<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): August 1, 1999
--------------
Chicago Title Corporation
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(Exact name of registrant as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation)
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1-13995 36-4217886
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(Commission File Number) (IRS Employer Identification Number)
</TABLE>
171 North Clark Street
Chicago, Illinois 60601
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (888) 431-4288
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Item 5. Other Events.
On August 1, 1999, Chicago Title Corporation, a Delaware corporation
(the "Company"), and Fidelity National Financial, Inc., a Delaware corporation
("Fidelity"), entered into an Agreement and Plan of Merger (the "Merger
Agreement"). Pursuant to the Merger Agreement and subject to the terms and
conditions set forth therein, the Company will be merged with and into Fidelity,
with Fidelity being the surviving corporation of such merger (the "Merger"). At
the Effective Time (as defined in the Merger Agreement) of the Merger, each
issued and outstanding share of common stock, par value $1.00 per share, of the
Company ("Company Common Shares") will be converted into the right to receive
merger consideration having a value of $52.00 (subject to certain adjustments)
and consisting of cash and shares of common stock, par value $.0001 per share,
of Fidelity ("Fidelity Common Shares"). Holders of Company Common Shares will
be provided an opportunity to elect to receive the merger consideration in the
form of cash or in the form of Fidelity Common Shares, subject to proration.
The transaction is expected to be completed in the first quarter of 2000,
subject to approval by the stockholders of the Company and Fidelity and to
certain regulatory approvals. The Merger Agreement is attached hereto as
Exhibit 99.1 and is incorporated herein by reference.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits. The following exhibits accompany this Report:
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<CAPTION>
Exhibit Number Exhibit Description
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<S> <C>
99.1 Agreement and Plan of Merger, dated as of
August 1, 1999 (the "Merger Agreement"),
by and between Fidelity National Financial,
Inc. and Chicago Title Corporation.
99.2 List of Contents of Exhibits to the Merger
Agreement.
</TABLE>
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CHICAGO TITLE CORPORATION
Date: August 4, 1999 By: /s/ Paul T. Sands, Jr.
-------------------------------
Paul T. Sands, Jr.
Executive Vice President,
General Counsel and Secretary
<PAGE> 4
Index to Exhibits
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<CAPTION>
Exhibit Number Description of Exhibit
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<S> <C>
99.1 Agreement and Plan of Merger, dated as of August 1,
1999 (the "Merger Agreement"), by and between
Fidelity National Financial, Inc. and Chicago Title
Corporation.
99.2 List of Contents of Exhibits to the Merger
Agreement.
</TABLE>
<PAGE> 1
Exhibit 99.1
Conformed Copy
AGREEMENT AND PLAN OF MERGER
DATED AS OF AUGUST 1, 1999
BY AND BETWEEN
FIDELITY NATIONAL FINANCIAL, INC.
AND
CHICAGO TITLE CORPORATION
<PAGE> 2
TABLE OF CONTENTS
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ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1 Definitions. . . . . . . . . . . . . . . . . . . 1
ARTICLE II THE MERGER . . . . . . . . . . . . . . . . . . . . . 7
Section 2.1 The Merger. . . . . . . . . . . . . . . . . . . . 7
Section 2.2 Certificate of Incorporation and By-laws of the
Surviving Corporation . . . . . . . . . . . . . . . . . . . . 8
Section 2.3 Board of Directors of the Surviving Corporation . 8
Section 2.4 Headquarters . . . . . . . . . . . . . . . . . . 8
Section 2.5 Transition Committee . . . . . . . . . . . . . . 8
ARTICLE III CONVERSION OF SECURITIES AND RELATED MATTERS . . . 9
Section 3.1 Conversion of Capital Stock . . . . . . . . . . . 9
Section 3.2 Fractional Shares; Adjustments . . . . . . . . 14
Section 3.3 Exchange of Certificates. . . . . . . . . . . . 15
Section 3.4 Company Stock Options . . . . . . . . . . . . . 17
Section 3.5 Shares of Dissenting Stockholders . . . . . . . 18
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . 18
Section 4.1 Corporate Existence and Power . . . . . . . . . 18
Section 4.2 Corporate Authorization . . . . . . . . . . . . 18
Section 4.3 Governmental Authorization . . . . . . . . . . 19
Section 4.4 Non-Contravention . . . . . . . . . . . . . . . 19
Section 4.5 Capitalization . . . . . . . . . . . . . . . . 19
Section 4.6 Subsidiaries . . . . . . . . . . . . . . . . . 20
Section 4.7 The Company SEC Documents . . . . . . . . . . . 21
Section 4.8 Financial Statements; Reserves. . . . . . . . . 21
Section 4.9 No Material Undisclosed Liabilities . . . . . . 23
Section 4.10 Information to Be Supplied. . . . . . . . . . 23
Section 4.11 Absence of Certain Changes . . . . . . . . . . 23
Section 4.12 Transactions with Affiliates . . . . . . . . . 24
Section 4.13 Litigation . . . . . . . . . . . . . . . . . . 24
Section 4.14 Taxes . . . . . . . . . . . . . . . . . . . . 24
Section 4.15 Employees and Employee Benefits . . . . . . . 25
Section 4.16 Investment Securities . . . . . . . . . . . . 26
Section 4.17 Compliance with Laws . . . . . . . . . . . . . 26
Section 4.18 Forms of Contract . . . . . . . . . . . . . . 27
Section 4.19 Directors' and Officers' Insurance Policies . 27
Section 4.20 Environmental Matters. . . . . . . . . . . . . 27
Section 4.21 Finders' Fees; Opinion of Financial Advisor. . 28
Section 4.22 Required Vote; Board Approval. . . . . . . . . 28
Section 4.23 State Takeover Statutes . . . . . . . . . . . 28
Section 4.24 Year 2000 Compliance . . . . . . . . . . . . . 29
ARTICLE V REPRESENTATIONS AND WARRANTIES OF FIDELITY . . . . 29
Section 5.1 Corporate Existence and Power . . . . . . . . . 29
Section 5.2 Corporate Authorization . . . . . . . . . . . . 29
Section 5.3 Governmental Authorization . . . . . . . . . . 29
Section 5.4 Non-Contravention . . . . . . . . . . . . . . . 30
Section 5.5 Capitalization of Fidelity. . . . . . . . . . . 30
Section 5.6 Subsidiaries . . . . . . . . . . . . . . . . . 31
Section 5.7 Fidelity SEC Documents. . . . . . . . . . . . . 32
Section 5.8 Financial Statements; Reserves. . . . . . . . . 32
Section 5.9 No Material Undisclosed Liabilities . . . . . . 33
</TABLE>
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Section 5.10 Information to Be Supplied. . . . . . . . . . 34
Section 5.11 Absence of Certain Changes . . . . . . . . . . 34
Section 5.12 Transactions with Affiliates . . . . . . . . . 35
Section 5.13 Litigation . . . . . . . . . . . . . . . . . . 35
Section 5.14 Taxes . . . . . . . . . . . . . . . . . . . . 35
Section 5.15 Employees and Employee Benefits . . . . . . . 36
Section 5.16 Investment Securities . . . . . . . . . . . . 37
Section 5.17 Compliance with Laws . . . . . . . . . . . . . 37
Section 5.18 Forms of Contract . . . . . . . . . . . . . . 38
Section 5.19 Directors' and Officers' Insurance Policies . 38
Section 5.20 Environmental Matters . . . . . . . . . . . . 38
Section 5.21 Finders' Fees; Opinion of Financial Advisor . 38
Section 5.22 Required Vote; Board Approval. . . . . . . . . 39
Section 5.23 Ownership of Company Common Shares . . . . . . 39
Section 5.24 Year 2000 Compliance . . . . . . . . . . . . . 39
Section 5.25 Financing . . . . . . . . . . . . . . . . . . 39
ARTICLE VI COVENANTS OF THE COMPANY . . . . . . . . . . . . . 40
Section 6.1 The Company Interim Operations . . . . . . . . 40
Section 6.2 Stockholder Meeting . . . . . . . . . . . . . . 42
Section 6.3 Acquisition Proposals; Board Recommendation. . 43
Section 6.4 Purchases of Company Common Shares . . . . . . 44
ARTICLE VII COVENANTS OF FIDELITY . . . . . . . . . . . . . . 44
Section 7.1 Fidelity Interim Operations . . . . . . . . . . 44
Section 7.2 Executive Management . . . . . . . . . . . . . 47
Section 7.3 Stockholder Meeting . . . . . . . . . . . . . . 47
Section 7.4 Indemnification, Exculpation and Insurance. . . 47
Section 7.5 Employee Benefits . . . . . . . . . . . . . . . 48
Section 7.6 Stock Exchange Listing . . . . . . . . . . . . 48
ARTICLE VIII COVENANTS OF FIDELITY AND THE COMPANY . . . . . 48
Section 8.1 Reasonable Best Efforts . . . . . . . . . . . . 48
Section 8.2 Certain Filings; Cooperation in Receipt of
Consents. . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 8.3 Public Announcements . . . . . . . . . . . . . 51
Section 8.4 Access to Information; Notification of Certain
Matters. . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 8.5 Payment of Special Dividend . . . . . . . . . . 51
Section 8.6 Further Assurances . . . . . . . . . . . . . . 52
Section 8.7 Tax Matters . . . . . . . . . . . . . . . . . . 52
Section 8.8 Control of Other Party's Business . . . . . . . 52
Section 8.9 Affiliate Letters . . . . . . . . . . . . . . . 52
Section 8.10 Financing . . . . . . . . . . . . . . . . . . 53
ARTICLE IX CONDITIONS TO THE MERGER . . . . . . . . . . . . . 53
Section 9.1 Conditions to the Obligations of Each Party . . 53
Section 9.2 Conditions to the Obligations of the Company . 53
Section 9.3 Conditions to the Obligations of Fidelity . . . 54
ARTICLE X TERMINATION . . . . . . . . . . . . . . . . . . . . 55
Section 10.1 Termination . . . . . . . . . . . . . . . . . 55
Section 10.2 Effect of Termination . . . . . . . . . . . . 57
Section 10.3 Termination Fee and Expenses. . . . . . . . . 57
ARTICLE XI MISCELLANEOUS . . . . . . . . . . . . . . . . . . 58
Section 11.1 Notices . . . . . . . . . . . . . . . . . . . 58
Section 11.2 Survival of Representations, Warranties and
Covenants after the Effective Time . . . . . . . . . . . . 59
</TABLE>
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Section 11.3 Amendments; No Waivers. . . . . . . . . . . . 59
Section 11.4 Successors and Assigns . . . . . . . . . . . . 60
Section 11.5 Governing Law . . . . . . . . . . . . . . . . 60
Section 11.6 Counterparts; Effectiveness; Third Party
Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . 60
Section 11.7 Jurisdiction . . . . . . . . . . . . . . . . . 60
Section 11.8 Waiver of Jury Trial . . . . . . . . . . . . . 60
Section 11.9 Enforcement . . . . . . . . . . . . . . . . . 60
Section 11.10 Entire Agreement . . . . . . . . . . . . . . 61
</TABLE>
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<PAGE> 5
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of August 1, 1999 by and
between Chicago Title Corporation, a Delaware corporation (the "Company"), and
Fidelity National Financial, Inc., a Delaware corporation ("Fidelity").
RECITALS
WHEREAS, the Boards of Directors of the Company and Fidelity each
have determined that a business combination between the Company and Fidelity is
advisable and in the best interests of their respective companies and
stockholders and presents an opportunity for their respective companies to
achieve long-term strategic and financial benefits, and accordingly have agreed
to effect the merger provided for herein upon the terms and subject to the
conditions set forth herein; and
WHEREAS, the parties hereto intend that the merger provided for
herein shall qualify for U.S. federal income tax purposes as a reorganization
within the meaning of Section 368 of the U.S. Internal Revenue Code of 1986, as
amended (together with the rules and regulations promulgated thereunder, the
"Code") (a "368 Reorganization"); and
WHEREAS, by resolutions duly adopted, the respective Boards of
Directors of the Company and Fidelity have approved and adopted this Agreement
and the transactions contemplated hereby.
NOW, THEREFORE, in consideration of the foregoing, and of the
representations, warranties, covenants and agreements contained herein, and
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions.
(a) As used herein, the following terms have the following
meanings:
"AAM" means Alleghany Asset Management, a Delaware corporation.
"AAM Distribution" means the distribution of Alleghany Asset
Management to Alleghany by Chicago Title & Trust Company, a wholly-owned
subsidiary of the Company, in June 1998.
"Acquisition Proposal" means any offer or proposal for, or indication
of interest in, a merger, consolidation, share exchange, business combination,
reorganization, recapitalization, liquidation, dissolution or other similar
transaction involving, or any purchase or acquisition of, 25% or more of (i)
any class of equity securities of the Company
1
<PAGE> 6
or (ii) the consolidated assets of the Company and its Subsidiaries, other than
the transactions contemplated by this Agreement.
"Affiliate" means, with respect to any Person, any other Person,
directly or indirectly, controlling, controlled by, or under common control
with, such Person. For purposes of this definition, the term "Control"
(including the correlative terms "Controlling", "Controlled By" and "Under
Common Control With") means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract, or otherwise.
"Alleghany" means Alleghany Corporation, a Delaware corporation of
which the Company was a wholly-owned subsidiary prior to the distribution of
the Company to stockholders of Alleghany in June 1998.
"Business Combination" means, with respect to the Company, (i) a
merger, reorganization, consolidation, share exchange, business combination,
recapitalization, liquidation, dissolution or similar transaction involving the
Company as a result of which either (A) the Company's stockholders prior to
such transaction (by virtue of their ownership of Company Common Shares) in the
aggregate cease to own at least 50.1% of the voting securities of the entity
surviving or resulting from such transaction (or the ultimate parent entity
thereof), or (B) the individuals comprising the board of directors of the
Company prior to such transaction do not constitute a majority of the board of
directors of the ultimate parent entity after such transaction, or (ii) a sale,
lease, exchange, transfer or other disposition of at least 49.9% of the assets
of the Company and its Subsidiaries, taken as a whole, in a single transaction
or a series of related transactions.
"Business Day" means any day other than a Saturday, Sunday or one on
which banks are authorized by law to close in New York, New York.
"Company Balance Sheet" means the Company's consolidated balance
sheet included in the Company 10-K relating to its fiscal year ended on
December 31, 1998.
"Company Common Share" means one share of common stock of the
Company, $1.00 par value per share.
"Company Proceedings" means the litigation and other proceedings
identified as such on Section 4.13 of the Company Disclosure Schedule.
"Company SEC Documents" means (i) the annual report on Form 10-K of
the Company (the "Company 10-K") for the fiscal year ended December 31, 1998,
(ii) the quarterly report on Form 10-Q of the Company (the "Company 10-Q") for
the fiscal quarter ended March 31, 1999, (iii) the Company's proxy statement
dated March 29, 1999 relating to the 1999 Annual Meeting of Stockholders (the
"Company Proxy Statement"), and (iv) all other reports, filings, registration
statements and other documents filed by the Company with the SEC since June 17,
1998.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
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"Exchange Ratio" means a fraction the numerator of which is the
product of 1.004 and the number of outstanding Fidelity Common Shares
immediately prior to the Effective Time, and the denominator of which is the
number of Merger Shares.
"Fidelity Balance Sheet" means Fidelity's consolidated balance sheet
included in the Fidelity 10-K relating to its fiscal year ended on December 31,
1998.
"Fidelity Common Share" means one share of common stock of Fidelity,
$.0001 par value per share.
"Fidelity Proceedings" means the litigation and other proceedings
identified as such on Section 5.13 of the Fidelity Disclosure Schedule.
"Fidelity SEC Documents" means (i) Fidelity's annual reports on Form
10-K for its fiscal years ended December 31, 1997 and December 31, 1998 (the
"Fidelity 10-Ks"), (ii) Fidelity's quarterly report on Form 10-Q (the "Fidelity
10-Q") for its fiscal quarter ended March 31, 1999, (iii) Fidelity's proxy
statement dated May 10, 1999 relating to the 1999 Annual Meeting of
Stockholders (the "Fidelity Proxy Statement"), and (iv) all other reports,
filings, registration statements and other documents filed by Fidelity with the
SEC since December 31, 1997.
"Governmental Entity" means any federal, state, municipal or local
governmental authority, any foreign or international governmental authority, or
any court, administrative or regulatory agency or commission or other
governmental agency.
"Joint Proxy Statement/Prospectus" means the joint proxy statement/
prospectus including the Registration Statement and the proxy statement for the
Company Stockholders Meeting and the Fidelity Stockholders Meeting, together
with any amendments or supplements thereto.
"knowledge" (and all correlative terms) as to any party means to the
knowledge of such party's executive officers or senior management identified on
Section 1.1 of that party's Disclosure Schedule.
"Law" means all laws, statutes and ordinances and all regulations,
rules and other pronouncements of Governmental Entities having the effect of
law of the United States, any foreign country or any foreign or domestic state,
province, commonwealth, city, country, municipality, territory, protectorate,
possession or similar instrumentality or any Governmental Entity thereof.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset;
provided, however, that the term "Lien" shall not include (i) liens for water
and sewer charges and taxes not yet due and payable or being contested in good
faith (and for which adequate accruals or reserves have been established by the
Company or Fidelity, as the case may be) and (ii) mechanics', carriers',
workers', repairers', materialmen's, warehousemen's and other similar liens
arising or incurred in the ordinary course of business.
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"Material Adverse Effect" means a material adverse effect on the
financial condition, business or results of operations of a Person and its
Subsidiaries, taken as a whole, other than (x) effects caused by (i) changes in
general economic or securities markets conditions, (ii) changes in interest
rate levels, (iii) changes that affect the title insurance industry, (iv) (A)
in the case of the Company, the identity of Fidelity as acquiror of the Company
or the conduct of Fidelity with respect to the transactions contemplated by
this Agreement prior to the Effective Time, or (B) in the case of Fidelity, the
identity of the Company as the acquired party or the conduct of the Company
with respect to the transactions contemplated by this Agreement prior to the
Effective Time, or (v) the public announcement of the transactions contemplated
by this Agreement, or (y) developments in, effects of, or circumstances arising
from, in the case of the Company, the Company Proceedings or, in the case of
Fidelity, the Fidelity Proceedings. "Fidelity Material Adverse Effect" means a
Material Adverse Effect in respect of Fidelity and its Subsidiaries, taken as a
whole, and "Company Material Adverse Effect" means a Material Adverse Effect in
respect of the Company and its Subsidiaries, taken as a whole.
"Merger Shares" means each Company Common Share outstanding
immediately prior to the Effective Time (other than Dissenting Shares as
hereinafter defined) and other than shares to be cancelled in accordance with
Section 3.1(a) hereof.
"Micro General" means Micro General Corporation, a Delaware
corporation of which Fidelity is a controlling stockholder.
"NYSE" means the New York Stock Exchange.
"Person" means an individual, a corporation, a limited liability
company, a partnership, an association, a trust or any other entity or
organization, including any Governmental Entity.
"Registration Statement" means the Registration Statement on Form S-4
registering under the Securities Act the Fidelity Common Shares issuable in
connection with the Merger.
"Revolving Credit Facility" means the Credit Agreement, dated as of
August 1, 1998, by and among Fidelity, Sanwa Bank California and the Lenders
from time to time party thereto, or any similar replacement facility.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
"Subsidiary" when used with respect to any Person, means any other
Person, whether incorporated or unincorporated, of which (i) more than fifty
percent of the securities or other ownership interests or (ii) securities or
other interests having by their terms ordinary voting power to elect more than
fifty percent of the board of directors or others performing similar functions
with respect to such corporation or other organization, is directly owned or
controlled by such Person or by any one or more of its Subsidiaries.
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<PAGE> 9
"Superior Proposal" means a written proposal made by a Person other
than Fidelity which is (A) for a merger, consolidation, share exchange,
business combination, reorganization, recapitalization, liquidation,
dissolution or other similar transaction involving, or any purchase or
acquisition of, that percentage equal to 100% less the Minimum Percentage (as
hereinafter defined) or more of (i) any class of equity securities of the
Company or (ii) the consolidated assets of the Company and its Subsidiaries,
and which is (B) otherwise on terms which the Company's Board of Directors by a
majority vote determines in good faith (after consultation with its investment
advisors and outside legal counsel) would result in a transaction, if
consummated, that is more favorable to the Company's stockholders, from a
financial point of view (taking into account, among other things, all legal,
financial, regulatory and other aspects of the proposal, including conditions
to consummation (which shall not include a financing condition)) than the
transactions contemplated hereby.
"Tax Sharing Agreement" means the Tax Sharing Agreement between the
Company and Alleghany dated as of June 17, 1998.
