon the conversion, exchange, or exercise
thereof would require the issuance, sale, or transfer by the Company of any new
or additional Capital Stock of the Company (or any other securities of the
Company which, whether after notice, lapse of time, or payment of monies, are or
would be convertible into or exchangeable or exercisable for Capital Stock of
the Company), (iii) no agreements or commitments obligating the Company to
repurchase, redeem, or otherwise acquire Capital Stock or other securities of
the Company or its Subsidiaries, and (iv) no outstanding or authorized stock
appreciation rights, phantom stock, stock rights, or other equity-based
interests in respect of the Company. The Company has not issued any voting
indebtedness.
(c) There is no proxy, stockholders agreement, voting trust, or other
agreement or understanding to which the Company, Parent, or to Parent's
Knowledge, any other Person, is a party or by which it is bound relating to the
voting of any shares of Capital Stock of the Company.
3.7 Subsidiaries and Equity Investments; Joint Ventures.
(a) Schedule 3.7 sets forth the name, jurisdiction of incorporation, and
the Company's percentage ownership interest of Capital Stock for each direct and
indirect Subsidiary of the Company. The Company does not, directly or
indirectly, own any Capital Stock of any Person other than the Subsidiaries set
forth on Schedule 3.7. The Company is not a direct or indirect participant in
any material joint venture or other equivalent arrangement.
(b) The outstanding shares of Capital Stock of each Subsidiary of the
Company are duly authorized, validly issued, fully paid, and non-assessable,
have not been issued in violation of any preemptive rights, and are owned of
record and beneficially, directly or indirectly, by the Company, free and clear
of all Encumbrances.
(c) There are (i) no authorized or outstanding securities, rights
(preemptive or other), subscriptions, calls, commitments, warrants, options, or
other agreements that give
14
any Person the right to purchase, subscribe for, or otherwise receive or be
issued Capital Stock of any Subsidiary of the Company or any security
convertible into or exchangeable or exercisable for Capital Stock of any
Subsidiary of the Company, (ii) no outstanding debt or equity securities of the
Company or its Subsidiaries that upon the conversion, exchange, or exercise
thereof would require the issuance, sale, or transfer by the Company or its
Subsidiaries of any new or additional Capital Stock of any Subsidiary of the
Company (or any other securities, which, whether after notice, lapse of time, or
payment of monies, are or would be convertible into or exchangeable or
exercisable for Capital Stock of any Subsidiary of the Company), (iii) no
agreements or commitments obligating any Subsidiary of the Company to
repurchase, redeem, or otherwise acquire Capital Stock or other Securities of
the Company or its Subsidiaries and (iv) no outstanding or authorized stock
appreciation rights, phantom stock, stock rights, or based interests in respect
of any Subsidiary of the Company. No Subsidiary of the Company has issued any
voting indebtedness.
3.8 Authorization of Securities. When issued in accordance with the terms
of this Agreement, the Shares will be duly authorized, validly issued, fully
paid and nonassessable, free and clear of all Encumbrances.
3.9 Investment Company Act. The Company is not, and after giving affect to
the issuance of the Shares and the application of the proceeds thereof will not
be, an "investment company" within the meaning of Investment Company Act of
1940, as amended.
3.10 Financial Statements. Prior to the date hereof, the Company has
provided to the Purchasers (i) the annual combined balance sheets of the Company
and its Subsidiaries as of December 31, 2003 and 2002 and the related combined
statements of earnings, equity and comprehensive earnings and cash flows for
each of the years in the three-year period ended December 31, 2003 (the "Annual
Combined Financial Statements"), together with the notes thereto, and the draft
report of KPMG LLP thereon which includes a legend indicating that certain
transactions would have to be completed before KPMG LLP would be in a position
to issue the draft report in final form, (ii) the unaudited combined balance
sheet of the Company and its Subsidiaries as at June 30, 2004 reviewed by KPMG
LLP (the "Interim Balance Sheet"), and the related combined statements of
earnings and cash flows, for the six (6) month period then ended, the "Unaudited
Financial Statements"). The Unaudited Financial Statements, together with the
Annual Combined Financial Statements are referred to as the "Financial
Statements". The Financial Statements have been prepared in accordance with U.S.
generally accepted accounting principles consistently applied ("GAAP") and
fairly present the combined financial condition, assets and liabilities, results
of operations, cash flows, and changes in equity and comprehensive earnings of
the Company and its Subsidiaries as of the dates, and for the periods, indicated
therein, subject in the case of the Unaudited Financial Statements to lack of
footnotes and a statement of changes in equity and comprehensive earnings and
normal year end adjustments that will not be material. Since June 30, 2004,
there has not been any change of the Company's accounting principles, methods,
or policies except as required by GAAP or as would not reasonably be expected to
have a
15
Material Adverse Effect. The results and accounts of the entities listed on
disclosure Schedule 3.10 are included in the Financial Statements, but have been
excluded from the final formation of the Company and its Subsidiaries and are
therefore, not subject to the terms of this Transaction.
3.11 Absence of Undisclosed Liabilities, Indebtedness. The Company and its
Subsidiaries have no Liabilities that are required to be reflected in, reserved
against, or otherwise described in a balance sheet (or the notes thereto)
prepared in accordance with GAAP except (i) those Liabilities provided for or
reserved against in the Financial Statements (or set forth in the notes
thereto), (ii) Liabilities arising in the ordinary course of business consistent
with past practice since June 30, 2004, and (iii) Liabilities under this
Agreement. Immediately after the Closing, other than the Indebtedness for
borrowed money incurred in connection with the Financing and other than with
respect to Capital Leases, neither the Company nor any of its Subsidiaries will
have any Indebtedness.
3.12 Absence of Certain Changes. Except as set forth in the Unaudited
Financial Statements and except as contemplated by the Financing, since June 30,
2004, neither the Company nor any of its Subsidiaries has: (i) terminated or
suffered any material amendment of any Material Contract; (ii) suffered any
event or circumstance that has had or could reasonably be expected to have a
Material Adverse Effect; (iii) other than in the ordinary course of business
consistent with past practice, increased the salaries or other compensation of,
or made any advance or loan to, any of its current or former directors or
executive officers or made any increase in, or any addition to, other benefits
to which any of its current or former directors or executive officers may be
entitled; (iv) declared, set aside, or paid any dividend or made or agreed to
make any other distribution or payment in respect of its Capital Stock or
redeemed, purchased, or otherwise acquired or agreed to redeem, purchase, or
acquire any of its Capital Stock or other securities; (v) waived any right of
material value to the Company or its Subsidiaries; or (vi) incurred any
Indebtedness.
3.13 Litigation; Orders. There is no claim or judicial or administrative
action, suit, proceeding, or investigation pending or, to Parent's Knowledge,
threatened (i) that questions the validity of this Agreement or any other
Transaction Document, the performance by the Company or Parent of the
obligations to be performed by it hereunder or thereunder or the consummation of
the transactions contemplated hereby or thereby, or (ii) except as would not
reasonably be expected to have a Material Adverse Effect, relating to the
business of the Company or any of its Subsidiaries (as now conducted or as
proposed to be conducted) or materially affecting the Company or any of its
Subsidiaries or any of their respective assets or properties. There is no
material Order of any Governmental Entity binding on the Company, any of its
Subsidiaries, or any of their respective assets or properties.
3.14 Compliance with Laws. The Company and each of its Subsidiaries has
complied in all material respects with each Law and Order binding on it or on
any of its assets or properties and is not currently in material violation of
any such Law or Order,
16
and there have been no notices or Orders of noncompliance issued to the Company
of any of its Subsidiaries under or in respect of any such Law.
3.15 Permits. The Company and each of its Subsidiaries owns, holds,
possesses, or lawfully uses in its business all approvals, authorizations,
certifications, franchises, licenses, permits, and equivalent authorities
("Permits") that are necessary for the conduct of their business as currently
conducted or the ownership and use of their assets or properties, in compliance
with all Laws, except for those Permits the failure to obtain or loss of which
would not reasonably be expected to have a Material Adverse Effect. Neither the
Company nor any of its Subsidiaries is in Default under, or has received any
notice of any claim of Default in respect of, any such Permits, except as would
not reasonably be expected to have a Material Adverse Effect. To Parent's
Knowledge, all such Permits are renewable by their respective terms in the
ordinary course of business without the need to comply with any special
qualification procedures or to pay any amounts other than routine filing fees.
3.16 Contracts. Schedule 3.16 sets forth all of the following Contracts to
which the Company or any of its Subsidiaries is a party or by which it is bound:
(i) Contracts with any labor union or association representing any employee of
the Company or any of its Subsidiaries; (ii) Contracts for the sale of any of
the assets of the Company or any of its Subsidiaries other than in the ordinary
course of business or for the grant to any Person of any preferential rights to
purchase any of their assets; (iii) Contracts containing covenants of the
Company or any of its Subsidiaries not to compete in any line of business or
with any Person in any geographical area; (iv) Contracts granting any
registration or similar right in respect of securities of the Company or any of
its Subsidiaries, and (v) Contracts pursuant to which the Company or any of its
Subsidiaries acquired the capital stock or assets of another entity and which
contain earn-out provisions relating to such acquisition requiring the Company
or any of its Subsidiaries to make payments in the future in excess of $250,000
individually or $750,000 in the aggregate. All of the Contracts to which the
Company or any of its Subsidiaries is a party or by which it is bound are in
full force and effect and are the legal, valid, and binding obligations of the
Company and/or its Subsidiaries, enforceable against them in accordance with
their terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium, and equivalent Laws affecting creditors' rights and remedies
generally and subject, as to enforceability, to general principles of equity
(regardless of whether enforcement is sought in a proceeding at law or in
equity). Neither the Company nor any of its Subsidiaries is in default, except
as would not reasonably be expected to have a Material Adverse Effect, in any
respect under any Contract of the Company and its Subsidiaries, nor, to Parent's
Knowledge, is any other party to any such Contract in default thereunder in any
respect.
3.17 Intellectual Property.
(a) Schedule 3.17(a) sets forth an accurate and complete list of all
material Patents, registered Marks, pending applications for registrations of
any Marks, registered
17
Copyrights, and pending applications for registration of Copyrights, owned or
filed by the Company or any of its Subsidiaries.
(b) The Company or its Subsidiaries is the sole and exclusive owner of all
right, title and interest in and to all of the Patents, the registered Marks,
and each of the registered Copyrights and pending applications filed by the
Company or its Subsidiary therefor, and each of the other Copyrights in any
works of authorship prepared by or for the Company or its Subsidiary that
resulted from or arose out of any work performed by or on behalf of the Company
or by any employee, officer, consultant or contractor of any of them. To
Parent's Knowledge and except as would not reasonably be expected to have a
Material Adverse Effect, the Company and its Subsidiaries is the sole and
exclusive owner of, or has valid and continuing rights to use, sell or license,
as the case may be, all other Intellectual Property used, sold or licensed by
the Company or its Subsidiaries in their businesses as presently conducted, free
and clear of all Encumbrances.
(c) To Parent's Knowledge, and except as would not reasonably be expected
to have a Material Adverse Effect, the Intellectual Property owned, used,
practiced or otherwise commercially exploited by the Company or its Subsidiaries
in connection with, their businesses as presently conducted (the "Company
Intellectual Property") do not constitute an unauthorized use or
misappropriation of any Patent, Copyright, trade secret or other equivalent
right, of any Person and do not infringe, constitute an unauthorized use of, or
violate any other right of any Person. The Intellectual Property owned by or
licensed to the Company or its Subsidiaries, or as to which the Company or its
Subsidiaries otherwise possess valid and continuing rights for use, includes all
of the material intellectual property rights necessary to enable the Company and
its Subsidiaries to conduct their businesses in the manner in which such
businesses are currently being conducted.
(d) Neither the Company, nor any of its Subsidiaries: (i) is a party to
any suit, action or proceeding which involves a claim of infringement or
misappropriation of any Patent, Copyright or trade secret right by the Company
or any of its Subsidiaries against any third party; (ii) has provided written
notice to any third party alleging infringement or misappropriation of the
Company's and its Subsidiaries' Patents, Copyrights or trade secrets; (iii) is a
party to any suit, action or proceeding which involves a claim of infringement
or misappropriation of any Patent, Copyright or trade secret by a third party
against the Company or any of its Subsidiaries; (iv) except as would not
reasonably be expected to have a Material Adverse Effect, has received any
written notice from any third party alleging infringement or misappropriation of
such third party's Patents, Copyrights or trade secrets. To Parent's Knowledge
and except as would not reasonably be expected to have a Material Adverse
Effect, the manufacturing, marketing, licensing, use or sale of the products or
the performance of the services offered by the Company and its Subsidiaries in
the ordinary course of its respective businesses as presently conducted do not
currently infringe, and have not infringed, upon any Patent, Copyright or trade
secret right of any third party.
18
(e) No trade secret or any other non-public, proprietary information
material to the Business as presently conducted has been authorized to be
disclosed or, to Parent's Knowledge, has been actually disclosed by the Company
or any of its Subsidiaries to any employee or any third party other than
pursuant to a non-disclosure agreement or employment policy restricting the
disclosure and use of such trade secret or non-public proprietary information.
Except as would not reasonably be expected to have a Material Adverse Effect,
the Company and its Subsidiaries have taken adequate security measures to
protect the secrecy and confidentiality of all trade secrets and any other
material confidential information of the Company and its Subsidiaries which
measures are reasonable in the industry in which the Company and its
Subsidiaries operate.
