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EXHIBIT 10.30
EXCHANGE AGREEMENT
BY AND AMONG
TRIAD GUARANTY INC.
COLLATERAL INVESTMENT CORP.
AND
THE SHAREHOLDERS OF COLLATERAL INVESTMENT CORP.
LISTED ON THE SIGNATURE PAGES HERETO
Dated as of May 18, 2005
EXCHANGE AGREEMENT
THIS
EXCHANGE AGREEMENT is made as of the 18th day of May, 2005, by and among Triad
Guaranty Inc., a Delaware corporation (“Triad”), Collateral
Investment Corp., a Delaware corporation (“CIC”), and the
shareholders of CIC listed on the signature pages hereto (collectively, the
“Principal CIC Shareholders”).
W I T N E S S E T H:
A. The
assets of CIC include 2,573,551 shares (the “Old Triad Shares”)
of Triad Common Stock (as hereinafter defined) and certain other assets. The
Principal CIC Shareholders own in excess of 51% of the issued and outstanding
shares of voting common stock, and own in excess of 37% of the issued and
outstanding shares of non-voting common stock, of CIC.
B. CIC
and the Principal CIC Shareholders have proposed that Triad and CIC effect a
transaction whereby CIC will transfer to Triad the Old Triad Shares and Triad
will transfer to CIC 2,528,514 shares of Triad Common Stock (the “New
Triad Shares”) in accordance with Section 2.4(A) (the
“Transaction”). Immediately prior to the consummation of
this Transaction, CIC will transfer and sell to Collateral Mortgage Ltd.
(“CML”) substantially all of its assets, other than the Old
Triad Shares, and transfer to CML or otherwise satisfy all indebtedness and
other contractual obligations of CIC (the “CML Transaction”).
Immediately following consummation of the CML Transaction and this Transaction,
CIC intends to distribute all of the New Triad Shares and any remaining
distributable assets of CIC to the CIC Shareholders (as herein defined) pursuant
to a plan of complete liquidation of CIC (the “Liquidation”).
Contemporaneous with the consummation of this Transaction and as a condition to
Triad entering into this Agreement, CIC, the Principal CIC Shareholders and
Triad are entering into a Share Transfer Restriction Agreement, which provides
for certain restrictions on the transfer of the New Triad Shares by the CIC
Shareholders, and an Escrow Agreement, which provides for the escrow of certain
of the New Triad Shares.
C. Triad
and CIC have determined that this Transaction is advisable and in the best
interests of Triad and CIC, respectively, and their respective shareholders.
D. Triad,
CIC and the Principal CIC Shareholders desire to consummate this Transaction
upon the terms and subject to the conditions set forth in this Agreement.
E. CIC
and the Principal CIC Shareholders intend that this Transaction and the
Liquidation shall constitute a reorganization within the meaning of
Section 368(a)(1)(C) and Section 368(a)(2)(G) of the United States
Internal Revenue Code of 1986, as amended (the “Code”), and
this Exchange Agreement shall constitute a plan of reorganization.
NOW,
THEREFORE, in consideration of the foregoing and the mutual representations,
warranties, covenants and agreements herein contained and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties to this Agreement agree as follows:
ARTICLE I.
DEFINITIONS
1.1.
Definitions. The following terms shall have the following meanings for
the purposes of this Agreement:
“Affiliate”
shall mean, with respect to any specified Person, (i) any other Person
which, directly or indirectly, owns or controls, is under common ownership or
control with, or is owned or controlled by, such specified Person,
(ii) any other Person which is a director, officer or partner, or is,
directly or indirectly, the beneficial owner of ten percent (10%) or more of
any class of equity securities, of the specified Person or a Person described
in clause (i) of this paragraph, (iii) another Person of which the
specified Person is a director, officer or partner or is, directly or
indirectly, the beneficial owner of ten percent (10%) or more of any class of
equity securities, (iv) another Person in which the specified Person has a
substantial beneficial interest or as to which the specified Person serves as
trustee or in a similar capacity or (v) any relative or spouse of the
specified Person or any of the foregoing Persons, any relative of such spouse
or any spouse of any such relative. For purposes of this Agreement, Triad shall
not be deemed an Affiliate of CIC or any Principal CIC Shareholder.
“Agreement”
shall mean this Exchange Agreement, including all exhibits and schedules
hereto, as it may be amended from time to time in accordance with its terms.