(b) Each of the following terms is defined in the Section set
forth opposite such term:
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<CAPTION>
Terms Section
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<S> <C>
368 Reorganization Recitals
Aggregate Cash Share Fraction Section 3.1(e)
Allocation of Merger Section 3.1(c)
Consideration
Average Fidelity Common Share Section 3.1(b)
Price
Burdensome Condition Section 8.1
By-law Amendment Section 2.2
Cash Election Section 3.1(d)
Cash Fraction Section 3.1(f)(iii)
Cash Portion Section 3.1(b)(ii)
Certificate Section 3.1(d)
Certificate Amendment Section 2.2
Certificate of Merger Section 2.1(b)
Closing Section 2.1(d)
Code Recitals
Company Preamble
Company 10-K Section 1.1
Company 10-Q Section 1.1
Company Employee Plans Section 4.15(a)
Company GAAP Financial Section 4.8(a)
Statements
Company Insurance Subsidiaries Section 4.6(b)
Company Option Section 3.4(a)
Company Proxy Statement Section 1.1
Company Recommendation Section 6.2
Company Returns Section 4.14
Company Securities Section 4.5(b)
</TABLE>
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<TABLE>
<CAPTION>
Terms Section
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<S> <C>
Company Statutory Financial Statements Section 4.8(b)
Company Stockholder Approval Section 4.22(a)
Company Stockholders Meeting Section 6.2
Company Systems Section 4.24
Confidentiality Agreement Section 6.3(a)
Determination Date Section 3.1(b)
DGCL Section 2.1(a)
Differential Section 3.1(b)(iii)
Dissenting Shares Section 3.5(a)
Effective Time Section 2.1(b)
Election Section 3.1(d)
Election Deadline Section 3.1(i)
End Date Section 10.1(b)(i)
Environmental Laws Section 4.20(b)
ERISA Section 4.15(a)
Exchange Agent Section 3.3(a)
Exchange Fund Section 3.3(a)
Extended End Date Section 10.1(b)(i)
Fidelity Preamble
Fidelity 10-Ks Section 1.1
Fidelity 10-Q Section 1.1
Fidelity Employee Plans Section 5.15(a)
Fidelity GAAP Financial Section 5.8(a)
Statements
Fidelity Insurance Section 5.6(b)
Subsidiaries
Fidelity Option Section 3.4(a)
Fidelity Proxy Statement Section 1.1
Fidelity Returns Section 5.14
Fidelity Securities Section 5.5(b)
Fidelity Statutory Financial Section 5.8(b)
Statements
Fidelity Stockholder Approval Section 5.22(a)
Fidelity Stockholders Meeting Section 7.3
Fidelity Systems Section 5.24
Form of Election Section 3.1(d)
GAAP Section 4.8(a)
Guarantee of Delivery Section 3.1(i)
HSR Act Section 4.3
Maximum Cash Section 3.1(c)
Maximum Shares Section 3.1(c)
Merger Section 2.1(a)
Merger Consideration Section 3.1(c)
Minimum Percentage Section 3.1(c)(i)
Non-Electing Shares Section 3.1(h)(iii)
Non-Election Section 3.1(d)
Non-Election Fraction Section 3.1(h)(iii)
Per Share Cash Amount Section 3.1(e)
</TABLE>
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<TABLE>
<CAPTION>
Terms Section
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<S> <C>
Per Share Stock Amount Section 3.1(e)
Reduced Supplemental Consideration Section 3.1(b)(iii)
Restated By-laws Section 2.2
Restated Certificate Section 2.2
Stock Election Section 3.1(d)
Stock Fraction Section 3.1(g)(iii)
Stock Portion Section 3.1(b)(i)
Supplemental Consideration Section 3.1(b)(iii)
Surviving Corporation Section 2.1(a)
Termination Fee Section 10.3(c)
Transition Committee Section 2.5
Year 2000 Compliant Section 4.24
</TABLE>
ARTICLE II
THE MERGER
Section 2.1 The Merger.
(a) At the Effective Time, the Company shall be merged (the
"Merger") with and into Fidelity in accordance with the terms and conditions of
this Agreement and of the General Corporation Law of the State of Delaware (the
"DGCL"). Following the Effective Time, Fidelity shall be the surviving
corporation (the "Surviving Corporation"), and shall succeed to and assume all
the rights and obligations of the Company in accordance with the DGCL.
(b) Not later than the second Business Day after satisfaction
or, to the extent permitted hereby, waiver of the conditions set forth in
Article IX (other than conditions that by their nature are to be satisfied at
the Closing, but subject to those conditions), the Company and Fidelity will
file a certificate of merger (the "Certificate of Merger") with the Secretary
of State of the State of Delaware and make all other filings or recordings
required by the DGCL in connection with the Merger. The Merger shall become
effective upon the filing of the Certificate of Merger with the Secretary of
State of the State of Delaware in accordance with the DGCL or at such later
time which the parties hereto shall have agreed upon and designated in such
Certificate of Merger as the effective time of the Merger (the "Effective
Time").
(c) From and after the Effective Time, the Merger shall have
the effects set forth in the DGCL.
(d) The closing of the Merger (the "Closing") shall be held at
the offices of Dewey Ballantine LLP, 1301 Avenue of the Americas, New York, NY
(or such other place as agreed by the parties) at 10:00 a.m. New York City time
on a date to be specified by the parties, which shall be no later than the
second Business Day after satisfaction or, to the extent permitted hereby,
waiver of the conditions set forth in Article IX (other than
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conditions that by their nature are to be satisfied at the Closing, but subject
to those conditions), unless the parties hereto agree to another date or time.
Section 2.2 Certificate of Incorporation and By-laws of the
Surviving Corporation. The restated certificate of incorporation of Fidelity,
as in effect immediately prior to the Effective Time, shall be amended as of
the Effective Time as described in Exhibit A-1 hereto and, as so amended, such
restated certificate of incorporation shall be the restated certificate of
incorporation of the Surviving Corporation until thereafter changed or amended
as provided therein or by applicable law (as so amended, the "Restated
Certificate"). The by-laws of Fidelity, as in effect immediately prior to the
Effective Time, shall be amended as of the Effective Time as described in
Exhibit A-2 hereto and, as so amended, such by-laws shall be the by-laws of the
Surviving Corporation until thereafter changed or amended as provided therein
or by applicable law (as so amended, the "Restated By-laws"). Such amendment
and restatement of Fidelity's certificate of incorporation and by-laws are
referred to herein as the "Certificate Amendment" and the "By-law Amendment,"
respectively.
Section 2.3 Board of Directors of the Surviving Corporation.
Prior to the Effective Time, Fidelity shall adopt resolutions to constitute the
Board of Directors of Fidelity and committees thereof from and after the
Effective Time in the manner described in Exhibit B hereto. From and after the
Effective Time, the members of the Board of Directors, the committees of the
Board of Directors and the composition of such committees shall be as set forth
on or designated in accordance with the Restated Certificate, the Restated
By-laws and Exhibit B hereto until the earlier of the resignation or removal of
any individual set forth on or designated in accordance with the Restated
Certificate, the Restated By-laws and Exhibit B or until their respective
successors are duly elected and qualified, as the case may be, or until as
otherwise provided in the Restated Certificate, the Restated By-laws and
Exhibit B.
Section 2.4 Headquarters. Fidelity and the Company agree that
the headquarters of the Surviving Corporation shall be located in Irvine,
California; provided, however, that the Chicago Title and Trust Company
Foundation and the headquarters of certain business segments of the Surviving
Corporation to be mutually agreed by the parties prior to the Effective Time
will be located in Chicago, Illinois.
Section 2.5 Transition Committee. The parties agree to
establish a Transition Committee (the "Transition Committee") which will have a
consultative role and which will be in effect from the date hereof until the
earlier of the termination hereof or the Effective Time. The Transition
Committee shall be comprised of eleven persons, six of whom shall be designated
by Fidelity (including Patrick F. Stone, who shall serve as Chairman of the
Transition Committee), and five of whom shall be designated by the Company. The
Transition Committee will coordinate contacts between officers and employees of
Fidelity and the Company and will plan matters relating to the integration
after the Effective Time of Fidelity and the Company, including organization
and staffing. The Transition Committee will draw upon the resources of
Fidelity and the Company as necessary or appropriate.
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ARTICLE III
CONVERSION OF SECURITIES AND RELATED MATTERS
Section 3.1 Conversion of Capital Stock. At the Effective
Time, by virtue of the Merger:
(a) Each Company Common Share held by the Company as treasury
stock or owned by Fidelity or any of its Subsidiaries immediately prior to the
Effective Time shall be cancelled, and no payment shall be made in respect
thereof.
(b) Subject to Section 3.5 hereof, each Merger Share shall be
cancelled and, at the Effective Time, shall be converted into the right to
receive consideration having a value of $52.00 (unless Fidelity elects to pay
the Reduced Supplemental Consideration (as defined below), in which case the
Company shall have the right to terminate this Agreement as provided in Section
10.1(c)(iii) below), consisting of:
(i) a number of Fidelity Common Shares (the "Stock Portion")
equal to the Exchange Ratio;
(ii) an amount in cash equal to the lesser of (x) $26.00 or (y)
(1) $52.00 less (2) the Stock Portion multiplied by the Average Fidelity
Common Share Price (the "Cash Portion"); and
(iii) to the extent that the sum of (1) the product of the Stock
Portion and the Average Fidelity Common Share Price and (2) the Cash
Portion is less than $52.00 (the "Differential"), then Fidelity shall add
an additional amount (the "Supplemental Consideration"), which at the
election of Fidelity may be in the form of cash, Fidelity Common Shares
(valued at the Average Fidelity Common Share Price), or a combination
thereof, to make up the Differential; provided, however, that if the
Average Fidelity Common Share Price is less than $15.00, then Fidelity
shall elect either (i) to pay the Supplemental Consideration or (ii) to
pay a lesser amount of Supplemental Consideration (the "Reduced
Supplemental Consideration") equal to the amount of the Supplemental
Consideration which Fidelity would be required to pay if the Average
Fidelity Common Share Price were $15.00. Schedule I hereto illustrates
the application of this Section 3.1(b)(iii) at various assumed Average
Fidelity Common Share Prices.
For purposes of this Agreement, "Average Fidelity Common Share Price" shall be
determined on the second trading day immediately prior to the date of the
Effective Time (the "Determination Date") and shall mean the average of the
daily averages of the high and low sales prices of a Fidelity Common Share
(calculated to the nearest 0.0001) on the NYSE Composite Transactions Tape for
the 30 consecutive trading days immediately preceding and including the
Determination Date (or, in the event that there is no trading of Fidelity
Common Share on any day during the 30-trading-day period, for such lesser
number of days within such 30-trading-day period when Fidelity Common Shares
are traded).
(c) The amount of merger consideration payable pursuant to
Section 3.1(b) (which shall be an amount equal to cash and Fidelity Common
Shares having a total
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value of $52.00 or, if Fidelity has elected to pay the Reduced Supplemental
Consideration, an amount equal to $52.00 less the amount such reduction) shall
be referred to herein as the "Merger Consideration." After determining the
aggregate amount of Merger Consideration in accordance with the provisions of
Section 3.1(b) (and giving effect to any determination by Fidelity to pay any
Supplemental Consideration in the form of cash, Fidelity Common Shares or a
combination thereof), a determination shall be made (the "Allocation of Merger
Consideration") as to the total number of Fidelity Common Shares to be paid as
Merger Consideration (the "Maximum Shares") and the total amount of cash to be
paid as Merger Consideration (the "Maximum Cash"), taking into account the
following adjustments:
(i) in the event that the Allocation of Merger Consideration
would result in holders of Merger Shares owning less than that percentage
(the "Minimum Percentage") of whole outstanding Fidelity Common Shares
immediately after the Effective Time as is equal to the sum of (A) 50.1%,
plus (B) that percentage as is equal to (x) the Company Common Shares
issued by the Company (regardless of the consideration, if any, received
by the Company) to any person other than Alleghany, and not repurchased by
the Company directly from such person prior to the Effective Time, divided
by (y) the number of shares of Company Common Shares outstanding
immediately prior to the Effective Time, then if necessary to satisfy the
conditions in Section 9.2(c) or Section 9.3(c) hereof, the foregoing
allocation shall be adjusted (i.e., the Maximum Cash shall be reduced, and
the Maximum Shares shall be increased) such that the holders of the Merger
Shares immediately prior to the Effective Time will acquire at the
Effective Time whole Fidelity Common Shares equal to the Minimum
Percentage of the Fidelity Common Shares outstanding immediately after the
Effective Time;
(ii) after giving effect to any adjustment required pursuant to
the immediately preceding clause (i), if the product of (A) the number of
Fidelity Common Shares to be issued in the Merger and (B) the mean of the
highest and lowest quoted trading price of Fidelity Common Shares on the
date of the Effective Time (such product referred to as "Value of Stock
Consideration") is less than 40% of the sum of the Value of Stock
Consideration and the amount of cash consideration to be issued in the
Merger (such sum referred to as "Value of Merger Consideration"), then the
amount of cash to be issued in the Merger shall be reduced and the amount
of Fidelity Common Shares to be issued in the Merger shall be increased
such that the Value of Stock Consideration is at least equal to 40% of the
Value of Merger Consideration. For purposes of the preceding sentence,
Dissenting Shares, Company Common Shares exchanged for cash in lieu of
fractional shares of Fidelity Common Shares, Company Common Shares owned
by Fidelity or any of its Subsidiaries that will be cancelled in
accordance with Section 3.1(a), and Company Common Shares repurchased by
the Company since January 1, 1999, shall be treated as Company Common
Shares exchanged in the Merger for an amount of cash equal to the purchase
price therefor. The adjustments referred to in this subparagraph (ii)
shall be made in a manner so as to ensure that the Merger qualifies as a
reorganization under Section 368(a) of the Code and that the conditions in
Section 9.2(b) and Section 9.3(b) are satisfied.
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<PAGE> 15
(iii) The foregoing adjustments in subparagraphs (i) and (ii)
shall be applied in a manner such that the sum of (x) the total cash
payable in exchange for each Company Common Share and (y) the product of
the number of Fidelity Common Shares to be issued in exchange for each
Company Common Share multiplied by the Average Fidelity Common Share
Price, shall be equal to the amount of such sum in the absence of any
adjustments under subparagraphs (i) and (ii). For this purpose, the
Average Fidelity Common Share Price shall be equal to $15 if under Section
3.1(b)(iii) Fidelity has elected to pay the Reduced Supplemental
Consideration.
(d) Subject to the allocation and election procedures set forth
in this Section 3.1, each record holder (or beneficial owner through
appropriate and customary documentation and instructions) of Company Common
Shares immediately prior to the Effective Time shall be entitled to elect to
receive the Merger Consideration in respect of such Company Common Shares
entirely in cash (a "Cash Election"), (ii) to elect to receive the Merger
Consideration in respect of such Company Common Share entirely in Fidelity
Common Shares (a "Stock Election"), or (iii) to indicate that such record
holder has no preference as to the receipt of cash, Fidelity Common Shares or a
combination thereof with respect to such holder's Company Common Shares (a
"Non-Election"; and any Cash Election, Stock Election or Non-Election shall be
referred to herein as an "Election"); provided, however, that no holder of
Dissenting Shares shall be entitled to make an Election. All such Elections
shall be made on a form furnished by Fidelity for that purpose (a "Form of
Election") and reasonably satisfactory to the Company. If more than one
certificate which immediately prior to the Effective Time represented
outstanding Company Common Shares (a "Certificate") shall be surrendered for
the account of the same holder, the number of Fidelity Common Shares, if any,
to be issued to such holder in exchange for the Certificates which have been
surrendered shall be computed on the basis of the aggregate number of Company
Common Shares represented by all of the Certificates surrendered for the
account of such holder. Holders of record of Company Common Shares who hold
such Company Common Shares as nominees, trustees or in other representative
capacities may submit multiple Forms of Election, provided that such nominee,
trustee or representative certifies that each such Form of Election covers all
Company Common Shares held for a particular beneficial owner.
(e) For purposes of this Agreement (including without
limitation the election procedures set forth in this Section 3.1), the
following terms shall have the following meanings (after giving effect to
Section 3.1(b) and Section 3.1(c)): (i) the "Aggregate Cash Shares" shall mean
the aggregate number of Company Common Shares which may be converted into the
right to receive the Merger Consideration in the form of cash, and shall be
equal to the product of (A) a fraction (the "Aggregate Cash Share Fraction"),
the numerator of which shall be equal to the amount of cash to be issued in the
Merger and the denominator of which shall be equal to the sum of (x) the amount
of cash to be issued in the Merger and (y) the product of (1) the number of
Fidelity Common Shares to be issued in the Merger and (2) the Average Fidelity
Common Share Price, and (B) the number of Merger Shares; (ii) the "Aggregate
Stock Shares" shall mean the aggregate number of Company Common Shares which
may be converted into the right to receive the Merger Consideration in the form
of Fidelity Common Shares, and shall be equal to the product of (A) one minus
the Aggregate
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<PAGE> 16
Cash Share Fraction and (B) the number of Company Common Shares outstanding
immediately prior to the Effective Time (including Dissenting Shares and shares
owned by Fidelity or any of its Subsidiaries that will be cancelled in
accordance with Section 3.1(a)); (iii) the "Per Share Stock Amount" shall mean
a number of Fidelity Common Shares equal to (A) the Merger Consideration
divided by (B) the Average Fidelity Common Share Price; and (iv) the "Per Share
Cash Amount" shall mean an amount of cash equal to the Merger Consideration.
(f) If the aggregate number of Company Common Shares with
respect to which Cash Elections have been made exceeds the Aggregate Cash
Shares, then:
(i) each Company Common Share with respect to which a Stock
Election shall have been made shall be converted into the right to receive
the Per Share Stock Amount;
(ii) each Company Common Share with respect to which a
Non-Election shall have been made (or deemed to have been made) shall be
converted into the right to receive the Per Share Stock Amount; and
(iii) each Company Common Share with respect to which a Cash
Election shall have been made shall be converted into the right to
receive: (x) the amount in cash, without interest, equal to the product of
(A) the Per Share Cash Amount and (B) a fraction (the "Cash Fraction"),
the numerator of which shall be the Aggregate Cash Shares, and the
denominator of which shall be the aggregate number of Company Common
Shares with respect to which Cash Elections shall have been made, and (y)
the number of Fidelity Common Shares equal to the product of (A) the Per
Share Stock Amount and (B) a fraction equal to one minus the Cash
Fraction.
(g) If the aggregate number of Company Common Shares with
respect to which Stock Elections have been made exceeds the Aggregate Stock
Shares, then:
(i) each Company Common Share with respect to which a Cash
Election shall have been made shall be converted into the right to receive
the Per Share Cash Amount;
(ii) each Company Common Share with respect to which a
Non-Election shall have been made (or deemed to have been made) shall be
converted into the right to receive the Per Share Cash Amount; and
(iii) each Company Common Share with respect to which a Stock
Election shall have been made shall be converted into the right to
receive: (x) the number of Fidelity Common Shares equal to the product of
(A) the Per Share Stock Amount and (B) a fraction (the "Stock Fraction"),
the numerator of which shall be the Aggregate Stock Shares, and the
denominator of which shall be the aggregate number of Company Common
Shares with respect to which Stock Elections shall have been made, and (y)
the amount in cash, without interest, equal to the product of (A) the Per
Share Cash Amount and (B) a fraction equal to one minus the Stock
Fraction.
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<PAGE> 17
(h) In the event that neither Section 3.1(f) nor Section 3.1(g)
is applicable, then:
(i) Each Company Common Share with respect to which a Cash
Election shall have been made shall be converted into the right to receive
the Per Share Cash Amount;
(ii) Each Company Common Share with respect to which a Stock
Election shall have been made shall be converted into the right to receive
the Per Share Stock Amount; and
(iii) Each Company Common Share with respect to which a
Non-Election shall have been made (or deemed to have been made) (the
"Non-Electing Shares"), if any, shall be converted into the right to
receive: (x) an amount in cash, without interest, equal to the product of
(A) the Merger Consideration and (B) a fraction (the "Non-Election
Fraction"), the numerator of which shall be the excess of (1) the
Aggregate Cash Shares over (2) the sum of the aggregate number of Company
Common Shares with respect to which a Cash Election shall have been made,
and the denominator of which shall be the excess of (1) the aggregate
number of Merger Shares over (2) the sum of the aggregate number of
Company Common Shares with respect to which a Cash Election and a Stock
Election shall have been made, and (y) the number of Fidelity Common
Shares equal to the product of (a) the Per Share Stock Amount and (B) a
fraction equal to one minus the Non-Election Fraction multiplied by (B)
the Aggregate Cash Shares less the number of Company Common Shares with
respect to which a Cash Election has been made divided by (C) the number
of Non- Electing Shares, and (y) the number of Fidelity Common Shares
equal to (A) the Exchange Ratio multiplied by (B) the Maximum Stock Shares
less the number of Company Common Shares with respect to which a Stock
Election has been made divided by (C) the number of Non-Electing Shares.
(i) Elections shall be made by holders of Company Common Shares
by delivering the Form of Election to the Exchange Agent (as hereinafter
defined). To be effective, a Form of Election must be properly completed,
signed and submitted to the Exchange Agent by no later than 5:00 p.m. (New York
City time) on the date of the Effective Time (the "Election Deadline"), and
accompanied by (1)(x) the Certificates representing the Company Common Shares
as to which the election is being made or (y) an appropriate guarantee of
delivery of such Certificates as set forth in such Form of Election from a firm
which is a member of a registered national securities exchange or of the
National Association of Securities Dealers, Inc. or a commercial bank or trust
company having an office or correspondent in the United States, provided such
Certificates are in fact delivered to the Exchange Agent within three NYSE
trading days after the date of execution of such guarantee of delivery (a
"Guarantee of Delivery"), and (2) a properly completed and signed letter of
transmittal. Failure to deliver Certificates covered by any Guarantee of
Delivery within three NYSE trading days after the date of execution of such
Guarantee of Delivery shall be deemed to invalidate any otherwise properly made
Cash Election or Stock Election. Fidelity will have the discretion, which it
may delegate in whole or in part to the Exchange Agent, to determine whether
Forms of Election have been properly completed, signed and
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<PAGE> 18
submitted or revoked and to disregard immaterial defects in Forms of Election.