(f) The Company and its Subsidiaries have not received written notice from
any current or prior officers, employees, or Contractors of the Company and its
Subsidiaries claiming any ownership interest in any Company Intellectual
Property as a result of having been involved in the development of such property
while employed by or performing services for the Company or its Subsidiaries.
(g) Except as would not reasonably be expected to have a Material Adverse
Effect, the Company's unmodified version of its material software that is
marketed and licensed by the Company and its Subsidiaries to its customers (the
"Products") conforms in all material respects with the documentation prepared,
marketed and licensed by the Company in respect of such Products. Except as
would not reasonably be expected to have a Material Adverse Effect: (i) there
are no defects, malfunctions or nonconformities in the unmodified version of the
Products that cause the unmodified version of the Products, as properly
installed, not to perform the material functions for which they are intended, on
the whole, as provided in the Company's documentation, and (ii) there are no
errors in any documentation, specifications, manuals, and user guides associated
with or used or produced in the development, maintenance or marketing of the
Company Intellectual Property.
3.18 Affiliate Transactions. Except as contemplated by the Intercompany
Agreements, and except for arrangements between the Parent or its Subsidiaries
(other than the Company and its Subsidiaries) on the one hand, and the Company
and its Subsidiaries on the other hand, which do not involve payments by any
party of more than $500,000 annually in the aggregate and which do not restrict
the ability of the Company and its Subsidiaries to engage in any line of
business in any geographic area, no stockholder, officer, or director of the
Company or any of its Subsidiaries, or to Parent's Knowledge, any member of his
or her immediate family, or any Person controlled by any of the foregoing
Persons (collectively, "Related Persons") (i) owes any amount to the Company or
any of its Subsidiaries nor does the Company or any of its Subsidiaries owe any
amount (other than employment compensation or benefits), or has it committed to
make any loan or extend or guarantee credit to or for the benefit of, any
Related Person, (ii) has made any claim or cause of action or any action, suit,
or proceeding whatsoever against the Company or any of its Subsidiaries, (iii)
to Parent's Knowledge, (other than through stock ownership in a public company)
has any direct or indirect ownership interest in, or is an officer, director,
employee, consultant, or agent of, any Person that
19
has a business relationship with the Company (or any of its Subsidiaries) or
that competes with the Company or any of its Subsidiaries, or (iv) owns,
directly or indirectly, in whole or in part, any real property, leasehold
interests, or other property or any Permits, the use of which is necessary for
the conduct of the business of the Company or its Subsidiaries as currently
conducted and as proposed to be conducted. To the Company's Knowledge, no
Related Person has any direct or indirect (other than through stock ownership in
a public company) interest in any Contract to which the Company or its
Subsidiaries is a party or by which it is bound.
3.19 Assets and Properties. The Company and each of its Subsidiaries has
good and marketable title to its assets and properties, and a valid leasehold
interest in leasehold estates, free and clear of all Encumbrances, other than
(i) Permitted Encumbrances and (ii) those that have arisen in the ordinary
course of business consistent with past practice and that do not materially
impair the ownership or use of such assets or properties. Such assets and
properties are in such operating condition and repair as is suitable for the
uses for which they are used in the business of the Company and its
Subsidiaries, are not subject to any condition which materially interferes with
the use thereof by the Company or its Subsidiaries, as the case may be, and,
together with rights under the Intercompany Agreements, constitute all assets,
properties, interests in properties and rights necessary to permit the Company
and its Subsidiaries to carry on their business after the Closing substantially
as conducted by the Company and its Subsidiaries prior thereto.
3.20 Insurance. The Company and each of its Subsidiaries has in full force
and effect all insurance policies, with coverage, in customary amounts (subject
to reasonable deductibles), sufficient to provide adequate insurance coverage
for all of the assets and properties of the Company and its Subsidiaries for all
material risks in compliance with all applicable Laws, Orders, and Permits.
There are no pending claims against any such insurance policy as to which the
insurers have denied liability.
3.21 Tax Matters.
(a) (i) All income, franchise and other material Tax Returns required to
be filed by or with respect to the Company, any of its Subsidiaries or any
Affiliated Group of which the Company or any of its Subsidiaries is or was a
member have been properly prepared and duly and timely filed with the
appropriate taxing authorities in all jurisdictions in which such Tax Returns
are required to be filed (after giving effect to any valid extensions of time in
which to make such filings); (ii) all amounts of Taxes due and payable by or
with respect to the Company, any of its Subsidiaries or any Affiliated Group of
which the Company or any of its Subsidiaries is or was a member for any periods
prior to (A) the date of this Agreement have been fully and timely paid or
accrued on the consolidated balance sheet of the Company and its Subsidiaries
dated November 30, 2004 previously delivered by Parent to Purchasers and
attached hereto as Schedule 3.21(a)(ii)(A), and (B) the last day of the month
immediately preceding the Closing Date will have been fully and timely paid or
accrued in the financial statements delivered to Purchasers pursuant to Section
5.11 (provided that such accruals are made
20
consistent with past practice, in accordance with GAAP and reflect only Taxes
properly allocable to the Company and its Subsidiaries (as opposed to those
allocable to Parent and its Subsidiaries other than the Company and its
Subsidiaries), unless being contested in good faith by the Company or its
Subsidiaries (such contested matters and the exposure thereunder as of the date
of this Agreement are set forth on Schedule 3.21(a) and such contested matters
arising after the date of this Agreement and prior to the Closing Date shall be
adequately reserved for in the financial statements delivered to Purchasers
pursuant to Section 5.11); and (iii) with respect to any taxable period prior to
the Closing Date for which (A) Tax Returns have not yet been filed, or (B) Taxes
not yet due or owing, the Company and its Subsidiaries will have made due and
sufficient current accruals for any such Taxes on the financial statements
delivered to Purchasers pursuant to Section 5.11.
(b) The Company and each of its Subsidiaries have complied in all material
respects with all applicable Laws relating to the payment and withholding of
Taxes and have duly and timely withheld from employee salaries, wages, other
compensation, and other amounts of Taxes and have paid over to the appropriate
taxing authorities all amounts required to be so withheld and paid over for all
periods (including portions thereof) ending on or prior to the Closing Date
under all applicable Laws.
(c) The Company has delivered or made available to Purchasers true and
complete copies of (i) all federal, state, local, and foreign income and
franchise Tax Returns of the Company and each of its Subsidiaries (or, in the
case of Tax Returns filed for an Affiliated Group, the portion of such
consolidated Tax Returns relating to the Company and its subsidiaries) relating
to the taxable periods since December 31, 2000, and (ii) any audit report issued
within the last three years relating to Taxes due from or in respect of the
Company or any of its Subsidiaries.
(d) To Parent's Knowledge, with respect to the Company and its
Subsidiaries no claim has been made by a taxing authority in a jurisdiction
where the Company or any of its Subsidiaries does not file a type of Tax Return
such that it is or may be subject to that type of Tax in that jurisdiction.
(e) To Parent's Knowledge, with respect to the Company and its
Subsidiaries, there are no current audits or investigations by any taxing
authority in progress, nor has the Company or any of its Subsidiaries received
written notice from any taxing authority that it intends to conduct such an
audit or investigation. No agreement, waiver or other document or arrangement
extending or having the effect of extending the period for assessment or
collection of Taxes (including any applicable statute of limitation), has been
executed or filed with the IRS or any other taxing authority by or on behalf of
the Company or any of its Subsidiaries and no power of attorney in respect of
any Tax matter is currently in force.
(f) Neither the Company, any of its Subsidiaries nor any other Person on
any of their behalf has (i) agreed to or is required to make any adjustments
pursuant to Section 481(a) of the Code or any similar provision of Law by reason
of a change in
21
accounting method initiated by the Company or any of its Subsidiaries or has any
knowledge that the IRS or any other taxing authority has proposed any such
adjustment or change in accounting method, or has any application pending with
any taxing authority requesting permission for any changes in accounting methods
that relate to the business or operations of the Company or any of its
subsidiaries, or (ii) executed or entered into a closing agreement pursuant to
Section 7121 of the Code or any predecessor provision thereof or any similar
provision of Law in respect of the Company or any of its Subsidiaries.
(g) Neither the Company nor its Subsidiaries is a party to any tax sharing
agreement or arrangement, or any other agreement relating to the allocation of
responsibility for any Tax, pursuant to which it will have any obligation to
make any payments after the Closing.
(h) There are no Encumbrances (other than Permitted Encumbrances) as a
result of any unpaid Taxes upon any of the assets of the Company or its
Subsidiaries.
(i) Neither the Company nor any of its Subsidiaries has constituted a
"distributing corporation" or a "controlled corporation" (within the meaning of
Section 355(a)(1)(A) of the Code) in a distribution of shares qualifying for
tax-free treatment under Section 355 of the Code (i) in the two (2) years prior
to the date of this Agreement or (ii) in a distribution that could otherwise
constitute part of a "plan" or "series of related transactions" (within the
meaning of Section 355(e) of the Code) in conjunction with this acquisition. All
distributions of shares by, or consisting of shares of, the Company, any of its
Subsidiaries or any member of an Affiliated Group of which the Company or any of
its Subsidiaries is or was a member, purporting to qualify for tax-free
treatment under Section 355 of the Code so qualified.
(j) Neither the Company nor any of its Subsidiaries has constituted a
"U.S. real property holding company" within the meaning of Section 897(c)(2) of
the Code at any time during the last five years.
(k) To Parent's knowledge, after due inquiry, neither the Company nor any
of its Subsidiaries has engaged in any "reportable transaction" within the
meaning of Treasury Regulation Section 1.6011-4.
(l) As of the date of this Agreement, the Company and its Subsidiaries, in
the aggregate, own intangible assets that are amortizable for federal income tax
purposes with a tax basis equal to at least $1,000,000,000.
3.22 Employee Benefit Plans.
(a) Schedule 3.22(a) sets forth a true and complete list of all "employee
benefit plans" (as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")), and any employee benefit plans,
agreements, arrangements, programs or payroll practices (including, without
limitation, severance
22
pay, vacation pay, company awards, salary continuation for disability, sick
leave, retirement, deferred compensation, equity-based, bonus or other incentive
compensation, stock purchase arrangements or policies, hospitalization, medical
insurance, life insurance, and scholarship programs) maintained by the Company
or any of its Subsidiaries or to which the Company or any of its Subsidiaries
contributes or is obligated to contribute thereunder in respect of any current
or former employee of the Company or any of its Subsidiaries or with respect to
which the Company or any of its Subsidiaries could otherwise have any liability
(contingent or otherwise), including any liability that results from the Company
or any of its Subsidiaries being considered a single employer or under common
control with any entity (whether incorporated or not) under Section 414(b), (c),
(m) or (o) of the Code (an "ERISA Affiliate") (in each case, any of the
foregoing, whether domestic or foreign "Employee Benefit Plans"). The Company
disclosure letter identifies, in separate categories, Employee Benefit Plans
that are (i) subject to Sections 4063 and 4064 of ERISA ("Multiple Employer
Plans"), (ii) multiemployer plans (as defined in Section 4001(a)(3) of ERISA)
("Multiemployer Plans"), or (iii) "benefit plans" within the meaning of Section
5000(b)(1) of the Code providing continuing benefits after the termination of
employment (other than as required by Section 4980B of the Code, Part 6 of Title
I of ERISA or comparable state or local Laws and at the former employee's or his
or her beneficiary's sole expense).
(b) Except as would not reasonably be expected to result in a Material
Adverse Effect, each of the Employee Benefit Plans intended to qualify under
Section 401 of the Code ("Qualified Plans") so qualify and the trusts maintained
thereto are exempt from federal income taxation under Section 501 of the Code,
and, to Parent's Knowledge, nothing has occurred in respect of the operation of
any such plan that could cause the loss of such qualification or exemption or
the imposition of any liability, penalty, or tax under ERISA or the Code.
(c) All contributions and premiums required by Law or by the terms of any
Employee Benefit Plan have been timely made (without regard to any waivers
granted in respect thereof) to any funds or trusts established thereunder or in
connection therewith, and no accumulated funding deficiencies exist in any of
such plans subject to Section 412 of the Code.
(d) The benefit liabilities (as defined in Section 4001(a)(16) of ERISA),
of each of the Employee Benefit Plans subject to Title IV of ERISA using the
actuarial assumptions that would be used by the Pension Benefit Guaranty
Corporation (the "PBGC") in the event it terminated each such plan do not exceed
the fair market value of the assets of each such plan. The liabilities of each
Employee Benefit Plan that has been terminated or otherwise wound up, have been
fully discharged in full compliance with applicable Law.
(e) During the 12-month period ending on the date hereof, no "reportable
event" (as defined in Section 4043 of ERISA and the regulations thereunder) for
which the 30-day reporting requirement has not been waived or extended has
occurred with
23
respect to any of the Employee Benefit Plans subject to Title IV of ERISA, nor
has any event requiring notice to be provided under Section 4041(c)(3)(C) or
4063(a) of ERISA.
(f) There has been no violation of ERISA in respect of the filing of
applicable returns, reports, documents, and notices regarding any of the
Employee Benefit Plans with the Secretary of Labor or the Secretary of the
Treasury or the furnishing of such notices or documents to the participants or
beneficiaries of the Employee Benefit Plans or Pension Plans that would
reasonably be expected to result in a Material Adverse Effect.