“Business
Day” shall mean any day of the year other than (1) any Saturday or
Sunday or (ii) any other day on which banks located in Winston-Salem, North Carolina
are authorized or required to be closed for business.
“CIC”
shall have the meaning set forth in the preamble hereto.
“CIC
Common Stock” shall have the meaning set forth in Section 3.3.
“CIC
Consolidated Financial Statements” shall have the meaning set forth in Section
3.9.
“CIC
Disclosure Schedule” shall mean the schedule delivered by CIC to Triad
concurrently with the execution of this Agreement.
“CIC
Escrow Certificates” shall have the meaning set forth in Section 2.4(B).
“CIC
Material Adverse Effect” shall mean with respect to CIC, any event,
change, occurrence, development, circumstance or effect that is or would
reasonably be expected to be materially adverse to (i) the assets, properties
or condition (financial or otherwise) of CIC, or (ii) the ability of such
party to consummate the transactions contemplated by this Agreement, provided,
however, that the liquidation of CIC following the completion of the
Transaction shall be deemed not to have or result in a CIC Material Adverse
Effect.
“CIC
Representative” shall have the meaning set forth in Section 9.13.
“CIC
Requisite Vote” shall have the meaning set forth in Section 3.4.
“CIC
Securities” shall have the meaning set forth in Section 3.3.
“CIC
Shareholders” shall mean the holders of the outstanding CIC Common Stock.
“CIC
Shareholder Escrow Certificate” shall have the meaning set forth in Section
2.6(D).
”CIC
Shareholder Meeting” shall have the meaning set forth in Section 3.4.
“Closing”
shall have the meaning set forth in Section 6.1.
“Closing
Date” means the actual date on which the Closing occurs.
“CML
Transaction” shall have the meaning set forth in the recitals hereto.
“Code”
shall have the meaning set forth in the recitals hereto.
“Environmental
Law” shall have the meaning set forth in Section 3.11.
“Escrow
Agent” shall mean AmSouth Bank, an Alabama banking corporation.
“Escrow
Agreement” shall mean the Escrow Agreement, dated as of the Closing Date,
among Triad, CIC, the Principal CIC Shareholders and the Escrow Agent in the
form attached hereto as Exhibit A.
“Escrow
Liquidation Notice” shall have the meaning set forth in Section 2.6(D).
“Escrow
Shares” shall have the meaning set forth in Section 2.4(B).
“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules
and regulations promulgated thereunder.
“Governmental
Authority” shall have the meaning set forth in Section 3.6.
“HSR
Act” shall have the meaning set forth in Section 3.6.
“Indemnified
Person” shall mean the Person or Persons entitled to, or claiming a right
to, indemnification under Article VIII.
“Indemnifying
Person” shall mean the Person or Persons claimed by the Indemnified
Person to be obligated to provide indemnification under Article VIII.
“Indemnifying
CIC Shareholders” shall mean William T. Ratliff, III and William T.
Ratliff, Jr.
“IRS”
shall mean the United States Internal Revenue Service.
“Law”
shall have the meaning set forth in Section 3.7.
“Liability”
shall mean any past, present or future liability or obligation (whether known
or unknown, whether asserted or unasserted, whether absolute, fixed, contingent
or otherwise, whether accrued or unaccrued, whether liquidated or unliquidated,
and whether due or to become due), including any liability or obligation for
Taxes.
“Lien”
shall mean any lien, Liability, mortgage, charge, restriction, pledge, security
interest, option, lease, sublease or right of any third party, other than any
restriction arising under federal or state securities laws.
“Liquidation”
shall have the meaning set forth in the recitals hereto.
“Liquidation
Notice” shall have the meaning set forth in Section 2.6(C).
“Loss”
or “Losses” shall mean any and all losses, Liabilities, costs,
claims, damages, penalties and expenses (including reasonable attorneys’
fees and expenses and reasonable costs of investigation and litigation). In the
event any of the foregoing are indemnifiable hereunder, the terms “Loss”
and “Losses” shall include any and all reasonable attorneys’
fees and expenses and reasonable costs of investigation and litigation incurred
by the Indemnified Person in enforcing such indemnity. The amount of any Loss
or Losses incurred or suffered by the Indemnified Person shall be calculated
after giving effect to (i) any insurance proceeds received by the
Indemnified Person with respect to such Loss or Losses and (ii) any net
Tax benefit or detriment realized by the Indemnified Person arising from the
facts or circumstances giving rise to such Loss or Losses or arising from
indemnification for such Loss or Losses.