The good faith decision of Fidelity (or the Exchange Agent) in such matters
shall be conclusive and binding. Neither Fidelity nor the Exchange Agent will
be under any obligation to notify any person of any defect in a Form of
Election submitted to the Exchange Agent. A Form of Election with respect to
Dissenting Shares shall not be valid. The Exchange Agent shall also make all
computations contemplated by Sections 3.1(f), 3.1(g) and 3.1(h) above and all
such computations shall be conclusive and binding on the holders of Company
Common Shares in the absence of manifest error. Any Form of Election may be
changed or revoked prior to the Election Deadline. In the event a Form of
Election is revoked prior to the Election Deadline, Fidelity shall, or shall
cause the Exchange Agent to, cause the Certificates representing the Company
Common Shares covered by such Form of Election to be promptly returned without
charge to the Person submitting the Form of Election upon written request to
that effect from such Person.
(j) For the purposes hereof, a holder of Company Common Shares
who does not submit a Form of Election which is received by the Exchange Agent
prior to the Election Deadline (including a holder who submits and then revokes
his or her Form of Election and does not resubmit a Form of Election which is
timely received by the Exchange Agent), or who submits a Form of Election
without the corresponding Certificates or a Guarantee of Delivery, shall be
deemed to have made a Non-Election. Holders of Dissenting Shares shall not be
entitled to make an Election and shall not be deemed to have made a
Non-Election; the rights of such holders of Dissenting Shares shall be
determined in accordance with Section 262 of the DGCL and as provided in
Section 3.5 hereof. If any Form of Election is defective in any manner such
that the Exchange Agent cannot reasonably determine the election preference of
the stockholder submitting such Form of Election, the purported Cash Election
or Stock Election set forth therein shall be deemed to be of no force and
effect and the stockholder making such purported Cash Election or Stock
Election shall, for purposes hereof, be deemed to have made a Non-Election.
(k) A Form of Election and a letter of transmittal shall be
included with or mailed contemporaneously with each copy of the Joint Proxy
Statement/Prospectus mailed to stockholders of the Company in connection with
the Company Stockholders Meeting (as hereinafter defined). Fidelity and the
Company shall each use its reasonable best efforts to mail or otherwise make
available the Form of Election and a letter of transmittal to all persons who
become holders of Company Common Shares during the period between the record
date for the Company Stockholders Meeting and the Election Deadline.
Section 3.2 Fractional Shares; Adjustments.
(a) No certificate or scrip representing fractional Fidelity
Common Shares shall be issued upon the surrender for exchange of Certificates,
and such fractional share interests will not entitle the owner thereof to vote
or to any other rights of a stockholder of Fidelity. Notwithstanding any other
provision of this Agreement, each holder of Company Common Shares exchanged
pursuant to the Merger who would otherwise have been entitled to receive a
fraction of a Fidelity Common Share (after taking into account all Certificates
delivered by such holder) shall receive, in lieu thereof, cash (without
interest) in an amount
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<PAGE> 19
equal to such fractional part of a Fidelity Common Share multiplied by the
Average Fidelity Common Share Price.
(b) If at any time during the period between the Determination
Date and the Effective Time, any change in the outstanding shares of capital
stock of Fidelity or securities convertible or exchangeable into capital stock
of Fidelity shall occur, including by reason of any reclassification,
recapitalization, stock split or combination, exchange or readjustment of
shares, or any dividend or distribution thereon (other than regular quarterly
cash dividends, not in excess of $0.084 per Fidelity Common Share) or a record
date with respect to any of the foregoing shall occur during such period, the
number of Fidelity Common Shares constituting part of the Merger Consideration
shall be appropriately adjusted to provide to the holders of the Fidelity
Common Shares and the Company Common Shares the same economic effect as
contemplated by this Agreement prior to the consummation of such event.
Section 3.3 Exchange of Certificates.
(a) Exchange Agent. Promptly after the date hereof, Fidelity
shall appoint a commercial bank or trust company reasonably acceptable to the
Company, having net capital of not less than $100,000,000, or a subsidiary
thereof, as an exchange agent (the "Exchange Agent") for the benefit of holders
of Company Common Shares. At or immediately prior to the Effective Time,
Fidelity shall deposit with the Exchange Agent, for exchange or payment in
accordance with this Section 3.3, through the Exchange Agent, (i) certificates
evidencing the total number of Fidelity Common Shares to be issued in the
Merger, and (ii) (1) cash in an amount equal to (x) the Per Share Cash Amount
multiplied by (y) the Aggregate Cash Shares, and (2) any cash necessary to pay
amounts due pursuant to Section 3.2(a) and Section 3.5 (such certificates for
Fidelity Common Shares and such cash being hereinafter referred to as the
"Exchange Fund"). The Exchange Agent shall, pursuant to irrevocable
instructions in accordance with this Article III, deliver the Fidelity Common
Shares and cash contemplated to be issued pursuant to this Article III out of
the Exchange Fund. Except as contemplated by Section 3.3(e), Section 3.3(f) or
Section 3.3(g) hereof, the Exchange Fund shall not be used for any other
purpose.
(b) Exchange Procedures. As promptly as practicable after the
Effective Time, Fidelity shall send, or will cause the Exchange Agent to send,
to each holder of record of a Certificate or Certificates that were converted
into the right to receive Fidelity Common Shares and/or cash pursuant Section
3.1, a letter of transmittal and instructions (which shall be in customary form
and specify that delivery shall be effected, and risk of loss and title shall
pass, only upon delivery of the Certificates to the Exchange Agent), for use in
the exchange contemplated by this Section 3.3. Upon surrender of a Certificate
to the Exchange Agent, together with a duly executed letter of transmittal, the
holder of such Certificate shall be entitled to receive in exchange therefor a
certificate representing that number of whole Fidelity Common Shares and/or
cash which such holder has the right to receive pursuant to the provisions of
this Article III (after giving effect to any required withholding tax). Until
surrendered as contemplated by this Section 3.3, each Certificate shall be
deemed at any time after the Effective Time to represent only the right to
receive the Merger Consideration and unpaid dividends and distributions
thereon, if any, as provided in this Article III. If any
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<PAGE> 20
portion of the Merger Consideration is to be paid to a Person other than the
Person in whose name the Certificate is registered, it shall be a condition to
such payment that the Certificate so surrendered shall be properly endorsed or
otherwise be in proper form for transfer and that the Person requesting such
payment shall pay to the Exchange Agent any transfer or other taxes required as
a result of such payment to a Person other than the registered holder of such
Certificate or establish to the satisfaction of the Exchange Agent that such
tax has been paid or is not payable. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the Person
claiming such Certificate to be lost, stolen or destroyed and, if required by
Fidelity, the posting by such Person of a bond, in such reasonable amount as
Fidelity may direct, as indemnity against any claim that may be made against it
with respect to such Certificate, the Exchange Agent will deliver, in exchange
for such lost, stolen or destroyed Certificate, the proper amount of the Merger
Consideration, together with any unpaid dividends and distributions on any such
Fidelity Common Shares, as contemplated by this Article III.
(c) Distributions with Respect to Unexchanged Shares. Whenever
a dividend or other distribution is declared by Fidelity in respect of the
Fidelity Common Shares, the record date for which is at or after the Effective
Time, that declaration shall include dividends or other distributions in
respect of all Fidelity Common Shares issuable pursuant to this Agreement. No
dividends or other distributions declared or made after the Effective Time with
respect to Fidelity Common Shares constituting part of the Merger Consideration
shall be paid to the holder of any unsurrendered Certificate, and no cash
payment in lieu of fractional shares shall be paid to any such holder, until
such Certificate is surrendered as provided in this Section 3.3. Following
such surrender, there shall be paid, without interest, to the Person in whose
name the Fidelity Common Shares have been registered (i) at the time of such
surrender, the amount of dividends or other distributions with a record date at
or after the Effective Time previously paid or payable on the date of such
surrender with respect to such whole Fidelity Common Shares, less the amount of
any withholding taxes that may be required thereon, and (ii) at the appropriate
payment date subsequent to surrender, the amount of dividends or other
distributions with a record date at or after the Effective Time but prior to
surrender and a payment date subsequent to surrender payable with respect to
such whole Fidelity Common Shares, less the amount of any withholding taxes
which may be required thereon.
(d) No Further Ownership Rights in the Company Common Shares.
As of the Effective Time, all Company Common Shares shall automatically be
cancelled and retired and shall cease to exist, and each holder of a
Certificate representing any such Company Common Shares shall cease to have any
rights with respect thereto, except the right to receive, upon surrender of
such Certificate, the Merger Consideration. As of the Effective Time, the
stock transfer books of the Company shall be closed and there shall be no
further registration of transfers on the Company's stock transfer books of
Company Common Shares outstanding immediately prior to the Effective Time. If,
after the Effective Time, Certificates are presented to the Surviving
Corporation for any reason, they shall be cancelled and exchanged as provided
in this Section 3.3.
(e) Return of Merger Consideration. Upon demand by Fidelity,
the Exchange Agent shall deliver to Fidelity any portion of the Merger
Consideration deposited with the Exchange Agent pursuant to this Section 3.3
that remains undistributed to holders of
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<PAGE> 21
Company Common Shares one year after the Effective Time. Holders of
Certificates who have not complied with this Section 3.3 prior to such demand
shall thereafter look only to Fidelity for payment of any claim to the Merger
Consideration and dividends or distributions, if any, in respect thereof.
(f) No Liability. Neither Fidelity nor the Exchange Agent
shall be liable to any Person in respect of any Company Common Shares (or
dividends or distributions with respect thereto) for any amounts paid to a
public official pursuant to any applicable abandoned property, escheat or
similar law.
(g) Withholding Rights. Fidelity shall be entitled to deduct
and withhold from the Merger Consideration (and any dividends or distributions
thereon) otherwise payable hereunder to any Person such amounts as it is
required to deduct and withhold with respect to the making of such payment
under any provision of federal, state, local or foreign income tax law. To the
extent that Fidelity so withholds those amounts, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to the holder of
Company Common Shares in respect of which such deduction and withholding was
made by Fidelity.
Section 3.4 Company Stock Options.
(a) At the Effective Time, each option to purchase Company
Common Shares (each, a "Company Option") outstanding under any stock option or
compensation plan or arrangement of the Company, whether or not vested or
exercisable, shall cease to represent a right to acquire Company Common Shares
and shall be converted into an option (each, a "Fidelity Option") to acquire,
on the same terms and conditions as were applicable under such Company Option
except that such Fidelity Option shall be vested and immediately exercisable,
that number of Fidelity Common Shares determined by multiplying the number of
Company Common Shares subject to such Company Option by the Per Share Stock
Amount, with any fractional shares of Fidelity Common Shares resulting from
such calculation being rounded down to the nearest whole share, at a price per
share (rounded up to the nearest whole cent) equal to (x) the aggregate
exercise price for the Company Common Shares covered by such Company Option
divided by (y) the number of full Fidelity Common Shares covered by such
Company Option in accordance with the foregoing.
(b) Prior to the Effective Time, the Company and Fidelity shall
take all actions (including, if appropriate, amending the terms of the
Company's stock option plan, employee purchase plan and other compensation
plans or arrangements) that are necessary to give effect to the transactions
contemplated by Section 3.4(a).
(c) At or prior to the Effective Time, Fidelity shall take all
corporate action necessary to reserve for issuance a sufficient number of
Fidelity Common Shares for delivery upon exercise of the Fidelity Options. At
the Effective Time, Fidelity shall file a registration statement on Form S-8
(or any successor form), with respect to the Fidelity Common Shares subject to
such Fidelity Options, and shall use its reasonable best efforts to maintain
the effectiveness of such registration statement(s), maintain the current
status of the prospectus(es) contained therein and comply with all applicable
state securities or "blue sky" laws for so long as such Fidelity Options remain
outstanding.
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Section 3.5 Shares of Dissenting Stockholders.
(a) Notwithstanding anything in this Agreement to the contrary,
any Company Common Shares that are outstanding immediately prior to the
Effective Time and that are held by stockholders who shall not have voted in
favor of the Merger and who shall have demanded properly in writing appraisal
of such shares in accordance with Section 262 of the DGCL and who object to the
Merger and comply with all provisions of the DGCL concerning the right of such
person to dissent from the Merger and demand appraisal of such shares
(collectively, the "Dissenting Shares") shall not be converted into or
represent the right to receive the Merger Consideration. Such stockholders
shall be entitled to receive the amounts determined in accordance with the
provisions of such Section 262. If, after the Effective Time, any such holder
effectively withdraws the demand for appraisal or fails to preserve such right
to appraisal, in either case pursuant to the DGCL, such Dissenting Shares shall
thereupon be deemed to have been converted into and to have become exchangeable
for, as of the Effective Time, the right to receive, without any interest
thereon, the Per Share Cash Amount.
(b) Any payments relating to Dissenting Shares shall be made
solely by the Surviving Corporation, and the Company shall not make any payment
with respect to, or settle or offer to settle with, the holders of Dissenting
Shares without the prior consent of Fidelity. The Company shall give Fidelity
prompt notice of any demands received by the Company for the payment of fair
value for Dissenting Shares, and Fidelity shall have the right to direct all
negotiations and proceedings with respect to Dissenting Shares.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as disclosed in (i) the Company Disclosure Schedule attached
hereto or (ii) the Company SEC Documents filed prior to the date hereof, the
Company represents and warrants to Fidelity that:
Section 4.1 Corporate Existence and Power. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware, and has all corporate powers required to carry
on its business as now conducted. The Company is duly qualified to do business
as a foreign corporation and is in good standing in each jurisdiction where the
character of the property owned or leased by it or the nature of its activities
makes such qualification necessary, except where the failure to be so qualified
would not, individually or in the aggregate, have a Company Material Adverse
Effect. The Company has heretofore made available to Fidelity true and
complete copies of the Company's certificate of incorporation and by-laws as
currently in effect.
Section 4.2 Corporate Authorization. The execution, delivery
and performance by the Company of this Agreement and the consummation by the
Company of the transactions contemplated hereby are within the Company's
corporate powers and, except for the Company Stockholder Approval (as
hereinafter defined), have been duly authorized by all necessary corporate
action. Assuming that this Agreement constitutes the valid and binding
obligation of Fidelity, this Agreement constitutes a valid and binding
agreement of
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<PAGE> 23
the Company, enforceable in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium and similar laws, now or hereafter in
effect, relating to or affecting creditors' rights and remedies and to general
principles of equity.
Section 4.3 Governmental Authorization. The execution,
delivery and performance by the Company of this Agreement and the consummation
by the Company of the transactions contemplated hereby require no action by or
in respect of, or filing with, any Governmental Entity other than (a) the
filing of the Certificate of Merger in accordance with the DGCL; (b) compliance
with any applicable requirements of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (the "HSR Act") or decrees thereunder applicable to
the Company; (c) compliance with any applicable requirements of the Securities
Act and the Exchange Act; (d) such as may be required under any applicable
state securities or "blue sky" laws; (e) filings with and approval of the
Commissioners of Insurance of the jurisdictions listed on Section 4.3 (e) of
the Company Disclosure Schedule; (f) compliance with any applicable
Environmental Laws or state environmental property transfer laws; and (g) such
other consents, approvals, actions, orders, authorizations, registrations,
declarations and filings which, if not obtained or made, would not,
individually or in the aggregate, (x) be reasonably likely to have a Company
Material Adverse Effect, or (y) prevent or materially impair the ability of the
Company to consummate the transactions contemplated by this Agreement.
Section 4.4 Non-Contravention. Except as set forth on
Section 4.4 of the Company Disclosure Schedule, the execution, delivery and
performance by the Company of this Agreement and the consummation by the
Company of the transactions contemplated hereby do not and will not (a)
contravene or conflict with the Company's certificate of incorporation or by-
laws, (b) assuming compliance with the matters referred to in Section 4.3,
contravene or conflict with or constitute a violation of any provision of any
law, regulation, judgment, injunction, order or decree binding upon or
applicable to the Company or any of its Subsidiaries, (c) constitute a breach
or default under or give rise to a right of termination, cancellation or
acceleration of any right or obligation of the Company or any of its
Subsidiaries or to a loss of any benefit or status to which the Company or any
of its Subsidiaries is entitled under any provision of any agreement, contract
or other instrument binding upon the Company or any of its Subsidiaries or any
license, franchise, permit or other similar authorization held by the Company
or any of its Subsidiaries, or (d) result in the creation or imposition of any
Lien on any asset of the Company or any of its Subsidiaries other than, in the
case of each of (b), (c) and (d), any such items that would not, individually
or in the aggregate (x) be reasonably likely to have a Company Material Adverse
Effect or (y) prevent or materially impair the ability of the Company to
consummate the transactions contemplated by this Agreement.
Section 4.5 Capitalization.
(a) The authorized capital stock of the Company consists of
66,000,000 Company Common Shares and 8,000,000 shares of preferred stock, $1.00
par value per share. As of July 31, 1999, there were outstanding (i)
21,807,531 Company Common Shares, (ii) no shares of Company preferred stock,
(iii) stock options (or binding obligations to issue stock options) to purchase
an aggregate of up to 891,440 Company Common Shares (of which options to
purchase an aggregate of 4,000 Company Common Shares were vested and
exercisable), and (iv) stock options to purchase Company Common Shares pursuant
to
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<PAGE> 24
the Chicago Title Corporation Employee's Stock Purchase Plan. All outstanding
shares of capital stock of the Company have been duly authorized and validly
issued and are fully paid and nonassessable.
(b) As of the date hereof, except (i) as set forth in this
Section 4.5, (ii) for issuances of Company Common Shares since July 31, 1999
pursuant to the Company's Employee Stock Purchase Plan in accordance with its
present terms, (iii) for changes since July 31, 1999 resulting from the
exercise of stock options, and (iv) for the rights of directors and employees
of the Company and its Subsidiaries pursuant to Company Employee Plans (as
hereinafter defined) as in effect on the date hereof and giving effect to the
modifications described on Exhibit C hereto, there are no outstanding (x)
shares of capital stock or other voting securities of the Company, (y)
securities of the Company convertible into or exchangeable for shares of
capital stock or voting securities of the Company, and (z) options or other
rights to acquire from the Company, and there is no obligation of the Company
to issue, any capital stock, voting securities or securities convertible into
or exchangeable for capital stock or voting securities of the Company (the
items in clauses (x), (y) and (z) being referred to collectively as the
"Company Securities"). There are no outstanding obligations of the Company or
any of its Subsidiaries to repurchase, redeem or otherwise acquire any Company
Securities.
Section 4.6 Subsidiaries.
(a) Each Subsidiary of the Company is a corporation duly
incorporated or an entity duly organized, and is validly existing and in good
standing, under the laws of its jurisdiction of incorporation or organization,
has all powers and authority and all material governmental licenses,
authorizations, consents and approvals required to carry on its business as now
conducted and is duly qualified to do business as a foreign corporation and is
in good standing in each jurisdiction where the character of the property owned
or leased by it or the nature of its activities makes such qualification
necessary, in each case with such exceptions as, individually or in the
aggregate, would not be reasonably likely to have a Company Material Adverse
Effect.
(b) The Company conducts its insurance operations through the
Subsidiaries listed in Section 4.6(b) of the Company Disclosure Schedule
(collectively, the "Company Insurance Subsidiaries"). Each of the Company
Insurance Subsidiaries is, where required, (i) duly licensed or authorized as
an insurance company in its jurisdiction of incorporation, (ii) duly licensed
or authorized as an insurance company in each other jurisdiction where it is
required to be so licensed, authorized or eligible, and (iii) duly authorized
or eligible in its jurisdiction of incorporation and each other applicable
jurisdiction to write each line of business reported as being written in the
Company Statutory Financial Statements (as hereinafter defined), except where
the failure to be so licensed, authorized or eligible, individually or in the
aggregate, would not be reasonably likely to have a Company Material Adverse
Effect. The Company has made all required filings under applicable insurance
holding company statutes except where the failure to file, individually or in
the aggregate, would not be reasonably likely to have a Company Material
Adverse Effect.
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<PAGE> 25
(c) All of the outstanding shares of capital stock of, or other
ownership interest in, each Subsidiary of the Company has been validly issued
and is fully paid and nonassessable. All of the outstanding capital stock of,
or other ownership interest, which is owned, directly or indirectly, by the
Company in, each of its Subsidiaries is owned free and clear of any Lien and
free of any other limitation or restriction (including any limitation or
restriction on the right to vote, sell or otherwise dispose of such capital
stock or other ownership interests) with such exceptions as, individually or in
the aggregate, would not be reasonably likely to have a Company Material
Adverse Effect. There are no outstanding (i) securities of the Company or any
of its Subsidiaries convertible into or exchangeable or exercisable for shares
of capital stock or other voting securities or ownership interests in any of
its Subsidiaries, (ii) options, warrants or other rights to acquire from the
Company or any of its Subsidiaries, and no other obligation of the Company or
any of its Subsidiaries to issue, any capital stock, voting securities or other
ownership interests in, or any securities convertible into or exchangeable or
exercisable for any capital stock, voting securities or ownership interests in,
any of its Subsidiaries or (iii) obligations of the Company or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any outstanding
securities of any of its Subsidiaries or any capital stock of, or other
ownership interests in, any of its Subsidiaries.
Section 4.7 The Company SEC Documents.
(a) The Company has made available to Fidelity the Company SEC
Documents. The Company has filed all reports, filings, registration statements
and other documents required to be filed by it with the SEC since June 17,
1998. No Subsidiary of the Company is required to file any form, report,
registration statement or prospectus or other document with the SEC.
(b) As of its filing date, each Company SEC Document complied
as to form in all material respects with the applicable requirements of the
Securities Act and/or the Exchange Act, as the case may be.
(c) No Company SEC Document filed pursuant to the Exchange Act
contained, as of its filing date or mailing date, as applicable, any untrue
statement of a material fact or omitted to state any material fact necessary in
order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading. No Company SEC Document filed
pursuant to the Securities Act, as amended or supplemented, if applicable,
contained, as of the date such document or amendment became effective, any
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading.
Section 4.8 Financial Statements; Reserves.