(g) True and complete copies of the following documents, in respect of
each of the Employee Benefit Plans that, after the Closing, the Company or any
if its Subsidiaries will maintain, contribute to, or have any liability with
respect to (as applicable), have been delivered to Purchaser (i) any plans and
related trust documents, and all amendments thereto, (ii) the most recent Forms
5500 for the past three years and schedules thereto, (iii) the most recent
financial statements and actuarial valuations for the past three years, (iv) the
most recent IRS determination letter, (v) the most recent summary plan
descriptions (including letters or other documents updating such descriptions),
and (vi) written descriptions of all material non-written agreements relating to
such Employee Benefit Plans.
(h) There is no pending claim, action, suit, or proceeding that has been
asserted or instituted against any Employee Benefit Plan , the assets of any
such plans, the Company, any of its Subsidiaries, or the plan administrator or
any fiduciary of the Employee Benefit Plans in respect of the operation of such
plans (other than routine, uncontested benefit claims) and no Employee Benefit
Plan is under audit or is the subject of any audit or investigation by any
Governmental Entity, and there are no facts or circumstances that could form the
basis for any such claim, action, suit, proceeding or audit, in each case,
except to the extent it would not reasonably be expected to result in a Material
Adverse Effect.
(i) Each of the Employee Benefit Plans has been maintained, in all
material respects, in accordance with its terms and all provisions of applicable
Law. All amendments and actions required to bring each of the Employee Benefit
Plans into conformity in all material respects with all of the applicable
provisions of ERISA and other applicable Laws have been made or taken except to
the extent that such amendments or actions are not required by Law to be made or
taken until a date after the Closing Date. Except to the extent it would not
reasonably be expected to result in a Material Adverse Effect, neither the
Company nor any of its Subsidiaries has incurred or reasonably expects to incur,
either directly or indirectly (including as a result of an indemnification
obligation), any liability under Title I or IV of ERISA or the penalty, excise
tax or joint and several liability provisions of the Code or any foreign law or
regulation relating to employee benefit plans (including, without limitation,
Section 406, 409, 502(i), 502(1), 4069 or 42 12(c) of ERISA, or Section 4971,
4975 or 4976 of the Code), or under any agreement, instrument, statute, rule or
legal requirement pursuant to or under which the Company or any of its
Subsidiaries or any Employee Benefit Plan or Pension Plan has agreed to
indemnify or is required to indemnify any person against
24
liability incurred under, or for a violation or failure to satisfy the
requirements of any such legal requirement, and to the knowledge of the Company,
no event, transaction or condition has occurred, exists or is expected to occur
which could result in any such liability to the Company or any of its
Subsidiaries after the Closing.
(j) The Company, each of its Subsidiaries, and any ERISA Affiliate that
maintains a "benefits plan" (within the meaning of Section 5000(b)(1) of ERISA)
have complied with the notice and continuation requirements of Section 4980B of
the Code or Part 6 of Title I of ERISA and the applicable regulations
thereunder, except to the extent that failure to so comply would not reasonably
be expected to result in a Material Adverse Effect.
(k) None of the Company, any of its Subsidiaries, any ERISA Affiliate or
any organization to which any is a successor or parent corporation, has divested
any business or entity maintaining or sponsoring a defined benefit pension plan
having unfunded benefit liabilities (within the meaning of Section 4001(a)(18)
of ERISA) or transferred any such plan to any Person other than the Company, any
of its Subsidiaries, or any ERISA Affiliate during the five-year period ending
on the Closing Date.
(l) To Parent's Knowledge, neither the Company nor any of its Subsidiaries
nor any "party in interest" or "disqualified person" in respect of the Employee
Benefit Plans has engaged in a "prohibited transaction" (within the meaning of
Section 4975 of the Code or Section 406 of ERISA) that would not reasonably be
expected to result in a Material Adverse Effect.
(m) None of the Company, any Subsidiary, or any ERISA Affiliate has
terminated any Employee Benefit Plan subject to Title IV of ERISA, or incurred
any outstanding liability under Section 4062 of ERISA to the PBGC or to a
trustee appointed under Section 4042 of ERISA and no Person (including without
limitation the Pension Benefit Guaranty Corporation) has instituted any
proceeding to terminate any Employee Benefit Plan or Pension Plan or appoint a
trustee to administer any such Employee Benefit Plan or Pension Plan, in each
case, except to the extent it would not reasonably be expected to result in a
Material Adverse Effect.
(n) Other than the granting of stock options pursuant to the Stock
Incentive Plan, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
payment becoming due to any employee of Company or any of its Subsidiaries, (ii)
increase any benefits otherwise payable under any Employee Benefit Plan or
Pension Plan, or (iii) result in the acceleration of the time of payment,
funding or vesting of any such benefits.
(o) No stock or other security issued by Company or any of its
Subsidiaries forms or has formed a material part of the assets of any Employee
Benefit Plan.
(p) There is no contract, agreement, plan or arrangement covering any
Person that, individually or collectively, could give rise to the payment of any
amount after the
25
Closing Date by the Company or any Subsidiary that would not be deductible by
the party making such payment by reason of Section 280G of the Code, or would
constitute compensation in excess of the limitation set forth in Section 162(m)
of the Code.
(q) Except to the extent it would not reasonably be expected to result in
a Material Adverse Effect, each Foreign Plan, to the extent requiring
qualification under any applicable governmental laws or authority, is so
qualified. According to the actuarial assumptions and valuations most recently
used for the purposes of funding each Foreign Plan (or, if the same has no such
assumptions and valuations or is unfunded, according to actuarial assumptions
and valuations in use by the PBGC on the date hereof), as of October 12, 2004
the total amount or value of the funds available under each such Foreign Plan to
pay benefits accrued thereunder or segregated in respect of such benefits,
together with any reserve or accrual with respect thereto, exceeded the present
value of all benefits (contingent or otherwise) accrued as of such date of all
participants and past participants therein in respect of which the Company or
any of its Subsidiaries has or would have after the Closing Date any obligation.
For purposes hereof, the term "Foreign Plan" shall mean an Employee Benefit Plan
with respect to current or former employees of the Company or any of its
Subsidiaries employed outside the United States.
3.23 Labor and Employment Matters.
(a) Except with respect to the Company's Kordoba Subsidiary, neither the
Company nor any of its Subsidiaries is a party to any labor or collective
bargaining agreement, and no employees of the Company or any of its Subsidiaries
are represented by any labor organization. Within the preceding three years,
there have been no material representation or certification proceedings, or
petitions seeking a representation proceeding, pending or, to Parent's
Knowledge, threatened to be brought or filed with the National Labor Relations
Board or any other labor relations tribunal or authority. Within the preceding
three years, to Parent's Knowledge, there have been no organizing activities
involving the Company or any of its Subsidiaries in respect of any group of
employees of Company or any of its Subsidiaries.
(b) There are no strikes, work stoppages, slowdowns, lockouts, material
arbitrations, or material grievances or other material labor disputes pending
or, to Parent's Knowledge, threatened against or involving the Company or any of
its Subsidiaries.
(c) There are no material unfair labor practice charges, grievances or
complaints pending or, to Parent's Knowledge, threatened by or on behalf of any
employee or group of employees of the Company or its Subsidiaries. There are no
complaints, charges, or claims against the Company or its Subsidiaries pending
or, to Parent's Knowledge, threatened to be brought or filed with any
Governmental Entity based on, arising out of, in connection with, or otherwise
relating to the employment or termination of employment of any individual by the
Company or its Subsidiaries.
26
(d) To Parent's Knowledge, no officer or key employee, or any group of key
employees, currently intends to terminate his, her, or their employment with the
Company or any of its Subsidiaries. The employment of each officer and U.S.
employee of the Company and its Subsidiaries is terminable at the will of the
Company or such Subsidiary, as the case may be. To Parent's Knowledge, no
officer, employee, agent, or consultant of the Company or any of its
Subsidiaries is in violation of any material term of any employment, consultant,
non-disclosure, non-competition, confidentiality, or other equivalent agreement.
3.24 Real Property.
(a) Schedule 3.24(a) sets forth and complete list of (i) the real property
owned in fee by the Company or any of its Subsidiaries (the "Owned Real
Property") and (ii) all real property leased by the Company or any of its
Subsidiaries (the "Leased Real Property" and together with the Owned Real
Property and all other rights or interests of the Company or its Subsidiaries in
real property, the "Real Property"). None of the real property reflected in the
Interim Balance Sheet has been disposed of and no real property has been
acquired by the Company or any of its Subsidiaries since the date of the Interim
Balance Sheet.
(b) The Company and each of its Subsidiaries has good and marketable title
in fee simple to all Owned Real Property, and a valid leasehold interest in all
Leased Real Property, in each case free and clear of all Encumbrances, except
for Permitted Encumbrances.
(c) Each of the leases and subleases relating to the Leased Real Property
is in full force and effect, there is no material default by the Company or any
of its Subsidiaries or, to Parent's Knowledge, by the lessor under any such
lease or sublease.
(d) The structures, plants, improvements, systems, and fixtures located on
each parcel of Owned Real Property and, to Parent's Knowledge, Leased Real
Property comply in all material respects with all Laws, and are in good
operating condition and repair, ordinary wear and tear excepted. Each such
parcel of Owned Real Property and, to Parent's Knowledge, Leased Real Property,
conforms in all material respects with all covenants or restrictions of record
and conforms with all applicable building codes and zoning requirements and
there is not, to Parent's Knowledge, any proposed change in any such
governmental or regulatory requirements or in any such zoning requirements.
3.25 Environmental Matters. Except as would not reasonably be expected to
result in a Material Adverse Effect:
(a) The operations of the Company and each of its Subsidiaries are and
have been in compliance with all applicable Environmental Laws, including
obtaining, maintaining in good standing, and complying with all Permits required
by Environmental Laws ("Environmental Permits"), and no action or proceeding is
pending or, to Parent's Knowledge, threatened to revoke, modify, or terminate
any such Environmental Permit,
27
and, to Parent's Knowledge, no facts, circumstances, or conditions currently
exist that could adversely affect such continued compliance with Environmental
Laws and Environmental Permits or require currently unbudgeted capital
expenditures to achieve or maintain such continued compliance with Environmental
Laws and Environmental Permits.
(b) Neither the Company nor any of its Subsidiaries is the subject of any
outstanding written order or Contract with any Governmental Entity or other
person in respect of any (i) Environmental Laws, (ii) Remedial Action, or (iii)
Release or threatened Release of a Hazardous Material.
(c) No claim has been made or is pending, or to Parent's Knowledge,
threatened against the Company or any of its Subsidiaries alleging either or
both that the Company or any of its Subsidiaries may be in violation of any
Environmental Law or Environmental Permit or may have any liability under any
Environmental Law.
(d) No fact, circumstance, or condition exists in respect of the Company
or any of its Subsidiaries or any property currently or formerly owned,
operated, or leased by the Company or any of its Subsidiaries or any property to
which the Company or any of its Subsidiaries arranged for the disposal or
treatment of Hazardous Materials that could reasonably be expected to result in
the Company or any Subsidiary incurring unbudgeted Environmental Costs and
Liabilities.
(e) There is no investigation of the business, operations, or Real
Property of the Company or any of its Subsidiaries or, to Parent's Knowledge,
previously owned, operated, or leased property of the Company or its
Subsidiaries pending or, to Parent's Knowledge, threatened that could lead to
the imposition of any Environmental Costs and Liabilities or Encumbrances under
any Environmental Law.
(f) To Parent's Knowledge, there is not located at any of the Real
Property any (i) underground storage tanks, (ii) asbestos-containing material,
or (iii) equipment containing polychlorinated biphenyls.
(g) The transactions contemplated by this Agreement do not trigger any
requirements under any federal, state, local or foreign laws, statutes, codes,
ordinances, rules, regulations or other legal requirements relating to the
environment or natural resources which condition the transfer of assets, real
estate or stock on the approval of or the need to notify a Governmental Entity
having jurisdiction over the environment or natural resources, including, but
not limited to the New Jersey Industrial Site Recovery Act and the Connecticut
Transfer Act.
3.26 Material Customers.
(a) The top ten (10) customers of the Company and its Subsidiaries, and
annual revenues related to such customers for each of (i) the 2004 fiscal year
as of October 31, 2004, and (ii) the fiscal year ended December 31, 2003, are
listed by division
28
of the Company on Schedule 3.26(a) (the "Material Customers"). To Parent's
Knowledge, no Material Customer of the Company or its Subsidiaries has given the
Company or its Subsidiaries any written notice terminating, suspending, or
reducing in any material respect, or specifying an intention to terminate,
suspend, or reduce in any material respect in the future, or otherwise
reflecting an adverse change in, the business relationship between such customer
and the Company or its Subsidiaries, there has not been any materially adverse
change in the business relationship of the Company or its Subsidiaries with any
such customer.
(b) Schedule 3.2(b) sets forth the names and annual revenues for each of
(i) the 2004 fiscal year as of September 30, 2004, and (ii) the fiscal year
ended December 31, 2003, of the Material Customers of the Company or any of its
Subsidiaries which have cancelled or terminated their relationships with the
Company during the twelve months prior to the date of this Agreement.