“Market
Price” shall mean the last quoted sale price for shares of Triad Common
Stock on the Nasdaq National Market on the date hereof.
“New
Triad Shares” shall have the meaning set forth in the recitals hereto.
“No-Action
Letter” shall have the meaning set forth in Section 5.1(A).
“Old
Triad Shares” shall have the meaning set forth in the recitals hereto.
“Person”
shall mean any individual, corporation, proprietorship, firm, partnership,
limited partnership, limited liability company, trust, association or other
entity.
“Plan
of Liquidation” shall have the meaning set forth in Section 2.6(B).
“Principal
CIC Shareholders” shall have the meaning set forth in the recitals
hereto.
“Registration
Statement” shall have the meaning set forth in Section 5.1(B).
“Related
Agreements” means the Escrow Agreement, the Share Transfer Restriction
Agreement and any other document or agreement delivered in connection with this
Agreement.
“Reorganization”
means the Transaction, CML Transaction and Liquidation.
“SEC”
shall have the meaning set forth in Section 4.6.
“Securities
Act” means the Securities Act of 1933 and the rules and regulations
promulgated thereunder.
“Share
Transfer Restriction Agreement” shall mean the Share Transfer Restriction
Agreement, dated as of the Closing Date, among Triad, CIC, the Principal CIC
Shareholders and the other signatories thereto in the form attached hereto as
Exhibit B.
“Share
Transfer Restriction Agreement Legend” shall mean the legend set forth in
Section 2.8(A).
“Subsidiary”
shall mean, with respect to any Person, any corporation or other entity,
whether incorporated or unincorporated, of which (i) such Person or any
other Subsidiary of such Person is a general partner or (ii) at least a
majority of the securities or other interests having by their terms ordinary
voting power to elect a majority of the board of directors or others performing
similar functions with respect to such corporation or other entity is, directly
or indirectly, owned or controlled by such Person or by any one or more of its
Subsidiaries, or by such Person and any one or more of its Subsidiaries.
“Taxes”
shall mean all taxes, charges, fees, duties (including customs duties), levies
or other assessments, including income, gross receipts, net proceeds, ad
valorem, turnover, real and personal property (tangible and intangible), sales,
use, franchise, excise, goods and services, value added, stamp, leasing, lease,
user, transfer, fuel, excess profits, occupational, interest equalization,
windfall profits, severance, license, payroll, environmental, capital stock,
disability, employee’s income withholding, other withholding,
unemployment and Social Security taxes, which are imposed by any Governmental
Authority, and such term shall include any interest, penalties or additions to
tax attributable thereto.
“Tax
Return” shall mean any report, return or other information required to be
supplied to a Governmental Authority in connection with any Taxes.
“Transaction”
shall have the meaning set forth in the recitals hereto.
“Triad”
shall have the meaning set forth in the preamble hereto.
“Triad
Common Stock” shall mean the common stock, par value $.01 per share, of
Triad.
“Triad
Disclosure Schedule” shall have the meaning set forth in Section 4.4.
“Triad
Indemnified Parties” shall mean Triad, each of its Subsidiaries and
Affiliates and each of their respective officers, directors, shareholders,
employees, agents and representatives; provided, that in no event shall
CIC or any CIC Shareholder be deemed a Triad Indemnified Party.
“Triad
Material Adverse Effect” shall mean with respect to Triad, any event,
change, occurrence, development, circumstance or effect that is or would
reasonably be expected to be materially adverse to the ability of such party to
consummate the transactions contemplated by this Agreement.
“Triad
SEC Reports” shall have the meaning set forth in Section 4.6.
1.2.