(a) The audited consolidated financial statements and unaudited
consolidated interim financial statements of the Company included in the
Company 10-K and the Company 10-Q (the "Company GAAP Financial Statements")
fairly present in all material respects, in conformity with generally accepted
accounting principles applied on a consistent basis ("GAAP") (except as may be
indicated in the notes thereto), the consolidated financial position of the
Company and its consolidated Subsidiaries as of the dates thereof
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<PAGE> 26
\
and their consolidated results of operations and cash flows for the periods
then ended (subject to normal year-end adjustments in the case of any unaudited
interim financial statements).
(b) The Company has made available to Fidelity true and
complete copies of the Annual Convention Statement on NAIC Form 9 for the year
ended December 31, 1998 and the Quarterly Convention Statement for the
quarterly period ended March 31, 1999 of each of the Company Insurance
Subsidiaries as filed with the applicable insurance regulatory authorities,
including all exhibits, interrogatories, notes, schedules and any actuarial
opinions, affirmations or certifications or other supporting documents filed in
connection therewith (collectively, the "Company Statutory Financial
Statements"). The Company Statutory Financial Statements fairly present in all
material respects, in conformity with statutory accounting practices prescribed
or permitted by the applicable insurance regulatory authority applied on a
consistent basis, the statutory financial position of such Company Insurance
Subsidiaries as at the respective dates thereof and the results of operations
of such Subsidiaries for the respective periods then ended. The Company
Statutory Financial Statements complied in all material respects with all
applicable laws, rules and regulations when filed, and no material deficiency
has been asserted with respect to any Company Statutory Financial Statements by
the applicable insurance regulatory body or any other governmental agency or
body. The annual statutory balance sheets and income statements included in
the Company Statutory Financial Statements have been audited by KPMG LLP, and
the Company has delivered or made available to Fidelity true and complete
copies of all audit opinions related thereto.
(c) Section 4.8(c) of the Company Disclosure Schedule sets
forth a description of the Company's method or methods for providing title
insurance loss reserves on the Company GAAP Financial Statements and on the
Company Statutory Financial Statements.
(d) (i) The reserves carried on the Company Statutory Financial
Statements of each Company Insurance Subsidiary for the year ended December 31,
1998 and the three-month period ended March 31, 1999 for unearned premiums,
losses, loss adjustment expenses, claims and similar purposes (including claims
litigation) are in compliance in all material respects with the requirements
for reserves established by the insurance departments of the jurisdiction of
domicile of such Company Insurance Subsidiary, were determined in all material
respects in accordance with published actuarial standards of practice and
principles consistently applied throughout the periods presented in such
Company Statutory Financial Statements, and are fairly stated in all material
respects in accordance with accepted actuarial and statutory accounting
principles; (ii) such reserves were adequate in the aggregate to cover the
total amount of all reasonably anticipated liabilities of the Company and each
Company Insurance Subsidiary under all outstanding insurance, reinsurance and
other applicable agreements as of the respective dates of such Company
Statutory Financial Statements, and the admitted assets of the Company and each
Company Insurance Subsidiary as determined under applicable laws are in an
amount at least equal to the minimum amounts required by applicable laws; and
(iii) there are no agreements between the Company or any of the Company
Insurance Subsidiaries concerning the maintenance of any reserves by any of the
Company Insurance Subsidiaries that go beyond normal legal requirements.
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<PAGE> 27
Section 4.9 No Material Undisclosed Liabilities. Except as
set forth in Section 4.9 of the Company Disclosure Schedule and except for the
Company Proceedings, there are no liabilities of the Company or of any
Subsidiary of the Company of any kind whatsoever, whether accrued, contingent,
absolute, determined, determinable or otherwise, in each case, that are
required by GAAP to be set forth on a consolidated balance sheet of the
Company, other than:
(i) liabilities or obligations disclosed or provided for in the
Company Balance Sheet or disclosed in the notes thereto;
(ii) liabilities or obligations incurred or arising after
December 31, 1998 and disclosed in the Company 10-Q or provided for in the
Company balance sheet (or notes thereto) included in the Company 10-Q;
(iii) liabilities or obligations incurred or arising in the
ordinary course of business after the date of the Company balance sheet
included in the Company 10-Q or arising under this Agreement or incurred
in connection with the transactions contemplated hereby; and
(iv) other liabilities or obligations, which, individually or in
the aggregate, would not be reasonably likely to exceed $17.5 million.
Section 4.10 Information to Be Supplied.
(a) The information to be supplied in writing by the Company
expressly for inclusion or incorporation by reference in the Joint Proxy
Statement/Prospectus will (i) in the case of the Registration Statement, at the
time it becomes effective, not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary
in order to make the statements therein not misleading and (ii) in the case of
the remainder of the Joint Proxy Statement/Prospectus, at the time of the
mailing thereof and at the time of the Company Stockholders Meeting and the
Fidelity Stockholders Meeting (as hereinafter defined), not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they are made, not misleading. The Joint Proxy
Statement/Prospectus will comply (with respect to information relating to the
Company) as to form in all material respects with the provisions of the
Securities Act and the Exchange Act.
(b) Notwithstanding the foregoing, the Company makes no
representation or warranty with respect to any statements made or incorporated
by reference in the Joint Proxy Statement/Prospectus based on information
supplied in writing by Fidelity expressly for use therein.
Section 4.11 Absence of Certain Changes. Since December 31,
1998, except as disclosed in the Company 10-Q, provided for in the financial
statements (or notes thereto) included in the Company 10-Q, disclosed on
Section 4.11 of the Company Disclosure Schedule, or as contemplated by this
Agreement, the Company and its
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Subsidiaries have conducted their business in the ordinary course consistent
with past practice and there has not been:
(a) any action, event, occurrence, development, change in
method of doing business, or state of circumstances or facts that, individually
or in the aggregate, has had or would be reasonably likely to have a Company
Material Adverse Effect;
(b) any declaration, setting aside or payment of any dividend
or other distribution with respect to any Company Common Shares (other than (i)
regular quarterly cash dividends, not in excess of $0.36 per Company Common
Share, and (ii) as contemplated by Section 8.5 hereof) or any repurchase,
redemption or other acquisition by the Company or any of its Subsidiaries of
any outstanding shares of capital stock or other securities of, or other
ownership interests in, the Company or any of its Subsidiaries (other than any
repurchases of the Company Common Shares made prior to the date hereof pursuant
to the Company's publicly announced stock repurchase programs);
(c) any transaction or commitment made by, or any contract,
agreement or settlement entered into by, or any judgment, order or decree
affecting, the Company or any of its Subsidiaries relating to its assets or
business (including without limitation the acquisition or disposition of any
assets) or any relinquishment by the Company or any of its Subsidiaries of any
contract or other right, in either case, material to the Company and its
Subsidiaries taken as a whole, other than transactions, commitments, contracts,
agreements or settlements (including, without limitation, settlements of
litigation and tax proceedings) in the ordinary course of business consistent
with past practice, contemplated by this Agreement, or agreed to in writing by
Fidelity; or
(d) any change by the Company in accounting principles or
methods (other than as required by GAAP or Regulation S-X of the Exchange Act).
Section 4.12 Transactions with Affiliates. Except as
disclosed in the Company Proxy Statement and except as contemplated hereby
(including the Company Disclosure Schedule and the Exhibits hereto), none of
the Company nor any of its Affiliates is an officer, director, employee,
consultant, distributor, supplier or vendor of, or is party to any contract
with, the Company or any of its Subsidiaries that would be required to be
disclosed in a proxy statement filed by the Company pursuant to the Exchange
Act.
Section 4.13 Litigation. Except for title insurance claims
made in the ordinary course of business and except as disclosed in Section 4.13
of the Company Disclosure Schedule, there is no action, suit, investigation,
arbitration or proceeding pending against, or to the knowledge of the Company
threatened against, the Company or any of its Subsidiaries or any of their
respective assets or properties before any arbitrator or Governmental Entity
that, individually or in the aggregate, would be reasonably likely to result in
liability to the Company or such Subsidiaries in excess of $10 million.
Section 4.14 Taxes. (a) All material tax returns, statements,
reports and forms (collectively, the "Company Returns") required to be filed
with any taxing authority by, or with respect to, the Company and its
Subsidiaries were filed on a timely basis and were true, complete and correct
except to the extent that the failure to file or be true, complete and correct
would not, individually or in the aggregate, have a Company Material
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<PAGE> 29
Adverse Effect; (b) the Company and its Subsidiaries have timely paid all
material taxes (which for purposes of this Section 4.14 shall include interest,
penalties and additions to tax with respect thereto) shown as due and payable
on the Company Returns (other than taxes which are being contested in good
faith and for which adequate reserves are reflected on the Company Balance
Sheet) except to the extent that the failure to pay would not, individually or
in the aggregate, have a Company Material Adverse Effect; (c) the Company and
its Subsidiaries have made provision for all material taxes payable by them for
which no Company Return has yet been filed except for inadequately reserved
taxes that would not, individually or in the aggregate, have a Company Material
Adverse Effect; (d) no taxing authority has asserted or initiated (or
threatened to assert or initiate) in writing any action, suit, proceeding or
claim against the Company or any of its Subsidiaries that, individually or in
the aggregate, would have a Company Material Adverse Effect; (e) there is no
application pending for approval of a change in accounting methods; (f) except
for the Alleghany affiliated group or any year for which the statute of
limitations has expired, neither the Company nor any of its Subsidiaries has
been a member of an affiliated, consolidated, combined or unitary group other
than one of which the Company was the common parent; and (g) except for the Tax
Sharing Agreement, neither the Company nor any of its Subsidiaries is obligated
by any contract, agreement or other arrangement to indemnify any other person
with respect to taxes or to compensate any third party for any tax payment or
tax liability under a tax sharing or similar agreement.
Section 4.15 Employees and Employee Benefits.
(a) Section 4.15(a) of the Company Disclosure Schedule contains
a correct and complete list identifying each material "employee benefit plan,"
as defined in Section 3(3) of the Employee Retirement Income Security Act of
1974 ("ERISA"), each material employment, severance or similar contract, plan,
arrangement or policy and each other material plan or arrangement providing for
compensation, bonuses, profit-sharing, stock option or other stock related
rights or other forms of incentive or deferred compensation or insurance
coverage (including any self-insured arrangements) which is maintained,
administered or contributed to by the Company or any of its Subsidiaries and
covers any employee or former employee of the Company or any of its
Subsidiaries. Copies of such plans (and, if applicable, related trust
agreements) and all amendments thereto and the most recent written summary
descriptions thereof have been provided to Fidelity, together with the most
recent annual report (Form 5500 including, if applicable, Schedule B thereto)
prepared in connection with any such plan. Such plans are referred to
collectively herein as the "Company Employee Plans."
(b) Each Company Employee Plan which is intended to be
qualified under Section 401(a) of the Code is so qualified and has received a
favorable determination letter from the Internal Revenue Service stating that
it is so qualified and, to the knowledge of the Company, nothing has occurred
since the date of such letter that would cause it to be revoked, whether
prospectively or retroactively. The Company will make available upon request to
Fidelity copies of the most recent Internal Revenue Service determination
letters with respect to each such Company Employee Plan. Each Company Employee
Plan has been administered in compliance with its terms and with the
requirements prescribed by any and all statutes, orders, rules and regulations,
including but not limited to ERISA and the Code,
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which are applicable to such Company Employee Plan except as would not be
reasonably likely to have a Company Material Adverse Effect.
(c) Except as described on Section 4.15(c) of the Company
Disclosure Schedule and except as contemplated by the plans and arrangements
described on Exhibit C hereto, the execution of, and performance of the
transactions contemplated in, this Agreement will not (either alone or upon the
occurrence of any additional or subsequent events) constitute an event under
any Company Employee Plan, trust or loan that will or may result in any
material payment (whether of severance pay or otherwise), acceleration,
forgiveness of indebtedness, vesting, distribution, increase in benefits or
obligation to fund benefits with respect to any current or former employee,
executive or director of the Company or any of its Subsidiaries.
(d) Except as set forth on Section 4.15(a) of the Company
Disclosure Schedule, neither the Company nor any of its Subsidiaries maintains
or contributes to any Company Employee Plan which provides, or has any
liability to provide, life insurance, medical or other welfare benefits to any
employee(s) upon their retirement or termination of employment, except as
required by Section 601 of ERISA and Section 4980B of the Code.
(e) There has been no amendment to, written interpretation or
announcement (whether or not written) relating to any Company Employee Plan
which would increase materially the expense of maintaining such Company
Employee Plans in the aggregate above the level of the expense incurred in
respect thereof for the fiscal year ended December 31, 1998.
(f) The Company and each of its Subsidiaries is in compliance
with all applicable federal, state and local laws, rules and regulations
respecting employment, employment practices, terms and conditions of
employment, wages, hours and withholding except as would not be reasonably
likely to have a Company Material Adverse Affect.
Section 4.16 Investment Securities. The ownership by the
Company and its Subsidiaries of stocks, bonds and other securities complies in
all material respects with all applicable insurance, trust and other Laws. The
Company has good and valid title to all such investment securities shown as
assets in the Company Balance Sheet (unless disposed of in the ordinary course
of business thereafter), free and clear of all material Liens except for
restrictions in respect of deposits, statutory premium reserve requirements and
statutory pledges with state regulatory authorities disclosed in the Company
SEC Documents. The Annual Convention Statements on NAIC Form 9 of the Company
Insurance Subsidiaries contain a complete description of all securities of the
Company Insurance Subsidiaries on deposit with each state insurance department
as of December 31, 1998.
Section 4.17 Compliance with Laws. The Company and its
Subsidiaries have all licenses, permits and qualifications necessary to conduct
their businesses and own their properties in each jurisdiction in which the
Company or its Subsidiaries currently do business or own property, or in which
such license, permit or qualification is otherwise required. Except for the
Company Proceedings, since July 1, 1994, (a) neither the Company nor any of its
Insurance Subsidiaries has had its license or qualification to conduct title
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<PAGE> 31
insurance business in any jurisdiction revoked or suspended or been involved in
a proceeding to revoke or suspend such license or qualification, nor to the
best knowledge of the Company has any investigation been conducted, or is
pending, in any such jurisdiction with a view to revocation or suspension of
any such license, (b) the Company and its Subsidiaries have complied in all
material respects with all laws, regulations and orders applicable to their
businesses and the present use by the Company and its Subsidiaries of their
respective properties, and the business conducted by the Company and its
Subsidiaries, does not violate in any material respect any such laws,
regulations or orders and (c) the Company and its Subsidiaries have timely
filed all reports and returns required by law, rule, regulation or policy of
any regulatory authority and all such returns and reports are true and correct
in all material respects, and there are no material deficiencies with respect
to such filings or submissions. Section 4.17 of the Company Disclosure
Schedule indicates the most recent date of the last completed insurance
regulatory examination and audit, regular or special, as the case may be, as to
the Company and its Insurance Subsidiaries for the jurisdictions listed
therein, and a copy of the most recent report of such examination has
heretofore been made available or delivered to Fidelity. There is no agreement
or understanding between the Company or any of its Insurance Subsidiaries, on
the one hand, and any regulatory authority, on the other hand, concerning the
payment of dividends by the Company or such Insurance Subsidiary or the
maintenance of any NAIC Insurance Regulatory Information System Ratio or
adequacy of reserves.
Section 4.18 Forms of Contract. Except as disclosed on
Section 4.18 of the Company Disclosure Schedule, each form of material
insurance policy, policy endorsement or amendment, reinsurance contract,
application form and sales material now in use by the Company Insurance
Subsidiaries in any jurisdiction has been approved (or has been submitted for
approval, which is pending), where required by the appropriate insurance
regulatory authorities of such jurisdiction.
Section 4.19 Directors' and Officers' Insurance Policies.
Section 4.19 of the Company Disclosure Schedule describes the Company's
directors' and officers' insurance policies as in effect on the date hereof.
The Company has not received any notice of cancellation or termination of such
directors' and officers' insurance policy and such insurance policy is valid
and enforceable.
Section 4.20 Environmental Matters.
(a) With such exceptions as, individually or in the aggregate,
would not be reasonably likely to have a Company Material Adverse Effect, (i)
no written notice, notification, demand, request for information, citation,
summons, complaint or order has been received or made by, and no investigation,
action, claim, suit, proceeding or review is pending or threatened by any
Person against, the Company or any of its Subsidiaries, with respect to any
applicable Environmental Law, (ii) the Company and its Subsidiaries are and
have been in compliance with all applicable Environmental Laws and (iii) there
are no liabilities or obligations of the Company or any of its Subsidiaries of
any kind whatsoever, whether accrued, contingent, absolute, direct or indirect,
determined, determinable or otherwise, arising under or relating to any
Environmental Law (including, without limitation, liabilities or obligations
relating to divested properties or businesses or predecessor entities), and
there are no facts, conditions, situations or set of circumstances that have
resulted or
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could reasonably be expected to result in or be the basis for any such
liabilities or obligations.
(b) For purposes of this Agreement, the term "Environmental
Laws" means any international, national, provincial, regional, federal, state,
local, municipal and foreign statutes, laws (including, without limitation,
common law), judicial decisions, decrees, regulations, ordinances, rules,
judgments, orders, codes, injunctions, permits or governmental agreements or
other requirements relating to human health and safety, to the environment,
including, without limitation, natural resources, or to pollutants,
contaminants, wastes, or chemicals, petroleum products, by-products or
additives, asbestos, asbestos-containing material, polychlorinated biphenyls,
radioactive material, hazardous substances or wastes, or any other substance
(including any product) regulated as harmful or potentially harmful to human
health or the environment.
Section 4.21 Finders' Fees; Opinion of Financial Advisor.
(a) Except for Merrill Lynch & Co., Inc. and Delano & Kopperl,
Inc., there is no investment banker, broker, finder or other intermediary who
might be entitled to any fee or commission from the Company, the Surviving
Corporation or any of their respective Affiliates in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company. Prior to the date hereof, the Company has provided
to Fidelity true and correct information regarding fees payable to Merrill
Lynch & Co., Inc. and Delano & Kopperl, Inc.
(b) The Company has received the opinion dated August 1, 1999
of Merrill Lynch & Co., Inc. to the effect that, as of such date and subject to
the exceptions stated therein, the Merger Consideration was fair from a
financial point of view to the holders of Company Common Shares (other than
Fidelity and its affiliates), a copy of which opinion has been made available
to Fidelity.
Section 4.22 Required Vote; Board Approval.
(a) The only vote of the holders of any class or series of
capital stock of the Company required by law, rule or regulation to approve
this Agreement, the Merger and/or any of the other transactions contemplated
hereby is the affirmative vote (the "Company Stockholder Approval") of the
holders of 75 percent of the outstanding Company Common Shares in favor of the
adoption and approval of this Agreement and the Merger.
(b) The Company's Board of Directors has (a) determined that
this Agreement and the transactions contemplated hereby, including the Merger,
are in the best interests of the Company and its stockholders, (b) approved
this Agreement and the transactions contemplated hereby and (c) resolved
(subject to Section 6.2) to recommend to such stockholders that they vote in
favor of adopting and approving this Agreement and the Merger in accordance
with the terms hereof.
Section 4.23 State Takeover Statutes. Assuming the accuracy
of the representations contained in Section 5.23 hereof (without giving effect
to the knowledge
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qualification therein), the provisions of Section 203 of the DGCL do not apply
to this Agreement or any of the transactions contemplated hereby.
Section 4.24 Year 2000 Compliance. The Company has (i)
completed a review and assessment of all areas within the business and
operations of the Company and its Subsidiaries (including those areas affected
by suppliers and vendors) that could be adversely affected by the "Year 2000
Problem" (that is, the risk that computer software and systems used by the
Company or any of its Subsidiaries (or their respective suppliers and vendors)
may be unable to recognize and perform properly date-sensitive functions
involving certain dates prior to and any date after December 31, 1999) and (ii)
developed a plan and timeline for addressing the Year 2000 Problem on a timely
basis, which plan and timeline have been made available to Fidelity. The
Company reasonably believes that all computer software and systems (including
those of vendors and suppliers) that are used in the business or operations of
the Company or its Subsidiaries as presently conducted (the "Company Systems")
will on a timely basis be able to perform properly date-sensitive functions for
all dates before and from and after January 1, 2000 ("Year 2000 Compliant")
except for such failures to perform which would not, individually or in the
aggregate, be reasonably likely to have a Company Material Adverse Effect.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF FIDELITY
Except as disclosed in (i) the Fidelity Disclosure Schedule attached
hereto or (ii) the Fidelity SEC Documents filed prior to the date hereof,
Fidelity represents and warrants to the Company that:
Section 5.1 Corporate Existence and Power. Fidelity is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware and has all corporate powers required to carry on
its business as now conducted. Fidelity is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction where the
character of the property owned or leased by it or the nature of its activities
makes such qualification necessary, except where the failure to be so qualified
would not, individually or in the aggregate, have a Fidelity Material Adverse
Effect. Fidelity has heretofore made available to the Company true and
complete copies of Fidelity's restated certificate of incorporation and by-laws
as currently in effect.
Section 5.2 Corporate Authorization. The execution, delivery
and performance by Fidelity of this Agreement and the consummation by Fidelity
of the transactions contemplated hereby are within the corporate powers of
Fidelity and, except for the Fidelity Stockholder Approval, have been duly
authorized by all necessary corporate action. Assuming that this Agreement
constitutes the valid and binding obligation of the Company, this Agreement
constitutes a valid and binding agreement of Fidelity, enforceable in
accordance with its terms, subject to bankruptcy, insolvency, reorganization,
moratorium and similar laws, now or hereafter in effect, relating to or
affecting creditors' rights and remedies and to general principles of equity.