3.27 Corporate Records. The Company has delivered or made available to
Purchaser true and complete copies of its Certificate of Incorporation and
bylaws (in each case as amended to the date of this Agreement). The minute books
previously made available to Purchaser of the Company and each of its
Subsidiaries contain complete and accurate records of all meetings and
accurately reflect all other corporate action of the stockholders and board of
directors (including committees thereof) of the Company and its Subsidiaries to
the date hereof, including all amendments and corrections.
ARTICLE IV
Representations and Warranties of Purchasers
Each of the Purchasers, severally as to itself only, and not jointly,
hereby makes the following representations and warranties to the Company, each
of which is true and correct as of the date hereof:
4.1 Organization. Such Purchaser is a limited partnership, corporation or
a limited liability company duly formed, validly existing, and in good standing
under the Laws of the state of its incorporation or formation, as the case may
be.
4.2 Authorization. Such Purchaser has the requisite partnership, corporate
or limited liability company power, as the case may be, to execute and deliver
this Agreement and each other Transaction Document to be executed by it in
connection with the consummation of the transactions contemplated hereby (the
"Purchaser Documents") and to perform its obligations hereunder and thereunder.
The execution and delivery by such Purchaser of this Agreement and each
Purchaser Document and the performance by it of its obligations hereunder and
thereunder have been (or at the time of execution will be) duly authorized by
all necessary partnership, corporate or limited liability company action, as the
case may be, on the part of such Purchaser. This Agreement has been (and each
Purchaser Document will be) duly executed and delivered by such Purchaser and,
assuming the due execution and delivery of this Agreement and each Purchaser
Document by the other party or parties hereto or thereto, constitutes or will
constitute a
29
valid and binding obligation of such Purchaser enforceable against such
Purchaser in accordance with its terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium, or other equivalent Laws affecting the
enforcement of creditors' rights in general and subject to general principles of
equity (regardless of whether such enforceability is considered in a proceeding
at law or in equity).
4.3 Consents and Approvals. Except as would not have a Purchaser Material
Adverse Effect, no consent, approval, waiver, order, or authorization of, or
registration, declaration, or filing with, or notice to, any Person or
Governmental Entity is required to be obtained or made by or in respect of, such
Purchaser in connection with the execution and delivery of this Agreement or any
Purchaser Document by such Purchaser, the performance by such Purchaser of its
obligations hereunder and thereunder, or the consummation of the transactions
contemplated hereby or thereby, other than the filing of premerger notification
and report forms under the HSR Act and any required filings with insurance
authorities in New York State.
4.4 No Conflicts. Except as would not have a Purchaser Material Adverse
Effect, the execution and delivery of this Agreement does not (and each
Purchaser Document will not), and neither the performance by such Purchaser of
its obligations hereunder and thereunder, nor the consummation of the
transactions contemplated hereby and thereby, will (i) conflict with the
organizational and partnership documents of such Purchaser or (ii) violate any
Order of any Governmental Entity or Law applicable to such Purchaser.
4.5 Brokers' Fees. Neither such Purchaser nor any Person acting on its
behalf has agreed to pay any commission, finder's or broker's fee, or equivalent
payment in connection with the transactions contemplated by this Agreement or
any matter related hereto to any Person for which the Company or any of its
Subsidiaries will be liable, except for the fees and expenses of Bear Xxxxxxx &
Co., Inc., which fees and expenses will be paid out of proceeds from this
Transaction in accordance with Section 2.4 hereof.
4.6 Securities Law Matters; Valid Offering. Such Purchaser is acquiring
the Shares for investment for its own account, and not with a view to, or for
sale in connection with, any distribution thereof. Such Purchaser (either alone
or together with its advisors) has sufficient knowledge and experience in
financial and business matters so as to be capable of evaluating the merits and
risks of its investment in the Shares and is capable of bearing the economic
risks of such investment. Such Purchaser is an "accredited investor" as defined
in Rule 501(a) of Registration D under the Securities Act. Such Purchaser
understands and acknowledges that the Shares have not been registered under the
Securities Act, or the securities Laws of any state or foreign jurisdiction and,
unless so registered, may not be offered, sold, transferred, or otherwise
disposed of except pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act and any
applicable securities Laws of any state or foreign jurisdiction. THL further
represents and warrants to the Parent as to the matters set forth on Schedule
4.6(a). TPG further represents and warrants to the Parent as to the matters set
forth on Schedule 4.6(b).
30
4.7 Sufficiency of Funds. Such Purchaser will have at Closing sufficient
funds available to pay its portion of the Purchase Price, as set forth on
Schedule A attached hereto.
ARTICLE V
Covenants
5.1 Access to Information. Between the date hereof and the Closing Date,
upon prior notice from the Purchasers Representatives to the Company, the
Company will afford to the Purchasers and their representatives reasonable
access during normal business hours to the employees, assets, facilities, and
the books and records of the Company and its Subsidiaries so as to afford
Purchasers a full opportunity to make such review, examination, and
investigation of the Company and its Subsidiaries as Purchasers may desire to
make. Purchasers will be permitted to make extracts from or to make copies of
such books and records as may be reasonably necessary in connection therewith.
Prior to the Closing, the Company will (i) promptly furnish or cause to be
furnished to Purchasers and their representatives such financial and operating
data and other information relating to the Company and its Subsidiaries as
Purchasers or their representatives may reasonably request (including, at the
request of the Purchasers and so long as the Purchasers execute all releases,
waivers and other agreements customary and reasonably requested by KPMG, the
work papers related to the audit of the Company's financial statements for the
year ended December 31, 2004), and (ii) instruct its officers and key employees
and its counsel and independent accountants to cooperate with Purchasers and
their representatives in its investigation of the Company.
5.2 Conduct of the Business.
(a) Except as approved by Purchasers Representatives in writing, between
the date hereof and the Closing Date, the Company will, and will cause its
Subsidiaries to, and Parent shall cause the Company and its Subsidiaries to (i)
conduct the business of the Company and its Subsidiaries only in the ordinary
course of business consistent with past practice, and (ii) use reasonable best
efforts to cooperate with respect to and consummate the Financing.
(b) Between the date hereof and the Closing Date, without limiting the
generality of Section 5.2(a), and except as otherwise expressly provided in this
Agreement, without the prior written consent of the Purchasers Representatives,
neither the Company nor any of its Subsidiaries will take any of the following
actions, and Parent shall cause the Company and its Subsidiaries to refrain from
taking any such actions:
(i) make or incur any capital expenditure (including with respect to
internally developed and purchased software) that has not been approved in
writing or budgeted for prior to the date hereof and, in either case, disclosed
to the Purchasers prior to the date hereof, and which are, in the aggregate, in
excess of $50,000,000, provided, that, if the Closing does not occur by April 1,
2005, such aggregate amount shall be increased by $50,000,000;
31
(ii) acquire, by merger or consolidation, or by purchase of, or
investments in, all or substantially all of the assets or stock of, any business
or any corporation, partnership, joint venture, limited liability company,
association or other business organization or division thereof (or enter into
any agreement other than any non-binding LOI with respect thereto) in excess of
$50,000,000 million prior to Closing in the aggregate; provided that, if the
Closing does not occur by April 1, 2005, such aggregate amount shall be
increased by $50,000,000;
(iii) amend the certificate of incorporation or bylaws of the
Company or any of its Subsidiaries;
(iv) other than in connection with the Financing, sell, lease,
encumber, transfer, or otherwise dispose of any properties or assets, real,
personal or mixed other than in the ordinary course of business consistent with
past practice; except that the scope of this covenant shall not include the
granting of Software licenses or the provision of services by the Company or any
Subsidiary;
(v) other than in connection with the Financing, create, incur,
assume or guarantee any Indebtedness in excess of $50,000,000 in the aggregate;
provided that, if the Closing does not occur by April 1, 2005, such aggregate
amount shall be increased by $50,000,000 (provided that any such Indebtedness
incurred pursuant to this clause (v) shall be for the purpose of effecting
acquisitions);
(vi) except as required in connection with the Financing, prepay any
of its Indebtedness or Capital Leases (other than mandatory and regularly
scheduled payments of principal and interest on existing Capital Leases);
(vii) authorize or issue, or commit to authorize or issue any equity
securities or securities convertible into or exchangeable for any equity
securities of the Company or its Subsidiaries, or grant or issue any options,
warrants, rights, agreements or commitments with respect to the issuance of any
such equity securities;
(viii) enter into any contract or transaction between the Company
and any of its Subsidiaries on the one hand and any stockholder of the Company
or its Affiliates or any other Related Person on the other;
(ix) (A) split, combine, or reclassify any shares of its capital
stock; (B) declare, set aside, or pay any dividend or make any other
distribution or payment (whether in cash, stock, or property or any combination
thereof) in respect of its capital stock or to its stockholders (other than (i)
with respect to Taxes properly allocated to the Company or its Subsidiaries and
arising in any period (or portion thereof) ending on or before the Closing Date,
(ii) amounts due related to intercompany payments or to fund intercompany
allocations by and among Parent and its Subsidiaries (other than the Company and
its Subsidiaries) and the Company and its Subsidiaries in a manner and amount
consistent with past practices and, with respect to Corporate Services only, in
32
amounts not to exceed $4,200,000 per month, or (iii) the Parent Distribution
(collectively, the "Excepted Payments")); (C) make any other actual,
constructive, or deemed distribution in respect of any shares of its capital
stock or otherwise make any payments (other than the Excepted Payments) to
stockholders in their capacity as such; or (D) redeem, repurchase, or otherwise
acquire any securities of the Company or any of its Subsidiaries;
(x) waive any material rights under any Material Contract;
(xi) fail to comply in any material respect with any Law applicable
to the Company or any of its Subsidiaries or their respective assets or
properties;
(xii) take any action, or knowingly omit to take any action, that
would or would reasonably be expected to result in any of the conditions to the
obligations of Purchasers set forth in Section 6.2 not being fully satisfied;
(xiii) increase the rate of compensation of, or pay or agree to pay
any bonus or benefit to, its directors, officers or senior executives, except as
may be required by any existing plan, and except in the ordinary course of
business, consistent with past practice, as part of the Company's and its
Subsidiaries' annual merit cycle provided that, in no event shall any bonuses be
paid for services rendered in 2004 (or agreements to pay any such bonuses be
entered into) in excess of $55,000,000 in the aggregate;
(xiv) enter into, adopt or amend in any material respect any written
employment, severance or change of control agreement or, except as required by
law, adopt or modify any employee retention program or Benefit Plan, make any
contributions to any Benefit Plan not within the ordinary course of business
consistent with past practices, or take any action that results in an
acceleration of vesting or timing of any employee benefit (other than by virtue
of the existing terms thereof);
(xv) enter into any covenants not to compete or any other contracts
or agreements which limit or restrict the ability of the Company or its
Subsidiaries to compete in any line of business in which they currently operate
other than such contracts or agreements entered into in the ordinary course of
business consistent with past practice;
(xvi) change any material election related to Taxes (unless required
by Law), settle or compromise any material Tax liability or agree to any
material adjustment of any Tax attribute, or fail to file any Tax Return when
due or fail to cause such Tax Returns when filed to be complete and accurate in
all material respects;
(xvii) accelerate receivables or delay payables in a manner not
consistent with past practice;
33
(xviii) adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or other
reorganization of either of the Company or of any if its Subsidiaries or
otherwise sell all or substantially all of the assets of the Company or of its
Subsidiaries;
(xix) settle or compromise any pending claim, judicial or
administrative action, suit, proceeding or investigation for more than
$10,000,000 in the aggregate;
(xx) make any change in any material method of accounting or
accounting practice or policy for tax or accounting purposes, other than those
required by GAAP or under applicable Law; or
(xxi) agree or commit to agree (in writing or otherwise) to do any
of the foregoing.
5.3 Intercompany Agreements. Parent and the Company shall use their
reasonable best efforts to (a) identify all of the services that have been
historically provided by Parent to the Company or its Subsidiaries and all other
relationships between the Company or its Subsidiaries and Parent that are
necessary for the Company and its Subsidiaries to continue operating in a manner
that is substantially equivalent to the manner in which they have operated
during the twelve (12) months prior to this Agreement (the "Relationships"), (b)
identify all of the other relationships and agreements between the Company or
its Subsidiaries and Parent that are necessary for the separation of the Company
and its Subsidiaries from the Parent (the "Separation Agreements"), (c)
memorialize in various agreements (the "Intercompany Agreements") the terms and
conditions of each of the Relationships and services to be continued after the
Closing, and (d) enter into the Separation Agreements, in each case in
accordance with the provisions of this Section 5.3. The Relationships to be
covered by the Intercompany Agreements shall include, but shall not be limited
to, corporate services provided by Parent and its Subsidiaries to the Company
and its Subsidiaries (including, without limitation, payroll, employee benefits
and human resources, insurance, expense reimbursement and legal) ("Corporate
Services"), software licenses, information technology ("IT"), intellectual
property cross licenses, joint ownership and development, agency, starter
repository access, title plant maintenance and title plant access (collectively,
"Title Plant"), lease for space at the Company's headquarters, and tax
disaffiliation agreements (which tax disaffiliation agreements shall not alter
or amend any indemnification obligations of Parent under Section 8.2(a)(iii)).