Section 5.3 Governmental Authorization. The execution,
delivery and performance by Fidelity of this Agreement, and the consummation by
Fidelity of the
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transactions contemplated hereby require no action by or in respect of, or
filing with, any Governmental Entity other than (a) the filing of the
Certificate of Merger in accordance with the DGCL; (b) compliance with any
applicable requirements of the HSR Act; (c) compliance with any applicable
requirements of the Securities Act and the Exchange Act; (d) such as may be
required under any applicable state securities or "blue sky" laws; (e) filings
with and approval of the Commissioners of Insurance of the jurisdictions listed
on Section 5.3(e) of the Fidelity Disclosure Schedule; (f) compliance with any
applicable Environmental Laws or state environmental property transfer laws;
and (g) such other consents, approvals, actions, orders, authorizations,
registrations, declarations and filings which, if not obtained or made, would
not, individually or in the aggregate, (i) be reasonably likely to have a
Fidelity Material Adverse Effect, or (ii) prevent or materially impair the
ability of Fidelity to consummate the transactions contemplated by this
Agreement.
Section 5.4 Non-Contravention. Except as set forth on
Section 5.4 of the Fidelity Disclosure Schedule, the execution, delivery and
performance by Fidelity of this Agreement and the consummation by Fidelity of
the transactions contemplated hereby do not and will not (a) contravene or
conflict with the restated certificate of incorporation or by-laws of Fidelity,
(b) assuming compliance with the matters referred to in Section 5.3, contravene
or conflict with or constitute a violation of any provision of any law,
regulation, judgment, injunction, order or decree binding upon or applicable to
Fidelity or any of its Subsidiaries, (c) constitute a breach or default under
or give rise to a right of termination, cancellation or acceleration of any
right or obligation of Fidelity or any of its Subsidiaries or to a loss of any
benefit or status to which Fidelity or any of its Subsidiaries is entitled
under any provision of any agreement, contract or other instrument binding upon
Fidelity or any of its Subsidiaries or any license, franchise, permit or other
similar authorization held by Fidelity or any of its Subsidiaries, or (d)
result in the creation or imposition of any Lien on any asset of Fidelity or
any of its Subsidiaries other than, in the case of each of (b), (c) and (d),
any such items that would not, individually or in the aggregate, (x) be
reasonably likely to have a Fidelity Material Adverse Effect or (y) prevent or
materially impair the ability of Fidelity to consummate the transactions
contemplated by this Agreement.
Section 5.5 Capitalization of Fidelity.
(a) The authorized capital stock of Fidelity consists of
50,000,000 Fidelity Common Shares, and 3,000,000 shares of preferred stock,
$.0001 par value per share. As of July 28, 1999, there were outstanding (i)
30,439,000 Fidelity Common Shares, (ii) no shares of Fidelity preferred stock,
(iii) stock options to purchase an aggregate of 5,452,005 Fidelity Common
Shares (of which options to purchase an aggregate of 4,568,525 Fidelity Common
Shares were vested and exercisable), and (iv) stock options to purchase
Fidelity Common Shares pursuant to the Fidelity National Financial, Inc.
Employee Stock Purchase Plan. All outstanding shares of capital stock of
Fidelity have been duly authorized and validly issued and are fully paid and
nonassessable.
(b) As of the date hereof, except (i) as set forth in this
Section 5.5, (ii) for changes since July 28, 1999 resulting from the grant of
stock options under Fidelity Employee Plans (as hereinafter defined) in the
ordinary course of business consistent with past practice and the exercise of
stock options outstanding on such date and (iii) for issuances of Fidelity
Common Shares since July 28, 1999 pursuant to Fidelity's Employee Stock
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Purchase Plan in accordance with its present terms, there are no outstanding
(x) shares of capital stock or other voting securities of Fidelity, (y)
securities of Fidelity convertible into or exchangeable for shares of capital
stock or voting securities of Fidelity, and (z) options or other rights to
acquire from Fidelity, and no obligation of Fidelity to issue, any capital
stock, voting securities or securities convertible into or exchangeable for
capital stock or voting securities of Fidelity (the items in clauses (x), (y)
and (z) being referred to collectively as the "Fidelity Securities"). There
are no outstanding obligations of Fidelity or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any Fidelity Securities.
(c) The Fidelity Common Shares to be issued as part of the
Merger Consideration have been duly authorized and, when issued and delivered
in accordance with the terms of this Agreement, will have been validly issued,
fully paid and nonassessable and free of any preemptive or other similar right.
Section 5.6 Subsidiaries.
(a) Each Subsidiary of Fidelity is a corporation duly
incorporated or an entity duly organized, and is validly existing and in good
standing, under the laws of its jurisdiction of incorporation or organization,
has all powers and authority and all material governmental licenses,
authorizations, consents and approvals required to carry on its business as now
conducted and is duly qualified to do business as a foreign corporation and is
in good standing in each jurisdiction where the character of the property owned
or leased by it or the nature of its activities makes such qualification
necessary, in each case with such exceptions as, individually or in the
aggregate, would not be reasonably likely to have a Fidelity Material Adverse
Effect.
(b) Fidelity conducts its insurance operations through the
Subsidiaries listed in Section 5.6(b) of Fidelity Disclosure Schedule
(collectively, the "Fidelity Insurance Subsidiaries"). Each of Fidelity
Insurance Subsidiaries is, where required, (i) duly licensed or authorized as
an insurance company in its jurisdiction of incorporation, (ii) duly licensed
or authorized as an insurance company in each other jurisdiction where it is
required to be so licensed, authorized or eligible, and (iii) duly authorized
or eligible in its jurisdiction of incorporation and each other applicable
jurisdiction to write each line of business reported as being written in the
Fidelity Statutory Financial Statements (as hereinafter defined), except where
the failure to be so licensed, authorized or eligible, individually or in the
aggregate, would not be reasonably likely to have a Fidelity Material Adverse
Effect. Fidelity has made all required filings under applicable insurance
holding company statutes except where the failure to file, individually or in
the aggregate, would not be reasonably likely to have a Fidelity Material
Adverse Effect.
(c) All of the outstanding shares of capital stock of, or other
ownership interest in, each Subsidiary of Fidelity has been validly issued and
is fully paid and nonassessable. Except as disclosed in Section 5.6(c) of the
Fidelity Disclosure Schedule, all of the outstanding capital stock of, or other
ownership interest, which is owned, directly or indirectly, by Fidelity in,
each of its Subsidiaries is owned free and clear of any Lien and free of any
other limitation or restriction (including any limitation or restriction on the
right to vote, sell or otherwise dispose of such capital stock or other
ownership interests) with such exceptions as, individually or in the aggregate,
would not be reasonably likely to have a
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Fidelity Material Adverse Effect. Except as disclosed in Section 5.6(c) of the
Fidelity Disclosure Schedule, there are no outstanding (i) securities of
Fidelity or any of its Subsidiaries convertible into or exchangeable or
exercisable for shares of capital stock or other voting securities or ownership
interests in any of its Subsidiaries, (ii) options, warrants or other rights to
acquire from Fidelity or any of its Subsidiaries, and no other obligation of
Fidelity or any of its Subsidiaries to issue, any capital stock, voting
securities or other ownership interests in, or any securities convertible into
or exchangeable or exercisable for any capital stock, voting securities or
ownership interests in, any of its Subsidiaries or (iii) obligations of
Fidelity or any of its Subsidiaries to repurchase, redeem or otherwise acquire
any outstanding securities of any of its Subsidiaries or any capital stock of,
or other ownership interests in, any of its Subsidiaries.
Section 5.7 Fidelity SEC Documents.
(a) Fidelity has made available to the Company the Fidelity SEC
Documents. Fidelity has filed all reports, filings, registration statements
and other documents required to be filed by it with the SEC since December 31,
1996. No Subsidiary of Fidelity other than Micro General is required to file
any form, report, registration statement or prospectus or other document with
the SEC.
(b) As of its filing date, each Fidelity SEC Document complied
as to form in all material respects with the applicable requirements of the
Securities Act and/or the Exchange Act, as the case may be.
(c) No Fidelity SEC Document filed pursuant to the Exchange Act
contained, as of its filing date or mailing date, as applicable, any untrue
statement of a material fact or omitted to state any material fact necessary in
order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading. No Fidelity SEC Document filed
pursuant to the Securities Act, as amended or supplemented, if applicable,
contained, as of the date such document or amendment became effective, any
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading.
Section 5.8 Financial Statements; Reserves.
(a) The audited consolidated financial statements and unaudited
consolidated interim financial statements of Fidelity included in the Fidelity
10-Ks and the Fidelity 10-Q (the "Fidelity GAAP Financial Statements") fairly
present in all material respects, in conformity with GAAP (except as may be
indicated in the notes thereto), the consolidated financial position of
Fidelity and its consolidated Subsidiaries as of the dates thereof and their
consolidated results of operations and cash flows for the periods then ended
(subject to normal year-end adjustments in the case of any unaudited interim
financial statements).
(b) Fidelity has made available to the Company true and
complete copies of the Annual Convention Statement on NAIC Form 9 for the year
ended December 31, 1998 and the Quarterly Convention Statement for the
quarterly period ended March 31, 1999 of
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each of the Fidelity Insurance Subsidiaries as filed with the applicable
insurance regulatory authorities, including all exhibits, interrogatories,
notes, schedules and any actuarial opinions, affirmations or certifications or
other supporting documents filed in connection therewith (collectively, the
"Fidelity Statutory Financial Statements"). The Fidelity Statutory Financial
Statements fairly present in all material respects, in conformity with
statutory accounting practices prescribed or permitted by the applicable
insurance regulatory authority applied on a consistent basis, the statutory
financial position of such Fidelity Insurance Subsidiaries as at the respective
dates thereof and the results of operations of such Subsidiaries for the
respective periods then ended. The Fidelity Statutory Financial Statements
complied in all material respects with all applicable laws, rules and
regulations when filed, and no material deficiency has been asserted with
respect to any Fidelity Statutory Financial Statements by the applicable
insurance regulatory body or any other governmental agency or body. The annual
statutory balance sheets and income statements included in the Fidelity
Statutory Financial Statements have been audited by KPMG LLP, and Fidelity has
delivered or made available to the Company true and complete copies of all
audit opinions related thereto.
(c) Section 5.8(c) of the Fidelity Disclosure Schedule sets
forth a description of Fidelity's method or methods for providing title
insurance loss reserves on the Fidelity GAAP Financial Statements and on the
Fidelity Statutory Financial Statements.
(d) Except as disclosed on Section 5.8(d) of the Fidelity
Disclosure Schedule, (i) the reserves carried on the Fidelity Statutory
Financial Statements of each Fidelity Insurance Subsidiary for the year ended
December 31, 1998 and the three-month period ended March 31, 1999 for unearned
premiums, losses, loss adjustment expenses, claims and similar purposes
(including claims litigation) are in compliance in all material respects with
the requirements for reserves established by the insurance departments of the
jurisdiction of domicile of such Fidelity Insurance Subsidiary, were determined
in all material respects in accordance with published actuarial standards of
practice and principles consistently applied throughout the periods presented
in such Fidelity Statutory Financial Statements, and are fairly stated in all
material respects in accordance with accepted actuarial and statutory
accounting principles; (ii) such reserves were adequate in the aggregate to
cover the total amount of all reasonably anticipated liabilities of Fidelity
and each Fidelity Insurance Subsidiary under all outstanding insurance,
reinsurance and other applicable agreements as of the respective dates of such
Fidelity Statutory Financial Statements, and the admitted assets of Fidelity
and each Fidelity Insurance Subsidiary as determined under applicable laws are
in an amount at least equal to the minimum amounts required by applicable laws;
and (iii) there are no agreements between Fidelity or any of the Fidelity
Insurance Subsidiaries concerning the maintenance of any reserves by any of the
Fidelity Insurance Subsidiaries that go beyond normal legal requirements.
Section 5.9 No Material Undisclosed Liabilities. Except as
set forth in Section 5.9 of the Fidelity Disclosure Schedule and except for the
Fidelity Proceedings, there are no liabilities of Fidelity or of any Subsidiary
of Fidelity of any kind whatsoever, whether accrued, contingent, absolute,
determined, determinable or otherwise, in each case, that are required by GAAP
to be set forth on a consolidated balance sheet of Fidelity, other than:
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(i) liabilities or obligations disclosed or provided for in the
Fidelity Balance Sheet or disclosed in the notes thereto;
(ii) liabilities or obligations incurred or arising after
December 31, 1998 and disclosed in the Fidelity 10-Q or provided for in
the Fidelity balance sheet (or notes thereto) included in the Fidelity
10-Q;
(iii) liabilities or obligations incurred or arising in the
ordinary course of business after the date of the Fidelity balance sheet
included in the Fidelity 10-Q or arising under this Agreement or incurred
in connection with the transactions contemplated hereby; and
(iv) other liabilities or obligations, which, individually or in
the aggregate, would not be reasonably likely to exceed $17.5 million.
Section 5.10 Information to Be Supplied.
(a) The information to be supplied in writing by Fidelity
expressly for inclusion or incorporation by reference in the Joint Proxy
Statement/Prospectus will (i) in the case of the Registration Statement, at the
time it becomes effective, not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary
in order to make the statements therein not misleading and (ii) in the case of
the remainder of the Joint Proxy Statement/Prospectus, at the time of the
mailing thereof and at the time of the Company Stockholders Meeting and the
Fidelity Stockholders Meeting, not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Joint Proxy
Statement/Prospectus will comply (with respect to information relating to
Fidelity) as to form in all material respects with the provisions of the
Securities Act and the Exchange Act.
(b) Notwithstanding the foregoing, Fidelity makes no
representation or warranty with respect to any statements made or incorporated
by reference in the Joint Proxy Statement/Prospectus based on information
supplied in writing by the Company expressly for use therein.
Section 5.11 Absence of Certain Changes. Since December 31,
1998, except as disclosed in the Fidelity 10-Q, provided for in the financial
statements (or notes thereto) included in the Fidelity 10-Q, disclosed on
Section 5.11 of the Fidelity Disclosure Schedule, or as contemplated by this
Agreement, Fidelity and its Subsidiaries have conducted their business in the
ordinary course consistent with past practice and there has not been:
(a) any action, event, occurrence, development, change in
method of doing business, or state of circumstances or facts that, individually
or in the aggregate, has had or would be reasonably likely to have a Fidelity
Material Adverse Effect;
(b) any declaration, setting aside or payment of any dividend
or other distribution with respect to any shares of capital stock of Fidelity
(other than regular quarterly cash dividends, not in excess of $0.084 per
Fidelity Common Share) or any
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repurchase, redemption or other acquisition by the Company or any of its
Subsidiaries of any outstanding shares of capital stock or other securities of,
or other ownership interests in, the Company or any of its Subsidiaries (other
than any repurchases of Fidelity Common Shares made prior to the date hereof
pursuant to Fidelity's existing or future publicly announced stock repurchase
program);
(c) any transaction or commitment made by, or any contract,
agreement or settlement entered into by, or any judgment, order or decree
affecting, Fidelity or any of its Subsidiaries relating to its assets or
business (including, without limitation, the acquisition or disposition of any
assets) or any relinquishment by Fidelity or any of its Subsidiaries of any
contract or other right, in either case, material to Fidelity and its
Subsidiaries taken as a whole, other than transactions, commitments, contracts,
agreements or settlements (including, without limitation, settlements of
litigation and tax proceedings) in the ordinary course of business consistent
with past practice, contemplated by this Agreement, or agreed to in writing by
the Company; or
(d) any change by Fidelity in accounting principles or methods
(other than as required by GAAP or Regulation S-X of the Exchange Act).
Section 5.12 Transactions with Affiliates. Except as
disclosed in the Fidelity Proxy Statement, none of Fidelity or any of its
Affiliates is an officer, director, employee, consultant, distributor, supplier
or vendor of, or is party to any contract with, Fidelity or any of its
Subsidiaries that would be required to be disclosed in a proxy statement filed
by Fidelity pursuant to the Exchange Act.
Section 5.13 Litigation. Except for title insurance claims
made in the ordinary course of business and except as disclosed in Section 5.13
of the Fidelity Disclosure Schedule, there is no action, suit, investigation,
arbitration or proceeding pending against, or to the knowledge of Fidelity
threatened against, Fidelity or any of its Subsidiaries or any of their
respective assets or properties before any arbitrator or Governmental Entity
that, individually or in the aggregate, would be reasonably likely to result in
liability to Fidelity or such Subsidiaries in excess of $10 million.
Section 5.14 Taxes. (a) All material tax returns, statements,
reports and forms (collectively, the "Fidelity Returns") required to be filed
with any taxing authority by, or with respect to, Fidelity and its Subsidiaries
were filed on a timely basis and were true, complete and correct except to the
extent that the failure to file or be true, complete and correct would not,
individually or in the aggregate, have a Fidelity Material Adverse Effect; (b)
Fidelity and its Subsidiaries have timely paid all material taxes (which for
purposes of this Section 5.14 shall include interest, penalties and additions to
tax with respect thereto) shown as due and payable on Fidelity Returns (other
than taxes which are being contested in good faith and for which adequate
reserves are reflected on Fidelity Balance Sheet) except to the extent that the
failure to pay would not, individually or in the aggregate, have a Fidelity
Material Adverse Effect; (c) Fidelity and its Subsidiaries have made provision
for all material taxes payable by them for which no Fidelity Return has yet been
filed except for inadequately reserved taxes that would not, individually or in
the aggregate, have a Fidelity Material Adverse Effect; (d) no taxing authority
has asserted or initiated (or threatened to assert or initiate) in writing any
action, suit, proceeding or claim against Fidelity or any of its
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Subsidiaries that, individually or in the aggregate, would have a Fidelity
Material Adverse Effect; (e) there is no application pending for approval of a
change in accounting methods; (f) except as set forth on Section 5.14 of the
Fidelity Disclosure Schedule and for any year for which the statute of
limitations has expired neither Fidelity nor any of its Subsidiaries has been a
member of an affiliated, consolidated, combined or unitary group other than one
of which Fidelity was the common parent and other than for which Fidelity or
any of its subsidiaries has contractual rights to indemnification for all
liabilities for taxes for each other person who was a member of such
affiliated, consolidated, combined or unitary group; and (g) except as set
forth on Section 5.14 of the Fidelity Disclosure Schedule and for any year for
which the statute of limitations has expired neither Fidelity nor any of its
Subsidiaries is obligated by any contract, agreement or other arrangement to
indemnify any other person with respect to taxes or to compensate any third
party for any tax payment or tax liability under a tax sharing or similar
agreement.
Section 5.15 Employees and Employee Benefits.
(a) Section 5.15(a) of Fidelity Disclosure Schedule contains a
correct and complete list identifying each material "employee benefit plan", as
defined in Section 3(3) of ERISA, each material employment, severance or
similar contract, plan, arrangement or policy and each other material plan or
arrangement providing for compensation, bonuses, profit-sharing, stock option
or other stock related rights or other forms of incentive or deferred
compensation or insurance coverage (including any self-insured arrangements)
which is maintained, administered or contributed to by Fidelity or any of its
Subsidiaries and covers any employee or former employee of Fidelity or any of
its Subsidiaries. Copies of such plans (and, if applicable, related trust
agreements) and all amendments thereto and the most recent written summary
descriptions thereof have been provided to the Company, together with the most
recent annual report (Form 5500 including, if applicable, Schedule B thereto)
prepared in connection with any such plan. Such plans are referred to
collectively herein as the "Fidelity Employee Plans."
(b) Each Fidelity Employee Plan which is intended to be
qualified under Section 401(a) of the Code is so qualified and has received a
favorable determination letter from the Internal Revenue Service stating that
it is so qualified and, to the knowledge of Fidelity, nothing has occurred
since the date of such letter that would cause it to be revoked, whether
prospectively or retroactively. Fidelity will make available upon request to
the Company copies of the most recent Internal Revenue Service determination
letters with respect to each such Fidelity Employee Plan. Each Fidelity
Employee Plan has been administered in compliance with its terms and with the
requirements prescribed by any and all statutes, orders, rules and regulations,
including but not limited to ERISA and the Code, which are applicable to such
Fidelity Employee Plan except as would not be reasonably likely to have a
Fidelity Material Adverse Effect.
(c) Except as described on Section 5.15(c) of the Fidelity
Disclosure Schedule, the execution of, and performance of the transactions
contemplated in, this Agreement will not (either alone or upon the occurrence
of any additional or subsequent events) constitute an event under any Fidelity
Employee Plan, trust or loan that will or may result in any material payment
(whether of severance pay or otherwise), acceleration, forgiveness of
indebtedness, vesting, distribution, increase in benefits or obligation to fund
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benefits with respect to any current or former employee, executive or director
of Fidelity or any of its Subsidiaries.
(d) Neither Fidelity nor any of its Subsidiaries maintains or
contributes to any Fidelity Employee Plan which provides, or has any liability
to provide, life insurance, medical or other welfare benefits to any
employee(s) upon their retirement or termination of employment, except as
required by Section 601 of ERISA and Section 4980B of the Code.
(e) There has been no amendment to, written interpretation or
announcement (whether or not written) relating to any Fidelity Employee Plan
which would increase materially the expense of maintaining such Fidelity
Employee Plans in the aggregate above the level of the expense incurred in
respect thereof for the fiscal year ended December 31, 1998.
(f) Fidelity and each of its Subsidiaries is in compliance with
all applicable federal, state and local laws, rules and regulations respecting
employment, employment practices, terms and conditions of employment, wages,
hours and withholding except as would not be reasonably likely to have a
Fidelity Material Adverse Affect.
Section 5.16 Investment Securities. The ownership by Fidelity
and its Subsidiaries of stocks, bonds and other securities complies in all
material respects with all applicable insurance, trust and other Laws. Fidelity
has good and valid title to all such investment securities shown as assets in
the Fidelity Balance Sheet (unless disposed of in the ordinary course of
business thereafter), free and clear of all material Liens except for
restrictions in respect of deposits, statutory premium reserve requirements and
statutory pledges with state regulatory authorities disclosed in the Fidelity
SEC Documents. The Annual Convention Statements on NAIC Form 9 of the Fidelity
Insurance Subsidiaries contain a complete description of all securities of the
Fidelity Insurance Subsidiaries on deposit with each state insurance department
as of December 31, 1998.
Section 5.17 Compliance with Laws. Fidelity and its
Subsidiaries have all licenses, permits and qualifications necessary to conduct
their businesses or own their properties in each jurisdiction in which Fidelity
or its Subsidiaries currently do business or own property, or in which such
license, permit or qualification is otherwise required. Except as disclosed on
Section 5.17 of the Fidelity Disclosure Schedule and except for the Fidelity
Proceedings, since July 1, 1994, (a) neither Fidelity nor any of its Insurance
Subsidiaries has had its license or qualification to conduct title insurance
business in any jurisdiction revoked or suspended or been involved in a
proceeding to revoke or suspend such license or qualification, nor to the best
knowledge of Fidelity has any investigation been conducted, or is pending, in
any such jurisdiction with a view to revocation or suspension of any such
license, (b) Fidelity and its Subsidiaries have complied in all material
respects with all laws, regulations and orders applicable to their businesses
and the present use by Fidelity and its Subsidiaries of their respective
properties, and the business conducted by Fidelity and its Subsidiaries, does
not violate in any material respect any such laws, regulations or orders and
(c) Fidelity and its Subsidiaries have timely filed all reports and returns
required by law, rule, regulation or policy of any regulatory authority and all
such returns and reports are true and correct in all material respects, and
there are no material deficiencies with respect to such
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filings or submissions. Section 5.17 of the Fidelity Disclosure Schedule
indicates the most recent date of the last completed insurance regulatory
examination and audit, regular or special, as the case may be, as to Fidelity
and its Insurance Subsidiaries for the jurisdictions listed therein, and a copy
of the most recent report of such examination has heretofore been made
available or delivered to the Company. There is no agreement or understanding
between Fidelity or any of its Insurance Subsidiaries, on the one hand, and any
regulatory authority, on the other hand, concerning the payment of dividends by
Fidelity or such Insurance Subsidiary or the maintenance of any NAIC Insurance
Regulatory Information System Ratio or adequacy of reserves.
Section 5.18 Forms of Contract. Except as disclosed on
Section 5.18 of the Fidelity Disclosure Schedule, each form of material
insurance policy, policy endorsement or amendment, reinsurance contract,
application form and sales material now in use by the Fidelity Insurance
Subsidiaries in any jurisdiction has been approved (or has been submitted for
approval, which is pending), where required by the appropriate insurance
regulatory authorities of such jurisdiction.
Section 5.19 Directors' and Officers' Insurance Policies.
Section 5.19 of the Fidelity Disclosure Schedule describes Fidelity's
directors' and officers' insurance policy as in effect on the date hereof.
Fidelity has not received any notice of cancellation or termination of such
directors' and officers' insurance policy, and such insurance policy is valid
and enforceable.
Section 5.20 Environmental Matters. With such exceptions as,
individually or in the aggregate, would not be reasonably likely to have a
Fidelity Material Adverse Effect, (i) no written notice, notification, demand,
request for information, citation, summons, complaint or order has been
received or made by, and no investigation, action, claim, suit, proceeding or
review is pending or threatened by any Person against, Fidelity or any of its
Subsidiaries, with respect to any applicable Environmental Law, (ii) Fidelity
and its Subsidiaries are and have been in compliance with all applicable
Environmental Laws and (iii) there are no liabilities or obligations of
Fidelity or any of its Subsidiaries of any kind whatsoever, whether accrued,
contingent, absolute, direct or indirect, determined, determinable or
otherwise, arising under or relating to any Environmental Law (including,
without limitation, liabilities or obligations relating to divested properties
or businesses or predecessor entities), and there are no facts, conditions,
situations or set of circumstances that have resulted or could reasonably be
expected to result in or be the basis for any such liabilities or obligations.
Section 5.21 Finders' Fees; Opinion of Financial Advisor.
(a) Except for Morgan Stanley & Co. Incorporated, whose fees
will be paid by Fidelity, there is no investment banker, broker, finder or
other intermediary who might be entitled to any fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of Fidelity.
(b) Fidelity has received the opinion of Morgan Stanley & Co.
Incorporated, dated the date of this Agreement, to the effect that, as of such
date, the Merger Consideration to be paid by Fidelity is fair to Fidelity from
a financial point of view, a copy of which opinion has been made available to
the Company.
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Section 5.22 Required Vote; Board Approval.
(a) The only vote of the holders of any class or series of
capital stock of Fidelity required by law, rule or regulation to approve this
Agreement, the Merger and/or any of the other transactions contemplated hereby
is (i) the affirmative vote of the holders of Fidelity Common Shares
representing a majority of the outstanding Fidelity Common Shares to approve
the Merger and the Certificate Amendment and (ii) the affirmative vote of the
holders of a majority of the votes cast at the Fidelity Stockholder Meeting (as
hereafter defined), provided that the total votes cast represent over 50% of
the outstanding Fidelity Common Shares, to approve the issuance of Fidelity
Common Stock in connection with the Merger (clauses (i) and (ii) constituting
the "Fidelity Stockholder Approval").
(b) Fidelity's Board of Directors has (a) determined that this
Agreement and the transactions contemplated hereby, including the Merger, are
in the best interests of Fidelity and its stockholders, (b) approved this
Agreement and the transactions contemplated hereby and (c) resolved to
recommend to such stockholders that they vote in favor of adopting and
approving this Agreement and the Merger in accordance with the terms hereof.
Section 5.23 Ownership of Company Common Shares. As of the
date hereof, neither Fidelity nor, to Fidelity's knowledge, any of its
affiliates or associates (as such terms are defined in the Exchange Act),
(a)(i) beneficially owns, directly or indirectly, or (ii) is a party to any
agreement, arrangement or understanding for the purpose of acquiring, holding,
voting or disposing of, in each case, Company Common Shares which in the
aggregate represent five percent (5%) or more of the outstanding Company Common
Shares, nor (b) is an "interested stockholder" of the Company within the
meaning of Section 203 of the DGCL.
Section 5.24 Year 2000 Compliance. Fidelity has (i) completed
a review and assessment of all areas within the business and operations of
Fidelity and its Subsidiaries (including those areas affected by suppliers and
vendors) that could be adversely affected by the "Year 2000 Problem" (that is,
the risk that computer software and systems used by Fidelity or any of its
Subsidiaries (or their respective suppliers and vendors) may be unable to
recognize and perform properly date-sensitive functions involving certain
dates prior to and any date after December 31, 1999) and (ii) developed a plan
and timeline for addressing the Year 2000 Problem on a timely basis, which plan
and timeline have been made available to the Company. Fidelity reasonably
believes that all computer software and systems (including those of vendors and
suppliers) that are used in the business or operations of Fidelity or its
Subsidiaries as presently conducted (the "Fidelity Systems") will on a timely
basis be Year 2000 Compliant, except for such failures to perform which would
not, individually or in the aggregate, be reasonably likely to have a Fidelity
Material Adverse Effect.
Section 5.25 Financing. At the Effective Time, Fidelity will
have sufficient funds to enable it to consummate the transactions contemplated
by this Agreement.
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ARTICLE VI
COVENANTS OF THE COMPANY
The Company agrees that:
Section 6.1 The Company Interim Operations. Except as set
forth in the Company Disclosure Schedule or as otherwise expressly contemplated
hereby, without the prior consent of Fidelity (which consent shall not be
unreasonably withheld or delayed), from the date hereof until the Effective
Time, the Company shall, and shall cause each of its Subsidiaries to, conduct
their business in all material respects in the ordinary course consistent with
past practice and shall use commercially reasonable efforts to (i) preserve
intact its present business organization, (ii) maintain in effect all material
licenses, approvals and authorizations, including, without limitation, all
material licenses and permits that are required by applicable Laws and
Environmental Laws for the Company or any of its Subsidiaries to carry on its
business and (iii) preserve existing relationships with its key employees, its
key agents, and its material customers, lenders, suppliers and others having
material business relationships with it. Without limiting the generality of
the foregoing, except as set forth in Section 6.1 of the Company Disclosure
Schedule or as otherwise expressly contemplated by this Agreement (including
the Exhibits hereto), from the date hereof until the Effective Time, without
the prior consent of Fidelity (which consent shall not be unreasonably withheld
or delayed), the Company shall not, nor shall it permit any of its Subsidiaries
to:
(a) amend its certificate of incorporation or by-laws;
(b) take any action that would prevent or materially impair the
ability of the Company to consummate the transactions contemplated by this
Agreement, including actions that would be reasonably likely to prevent or
materially impair the ability of the Company, Fidelity or any of their
Subsidiaries to obtain any consent, registration, approval, permit or
authorization required to be obtained from any Governmental Entity prior to the
Effective Time in connection with the execution and delivery of this Agreement
and the consummation of the Merger and the other transactions contemplated by
this Agreement;
(c) split, combine or reclassify any shares of capital stock of
the Company or any less-than-wholly-owned Subsidiary of the Company or declare,
set aside or pay any dividend or other distribution (whether in cash, stock or
property or any combination thereof) in respect of its capital stock, or
redeem, repurchase or otherwise acquire or offer to redeem, repurchase, or
otherwise acquire any of its securities or any securities of any of its
Subsidiaries, except for regular quarterly cash dividends (having customary
record and payment dates, not in excess of $0.36 per Company Common Share) and
as contemplated by Section 8.5 hereof;
(d) (i) issue, deliver or sell, or authorize the issuance,
delivery or sale of, any shares of its capital stock of any class or any
securities convertible into or exercisable for, or any rights, warrants or
options to acquire, any such capital stock or any such convertible securities,
other than (A) the issuance of Company Common Shares upon the exercise of stock
options or pursuant to a Company Employee Plan in accordance with its present
terms and (B) the granting of options to acquire Company Common Shares to the
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extent contemplated by the plans and arrangements described on Exhibit C
hereto; (ii) amend in any material respect any material term of any outstanding
security of the Company or any of its Subsidiaries or (iii) consent, including
consent by the applicable committee, to any transfer of a Company Option;
(e) other than in connection with transactions permitted by
Section 6.1(f), incur any capital expenditures or any obligations or
liabilities in respect thereof, except for those (i) contemplated by the
capital expenditure budgets for the Company and its Subsidiaries, (ii) incurred
in the ordinary course of business of the Company and its Subsidiaries, or
(iii) not otherwise described in clauses (i) and/or (ii) which are (x) not in
excess of $1 million, (y) in excess of $1 million but less than $2.5 million
and as to which the Transition Committee has been notified, or (z) approved by
the Transition Committee;
(f) except for acquisitions in the ordinary course of the
investment activities of the Company and its Subsidiaries consistent with past
practice, acquire (whether pursuant to merger, stock or asset purchase or
otherwise) in one transaction or series of related transactions any assets of
or equity interests in any Person having a fair market value in excess of $10
million;
(g) sell, lease, encumber or otherwise dispose of any assets,
other than (i) in the ordinary course of business consistent with past
practice, (ii) equipment and property no longer used in the operation of the
Company's business and (iii) sales or other dispositions of assets related to
discontinued operations of the Company or any of its Subsidiaries;
(h) incur any indebtedness for borrowed money or guarantee any
such indebtedness or issue or sell any debt securities or warrants or rights to
acquire any debt securities of the Company or any of its Subsidiaries or
guarantee any debt securities of others or request any advances in respect of,
or make any drawdowns on, any existing indebtedness which advance or drawdown
exceeds $10 million individually or $25 million in the aggregate;
(i) amend, modify or terminate any material contract, agreement
or arrangement of the Company or any of its Subsidiaries or otherwise waive,
release or assign any material rights, claims or benefits of the Company or any
of its Subsidiaries thereunder;
(j) (i) except in the ordinary course of business consistent with
past practice, or as required by law or by an agreement existing on the date
hereof, or as contemplated by Exhibit C hereto, increase the amount of
compensation of any director or executive officer or make any increase in or
commitment to increase any employee benefits, (ii) except as required by law or
by an agreement existing on the date hereof or as contemplated by Exhibit C
hereto, adopt any severance program or grant any material severance or
termination pay to any director, officer or employee of the Company or any of
its Subsidiaries, (iii) except as contemplated by Exhibit C hereto, adopt or
implement any employee retention program or other incentive arrangement not in
existence on the date hereof, (iv) except as contemplated by Exhibit C hereto,
adopt any additional employee benefit plan or, except in the ordinary course of
business, make any material contribution to
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any existing such plan, or (v) except as may be required by law or pursuant to
any agreement existing on the date hereof, amend in any material respect any
Company Employee Plan;
(k) change the Company's (x) methods of accounting in effect at
December 31, 1998, except as required by changes in GAAP or by Regulation S-X
of the Exchange Act, as concurred in by its independent public accountants or
(y) fiscal year;
(l) other than in the ordinary course of business consistent
with past practice, make any tax election or enter into any settlement or
compromise of any tax liability that in either case is material to the business
of the Company and its Subsidiaries, taken as a whole;
(m) pay, discharge, settle or satisfy any claim, liability or
obligation (absolute, accrued, asserted or unasserted, contingent or otherwise)
other than (x) for an amount of $5 million or less, (y) an insurance claim
arising in the ordinary course of business, and (z) ordinary course repayment
of indebtedness or payment of contractual obligations when due;
(n) take any action that would cause any of its representations
and warranties herein to become untrue in any material respect; and
(o) agree, resolve or otherwise commit to do any of the
foregoing;
provided, however, that the provisions of this Section 6.1 shall not limit the
Company's ability to repurchase Company Common Shares issued by the Company to
persons other than Alleghany as contemplated by the provisions of Section 6.4
below. Notwithstanding anything to the contrary in this Agreement, the Company
shall use its commercially reasonable efforts to complete the plan referred to
in Section 4.24 on a timely basis.
Section 6.2 Stockholder Meeting. The Company shall cause a
meeting of its stockholders (the "Company Stockholders Meeting") to be duly
called and held for the purpose of obtaining the Company Stockholder Approval
as soon as reasonably practicable after the Registration Statement is declared
effective under the Securities Act. Except as provided in the next sentence,
(a) the Company's Board of Directors shall recommend approval and adoption by
its stockholders of this Agreement (the "Company Recommendation"), and (b) the
Company shall use its reasonable best efforts to solicit the Company
Stockholder Approval. Without limiting the generality of the foregoing, the
Company agrees that its obligations under this Section 6.2 shall not be
affected by the commencement, public proposal, public disclosure or
communication to the Company of any Acquisition Proposal. The Board of
Directors of the Company shall be permitted to (i) not recommend to the
Company's stockholders that they give the Company Stockholder Approval or (ii)
withdraw or modify in a manner materially adverse to Fidelity the Company
Recommendation, only if the Board of Directors of the Company by a majority
vote determines in its good faith judgment (after consultation with its outside
legal counsel) that it is necessary to so withdraw or modify the Company
Recommendation to comply with its fiduciary duties under applicable law.
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Section 6.3 Acquisition Proposals; Board Recommendation.
(a) The Company agrees that it shall not, nor shall it permit
any of its Subsidiaries to, nor shall it authorize or knowingly permit any
officer, director, employee, investment banker, attorney, accountant, agent or
other advisor or representative of the Company or any of its Subsidiaries,
directly or indirectly, to (i) take any action to solicit, initiate or
facilitate or encourage the submission of any Acquisition Proposal, (ii) engage
in any negotiations regarding, or furnish to any Person any non-public
information with respect to, or take any other action knowingly to facilitate
any inquiries or the making of any proposal that constitutes, or may be
reasonably expected to lead to, any Acquisition Proposal, (iii) grant any
waiver or release under any standstill or similar agreement with respect to any
class of the Company's equity securities or (iv) other than in the manner
contemplated by Section 6.3(d), enter into any agreement with respect to any
Acquisition Proposal; provided, however, that the Company may take any actions
described in the foregoing clauses (i), (ii), (iii), or (iv) in respect of any
Person who makes an Acquisition Proposal, but only if (x) the Board of
Directors of the Company by a majority vote determines in its good faith
judgment that either (A) such Acquisition Proposal constitutes a Superior
Proposal and provides written notice of termination of this Agreement in
accordance with Section 6.3(d) and Section 10.1, or (B) such Acquisition
Proposal could reasonably be expected to result in a Superior Proposal, and (y)
prior to furnishing any non-public information to such Person, such Person
shall have entered into a confidentiality agreement with the Company on terms
no less favorable to the Company than the Confidentiality Agreement between the
Company and Fidelity dated as of June 24, 1999 (the "Confidentiality
Agreement").
(b) Unless the Company's Board of Directors has previously
withdrawn, or is concurrently therewith withdrawing, the Company
Recommendation, neither the Company's Board of Directors nor any committee
thereof shall recommend any Acquisition Proposal to the Company stockholders.
Notwithstanding the foregoing, nothing contained in this Section 6.3(b) or
elsewhere in this Agreement shall prevent the Company's Board of Directors from
complying with Rule 14e-2 under the Exchange Act with respect to any
Acquisition Proposal or making any disclosure required by applicable law.
(c) Promptly (but in no event later than 48 hours) after
receipt by the Company or any of its Subsidiaries (or any of their respective
directors, officers, agents or advisors) of any Acquisition Proposal, any
contacts concerning, or any request for non-public information or for access to
the properties, books or records of the Company or any of its Subsidiaries or
any request for a waiver or release under any standstill or similar agreement,
by any Person that has made an Acquisition Proposal or indicates that it is
considering making an Acquisition Proposal, the Company shall notify Fidelity
(x) that a Person may be considering making an Acquisition Proposal, and (y) of
the identity of such Person and, if an Acquisition Proposal is made, of the
material terms of such Acquisition Proposal. The Company shall keep Fidelity
reasonably informed of the status and material terms of any such Acquisition
Proposal.
(d) Upon notice and in accordance with the terms of Section
10.1, the Company may terminate this Agreement at any time before the Company
Stockholder Approval is obtained if (w) the Company's Board of Directors shall
have authorized the
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Company, subject to the terms and conditions of this Agreement, to enter into a
binding agreement concerning a transaction that constitutes a Superior
Proposal, (x) the Company notifies Fidelity that it intends to enter into such
agreement, specifying the material terms and conditions of such agreement, (y)
within three Business Days of receiving the notice described in (x) above,
Fidelity fails to propose and agree to enter into a modification of this
Agreement such that the Board of Directors of the Company determines by a
majority vote in its good faith judgment that such Superior Proposal is no
longer a Superior Proposal and (z) the Company pays Fidelity the fee
contemplated by Section 10.3(b).
Section 6.4 Purchases of Company Common Shares. Subject to
applicable legal requirements and to the contractual obligations of the
Company, the Company agrees to use its good faith efforts to repurchase Company
Common Shares issued by the Company to persons other than Alleghany; provided,
that unless consented to by Fidelity, the purchase price paid by the Company
for such Company Common Shares shall not exceed $52.00.
ARTICLE VII
COVENANTS OF FIDELITY
Fidelity agrees that:
Section 7.1 Fidelity Interim Operations. Except as set forth
in the Fidelity Disclosure Schedule or as otherwise expressly contemplated
hereby, without the prior consent of the Company (which consent shall not be
unreasonably withheld or delayed), from the date hereof until the Effective
Time, Fidelity shall, and shall cause each of its Subsidiaries to, conduct
their business in all material respects in the ordinary course consistent with
past practice and shall use commercially reasonable efforts to (i) preserve
intact its present business organization, (ii) maintain in effect all material
licenses, approvals and authorizations, including, without limitation, all
material licenses and permits that are required by applicable Laws or
Environmental Laws for Fidelity or any of its Subsidiaries to carry on its
business and (iii) preserve existing relationships with its material customers,
lenders, suppliers and others having material business relationships with it.