The Intercompany Agreements shall be negotiated between the Company and
Parent as promptly as practicable and prior to the Closing, and shall be in form
and substance reasonably satisfactory to the Parent, the Company and the
Purchasers Representatives. The Purchasers shall have the right to participate
in the negotiations of such Intercompany Agreements and each party will
negotiate in good faith to complete the Intercompany Agreements as contemplated
by this Section 5.3. The Intercompany Agreements shall provide that the costs of
the Corporate Services to and from the
34
Company shall be at each party's cost of providing such services; provided that,
in the case of the Corporate Services provided to the Company, in no event shall
the cost of such services per year exceed an amount equal to (A) $50,000,000
plus (b) commencing in 2006, an amount equal to (x) $50,000,000 times (y) a
percentage equal to one-half of the percentage of any increase in the Company's
and its Subsidiaries revenues over the prior fiscal year. The costs and fees of
all other services and rights under the Intercompany Agreements shall be at the
fair market value thereof that would be obtainable from an unaffiliated third
party. The Parent will agree to provide the Corporate Services (and unless
earlier terminated by the Purchasers) to the Company at all times prior to six
months following the earlier to occur of (i) a Public Offering, and (ii) a Sale
of the Company (as defined in the Stockholders' Agreement). It is anticipated
that any one Corporate Service may be terminated without terminating any other
Corporate Service under the relevant Agreement. The initial term of the agency
agreement shall be 10 years. The initial term of the Title Plant agreement shall
be 10 years. The initial term of the agreement pursuant to which the Company or
one of its Subsidiaries will provide IT services to Parent and its other
Subsidiaries will be 5 years, subject to a 2-year renewal at the option of
Parent. The licensing to the Company and its Subsidiaries of rights to the name
"Fidelity" shall be on a royalty-free basis, and for an initial 20-year term.
Notwithstanding anything herein to the contrary, the parties will cooperate and
use reasonable best efforts to agree upon terms designed to facilitate the
Purchasers' objectives with respect to the extension or termination of any
Intercompany Agreement or portions thereof upon a Sale of the Company or a
Public Offering.
5.4 All Reasonable Efforts; Further Assurances. Subject to the terms and
conditions hereof, each of the parties hereto shall use its reasonable best
efforts to take, or cause to be taken, all actions, and do, or cause to be done,
as promptly as practicable, all things necessary, proper, or advisable under
applicable Law to consummate and make effective as promptly as reasonably
practicable the transactions contemplated hereby, including, but not limited to,
obtaining all approvals, consents, waivers and authorizations set forth on
Schedule 6.1(h), executing the agreements in the forms set forth as Exhibits
hereto and consummating the Financing and the Parent Distribution. At and from
time to time after the Closing, at the request of any party hereto, the other
party shall execute and deliver such additional certificates, instruments, and
other documents and take such other actions as such party may reasonably request
in order to consummate the transactions contemplated by this Agreement.
5.5 Approvals.
(a) Each party hereto shall proceed diligently and in good faith and shall
use its reasonable best efforts to obtain, as promptly as practicable, (i) all
authorizations, consents, orders and approvals of all Governmental Entities that
may be or become necessary for such party's execution and delivery of, and the
performance of its obligations pursuant to, this Agreement and the other
Transaction Documents, including, without limitation, all authorizations or
waivers required under the HSR Act and by the New York State Department of
Insurance, and (ii) all approvals and consents required under all Contracts to
which the Company or any of its Subsidiaries is a party to
35
consummate the transactions contemplated hereby. Each party will cooperate fully
(including, without limitation, by providing all information the other party
reasonably requests) with the other parties in promptly seeking to obtain all
such authorizations, consents, orders and approvals. Notwithstanding anything to
the contrary in this Section 5.5, the Parent and the Company shall not be
required to agree to (i) the divestiture (including through a licensing
arrangement) by the Parent or any of the Parent's Subsidiaries (including the
Company and its Subsidiaries) of any of their respective businesses, product
lines or assets, or (ii) the imposition of any limitation on the ability of any
of them to conduct their business or to own or exercise control of such assets,
properties and stock, each, a "Restraint". All filing fees required to be paid
in connection with any filing under the HSR Act shall be expenses of the
Purchasers. Notwithstanding anything herein to the contrary, in obtaining any
consent required hereunder, the Purchasers shall not be required to consent to
any restrictions on or any other Restraint on their businesses or those of their
Affiliates nor to modify any term of (i) their investment in the Company or (ii)
the Transaction Documents in any material respect.
(b) Each party hereto shall promptly inform the other party of any
communication from any Governmental Entity regarding any of the transactions
contemplated by this Agreement. If any party or Affiliate thereof receives a
request for additional information or documentary material from any such
Governmental Entity in respect of the transactions contemplated hereby, then
such party will endeavor in good faith to make, or cause to be made, as soon as
reasonably practicable and after consultation with the other party, an
appropriate response in compliance with such request.
5.6 Public Announcements. The Company and Parent, on the one hand, and the
Purchasers Representatives, on the other hand, will consult with each other and
will mutually agree (the agreement of each party not to be unreasonably
withheld) upon the content and timing of any press release or other public
statement in respect of the transactions contemplated hereby and shall not issue
any such press release or make any such public statement prior to such
consultation and agreement, except as may be required by applicable Law or the
rules or regulations of any exchange on which a party or its Affiliates'
securities are listed or quoted; provided, however, that the Company and Parent,
on the one hand, and the Purchasers, on the other hand, will give prior notice
to the other party of the content and timing of any such press release or other
public statement.
5.7 Notification. From the date hereof through the Closing Date, the
Company and Parent will notify the Purchasers' Representatives of any change,
circumstance, condition, development, effect, event, fact, or result in respect
of the business, operations, financial condition, results of operations, assets
or liabilities, of the Company or its Subsidiaries that, individually or in the
aggregate, has resulted in or could reasonably be expected to result in a
Material Adverse Effect.
5.8 Exclusivity. At all times prior to the termination of this Agreement
in accordance with the terms hereof, the Company and Parent shall not, and shall
cause their
36
officers, directors, employees, agents, advisors and other representatives not
to, directly or indirectly:
(a) solicit offers for, respond to any unsolicited offers for, enter into
or conduct any negotiations with any other Person in respect of, or consummate
or enter into any agreement, arrangement or understanding in respect of, a (i)
sale of any securities of the Company or any material assets of the Company
(other than sales of the Company's products and services in the ordinary course
of business) or (ii) recapitalization, restructuring, merger, consolidation or
other business combination involving the Company; or
(b) disclose any non-public information relating to the business
operations or affairs of the Company to any Person, afford any such other Person
access to the books, records, information or assets of the Company, or otherwise
assist or encourage any such other Person in connection with any proposed (i)
acquisition of any securities or material assets of the Company (other than
sales of the Company's products and services in the ordinary course of business)
or (ii) recapitalization, restructuring, merger, consolidation or other business
combination involving the Company.
5.9 Confidentiality. Each party hereto agrees that such party will hold,
and will use all commercially reasonable efforts to cause its officers,
directors, members, managers, partners, employees, accountants, counsel,
consultants, advisors, financial sources, financial institutions, and agents
(the "Representatives") to hold, in confidence in accordance with the
Non-Disclosure Agreements all confidential information and documents received
from the other party hereto and the parties hereby agree that the Non-Disclosure
Agreements are not superseded and shall remain in effect pursuant to its terms.
5.10 Transfer Taxes. The Company shall pay all sales, use, transfer,
stamp, conveyance, value added, or other equivalent taxes, duties, excises, or
governmental charges imposed by any domestic or foreign taxing authority and all
recording and filing fees, notorial fees, and other equivalent costs in
connection with the issuance, sale or delivery of the Securities and shall
indemnify and hold harmless Purchasers without limitation as to time against any
and all liabilities in respect thereof.
5.11 Financial Statements. (a) Between the date hereof and the Closing
Date, the Company shall deliver to the Purchasers, (i) as soon as reasonably
practicable in accordance with normal practice after the end of each month,
unaudited combined balance sheets of the Company and its Subsidiaries as of the
end of such month (commencing with the delivery of such statements for the month
of November, 2004) and combined statements of income for such month and for the
period commencing at the end of the previous fiscal year and ending with the end
of such month, setting forth in each case in comparative form the corresponding
figures for the corresponding period of the preceding fiscal year, all in
reasonable detail (the "Monthly Financials"), and (ii) promptly after they are
available, the audited combined balance sheet of the Company and its
Subsidiaries at and for the fiscal year ending December 31, 2004 and the related
37
combined statements of income, cash flows and stockholders' equity for the
period then ending, together with the report of KPMG LLP with respect thereto
(the "2004 Statements"); (b) The 2004 Statements shall be prepared in accordance
with GAAP, consistent with past practices and shall fairly present the combined
financial condition, assets and liabilities, results of operations, cash flows,
and changes in stockholders' equity of the Company and its Subsidiaries as of
the dates, and for the periods, indicated therein; and (c) The Monthly
Financials shall be prepared in accordance with GAAP, consistent with past
practices.
5.12 Parent Board Approval. On or prior to January 7, 2005, the Parent
shall hold a meeting of its Board of Directors for the purpose of approving the
Transaction and the consummation of the transactions contemplated by this
Agreement and the Company Documents.
5.13 Non-Competition Agreements. The Parent shall use reasonable best
efforts to obtain, in connection with option grants to such persons, amendments
to the existing non-competition agreements (or covenants, in those circumstance
where the non-compete is contained in an employment agreement) of each of Xxxx
Xxxxxx, Xxxxx Xxxxx, Xxxxxxx Xxxxxxx, Xxxxxxx Xxxxxxx, Xxxx Xxxxxxxx and Xxxxx
Xxxxxxx to cover not only Fidelity Information Services, Inc., but also Fidelity
National Information Services, Inc. and all of its Subsidiaries.
ARTICLE VI
Conditions Precedent to Closing
6.1 Conditions Precedent to the Company's Obligations. The obligation of
the Company to consummate the issuance and sale of the Shares as contemplated
hereby on the Closing Date is subject to the satisfaction or waiver by the
Company of the following conditions:
(a) Accuracy of Representations and Warranties. The representations and
warranties of the Purchasers contained herein shall be true and correct as of
the date hereof and as of the Closing, with the same effect as if made at and as
of such time (except to the extent expressly made as of a date other than the
date of this Agreement, in which case such representations and warranties shall
be true and correct only as of such date), except where the failure of such
representations and warranties to be so true and correct (without giving effect
to any limitation as to "Purchaser Material Adverse Effect" qualifiers set forth
therein) does not have, and would not reasonably be likely to have a Purchaser
Material Adverse Effect. The representations and warranties contained in Section
4.6 shall be true and correct as of the date hereof and as of the Closing, with
the same effect as if made at and as of such time.
(b) Performance of Covenants. The Purchasers shall have performed and
complied, in all material respects, with the covenants and provisions of this
Agreement required to be performed or complied with by them between the date
hereof and the Closing Date.
38
(c) Closing Deliveries. The Purchasers shall have delivered to the Company
each item set forth in Section 7.2 required to be delivered by the Purchasers on
or before the Closing Date.
(d) Approvals. No judgment, order, decree, statute, law, ordinance, rule
or regulation, entered, enacted, promulgated, enforced or issued by any court or
other Governmental Entity of competent jurisdiction or other legal restraint or
prohibition (collectively, "Restraints") shall be in effect, and there shall not
be pending or threatened any suit, action or proceeding by any Governmental
Entity (i) preventing the consummation of the transactions contemplated by the
Transaction Documents, (ii) prohibiting or limiting the ownership or operation
by the Company or the Parent and their respective Subsidiaries of any portion of
the business or assets of the Company or the Parent and their respective
Subsidiaries taken as a whole, or compelling the Company or the Parent and their
respective Subsidiaries to dispose of or hold separate any portion of the
business or assets of the Company or the Parent and their respective
Subsidiaries, taken as a whole, as a result of the transactions contemplated by
the Transaction Documents or (iii) which otherwise would reasonably be likely to
have a Material Adverse Effect.
(e) Litigation. No action, suit, or proceeding shall have been initiated
or threatened with the probable or reasonably likely effect of enjoining or
preventing the consummation of the transactions contemplated hereby or seeking
damages on account thereof.
(f) HSR Act. All applicable waiting periods, if any, in respect of the
transactions contemplated hereby under the HSR Act shall have expired or
terminated.
(g) Financing. The Company shall have received the funds contemplated by,
and on terms no worse to the Company than those set forth in, the Financing Term
Sheet and the Parent Distribution shall have been made.
(h) Consents and Waivers. All approvals, authorizations, consents, and
waivers of any Person or Governmental Entity set forth on Schedule 6.1(h) that
are required in connection with the execution and delivery of any Transaction
Document, the performance of the parties of their obligations hereunder or
thereunder, and the consummation of the transactions contemplated hereby and
thereby shall have been duly obtained and effective prior to or as of the
Closing Date.
(i) Minimum Purchase. The Company shall have received payment from the
Purchasers of the aggregate Purchase Price.
(j) Parent Board Approval. The Parent's Board of Directors shall have
approved the Transaction and the consummation of the transactions contemplated
by this Agreement and the Company Documents and such approval have been obtained
by January 7, 2004 (the "Parent Board Approval").