Without limiting the generality of the foregoing, except as set forth in
Section 7.1 of the Fidelity Disclosure Schedule or otherwise expressly
contemplated by this Agreement (including the Exhibits hereto), from the date
hereof until the Effective Time, without the prior consent of the Company
(which consent shall not be unreasonably withheld or delayed), Fidelity shall
not, not shall it permit any of its Subsidiaries to:
(a) amend its certificate of incorporation or by-laws (other
than as contemplated by Section 2.2 hereof);
(b) take any action that would prevent or materially impair the
ability of Fidelity to consummate the transactions contemplated by this
Agreement, including actions that would be reasonably likely to prevent or
materially impair the ability of Fidelity, the Company or any of their
Subsidiaries to obtain any consent, registration, approval, permit or
authorization required to be obtained from any Governmental Entity prior to the
Effective Time in connection with the execution and delivery of this Agreement
and the consummation of the Merger and the other transactions contemplated by
this Agreement;
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(c) split, combine or reclassify any shares of capital stock of
Fidelity or any less-than-wholly-owned Subsidiary of Fidelity or declare, set
aside or pay any dividend or other distribution (whether in cash, stock or
property or any combination thereof) in respect of its capital stock, except
for regular quarterly cash dividends (having customary record and payment
dates, not in excess of $0.084 per Fidelity Common Share);
(d) redeem, repurchase or otherwise acquire or offer to redeem,
repurchase, or otherwise acquire any of its securities or any securities of, or
other ownership interests in, any of its Subsidiaries; provided, however, that
Fidelity shall be permitted to repurchase Fidelity Common Shares if such
repurchases (i) are made pursuant to Fidelity's existing or future publicly
announced stock repurchase program, (ii) are made on the NYSE pursuant to Rule
10b-18 under the Exchange Act, (iii) are not made (x) during the period
commencing on the date the Joint Proxy Statement/Prospectus is first
disseminated to the stockholders of the Company or Fidelity and ending on the
first day after the date that both the Company Stockholder Approval and the
Fidelity Stockholder Approval have been obtained, (y) during the 30 consecutive
trading day period ending on the Determination Date, or (z) at a time when such
repurchases are prohibited by Regulation M under the Exchange Act, and (iv)
would not prevent or materially impair the ability of Fidelity to obtain
sufficient funds to enable it to consummate the transactions contemplated by
this Agreement;
(e) (i) issue, deliver or sell, or authorize the issuance,
delivery or sale of, any shares of its capital stock of any class or any
securities convertible into or exercisable for, or any rights, warrants or
options to acquire, any such capital stock or any such convertible securities,
other than (A) the issuance of Fidelity Common Shares upon the exercise of
stock options or pursuant to a Fidelity Employee Plan in accordance with its
present terms and (B) the granting of options to acquire Fidelity Common Shares
in the ordinary course of business consistent with past practice; (ii) amend in
any material respect any material term of any outstanding security of Fidelity
or any of its Subsidiaries, or (iii) consent, including consent by the
applicable committee, to any transfer of a Fidelity Option;
(f) other than in connection with transactions permitted by
Section 7.1(g), incur any capital expenditures or any obligations or
liabilities in respect thereof, except for those (i) contemplated by the
capital expenditure budgets for Fidelity and its Subsidiaries made available to
the Company, (ii) incurred in the ordinary course of business of Fidelity and
its Subsidiaries or (iii) not otherwise described in clauses (i) and/or (ii)
which do not exceed $5 million individually or $25 million in the aggregate;
(g) except for acquisitions in the ordinary course of the
investment activities of Fidelity and its Subsidiaries consistent with past
practice, acquire (whether pursuant to merger, stock or asset purchase or
otherwise) in one transaction or series of related transactions any assets of
or equity interests in any Person having a fair market value in excess of $10
million;
(h) sell, lease, encumber or otherwise dispose of any assets,
other than (i) in the ordinary course of business consistent with past
practice, (ii) equipment and property no longer used in the operation of
Fidelity's business and (iii) sales or other dispositions of assets related to
discontinued operations of Fidelity or any of its Subsidiaries;
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(i) incur any indebtedness for borrowed money or guarantee any
such indebtedness or issue or sell any debt securities or warrants or rights to
acquire any debt securities of Fidelity or any of its Subsidiaries or guarantee
any debt securities of others or request any advances in respect of, or make
any drawdowns on, any existing indebtedness, except for (i) borrowings and
guarantees made by Fidelity and its Subsidiaries which are pursuant to or
permitted by the Revolving Credit Facility in accordance with the terms of the
Revolving Credit Facility, (ii) indebtedness incurred to effect the
transactions contemplated by this Agreement and (iii) indebtedness incurred in
connection with repurchases of Fidelity Common Shares permitted under Section
7.1(d), to the extent that incurrence of such indebtedness does not prevent or
materially impair the ability of Fidelity to obtain sufficient funds to enable
it to consummate the transactions contemplated by this Agreement;
(j) amend, modify or terminate any material contract, agreement
or arrangement of Fidelity or any of its Subsidiaries or otherwise waive,
release or assign any material rights, claims or benefits of Fidelity or any of
its Subsidiaries thereunder;
(k) (i) except in the ordinary course of business consistent with
past practice, or as required by law or by an agreement existing on the date
hereof, increase the amount of compensation of any director or executive
officer or make any increase in or commitment to increase any employee
benefits, (ii) except as required by law or by an agreement existing on the
date hereof grant any material severance or termination pay to any director,
officer or employee of Fidelity or any of its Subsidiaries, (iii) adopt any
additional employee benefit plan or, except in the ordinary course of business,
make any material contribution to any existing such plan or (iv) except as may
be required by law or pursuant to any agreement existing on the date hereof,
amend in any material respect any Fidelity Employee Plan;
(l) change Fidelity's (x) methods of accounting in effect at
December 31, 1998, except as required by changes in GAAP or by Regulation S-X
of the Exchange Act, as concurred in by its independent public accountants or
(y) fiscal year;
(m) other than in the ordinary course of business consistent
with past practice, make any tax election or enter into any settlement or
compromise of any tax liability that in either case is material to the business
of Fidelity and its Subsidiaries, taken as a whole;
(n) pay, discharge, settle or satisfy any claim, liability or
obligation (absolute, accrued, asserted or unasserted, contingent or otherwise)
other than (x) for an amount of $5 million or less, (y) an insurance claim
arising in the ordinary course of business, and (z) ordinary course repayment
of indebtedness or payment of contractual obligations when due;
(o) take any action that would cause any of its representations
and warranties herein to become untrue in any material respect; and
(p) agree, resolve or otherwise commit to do any of the
foregoing;
provided, however, that the provisions of this Section 7.1 shall not apply in
respect of Micro General (it being understood that Fidelity will not take any
action as a stockholder of Micro General that would prevent or materially
impair the ability of Fidelity to consummate the
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transactions contemplated by this Agreement); and further provided, that the
provisions of Section 7.1(g), Section 7.1(h) and Section 7.1(i) above shall not
apply to Fidelity National Leasing Inc. (it being understood that Fidelity will
not permit Fidelity National Leasing Inc. to take any action that would
prevent or materially impair the ability of Fidelity to consummate the
transactions contemplated by this Agreement). Notwithstanding anything to the
contrary in this Agreement, Fidelity shall use its commercially reasonable
efforts to complete the plan referred to in Section 5.24 on a timely basis.
Section 7.2 Executive Management. Effective at the later of
December 31, 1999 or the Effective Time, William P. Foley, II, Chief Executive
Officer of Fidelity, shall have resigned from all executive management
positions other than positions with Fidelity and its Subsidiaries; provided,
however, that nothing in this Section 7.2 shall require that Mr. Foley resign
as Chairman of the Board of, or from any other non-executive position he may
hold with, entities other than Fidelity or its Subsidiaries. At the Effective
Time, Mr. Foley will be appointed Vice Chairman of the Chicago Title and Trust
Company Foundation.
Section 7.3 Stockholder Meeting. Fidelity shall cause a
meeting of its stockholders (the "Fidelity Stockholders Meeting") to be duly
called and held for the purpose of approving the matters constituting the
Fidelity Stockholder Approval as soon as reasonably practicable after the
Registration Statement is declared effective under the Securities Act.
Fidelity's Board of Directors shall recommend approval and adoption by its
stockholders of this Agreement, and Fidelity shall use its reasonable best
efforts to solicit the Fidelity Stockholder Approval.
Section 7.4 Indemnification, Exculpation and Insurance.
(a) Fidelity agrees to maintain in effect in accordance with
their terms all rights to indemnification and exculpation from liabilities for
acts or omissions occurring at or prior to the Effective Time now existing in
favor of the current or former directors or officers of the Company and its
Subsidiaries as provided in their respective certificates of incorporation or
by-laws (or comparable organizational documents) and any indemnification
agreements of the Company. In addition, from and after the Effective Time,
directors and officers of the Company who become directors or officers of
Fidelity will be entitled to the same indemnity rights and protections as are
afforded to other directors and officers of Fidelity.
(b) In the event that Fidelity or any of its successors or
assigns (i) consolidates with or merges into any other person and is not the
continuing or surviving corporation or entity of such consolidation or merger
or (ii) except as required by applicable law in connection with the Merger,
transfers or conveys all or substantially all of its properties and assets to
any person, then, and in each such case, proper provision will be made so that
the successors and assigns of Fidelity assume the obligations set forth in this
Section 7.4.
(c) Immediately prior to the Closing, the Company shall
purchase, from an insurer or insurers chosen by the Company, one or more single
payment, run-off policies of directors and officers liability insurance
covering acts or omissions occurring prior to the Effective Time with respect
to those persons who are currently covered by the Company's directors' and
officers' liability insurance policies on terms with respect to such coverage
and
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amount no less favorable than the terms of the current policies of the Company
which policies are described on Section 4.19 of the Company Disclosure
Schedule, such policy (or policies) to become effective at the Effective Time
and to remain in effect for a period of six years after the Effective Time. If
such coverage is unavailable, for six years after the Effective Time, Fidelity
shall provide to the Company's directors and officers liability insurance
covering acts or omissions occurring prior to the Effective Time with respect
to those persons who are currently covered by the Company's directors' and
officers' liability insurance policies with insurance companies who are rated
at least as highly as the insurance companies who currently provide the
Company's directors' and officers' liability insurance as described on Section
4.19 of the Company Disclosure Schedule and on terms with respect to such
coverage and amount no less favorable than those described on Section 4.19 of
the Company Disclosure Schedule; provided, however, that if the aggregate
annual premiums for such insurance at any time during such period shall exceed
200% of the per annum rate of premium paid by the Company as of the date hereof
for such insurance, then Fidelity shall provide only such coverage as shall
then be available at an annual premium equal to 200% of such rate.
(d) The provisions of this Section 7.4 are intended to be for
the benefit of, and will be enforceable by, each indemnified party, his or her
heirs and his or her representatives and (ii) are in addition to, and not in
substitution for, any other rights to indemnification or contribution that any
such person may have by contract or otherwise.
Section 7.5 Employee Benefits. Fidelity agrees to cause the
Surviving Corporation to perform all of the obligations of the Company pursuant
to the Company severance plan and Company employee retention program and other
arrangements with regard to officers and employees of the Company described in
Exhibit C hereto. Prior to the Effective Time, the Company Board of Directors
will make any determinations required by the plans and arrangements described
on Exhibit C hereto, and Fidelity agrees that the Surviving Corporation will
implement such plans and arrangements in accordance with the determinations
made by the Company Board of Directors.
Section 7.6 Stock Exchange Listing. Fidelity shall use its
reasonable best efforts to cause the Fidelity Common Shares to be issued in
connection with the Merger or upon exercise of Fidelity Options to be listed on
the NYSE, subject to official notice of issuance.
ARTICLE VIII
COVENANTS OF FIDELITY AND THE COMPANY
The parties hereto agree that:
Section 8.1 Reasonable Best Efforts. Subject to the terms
and conditions hereof, each party will use reasonable best efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate the transactions contemplated by this Agreement as promptly as
practicable after the date hereof, including (i) preparing and filing as
promptly as practicable all documentation to effect all necessary applications,
notices, petitions, filings, tax ruling
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requests and other documents and to obtain as promptly as practicable all
consents, waivers, licenses, orders, registrations, approvals, permits, tax
rulings and authorizations necessary or advisable to be obtained from any third
party and/or any Governmental Entity in order to consummate the Merger or any
of the other transactions contemplated by this Agreement and (ii) taking all
reasonable steps as may be necessary to obtain all such material consents,
waivers, licenses, registrations, permits, authorizations, tax rulings, orders
and approvals. In furtherance and not in limitation of the foregoing, each
party hereto agrees to make an appropriate filing of a Notification and Report
Form pursuant to the HSR Act with respect to the transactions contemplated
hereby as promptly as practicable after the date hereof and to supply as
promptly as practicable any additional information and documentary material
that may be requested pursuant to the HSR Act and to take all other actions
necessary to cause the expiration or termination of the applicable waiting
periods under the HSR Act as soon as practicable, and (iii) the defending of
any lawsuits or other legal proceedings, whether judicial or administrative,
challenging this Agreement or the transactions contemplated hereby, including
seeking to have any stay or temporary restraining order entered by any
Governmental Entity vacated or reversed. Nothing in this Section 8.1 shall
require any of the Company and its Subsidiaries or Fidelity and its
Subsidiaries to sell, hold separate or otherwise dispose of or conduct their
business in a specified manner, or agree to sell, hold separate or otherwise
dispose of or conduct their business in a specified manner, or permit the sale,
holding separate or other disposition of, any assets of the Company, Fidelity
or their respective Subsidiaries or the conduct of their business in a
specified manner, whether as a condition to obtaining any approval from a
Governmental Entity or any other Person or for any other reason, if such sale,
holding separate or other disposition or the conduct of their business in a
specified manner either (x) is not conditioned on the Closing or (y) would
reasonably be expected to have a Material Adverse Effect on the Surviving
Corporation, taken as a whole, after giving effect to the Merger (any such
sale, holding separate or other disposition or conduct of business referred to
(x) or (y) shall be referred to herein as a "Burdensome Condition").
Section 8.2 Certain Filings; Cooperation in Receipt of
Consents.
(a) As promptly as practicable after the date hereof, Fidelity
and the Company shall prepare and file with the SEC the Joint Proxy
Statement/Prospectus and, as soon as practicable following the period of any
review thereof by the SEC staff, Fidelity shall prepare and file the
Registration Statement, in which the Joint Proxy Statement/Prospectus will be
included. Each of the Company and Fidelity shall use its reasonable best
efforts to have the Registration Statement declared effective under the
Securities Act as promptly as practicable after such filing and to keep the
Registration Statement effective as long as is necessary to consummate the
Merger. Each of the Company and Fidelity shall mail the Joint Proxy
Statement/Prospectus to its stockholders as promptly as practicable after the
Registration Statement is declared effective under the Securities Act and, if
necessary, after the Joint Proxy Statement/Prospectus shall have been so
mailed, promptly circulate amended, supplemental or supplemented proxy material
and, if required in connection therewith, resolicit proxies. Fidelity shall
also take any action (except to qualify to do business or to file a general
consent to service of process) required to be taken under any applicable state
securities or "blue sky" laws in connection with the issuance of Fidelity
Common Shares in the Merger, and the Company shall use its reasonable best
efforts to furnish all information
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concerning its directors, officers, stockholders and business as may be
reasonably requested by Fidelity in connection with any such action.
(b) No filing of, or any amendment or supplement to, the Joint
Proxy Statement/Prospectus will be made by the Company or Fidelity without
providing the other party the opportunity to review and comment thereon. Each
party will advise the other party, promptly after it receives notice thereof,
of the time when the Registration Statement has become effective or any
supplement or amendment has been filed, the issuance of any stop order, the
suspension of the qualification of the Fidelity Common Shares issuable in
connection with the Merger for offering or sale in any jurisdiction, or any
request by the SEC for amendment of the Joint Proxy Statement/Prospectus or
comments thereon and responses thereto or requests by the SEC for additional
information. If at any time prior to the Effective Time any information
relating to either party, or any of their respective Affiliates, officers or
directors should be discovered by the Company or Fidelity, that should be set
forth in an amendment or supplement to the Registration Statement or the Joint
Proxy Statement/Prospectus, so that either of such documents would not include
any misstatement of a material fact or omit to state any material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, the party that discovers such information
shall promptly notify the other party hereto and an appropriate amendment or
supplement describing such information shall be promptly filed with the SEC
and, to the extent required by law or regulation, disseminated to the
stockholders of the Company and Fidelity.
(c) The Company shall use its reasonable best efforts to cause
to be delivered to Fidelity two letters from the Company's independent public
accountants, one dated the date on which the Registration Statement shall
become effective and one dated the date of the Effective Time, each addressed
to the Company and Fidelity, in form and substance reasonably satisfactory to
Fidelity and customary in scope and substance for comfort letters delivered by
independent public accountants in connection with registration statements
similar to the Registration Statement. Fidelity shall use its reasonable best
efforts to cause to be delivered to the Company two letters from Fidelity's
independent public accountants, one dated the date on which the Registration
Statement shall become effective and one dated the date of the Effective Time,
each addressed to the Company and Fidelity, in form and substance reasonably
satisfactory to the Company and customary in scope and substance for comfort
letters delivered by independent public accountants in connection with
registration statements similar to the Registration Statement.
(d) The Company and Fidelity shall cooperate with one another
in (i) determining whether any other action by or in respect of, or filing
with, any Governmental Entity is required, or any actions, consents, approvals
or waivers are required to be obtained from parties to any material contracts,
in connection with the consummation of the transactions contemplated hereby and
(ii) seeking any such other actions, consents, approvals or waivers or making
any such filings, furnishing information required in connection therewith and
seeking promptly to obtain any such actions, consents, approvals or waivers.
Each party shall permit the other party to review any communication given by it
to, and shall consult with each other in advance of any meeting or conference
with, any Governmental Entity or, in connection with any proceeding by a
private party, with any other Person, and to
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the extent permitted by the applicable Governmental Entity or other Person,
give the other party the opportunity to attend and participate in such meetings
and conferences, in each case in connection with the transactions contemplated
hereby.
Section 8.3 Public Announcements. The parties shall consult
with each other before issuing, and provide each other a reasonable opportunity
to review and comment upon, any press release or public statement with respect
to this Agreement and the transactions contemplated hereby and, except as may
be required by applicable law or any listing agreement with any national
securities exchange, will not issue any such press release or make any such
public statement prior to such consultation.
Section 8.4 Access to Information; Notification of Certain
Matters.
(a) From the date hereof until the Effective Time and subject
to applicable law, the Company and Fidelity shall (i) give to the other party,
its counsel, financial advisors, auditors and other authorized representatives
reasonable access to the offices, properties, books and records of such party,
(ii) furnish or make available to the other party, its counsel, financial
advisors, auditors and other authorized representatives such financial and
operating data and other information as such Persons may reasonably request and
(iii) instruct its employees, counsel, financial advisors, auditors and other
authorized representatives to cooperate with the reasonable requests of the
other party in its investigation. Any investigation pursuant to this Section
8.4(a) shall be conducted in such manner as not to interfere unreasonably with
the conduct of the business of the other party. All such information shall be
governed by the terms of the Confidentiality Agreement. No information or
knowledge obtained in any investigation pursuant to this Section 8.4(a) shall
affect or be deemed to modify any representation or warranty made by any party
hereunder.
(b) Each party hereto shall give notice to each other party
hereto, as promptly as practicable after the event giving rise to the
requirement of such notice, of:
(i) any communication received by such party from, or given by
such party to, any Governmental Entity in connection with any of the
transactions contemplated hereby;
(ii) any notice or other communication from any Person alleging
that the consent of such Person is or may be required in connection with
the transactions contemplated by this Agreement; and
(iii) any actions, suits, claims, investigations or proceedings
commenced or, to its knowledge, threatened against, relating to or
involving or otherwise affecting such party or any of its Subsidiaries
that, if pending on the date of this Agreement, would have been required to
have been disclosed, or that relate to the consummation of the transactions
contemplated by this Agreement; provided, however, that the delivery of any
notice pursuant to this Section 8.4(b) shall not limit or otherwise affect
the remedies available hereunder to the party receiving such notice.
Section 8.5 Payment of Special Dividend. Fidelity and the
Company agree that, prior to the Effective Time, the Company Board of Directors
shall declare a special
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dividend payable to holders of record of Company Common Shares as of the close
of business on the Business Day immediately preceding the Effective Time. The
amount of such special dividend shall be an amount per Company Common Share
equal to $0.36 multiplied by a fraction the numerator of which shall be the
number of days elapsed from the record date of the last regular quarterly
dividend payment prior to the Effective Time through the date of the Effective
Time, and the denominator of which shall be ninety.
Section 8.6 Further Assurances. At and after the Effective
Time, the officers and directors of the Surviving Corporation will be
authorized to execute and deliver, in the name and on behalf of the Company,
any deeds, bills of sale, assignments or assurances and to take and do, in the
name and on behalf of the Company, any other actions and things to vest,
perfect or confirm of record or otherwise in the Surviving Corporation any and
all right, title and interest in, to and under any of the rights, properties or
assets of the Company acquired or to be acquired by the Surviving Corporation
as a result of, or in connection with, the Merger.
Section 8.7 Tax Matters.
(a) Prior to and following the Effective Time, each party shall
use its reasonable best efforts to cause the Merger to qualify as a 368
Reorganization and will not take any action or fail to take any action
reasonably likely to cause the Merger not so to qualify.
(b) Each party shall use its reasonable best efforts (i) to
obtain the opinions referred to in Section 9.2(b) and Section 9.3(b), (ii) to
obtain the rulings, opinions or consent referred to in Section 9.2(c), and
(iii) to obtain the ruling or opinion referred to in Section 9.3(c).
(c) From and after the Effective Time, Fidelity agrees to cause
the Surviving Corporation to perform all of the obligations of the Company
under the agreements entered into between the Company and Alleghany in
connection with the distribution of the Company from Alleghany in June 1998,
including without limitation, the Tax Sharing Agreement.
Section 8.8 Control of Other Party's Business. Nothing
contained in this Agreement shall give Fidelity, directly or indirectly, the
right to control or direct the Company's operations prior to the Effective
Time. Nothing contained in this Agreement shall give the Company, directly or
indirectly, the right to control or direct Fidelity's operations prior to the
Effective Time. Prior to the Effective Time, each of Fidelity and the Company
shall exercise, consistent with the terms and conditions of this Agreement,
complete control and supervision over its respective operations.
Section 8.9 Affiliate Letters. Within 30 days following the
date hereof, the Company shall cause to be delivered to Fidelity a letter
identifying, to the Company's reasonable judgment, the names and addresses of
all Persons who may be deemed to be "affiliates" of the Company for purposes of
Rule 145(c) under the Securities Act. The Company shall use commercially
reasonable efforts to cause each such Person who is so identified to deliver to
Fidelity on or prior to the 30th day prior to the Effective Time a letter
agreement substantially in the form of Exhibit D to this Agreement.
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Section 8.10 Financing. Prior to March 31, 2000, Fidelity
will take such action as may be necessary to obtain, and will obtain,
sufficient funds to enable it to consummate the transactions contemplated by
this Agreement.