39
6.2 Conditions Precedent to Purchasers' Obligations. The obligation of
each Sponsor Group to consummate the transactions contemplated hereby shall be
contingent upon the other Sponsor Group simultaneously performing its
obligations hereunder. Notwithstanding anything to the contrary contained
herein, if a Sponsor Group does not perform its obligations under this Agreement
(the "Defaulting Sponsor Group"), the non-Defaulting Sponsor Group shall have
the right (but not the obligation) to (a) extend the Closing Date by 10 business
days, and (b) assume the obligations of such Defaulting Sponsor Group for its
own behalf, or the behalf of any of its Affiliates, provided that such
Affiliates shall enter into this Agreement and the other Purchaser Documents to
which the Defaulting Sponsor Group was or would have been a party. In addition,
the obligation of each Purchaser to consummate the purchase of the Shares from
the Company as contemplated hereby is subject to the satisfaction or waiver by
such Purchaser on the Closing Date of the following conditions:
(a) Accuracy of Representations and Warranties. The representations and
warranties of Parent (i) contained in Article III, other than those referred to
below in clause 6.2(a)(ii), shall be true and correct as of the date hereof and
as of the Closing, with the same effect as if made at and as of such time
(except to the extent expressly made as of a date other than the date of this
Agreement, in which case such representations and warranties shall be true and
correct only as of such date), except where the failure of such representations
and warranties to be so true and correct (without giving effect to any "Material
Adverse Effect" qualifiers set forth therein) does not have, and would not
reasonably be likely to have a Material Adverse Effect, and (ii) contained in
each of Section 3.1, 3.2, 3.3, 3.6, 3.7, 3.8, 3.9, 3.10, 3.11 and 3.21 (the "No
MAE Reps") shall be true and correct in all material respects (without giving
effect to any limitation as to "Material Adverse Effect" qualifiers set forth
therein) as of the date hereof and as of the Closing, with the same effect as if
made at and as of such time (except to the extent expressly made as of a date
other than the date of this Agreement, in which case such representations and
warranties shall be true and correct only as of such date).
(b) Performance of Covenants. The Company and Parent shall have performed
and complied, in all material respects, with the covenants and provisions of
this Agreement required to be performed or complied with by them between the
date hereof and the Closing Date.
(c) Approvals. No Restraints shall be in effect, and there shall not be
pending or threatened any suit, action or proceeding by any Governmental Entity
(i) preventing the consummation of the transactions contemplated by the
Transaction Documents, (ii) prohibiting or limiting the ownership or operation
by the Company and its Subsidiaries of any portion of the business or assets of
the Company and its Subsidiaries or compelling the Company and its Subsidiaries
to dispose of or hold separate any portion of the business or assets of the
Company and its Subsidiaries as a result of the transactions contemplated by the
Transaction Documents or (iii) which otherwise would reasonably be likely to
have a Material Adverse Effect.
40
(d) Closing Deliveries. The Company and Parent shall have delivered to the
Purchasers each item set forth in Section 7.1 required to be delivered by the
Company or Parent on or before the Closing Date.
(e) Litigation. No action, suit, or proceeding shall have been initiated
or threatened with the probable or reasonably likely effect of enjoining or
preventing the consummation of the transactions contemplated hereby or seeking
damages on account thereof.
(f) HSR Act. All applicable waiting periods, if any, in respect of the
transactions contemplated hereby under the HSR Act shall have expired or
terminated.
(g) Consents and Waivers. All approvals, authorizations, consents, and
waivers of any Person or Governmental Entity set forth on Schedule 6.1(h) that
are required in connection with the execution and delivery of any Transaction
Document, the performance of the Company of its obligations hereunder or
thereunder, and the consummation of the transactions contemplated hereby and
thereby shall have been duly obtained and effective prior to or as of the
Closing Date.
(h) Board of Directors. Each member of Xxxxxx X. Xxxxxxx, Xxxx Xxxxx,
Xxxxxxxx Xxxxxx and Xxxxxxxx Xxxxxx shall have been duly nominated and elected
to the Board of Directors of the Company ("Board of Directors"), and Xxxxxxx X.
Xxxxx, XX shall have been elected as Chairman of the Board of Directors.
(i) D&O Insurance. Purchasers shall have received evidence reasonably
satisfactory to them that the Company has in place a directors' and officers'
liability insurance policy for directors of the Company, with coverage of at
least $50.0 million and of a scope that is customary for companies equivalent to
the Company in terms of size and industry.
(j) Assignments. Parent shall have assigned to the Company, or one of its
subsidiaries, as appropriate, the inventions referred to as "AQUA", "SCORE" and
"ATOMS" and related patent applications with respect thereto and such
assignments shall have been filed with the United States Patent and Trademark
office ("USPTO"). Additionally, Parent shall have filed documentation with the
USPTO indicating that the 24 registered trademarks and 3 trademark applications
set forth on Annex 6.2(j) hereto (the "LSI Marks"), which are currently on file
with the USPTO as owned by Lender's Service, Inc., are now owned by LSI Title
Company, and setting forth accurate chain of title thereto.
(k) Intentionally Left Blank.
(l) Incentive Plan. The Company shall have adopted the 2005 Stock
Incentive Plan, in substantially the form attached hereto as Exhibit C. Shares
of the Company's Common Stock, representing 7.5% of the Company's outstanding
Common Stock, on a
41
fully diluted basis immediately after the Closing, shall have been reserved for
issuance under such Plan.
(m) Financing; Repayment of Indebtedness. The Company shall have received
the funds contemplated by, and on terms no worse to the Company than those set
forth in, the Financing Term Sheet, and the Purchasers shall have received
evidence satisfactory to them that all of the Company's Indebtedness (other than
with respect to Capital Leases and the Financing) shall have been repaid and all
liens securing such Indebtedness shall have been released. Except as imposed by
the Financing, there shall be no Encumbrances (other than Permitted
Encumbrances) on any of the assets of the Company or its Subsidiaries on the
Closing Date.
(n) Indemnification Agreements. The Company shall have entered into a
separate Indemnification Agreements between the Company and each director
designated by the Purchasers, each substantially in the form of Exhibit H
attached hereto.
(o) Cash Management Systems. The Company shall have established treasury
and cash management systems and controls that are reasonably acceptable to
Purchasers and separate and apart from those of Parent.
(p) Minimum Cash. The Company and its Subsidiaries shall have cash and
cash equivalents (excluding cash held at Kordoba) of at least $120,000,000 after
giving effect to the payment by the Company of the intercompany payable of
$106.7 million reflected on Schedule 3.11 hereto (provided the Financing has
occurred and including at least $70.0 million of proceeds funded to the balance
sheet from the proceeds of the Financing and this Transaction), as certified by
a Certificate on behalf of the Company delivered by the Chief Financial Officer
of Parent. Such minimum amount will be adjusted downward to reflect the use of
cash to make acquisitions that have been approved in advance by the Purchasers.
(q) EBITDA. Excluding any extraordinary items, including write-offs of
intangibles, the Company's EBITDA for the year ended December 31, 2004 shall be
at least $558.0 million, as certified by a Certificate on behalf of the Company
delivered by the Chief Financial Officer of Parent.
(r) Parent Board Approval. On or prior to January 7, 2005, the Parent
Board Approval shall have been obtained.
(s) Permits. On or before the Closing Date, Company shall have obtained
state licenses (i) to conduct its title insurance business in Iowa, Oregon, Utah
and Washington, and (ii) to conduct its escrow business in Alaska, Arizona,
Hawaii, Idaho, Iowa, Oregon, South Dakota, Utah and Washington.
42
ARTICLE VII
Closing Deliveries
7.1 Items to Be Delivered by the Company. At the Closing, each of the
Parent and the Company shall deliver to the Purchasers:
(a) Stock Certificates. One or more validly issued stock certificates to
each Purchaser representing the Shares to be acquired by such Purchaser duly
executed by the appropriate officers of the Company.
(b) Certified Charter. A certified copy of the Certificate of
Incorporation (or equivalent operational document) of the Company, certified by
the Secretary of State of Delaware, as of a date no earlier than ten (10) days
prior to the Closing.
(c) Good Standing. A certificate of good standing of the Company issued by
the Secretary of State of Delaware.
(d) Officer's Certificate. A certificate, dated as of the Closing Date,
duly executed on behalf of each of Parent and the Company by the President and
the Secretary of each of Parent and the Company certifying that the conditions
set forth in Sections 6.2(a) and (b), have been fully satisfied.
(e) Independent Accountants' Review. The combined balance sheet of the
Company and its Subsidiaries as of September 30, 2004 and the related statements
of earnings, equity and comprehensive earnings and cash flows for the nine (9)
month period then ended, including an Independent Accountants' Review Report
issued by KPMG LLP in accordance with Statements on Standards for Accounting and
Review Services issued by the American Institute of Certified Public Accountants
shall have been delivered to Purchasers.
(f) Transaction Documents. Executed versions of each of the other
Transaction Documents to which it is a party.
7.2 Items to Be Delivered by Purchasers. At the Closing, Purchasers shall
deliver to the Company:
(a) Purchase Price. The Purchase Price in accordance with Section 2.2.
(b) Transaction Documents. Executed versions of each of the other
Transaction Documents to which it is a party.
(c) Officer's Certificates. A certificate, dated as of the Closing Date,
duly executed by the Purchasers certifying that the conditions set forth in
Sections 6.1(a), and (b) have been fully satisfied.
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ARTICLE VIII
Survival and Indemnification
8.1 Survival of Representations, Warranties, and Covenants.
(a) The representations and warranties of the Parent and the Purchasers
contained in this Agreement and in any certificate delivered pursuant hereto
shall survive until the date that is 45 days after receipt by the Purchasers of
the consolidated audited financial statements of the Company and its
Subsidiaries for the fiscal year ending December 31, 2005 (provided, however,
that representations and warranties made in Sections 3.2, 3.5, 3.6, 3.7, 3.8,
3.21, the third sentence of 3.22(i), 4.2, 4.5 and 4.6 shall survive until sixty
(60) days after any applicable statute of limitations or indefinitely if no such
statute of limitations is applicable). Any claim for indemnification in respect
of any representation or warranty that is not asserted by notice given as herein
provided relating thereto prior to the expiration of the specified period of
survival shall not be pursued and is hereby irrevocably waived after the
expiration of such period of survival. Any claim for an Indemnifiable Loss in
respect of such a breach asserted within such period of survival as herein
provided will be timely made for purposes hereof.
(b) Unless a specified period is set forth in this Agreement (in which
event such specified period will control), the covenants in this Agreement will
survive and remain in effect indefinitely.
8.2 Indemnification.
(a) Parent shall indemnify, defend, and hold harmless the Purchasers, the
Company and their Affiliates (provided however that the Parent shall not be
obligated to indemnify, defend or hold harmless the Company and its Affiliates
at any time after the Purchasers no longer hold any of the Shares (including any
equity securities into which such shares may subsequently be converted or
exchanged into)) from and against any and all Indemnifiable Losses to the extent
relating to, resulting from, or arising out of:
(i) any breach of representation or warranty of Parent under this
Agreement or any certificate delivered in connection herewith;
(ii) any breach or nonfulfillment of any agreement or covenant of
the Company or Parent under this Agreement;
(iii) any and all Taxes imposed on the Company or any of its
Subsidiaries (A) for any taxable year or period (or portion thereof) that
ends on or before the Closing Date (except, with respect to any particular
Tax, to the extent the amount of such Tax has been (1) paid, (2) accrued
on the consolidated balance sheet of the Company and its Subsidiaries
dated November 30, 2004 previously delivered to Purchasers by Parent, (3)
accrued in the financial statements delivered to Purchasers pursuant to
Section 5.11 (the "Accruals") (provided that such Accruals are made
consistent with past practice, in accordance with GAAP
44
and reflect only Taxes properly allocable to the Company and its
Subsidiaries (as opposed to FNF and its Subsidiaries, other than the
Company and its Subsidiaries) and including any amounts distributed under
clause (i) of 5.2(b)(ix) (B) to the extent such distributions exceed the
amounts accrued on the November 30, 2004 or the Accruals, or (4) with
respect to the period commencing the last day of the month immediately
preceding the Closing Date through the Closing Date, Taxes incurred in the
ordinary course of business of the Company and its Subsidiaries), (B)
under Treasury Regulation Section 1.1502-6(a) (or any similar provision of
Law) by reason of being a member of any Affiliated Group on or before the
Closing Date. Parent shall, unless prohibited by applicable Law, cause the
Company and its Subsidiaries to close the taxable period of the Company
and its Subsidiaries as of the close of business on the Closing Date. If
applicable Law does not permit the Company or any of its Subsidiaries to
close its taxable year on the Closing Date, the amount of such Taxes
allocable to the portion of such period ending on the Closing Date shall
(i) in the case of any Taxes based upon or related to income or gross
receipts, be deemed equal to the amount which would be payable if the
relevant taxable period ended on the Closing Date, and (ii) in the case of
any Taxes other than Taxes based upon or related to income or gross
receipts, be deemed to be the amount of such Taxes for the entire period
multiplied by a fraction the numerator of which is the number of days in
the portion of the period ending on the Closing Date and the denominator
of which is the number of days in the entire period. Any allocation of
income or deductions required to determine any Taxes relating to a such
period shall be taken into account as though the relevant taxable period
ended on the Closing Date and by means of a closing of the books and
records of the Company or its Subsidiary, as applicable, as of the close
of the Closing Date; provided that exemptions, allowances or deductions
that are calculated on an annual basis (including, but not limited to,
depreciation and amortization deductions) shall be allocated between the
period ending on the Closing Date and the period after the Closing Date in
proportion to the number of days in each such period.
(iv) Title IV of ERISA solely as a result of the Company being or
having been an ERISA Affiliate of Parent.
The Purchasers shall determine, in their sole discretion, as to whether
the Company, the Purchasers, or any other party entitled to indemnification
pursuant to this Section 8.2(a) shall be the recipient of indemnification
payments made hereunder.
(b) Purchasers shall severally, but not jointly, indemnify, defend, and
hold harmless the Company, the Parent and their Affiliates from and against any
and all Indemnifiable Losses to the extent relating to, resulting from, or
arising out of:
(i) any breach of representation or warranty of such Purchaser under
this Agreement; and
45
(ii) any breach or nonfulfillment of any agreement or covenant of
such Purchaser under this Agreement.
(c) For purposes of determining whether a breach of a representation and
warranty has occurred and for purposes of determining the amount of any
Indemnifiable Loss for all purposes under this Article VIII, each representation
and warranty contained in this Agreement (other than the representation in
Section 3.12(ii)) shall be read without regard to any materiality or Material
Adverse Effect qualifier contained therein.
8.3 Deductible; Maximum Liability. Neither Parent nor the Purchasers shall
be obligated to indemnify and hold harmless their respective Indemnitees under
Section 8.2(a)(i) or Section 8.2(b)(i) unless and until the aggregate amount of
all Indemnifiable Losses by the Indemnitees under such Section 8.2(a)(i) or
Section 8.2(b)(i), as the case may be, exceeds $30.0 million for all
Indemnifiable Losses (the "Deductible"), at which point Parent or the
Purchasers, as the case may be, shall be liable to their respective Indemnitees
for the value of the Indemnitee's claims under Section 8.2(a)(i) or Section
8.2(b)(i), as the case may be, that is in excess of the Deductible, subject to
the limitations set forth in this Article VIII . The maximum aggregate liability
of each of Parent and the Purchasers (considered together in the case of the
Purchasers), as the case may be, to their respective Indemnitees for any and all
Indemnifiable Losses pursuant to this Article VIII shall be $250.0 million (the
"Cap"). Notwithstanding anything to the contrary contained herein, neither the
Deductible nor the Cap shall apply with respect to Indemnifiable Losses to the
extent relating to, resulting from, or arising out of (x) any breach or
nonfulfillment of any agreement or any covenant contained in this Agreement, (y)
any breach of representation or warranty contained in any of Sections 3.2, 3.5,
3.6, 3.7, 3.8, 3.21, the third sentence of 3.22(i), 4.2, 4.5 and 4.6, or any
Indemnifiable Loss under Section 8.2(a)(iii); provided, however, that Parent
shall not be obligated to indemnify and hold harmless any Indemnitee hereunder
for a breach of Section 3.21 or for any Indemnifiable Loss relating to,
resulting from, or arising out of clause (A) of Section 8.2(a)(iii), unless and
until the aggregate amount of all such Indemnifiable Losses under such Section
3.21 and Section 8.2(a)(iii) exceeds $250,000 and then only to the extent of the
Purchase Price, or (z) any Indemnifiable Losses relating to, resulting from or
arising out of ERISA matters set forth in Section 8.1(a)(iv).
8.4 Definitions. As used in this Agreement:
(i) "Indemnitee" means any person entitled to indemnification under this
Agreement;
(ii) "Indemnitor" means any person required to provide indemnification
under this Agreement;
(iii) "Indemnifiable Losses" means any and all damages, losses,
liabilities, obligations, costs, and expenses, and any and all claims, demands,
actions, suits, proceedings, or investigations or appeals by any Person,
including the costs and expenses of any and all assessments, judgments,
settlements, and compromises relating thereto but
46
not including attorneys' fees and expenses in respect thereof and in respect of
establishing the right to indemnification hereunder; provided, however that any
Indemnity Payment (x) made to the Purchasers shall be prorated to reflect only
the Purchasers then percentage ownership interest in the Company, and, shall in
no event include any special or punitive damages (unless in connection with a
Third Party Claim), and (y) shall be net of any (A) amounts actually recovered
(after deducting related costs and expenses) or recoverable by the Indemnitee
for the Indemnifiable Losses for which such Indemnity Payment is made under any
insurance policy, warranty or indemnity from any Person other than a party
hereto, and (B) Tax benefits actually realized by the Indemnitee in respect of
any Indemnifiable Losses for which such Indemnity Payment is made.
(iv) "Indemnity Payment" means any amount of Indemnifiable Losses required
to be paid pursuant to this Agreement; and
(v) "Third-Party Claim" means any claim, action, suit, or proceeding made
or brought by any person that is not a party to this Agreement or an Affiliate
of a party to this Agreement.
8.5 Procedures for Third-Party Claims.
(a) If any Indemnitee receives notice of assertion or commencement of any
Third-Party Claim against such Indemnitee in respect of which an Indemnitor may
be obligated to provide indemnification under this Agreement, the Indemnitee
shall give such Indemnitor reasonably prompt written notice (but in no event
later than 30 days after becoming aware) thereof; provided, however, that no
delay on the part of the Indemnitee in notifying any Indemnitor shall relieve
the Indemnitor from any obligation hereunder unless (and then solely to the
extent) the Indemnitor is actually prejudiced by such delay.
(b) Any Indemnitor will have the right to defend the Indemnitee against
the Third-Party Claim with counsel of its choice reasonably satisfactory to the
Indemnitee so long as (i) the Indemnitor notifies the Indemnitee in writing
within thirty (30) days after the Indemnitee has given notice of the Third-Party
Claim that the Indemnitor will indemnify the Indemnitee from and against any
such Indemnifiable Losses, (ii) the Indemnitor provides the Indemnitee with
evidence reasonably acceptable to the Indemnitee that the Indemnitor will have
the financial resources to defend against the Third-Party Claim and, (iii) the
Indemnitor conducts the defense of the Third-Party Claim actively and
diligently; provided, that, in the event settlement of, or an adverse judgment
in respect of, a Third-Party Claim, is likely, in the good faith judgment of a
Purchaser who is an Indemnitee hereunder, to adversely affect the reputation or
business of such Purchaser or its Affiliates, such Purchaser shall have the
right to defend, at its expense, against such Third-Party Claim with the counsel
of its choice. The Purchasers may also participate in defense of any other
Third-Party Claim at their expense.
(c) So long as the Indemnitor is conducting the defense of the Third-Party
Claim in accordance with Section 8.4(b), (i) the Indemnitee may retain separate
co-
47
counsel at its sole cost and expense and participate in the defense of the
Third-Party Claim, (ii) the Indemnitee will not consent to the entry of any
judgment or enter into any compromise or settlement in respect of the
Third-Party Claim without the prior written consent of the Indemnitor (which
consent will not be unreasonably conditioned, delayed, or withheld), and (iii)
the Indemnitor will not consent to the entry of any judgment or enter into any
compromise or settlement in respect of the Third-Party Claim without the prior
written consent of the Indemnitee (which consent will not be unreasonably
conditioned, delayed, or withheld); provided, however, that, in respect of
clause (iii) above, the Indemnitee may condition such consent upon the delivery
by the claimant or plaintiff to the Indemnitee of a duly executed unconditional
release of the Indemnitee from all liability in respect of such Third-Party
Claim.
(d) In the event any condition set forth in Section 8.4(b) is or becomes
unsatisfied, however, (i) the Indemnitee may defend against, and consent to the
entry of any judgment or enter into any settlement in respect of, the
Third-Party Claim in any manner it reasonably may deem appropriate, provided
that the Indemnitee will consult with and obtain the consent of the Indemnitor
in connection therewith which shall not be unreasonably conditioned, delayed, or
withheld, (ii) the Indemnitor will reimburse the Indemnitee promptly and
periodically for the costs of defending against the Third-Party Claim (including
reasonable attorneys' fees and expenses), and (iii) the Indemnitor will remain
responsible for any Indemnifiable Losses the Indemnitee may suffer resulting
from, arising out of, relating to, in the nature of, or caused by, the
Third-Party Claim to the fullest extent provided in this Section 8.4.
8.6 Direct Claims. The Indemnitor will have a period of thirty (30) days
within which to respond in writing to any claim by an Indemnitee on account of
an Indemnifiable Loss that does not result from a Third-Party Claim (a "Direct
Claim"). If the Indemnitor does not so respond within such 30 day period, the
Indemnitor will be deemed to have rejected such claim, in which event the
Indemnitee will be entitled to pursue such remedies as may be available to the
Indemnitee. In any case where the Purchasers are the Indemnitees, the Purchasers
may bring the claim on behalf of the Purchasers or the Company, in their sole
discretion.
8.7 Sole Remedy. The parties hereto acknowledge and agree that, if the
Closing occurs, their sole and exclusive remedy following the Closing with
respect to any and all claims arising out of or related to the transactions
contemplated by this Agreement shall be pursuant to the provisions set forth in
this Article VIII; provided, however that nothing contained herein shall prevent
an Indemnitee from bringing a claim based on fraud.
8.8 Certain Other Matters. Upon making any Indemnity Payment, Indemnitor
will, to the extent of such Indemnity Payment, be subrogated to all rights of
Indemnitee against any third person (other than an insurance company) in respect
of the Indemnifiable Loss to which the Indemnity Payment related; provided,
however, that (i) Indemnitor shall then be in compliance with its obligations
under this Agreement in respect of such Indemnifiable Loss and (ii) until
Indemnitee fully recovers its
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Indemnifiable payment, any and all claims of the Indemnitor against any such
third person on account of such Indemnity Payment will be subrogated and
subordinated in right of payment to Indemnitee's rights against such third
person. Without limiting the generality or effect of any other provision hereof,
each such Indemnitee and Indemnitor will duly execute upon request all
instruments reasonably necessary to evidence and perfect the above-described
subrogation and subordination rights. Any Indemnity Payment hereunder shall be
treated as an adjustment to the applicable purchase price.
ARTICLE IX
Termination
9.1 Termination. This Agreement may be terminated and the transactions
contemplated hereby abandoned at any time prior to the Closing:
(a) by the written agreement of Purchasers, on the one hand, and the
Company, on the other hand;
(b) by Purchasers or the Company if there shall have been entered a
final, non-appealable order or injunction by any Governmental Entity
prohibiting or restraining the consummation of the transactions
contemplated hereby or any material part hereof;
(c) by the non-breaching party if another party shall have breached
or failed to perform in any material respect any of its representations,
warranties, covenants or other agreements contained in this Agreement,
which breach or failure to perform (A) would give rise to the failure of a
condition to the terminating party's obligations as set forth in Article
VI, and (B) such breach or failure to perform is incapable of being or has
not been cured by the breaching party within 20 calendar days after giving
written notice to the breaching party of such breach or failure to
perform; provided, however that with respect to any breach of the No MAE
Reps, the Parent shall have the right for 10 business days following the
receipt of notice from the Purchasers Representatives of their intent to
terminate this Agreement pursuant to this section, to attempt to cure such
breach prior to the Purchasers being deemed to have any right to terminate
this Agreement pursuant to this section;
(d) by Parent and the Company if any Restraint having any of the
effects set forth in Section 5.5 shall be in effect and shall have become
final and nonappealable (provided that the right to terminate this
Agreement under this Section 9.1(d) shall not be available to any party
who has materially breached any representation, warranty or failed to
fulfill any obligation under this Agreement)
(e) by the Purchasers if the Parent Board Approval is not obtained
by January 7, 2005; and
49
(f) by Purchasers or Parent on or after May 31, 2005, if the Closing
has not occurred prior to such date; provided that the right to terminate
this Agreement under this Section 9.1(f) shall not be available to any
party who has materially breached any representation, warranty or failed
to fulfill any obligation under this Agreement ;and provided further that
if the only condition yet to be satisfied as of May 31, 2005 is the
approval of the New York State Insurance Department, this date shall be
automatically extended until July 31, 2005.
The party desiring to terminate this Agreement pursuant to Section 9.1(b),
9.1(c), or 9.1(d) shall promptly give written notice of such termination to the
other party.
9.2 Effect of Termination. Except for Section 5.6, 5.9 and this Section
9.2 and Article X which shall survive any termination of this Agreement, upon
the termination of this Agreement pursuant to Section 9.1, this Agreement shall
become null and void and of no further force and effect and all obligations of
the parties hereto shall terminate and there shall be no liability or obligation
of any party hereto; provided, however, that nothing herein shall relieve any
party hereto from liability for its default under or breach of any
representation, warranty, covenant, or agreement under this Agreement prior to
such termination (other than a failure to obtain the Parent Board Approval;
provided a Board meeting of Parent has been held in accordance with Section
5.12).
ARTICLE X
Miscellaneous
10.1 Amendments. This Agreement may be amended, modified, or supplemented
only pursuant to a written instrument making specific reference to this
Agreement and signed by each of the parties hereto.
10.2 Assignment. This Agreement and the rights and obligations hereunder
shall not be assigned, delegated, or otherwise transferred (whether by operation
of law (other than a merger), by contract, or otherwise) without the prior
written consent of the Purchasers Representatives hereto; provided, however,
that any Purchaser may, without obtaining the prior written consent of any other
party, assign, delegate, or otherwise transfer its rights and obligations
hereunder to any Affiliate of such Purchaser so long as such Affiliate joins as
a Purchaser party hereto. Any attempted assignment, delegation, or transfer in
violation of this Section 10.2 shall be void and of no force or effect.
10.3 Binding Effect. Except as otherwise expressly provided herein, this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns.