ARTICLE IX
CONDITIONS TO THE MERGER
Section 9.1 Conditions to the Obligations of Each Party. The
obligations of the Company and Fidelity to consummate the Merger are subject to
the satisfaction of the following conditions:
(a) each of the Company Stockholder Approval and the Fidelity
Stockholder Approval shall have been obtained;
(b) the Fidelity Common Shares to be issued in the Merger shall
have been authorized for listing on the NYSE, subject to official notice of
issuance;
(c) (i) the Registration Statement shall have become effective
in accordance with the provisions of the Securities Act, no stop order
suspending the effectiveness of the Registration Statement shall have been
issued by the SEC and no proceedings for that purpose shall have been initiated
by the SEC and not concluded or withdrawn and (ii) all state securities or
"blue sky" authorizations necessary to carry out the transactions contemplated
hereby shall have been obtained and be in effect;
(d) any applicable waiting period under the HSR Act relating to
the Merger shall have expired or been earlier terminated without the imposition
of any Burdensome Condition;
(e) no Governmental Entity of competent authority or
jurisdiction shall have issued any order, injunction or decree, or taken any
other action, that is in effect and restrains, enjoins or otherwise prohibits
the consummation of the Merger; and
(f) the parties shall have obtained or made all consent,
approvals, actions, orders, authorizations, registrations, declarations,
announcements and filings contemplated by Section 4.3 and Section 5.3 which if
not obtained or made (i) would render consummation of the Merger illegal or
(ii) would be reasonably likely to have a Material Adverse Effect on the
Surviving Corporation, taken as a whole, after giving effect to the Merger.
Section 9.2 Conditions to the Obligations of the Company. The
obligations of the Company to consummate the Merger are subject to the
satisfaction of the following further conditions:
(a) (i) Fidelity shall have performed in all material respects
all of its obligations hereunder required to be performed by it at or prior to
the time of the filing of the Certificate of Merger, (ii) the representations
and warranties of Fidelity contained in this Agreement (without giving effect
to any materiality, Material Adverse Effect or similar qualifications included
therein) shall have been true and correct when made and at and as of the time
of the filing of the Certificate of Merger as if made at and as of such time
(except to
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the extent any such representation or warranty expressly speaks as of an
earlier date, in which case it shall be true and correct as of such date),
except for such inaccuracies as would not be reasonably likely, individually or
in the aggregate, to have a Fidelity Material Adverse Effect, and (iii) the
Company shall have received a certificate signed by the Chief Executive Officer
or Chief Financial Officer of Fidelity to the foregoing effect;
(b) The Company shall have received an opinion of Swidler
Berlin Shereff Friedman, LLP in form and substance reasonably satisfactory to
the Company, on the basis of certain facts, representations and reasonable
assumptions set forth in such opinion, dated as of the date of the filing of
the Certificate of Merger, to the effect that the Merger will be treated for
federal income tax purposes as a 368 Reorganization. In rendering such
opinion, such counsel shall be entitled to rely upon customary representations
of officers of the Company and Fidelity in form and substance reasonably
satisfactory to such counsel and other reasonable assumptions set forth
therein;
(c) In accordance with the provisions of the Tax Sharing
Agreement, either (i) the Company shall have (x) received a ruling from the
Internal Revenue Service that is reasonably satisfactory to Alleghany to the
effect that (A) the Merger will not affect the qualification of the
distribution of the Company from Alleghany as a transaction in which no gain or
loss is recognized under Section 355 of the Code and (B) the Merger will not
affect the qualification of the AAM Distribution as a transaction in which no
gain or loss is recognized under Section 355 of the Code (except that the
Company shall not submit any such ruling request to the Internal Revenue
Service if Alleghany determines in good faith that filing such request might
have a materially adverse effect upon Alleghany) or (y) obtained an unqualified
opinion of Swidler Berlin Shereff Friedman, LLP to the effect that (A) the
Merger will not affect the qualification of the distribution of the Company
from Alleghany as a transaction in which no gain or loss is recognized under
Section 355 of the Code and (B) the Merger will not affect the qualification of
the AAM Distribution as a transaction in which no gain or loss is recognized
under Section 355 of the Code, or (ii) Alleghany shall have consented in
writing to the Merger and the other transactions contemplated hereby; and
(d) Since the date of the Fidelity balance sheet included in
the Fidelity 10-Q, there shall not have occurred any change in the financial
condition, business or operations of Fidelity and its Subsidiaries, taken as a
whole, that would be reasonably likely to have a Fidelity Material Adverse
Effect.
Section 9.3 Conditions to the Obligations of Fidelity. The
obligations of Fidelity to consummate the Merger are subject to the
satisfaction of the following further conditions:
(a) (i) The Company shall have performed in all material
respects all of its obligations hereunder required to be performed by it at or
prior to the time of filing of the Certificate of Merger, (ii) the
representations and warranties of the Company contained in this Agreement
(without giving effect to any materiality, Material Adverse Effect or similar
qualifications included therein) shall have been true and correct when made and
at and as of the time of the filing of the Certificate of Merger as if made at
and as of such time (except to the extent any such representation or warranty
expressly speaks as of an earlier date, in which case it shall be true and
correct as of such date), except for such inaccuracies as would not be
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reasonably likely, individually or in the aggregate, to have a Company Material
Adverse Effect, and (iii) Fidelity shall have received a certificate signed by
the Chief Executive Officer or Chief Financial Officer of the Company to the
foregoing effect;
(b) Fidelity shall have received an opinion of Gibson, Dunn &
Crutcher LLP in form and substance reasonably satisfactory to Fidelity, on the
basis of certain facts, representations and reasonable assumptions set forth in
such opinion, dated as of the date of the filing of the Certificate of Merger,
to the effect that the Merger will be treated for federal income tax purposes
as a 368 Reorganization. In rendering such opinion, such counsel shall be
entitled to rely upon customary representations of officers of the Company and
Fidelity in form and substance reasonably satisfactory to such counsel and
other reasonable assumptions set forth therein;
(c) Either (x) the Company has received a ruling from the
Internal Revenue Service that is reasonably satisfactory to Fidelity to the
effect that (A) the Merger will not affect the qualification of the
distribution of the Company from Alleghany as a transaction in which no gain or
loss is recognized under Section 355 of the Code and (B) the Merger will not
affect the qualification of the AAM Distribution as a transaction in which no
gain or loss is recognized under Section 355 of the Code, or (y) the Company
has obtained an unqualified opinion of Swidler Berlin Shereff Friedman, LLP or
Fidelity has obtained an unqualified opinion of Gibson, Dunn & Crutcher LLP to
the effect that (A) the Merger will not affect the qualification of the
distribution of the Company from Alleghany as a transaction in which no gain or
loss is recognized under Section 355 of the Code and (B) the Merger will not
affect the qualification of the AAM Distribution as a transaction in which no
gain or loss is recognized under Section 355 of the Code; and
(d) Since the date of the Company balance sheet included in the
Company 10-Q, there shall not have occurred any change in the financial
condition, business or operations of the Company and its Subsidiaries, taken as
a whole, that would be reasonably likely to have a Company Material Adverse
Effect.
ARTICLE X
TERMINATION
Section 10.1 Termination. This Agreement may be terminated at
any time prior to the Effective Time by written notice by the terminating party
to the other party (except if such termination is pursuant to Section 10.1(a)),
whether before or after the Company Stockholder Approval shall have been
obtained:
(a) by mutual written agreement of Fidelity and the Company;
(b) by either Fidelity or the Company, if
(i) the Merger shall not have been consummated by March 31,
2000 (the "End Date"); provided, however, that the End Date may be
extended by the Company or Fidelity until June 30, 2000 (the "Extended End
Date") in the event that, as of March 31, 2000, all conditions to the
Merger have been satisfied other than the
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conditions set forth in Section 9.1(d) or Section 9.1(f) above, except
that any party whose breach of any provision of or whose failure to
perform any obligation under this Agreement has been the cause of, or has
resulted in, the failure to obtain such consent or approval which has not
been obtained by March 31, 2000 shall not be permitted to extend the End
Date to the Extended End Date; and provided further, that the right to
terminate this Agreement under this Section 10.1(b)(i) shall not be
available to any party whose breach of any provision of or whose failure
to perform any obligation under this Agreement has been the cause of, or
has resulted in, the failure of the Merger to occur on or before the End
Date or the Extended End Date, as the case may be;
(ii) there shall be any law or regulation that makes
consummation of the Merger illegal or otherwise prohibited or any
judgment, injunction, order or decree of any Governmental Entity having
competent jurisdiction enjoining the Company or Fidelity from consummating
the Merger is entered and such judgment, injunction, judgment or order
shall have become final and nonappealable and, prior to such termination,
the parties shall have used their respective reasonable best efforts to
resist, resolve or lift, as applicable, such law, regulation, judgment,
injunction, order or decree; provided, however, that the right to
terminate this Agreement under this Section 10.1(b)(ii) shall not be
available to any party whose breach of any provision of or whose failure
to perform any obligation under this Agreement has been the cause of such
law, regulation, judgment, injunction, order or decree; or
(iii) at the Company Stockholders Meeting (including any
adjournment or postponement thereof), the Company Stockholder Approval
shall not have been obtained, or at the Fidelity Stockholders Meeting
(including any adjournment or postponement thereof), the Fidelity
Stockholder Approval shall not have been obtained;
(c) by the Company, (i) if a breach of any representation,
warranty, covenant or agreement on the part of Fidelity set forth in this
Agreement shall have occurred which would cause the condition set forth in
Section 9.2(a) not to be satisfied, and either such condition shall be
incapable of being satisfied by the End Date or the Extended End Date or such
breach or failure to perform has not been cured within 10 days after notice of
such breach or failure to perform has been given by the Company to Fidelity,
(ii) as contemplated by Section 6.3(d), or (iii) if Fidelity shall have elected
to pay the Reduced Supplemental Consideration; or
(d) by Fidelity, (i) if the Company's Board of Directors shall
have (A) amended, modified, withdrawn, conditioned or qualified the Company
Recommendation in a manner materially adverse to Fidelity, (B) recommended any
Acquisition Proposal to the Company's stockholders, and/or (C) failed to make
the Company Recommendation; or (ii) if a breach of or failure to perform any
representation, warranty, covenant or agreement on the part of the Company set
forth in this Agreement shall have occurred which would cause the condition set
forth in Section 9.3(a) not to be satisfied, and either such condition is
incapable of being satisfied by the End Date or the Extended End Date or such
breach or failure to
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perform has not been cured within 10 days after notice of such breach or
failure to perform has been given by Fidelity to the Company.
Section 10.2 Effect of Termination. If this Agreement is
terminated pursuant to Section 10.1 (including any such termination by way of
Section 6.3(d)), there shall be no liability or obligation on the part of
Fidelity or the Company, or any of their respective officers, directors,
stockholders, agents or Affiliates, except as set forth in Section 10.3, except
that the provisions of Sections 10.2, 10.3, 11.1, 11.3, 11.4, 11.5, 11.6, 11.7,
11.8, 11.9 and 11.10 of this Agreement shall remain in full force and effect
and survive any termination of this Agreement and except that, notwithstanding
anything to the contrary contained in this Agreement, neither the Company nor
Fidelity shall be relieved of or released from any liabilities or damages
arising out of its material breach of or material failure to perform its
obligations under this Agreement; provided, however, that the Company shall
have no further liability or obligation under this Agreement if it shall have
paid the Termination Fee (as hereinafter defined).
Section 10.3 Termination Fee and Expenses.
(a) Whether or not the Merger is consummated, all fees and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses, except
that (i) each of the Company and Fidelity shall bear and pay one-half of the
costs and expenses incurred in connection with the printing of the Registration
Statement and the Joint Proxy Statement/Prospectus, as well as the SEC filing
fees related thereto, and (ii) if the Merger is consummated, the Surviving
Corporation shall pay, or cause to be paid, all state, local, foreign or
provincial sales, use, real property, transfer, stock transfer or similar taxes
(including any interest or penalties with respect thereto) attributable to the
Merger.
(b) The Company shall pay Fidelity the Termination Fee (as
hereinafter defined) if this Agreement is terminated solely as follows:
(i) if the Company shall terminate this Agreement pursuant to Section
10.1(c)(ii);
(ii) if (w) either party shall terminate this Agreement pursuant to
Section 10.1(b)(iii) due to the failure to obtain the Company Stockholder
Approval, (x) at any time after the date of this Agreement and at or
before the date of the Company Stockholders Meeting an Acquisition
Proposal shall have been publicly announced or otherwise communicated to
the Company Board of Directors, (y) within twelve months of the
termination of this Agreement, the Company enters into a definitive
agreement with any third party with respect to a Business Combination,
and (z) a Business Combination with respect to the Company is thereafter
consummated; or
(iii) if Fidelity shall terminate this Agreement pursuant to Section
10.1(d)(i); provided, however, that no Termination Fee shall be payable
upon termination of this Agreement pursuant to Section 10.1(d)(i)(A) or
Section 10.1(d)(i)(C) if such termination follows an adverse change in
the Company Recommendation or failure to make the Company Recommendation
occurring at a time when Fidelity is in material breach of this Agreement
or has materially failed to perform its obligations under this Agreement
and such breach or failure to perform either would give rise
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<PAGE> 62
to a right on the part of the Company to terminate this Agreement or is
of a magnitude which would have a Fidelity Material Adverse Effect and
(in either case) has not been sufficiently cured or improved within 10
days after notice of such breach or failure to perform that the breach or
failure to perform would no longer give rise to a right of termination or
have a Fidelity Material Adverse Effect).
(c) "Termination Fee" means $34,100,000.
(d) The Termination Fee required to be paid pursuant to Section
10.3(b) shall be paid prior to, and shall be a pre-condition to the
effectiveness of, termination of this Agreement pursuant to Section
10.1(c)(ii). Any other payment of the Termination Fee required to be made
pursuant to Section 10.3(b) shall be made not later than two Business Days
after (i) the consummation of a Business Combination with the Company, in the
case of a termination of this Agreement pursuant to Section 10.1(b)(iii), or
(ii) the termination of this Agreement pursuant to Section 10.1(d)(i).
(e) Notwithstanding anything to the contrary contained in this
Agreement, the Company shall not be required to pay a Termination Fee to
Fidelity if at the time of termination of this Agreement Fidelity is in
material breach of this Agreement or has materially failed to perform its
obligations under this Agreement and such breach or failure to perform either
would give rise to a right on the part of the Company to terminate this
Agreement or is of a magnitude which would have a Fidelity Material Adverse
Effect and (in either case) has not been sufficiently cured within 10 days
after notice of such breach or failure to perform that the breach or failure to
perform would no longer give rise to a right of termination or have a Material
Adverse Effect.
ARTICLE XI
MISCELLANEOUS
Section 11.1 Notices. Except as otherwise expressly set forth
in Section 6.3(c), all notices, requests and other communications to any party
hereunder shall be in writing (including facsimile or similar writing) and
shall be given,
if to Fidelity, to:
Fidelity National Financial, Inc.
3916 State Street, Suite 300
Santa Barbara, California 93105
Attention: Mr. William P. Foley, II
Chairman of the Board
and Chief Executive Officer
Facsimile: (805) 563-4141
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<PAGE> 63
with a copy to:
Stradling Yocca Carlson & Rauth
660 Newport Center Drive, Suite 1600
Newport Beach, California 92660
Attention: C. Craig Carlson, Esq.
Facsimile: (949) 725-4100
if to the Company, to:
Chicago Title Corporation
171 North Clark Street
Chicago, Illinois 60601
Attention: Mr. John Rau
President and Chief Executive Officer
Facsimile: (312) 223-3092
with a copy to:
Dewey Ballantine LLP
1301 Avenue of the Americas
New York, New York 10019
Attention: Aileen C. Meehan, Esq.
Facsimile: (212) 259-6333
or such other address or facsimile number as such party may hereafter specify
for the purpose by notice to the other party hereto. Each such notice, request
or other communication shall be effective upon receipt.
Section 11.2 Survival of Representations, Warranties and
Covenants after the Effective Time. The representations and warranties
contained herein and in any certificate or other writing delivered pursuant
hereto shall not survive the Effective Time or the termination of this
Agreement. The covenants contained in Articles II and III and Sections 7.4,
7.5, 8.5, 8.6, 8.7, 11.2, 11.4, 11.5, 11.6, 11.7, 11.8, 11.9 and 11.10 shall
survive the Effective Time.
Section 11.3 Amendments; No Waivers.
(a) Any provision of this Agreement may be amended or waived
prior to the Effective Time if, and only if, such amendment or waiver is in
writing and signed, in the case of an amendment, by the Company and Fidelity or
in the case of a waiver, by the party against whom the waiver is to be
effective; provided, however, that after the Company Stockholder Approval, no
such amendment or waiver shall, without the further approval of such
stockholders, be made that would require such approval under any applicable
law, rule or regulation.
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<PAGE> 64
(b) No failure or delay by any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
Section 11.4 Successors and Assigns. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, provided that no party may assign,
delegate or otherwise transfer any of its rights or obligations under this
Agreement without the consent of the other party hereto. Any purported
assignment in violation hereof shall be null and void.
Section 11.5 Governing Law. This Agreement shall be construed
in accordance with and governed by the internal laws of the State of Delaware
without reference to its principles of conflicts of laws.
Section 11.6 Counterparts; Effectiveness; Third Party
Beneficiaries. This Agreement may be signed in counterparts, each of which
shall be an original, with the same effect as if the signatures thereto and
hereto were upon the same instrument. This Agreement shall become effective
when each party hereto shall have received counterparts hereof signed by the
other party hereto. Except as set forth in Section 7.4, no provision of this
Agreement is intended to confer upon any Person other than the parties hereto
any rights or remedies hereunder.
Section 11.7 Jurisdiction. Except as otherwise expressly
provided in this Agreement, the parties hereto agree that any suit, action or
proceeding seeking to enforce any provision of, or based on any matter arising
out of or in connection with, this Agreement or the transactions contemplated
hereby shall be brought in the United States District Court for the Southern
District of New York or any New York State court sitting in Manhattan, and each
of the parties hereby consents to the exclusive jurisdiction of such courts
(and of the appropriate appellate courts therefrom) in any such suit, action or
proceeding and irrevocably waives, to the fullest extent permitted by law, any
objection which it may now or hereafter have to the laying of the venue of any
such suit, action or proceeding in any such court or that any such suit, action
or proceeding which is brought in any such court has been brought in an
inconvenient forum. Process in any such suit, action or proceeding may be
served on any party anywhere in the world, whether within or without the
jurisdiction of any such court. Without limiting the foregoing, each party
agrees that service of process on such party as provided in Section 11.1 shall
be deemed effective service of process on such party.
Section 11.8 Waiver of Jury Trial. EACH OF THE PARTIES HERETO
HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
Section 11.9 Enforcement. The parties agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms. It is accordingly
agreed that the parties shall be entitled to specific performance of the terms
hereof, this being in addition to any other remedy to which they are entitled
at law or in equity.
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<PAGE> 65
Section 11.10 Entire Agreement. This Agreement (together with the
Exhibits and Schedules hereto) and the Confidentiality Agreement constitute the
entire agreement between the parties with respect to the subject matter hereof
and supersede all prior agreements and understandings, both oral and written,
between the parties with respect to the subject matter hereof.
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<PAGE> 66
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
CHICAGO TITLE CORPORATION
Attest:
/s/ Paul T. Sands, Jr. By /s/ John Rau
-------------------------- -----------------------------------
Paul T. Sands, Jr. John Rau
President and Chief Executive Office
Attest: FIDELITY NATIONAL FINANCIAL, INC.
/s/ Andrew F. Puzder By /s/ William P. Foley, II
-------------------------- ------------------------
Andrew F. Puzder William P. Foley, II
Chairman of the Board
and Chief Executive Officer
<PAGE> 67
SCHEDULE I
Illustration of Section 3.1(b)(iii) before Section 3(c) Adjustment
<TABLE>
<CAPTION>
Proportion in Stock (b)
Average Minimum -----------------------
Fidelity Consideration
Common The Exchange Paid in Minimum The Cash Shares
Share Price Ratio(a) Fidelity Shares Cash Differential Option (c) Option (d)
- ----------- ------------ --------------- ------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
$15 1.4014 $21.02 $26.00 $4.98 40.4% 50.0%
16 1.4014 22.42 26.00 3.58 43.12% 50.0%
17 1.4014 23.82 26.00 2.18 45.81% 50.0%
18 1.4014 25.23 26.00 0.77 48.52% 50.0%
18.55 1.4014 26.00 26.00 -- 50.0% 50.0%
19 1.4014 26.63 25.37 -- 51.2% 51.2%
20 1.4014 28.03 23.97 -- 53.9% 53.9%
21 1.4014 29.43 22.57 -- 56.6% 56.6%
22 1.4014 30.83 21.17 -- 59.3% 59.3%
23 1.4014 32.23 19.77 -- 62.0% 62.0%
24 1.4014 33.63 18.37 -- 64.7% 64.7%
</TABLE>
(a) Based on 21.808 million Company Common Shares outstanding and 30.439
million Fidelity Common Shares outstanding.
(b) Percentage of Merger Consideration received in Fidelity Common Shares.
(c) Assumes the Differential is paid in all cash.
(d) Assumes the Differential is paid in all Fidelity Common Shares
<PAGE> 1
Exhibit 99.2
List of Contents of Exhibits to the Merger Agreement
- - Exhibit A-1 - The Certificate Amendment
- - Exhibit A-2 - The By-law Amendment
- - Exhibit B - Composition of Surviving Corporation Board of Directors
- - Exhibit C - Employee Benefit Matters
- - Exhibit D - Rule 145 Affiliate's Letter
- - Disclosure Schedule of Chicago Title Corporation
- - Disclosure Schedule of Fidelity National Financial, Inc.