10.4 Counterparts. This Agreement may be executed in multiple
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same instrument.
50
10.5 Entire Agreement. This Agreement (including the Schedules attached
hereto) and the Transaction Documents constitute the entire agreement of the
parties hereto in respect of the subject matter hereof and thereof, and
supersede all prior agreements or understandings, among the parties hereto in
respect of the subject matter hereof and thereof. Except for the representations
and warranties expressly set forth in this Agreement, neither the Company,
Parent, any Purchaser nor any other Person has made and does not hereby make any
express or implied representations or warranties of any nature.
10.6 Fees and Expenses.
(a) The Company shall pay, out of the proceeds of the Purchase Price, all
actual, reasonable and out-of-pocket expenses incurred by or on behalf of the
Purchasers (including, without limitation, legal, accounting and investment
banking fees and expenses) in connection with the preparation, negotiation,
execution, delivery, and performance of this Agreement and each Transaction
Document, including legal and financial diligence relating thereto but in no
event in an amount in excess of $45 million (inclusive of all amounts paid at
Closing under Section 2(a) of the Management Agreement).
(b) The Company shall pay, out of the proceeds of the Purchase Price and
the Transaction, all actual, reasonable and out-of-pocket of the expenses
incurred by or on behalf of the Company and the Parent (including, without
limitation, legal, accounting and investment banking fees and expenses) in
connection with the preparation, negotiation, execution, delivery, and
performance of this Agreement and each Transaction Document and the consummation
of the transactions contemplated hereby and thereby but in no event in an amount
in excess of $10 million. The Company shall pay, out of the proceeds of the
Financing, all actual, reasonable and out of pocket expenses incurred by or on
behalf of the Parent or the Company (including, without limitation, legal,
accounting and investment banking fees, commitment fees and other bank costs,
fee and expenses) in connection with the preparation, negotiation, execution,
delivery, and performance of this Agreement and each Transaction Document,
including legal and financial diligence relating thereto but in no event in an
amount in excess of $50 million.
10.7 Governing Law. This Agreement shall be enforced, governed, and
construed in all respects in accordance with the laws of the State of New York
applicable to contracts executed and performable solely in such state.
10.8 Headings. The article and section headings of this Agreement are for
convenience of reference only and shall not be deemed to alter or affect the
meaning or interpretation of any provision hereof.
10.9 Jurisdiction. The parties hereto agree that any action, suit, or
proceeding seeking to enforce any provision of, or based on any matter arising
out of or relating to, this Agreement or the transactions contemplated hereby
can only be brought in federal
51
court sitting in the Southern District of New York or, if such court does not
have jurisdiction, any state court sitting in the Borough of Manhattan, New York
County, New York, and each of the parties hereto hereby consents to the
jurisdiction of such courts (and of the appropriate appellate courts therefrom)
in any such action, suit, or proceeding and irrevocably waives, to the fullest
extent permitted by Law, any objection that it may now or hereafter have to the
laying of the venue of any such action, suit, or proceeding in any such court or
that any such action, suit, or proceeding that is brought in any such court has
been brought in an inconvenient forum.
10.10 Notices. Any notice, demand, request, instruction, correspondence,
or other document required or permitted to be given hereunder by any party to
the other shall be in writing and delivered (i) in person, (ii) by a nationally
recognized overnight courier service requiring acknowledgment of receipt of
delivery, (iii) by United States certified mail, postage prepaid and return
receipt requested, or (iv) by facsimile, as follows:
If to the Company, to:
Fidelity National Information Services, Inc.
000 Xxxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxx
Facsimile No.: (000)000-0000
If to Parent, to:
Fidelity National Financial, Inc.
000 Xxxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxx
Facsimile No.: (000)000-0000
If to a Purchaser, to:
the addresses set forth on Schedule A
with a copy to (which shall not constitute notice):
Weil, Gotshal & Xxxxxx LLP
000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxx Xxxxxx
Xxxxxxx Xxxxxx
Facsimile No.: 617.772.8333
52
and if to TPG Partners IV, L.P. or its affiliates, with a copy to
(which shall not constitute notice):
Cleary, Gottlieb, Xxxxx & Xxxxxxxx
Xxx Xxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxxxxx
Facsimile: (000) 000-0000
Notice shall be deemed given, received, and effective on: (i) if given by
personal delivery or courier service, the date of actual receipt by the
receiving party, or if delivery is refused on the date delivery was first
attempted; (ii) if given by certified mail, the third day after being so mailed
if posted with the United States Postal Service; and (iii) if given by
facsimile, the date on which the facsimile is transmitted if confirmed by
transmission report during the transmitter's normal business hours, or at the
beginning of the next business day after transmission if confirmed at any time
other than the transmitter's normal business hours. Any person entitled to
notice may change any address or facsimile number to which notice is to be given
to it by giving notice of such change of address or facsimile number as provided
in this Section 10.11. The inability to deliver notice because of changed
address or facsimile number of which no notice was given shall be deemed to be
receipt of the notice as of the date such attempt was first made.
10.11 No Recourse. Notwithstanding any provision of this Agreement to the
contrary, each party hereto agrees that absent fraud, willful misconduct or
intentional misrepresentation, neither it nor any person acting on its behalf
may assert any claim or cause of action against any officer, director,
stockholder, controlling person, manager, member, partner, employer, agent,
representative, or Affiliate of any other party nor their respective officers,
directors, stockholders, controlling persons, managers, members, partners,
employees, agents, or representatives in connection with, arising out of, or
relating to this Agreement, the Transaction Documents, or the transactions
contemplated hereby or thereby.
10.12 Severability. If any provision of this Agreement or the application
of such provision to any person or circumstance shall be held (by a court of
competent jurisdiction) to be invalid, illegal, or unenforceable under the
applicable Law of any jurisdiction, (i) the remainder of this Agreement or the
application of such provision to other persons or circumstances or in other
jurisdictions shall not be affected thereby, and (ii) such invalid, illegal, or
unenforceable provision shall not affect the validity or enforceability of any
other provision of this Agreement.
10.13 Specific Performance. The Parties hereby acknowledge and agree that
if any party fails to perform under this Agreement, monetary damages alone may
not be adequate to compensate the other parties for their injuries. Each party
shall, therefore, in addition to any other remedy that may be available to them,
be entitled to seek to obtain specific performance of this Agreement. If any
action, suit, or proceeding is instituted by a party to enforce this Agreement,
the other parties hereby waive the defense that there is
53
an adequate remedy at law. In the event of a Default by a party that results in
the filing of an action for damages, specific performance, or other remedies,
the winning party shall be entitled to reimbursement by the defaulting party of
all reasonable attorneys' fees and expenses incurred by it.
10.14 Third-Party Beneficiaries. Except as expressly provided in Article
VIII, nothing express or implied in this Agreement is intended or shall be
construed to confer upon or give any Person other than the parties hereto and
their respective permitted assigns any rights or remedies under of by reason of
this Agreement or the transactions contemplated hereby.
10.15 Waiver. Except as otherwise expressly provided herein, the rights
and remedies provided for herein are cumulative and not exclusive of any right
or remedy that may be available to any party whether at law, in equity, or
otherwise. No delay, forbearance, or neglect by any party, whether in one or
more instances, in the exercise or any right, power, privilege, or remedy
hereunder or in the enforcement of any term or condition of this Agreement shall
constitute or be construed as a waiver thereof. No waiver of any provision
hereof, or consent required hereunder, or any consent or departure from this
Agreement, shall be valid or binding unless expressly and affirmatively made in
writing and duly executed by the party to be charged with such waiver. No waiver
shall constitute or be construed as a continuing waiver or a waiver in respect
of any subsequent breach or Default, either of equivalent or different nature,
unless expressly so stated in such writing.
10.16 Purchaser Obligations. All obligations of the Purchasers contained
herein shall be several, not joint.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the undersigned have executed this Stock Purchase
Agreement as of the date first above written.
FIDELITY NATIONAL INFORMATION SERVICES, INC.
By:__________________________________________
Name:________________________________________
Title:_______________________________________
FIDELITY NATIONAL FINANCIAL, INC.
By:__________________________________________
Name:________________________________________
Title:_______________________________________
XXXXXX X. XXX EQUITY FUND V, L.P.
By: THL Equity Advisors V, LLC, its general
partners
By: Xxxxxx X. Xxx Partners, L.P., its sole
member
By: Xxxxxx X. Xxx Advisors LLC, its general
partner
By:__________________________________________
Name:
Title: Managing Director
55
XXXXXX X. XXX PARALLEL FUND V, L.P.
By: THL Equity Advisors V, LLC, its general
partner
By: Xxxxxx X. Xxx Partners, L.P., its sole
member
By: Xxxxxx X. Xxx Advisors LLC, its general
partner
By:__________________________________________
Name:
Title: Managing Director
XXXXXX X. XXX CAYMAN FUND V, L.P.
By: THL Equity Advisors V, LLC, its general
partner
By: Xxxxxx X. Xxx Partners, L.P., its sole
member
By: Xxxxxx X. Xxx Advisors LLC, its general
partner
By:__________________________________________
Name:
Title: Managing Director
XXXXXX X. XXX INVESTORS LIMITED PARTNERSHIP
By: THL Investment Management Corp., its
general partner
By:__________________________________________
Name:
Title:
56
XXXXXX INVESTMENTS EMPLOYEES' SECURITIES
COMPANY I LLC
By: Xxxxxx Investments Holdings, LLC, its
managing member
By: Xxxxxx Investments, LLC, its managing
member
By:__________________________________________
Name:
Title:
XXXXXX INVESTMENTS EMPLOYEES' SECURITIES
COMPANY II LLC
By: Xxxxxx Investments Holdings, LLC, its
managing member
By: Xxxxxx Investments, LLC, its managing
member
By:__________________________________________
Name:
Title:
57
XXXXXX INVESTMENTS HOLDINGS, LLC
By: Xxxxxx Investments, LLC, its managing
member
By:__________________________________________
Name:
Title:
TPG PARTNERS IV, L.P.
By: TPG GenPar IV, L.P., its general partner
By: TPG Advisors IV, Inc., its general
partner
By:__________________________________________
Name:
Title:
TPG PARTNERS III, L.P.
By: TPG GenPar III, L.P., its general partner
By: TPG Advisors III, Inc., its general
partner
By:__________________________________________
Name:
Title:
TPG PARALLEL III, L.P.
By: TPG GenPar III, L.P., its general
partner
By: TPG Advisors III, Inc., its general
partner
By:__________________________________________
Name:
Title:
58
TPG INVESTORS III, L.P.
By: TPG GenPar III, L.P., its general partner
By: TPG Advisors III, Inc., its general
partner
By:__________________________________________
Name:
Title:
FOF PARTNERS III, L.P.
By: TPG GenPar III, L.P., its general partner
By: TPG Advisors III, Inc., its general
partner
By:__________________________________________
Name:
Title:
FOF PARTNERS III-B, L.P.
By: TPG GenPar III, L.P., its general partner
By: TPG Advisors III, Inc., its general
partner
By:__________________________________________
Name:
Title:
TPG DUTCH PARALLEL III, C.V.
By: TPG GenPar Dutch, L.L.C., its general
partner
By: TPG GenPar III, L.P., its general partner
By: TPG Advisors III, Inc., its general
partner
By:__________________________________________
Name:
Title:
59
SCHEDULE A
ALLOCATION AMONG THE PURCHASERS OF 50,000,000 SHARES OF COMMON STOCK OF THE
COMPANY
THL ENTITIES
ENTITY NUMBER OF SHARES PERCENTAGE
------ ---------------- ----------
Xxxxxx X. Xxx Equity Fund V, L.P. 19,256,200.0000 77.0248%
Xxxxxx X. Xxx Parallel Fund V, L.P. 4,996,225.0000 19.9849%
Xxxxxx X. Xxx Equity (Cayman) Fund V, L.P. 265,325.0000 1.0613%
Xxxxxx Investments Holdings, LLC 150,525.0000 0.6021%
Xxxxxx Investments Employees' Securities 129,375.0000 0.5175%
Company I LLC
Xxxxxx Investments Employees' Securities 115,525.0000 0.4621%
Company II LLC
Xxxxxx X. Xxx Investors Limited Partnership 86,825.0000 0.3473%
THL ENTITIES IN TOTAL(1) 25,000,000.0000 100.0000%
TPG ENTITIES
ENTITY NUMBER OF SHARES PERCENTAGE
------ ---------------- ----------
TPG Partners IV, L.P. 15,435,900.0000 61.7436%
TPG Partners III, L.P. 7,593,200.0000 30.3728%
TPG Parallel III, L.P. 991,700.0000 3.9668%
TPG Investors III, L.P. 500,175.0000 2.0007%
FOF Partners III, L.P. 12,025.0000 0.0481%
FOF Partners III-B, L.P. 267,400.0000 1.0696%
TPG Dutch Parallel III, C.V 199,600.0000 0.7984%
TPG ENTITIES IN TOTAL 25,000,000.0000 100.0000%
TOTAL
ENTITY NUMBER OF SHARES PERCENTAGE
------ ---------------- ----------
THL Entities 25,000,000.0000 50.0000%
TPG Entities 25,000,000.0000 50.0000%
TOTAL 50,000,000.0000 100.0000%
---------------
(1) The 25,000,000 shares purchased by the THL entities in the aggregate may be
reallocated among the THL entities prior to Closing.