Interpretation. The headings preceding the text of Articles and Sections
included in this Agreement and the headings to Schedules attached to this
Agreement are for convenience only and shall not be deemed part of this
Agreement or be given any effect in interpreting this Agreement. The use of the
masculine, feminine or neuter gender or the singular or plural form of words
herein shall not limit any provision of this Agreement. The use of the terms
“including” or “include” shall in all cases herein mean
“including, without limitation” or “include, without
limitation,” respectively. Reference to any Person includes such
Person’s successors and assigns to the extent such successors and assigns
are permitted by the terms of any applicable agreement, and reference to a
Person in a particular capacity excludes such Person in any other capacity or
individually. Reference to any agreement (including this Agreement), document
or instrument means such agreement, document or instrument as amended or
modified and in effect from time to time in accordance with the terms thereof
and, if applicable, the terms hereof. Reference to any Law means such Law as
amended, modified, codified, replaced or re-enacted, in whole or in part,
including rules, regulations, enforcement procedures and any interpretations
promulgated thereunder. References to Articles, Sections, Subsections, Exhibits
or Disclosure Schedules shall refer to those portions of this Agreement. The
use of the terms “hereunder,” “hereof,” “hereto”
and words of similar import shall refer to this Agreement as a whole and not to
any particular Article, Section or clause of or Exhibit or Schedule to this
Agreement. No specific representation, warranty or covenant contained herein
shall limit the generality or applicability of a more general representation,
warranty or covenant contained herein. A breach of or inaccuracy in any
representation, warranty or covenant shall not be affected by the fact that any
more general or less general representation, warranty or covenant was not also
breached or inaccurate.
ARTICLE II.
THE TRANSACTION AND RELATED MATTERS
2.1.
Transfer of Old Triad Shares. Subject to the terms and conditions of
this Agreement, at and as of the Closing, CIC shall sell, assign, transfer and
deliver to Triad, free and clear of all Liens, the Old Triad Shares and Triad
shall acquire, and accept the assignment, transfer and delivery of, the Old
Triad Shares.
2.2.
Delivery of Old Triad Shares by CIC. At the Closing, CIC shall effect
the transfer of the Old Triad Shares to Triad by delivering to Triad
certificates registered in the name of CIC representing all of the Old Triad
Shares, which certificates shall be duly endorsed for transfer or accompanied
by duly executed stock powers.
2.3.
No Assumption of Debt. Notwithstanding anything else in this Agreement,
neither Triad nor any of its Affiliates shall assume or otherwise be liable in
respect of, or be deemed to have assumed or otherwise be liable in respect of,
any debt, obligation or other Lien of, or claim against, the Old Triad Shares,
CIC or any of its Affiliates or shareholders whatsoever.
2.4.
Consideration for Transfer of Old Triad Shares.
A.
At the Closing, as aggregate and complete consideration for the transfer of the
Old Triad Shares by CIC to Triad, Triad shall issue to CIC the New Triad
Shares.
B.
Triad shall effect the delivery of the New Triad Shares to CIC by delivering
(i) to CIC stock certificates registered in the name of CIC representing
2,275,662 of the New Triad Shares and (ii) to the Escrow Agent, on behalf
of CIC, stock certificates registered in the name of CIC (the “CIC
Escrow Certificates”) representing 252,852 of the New Triad Shares
(the “Escrow Shares”), in each case containing the Share
Transfer Restriction Agreement Legend. Contemporaneous with such deliveries,
CIC shall deliver to the Escrow Agent such reasonable number of duly executed
stock powers (undated and in blank, with Medallion guarantee) relating to the
Escrow Shares as Triad shall request in order to satisfy the obligations of CIC
and the CIC Shareholders under the Escrow Agreement.
C.
The Escrow Shares represented by the CIC Escrow Certificates shall be pledged
by CIC to Triad pursuant to the terms of the Escrow Agreement to serve as
security for the obligations and liabilities of CIC and the Indemnifying CIC
Shareholders set forth in Article VIII. From and after the
Liquidation, the Escrow Shares represented by the CIC Escrow Certificates shall
be pledged by each of the CIC Shareholders to Triad pursuant to the terms of
the Escrow Agreement to serve as security for the obligations and liabilities
of CIC and the Indemnifying CIC Shareholders set forth in Article VIII.
The release of the Escrow Shares from escrow shall be governed by the terms of
the Escrow Agreement.
2.5.
Payment of Transaction Expenses by CIC. CIC and the Indemnifying CIC
Shareholders jointly and severally agree to reimburse Triad promptly for all of
Triad’s reasonable out-of-pocket costs and reasonable expenses (including
securities registration, legal, investment banking, transfer agent and other
necessary advisory or professional fees and expenses of Triad and its Board of
Directors and any committee thereof) paid and to be paid to unrelated third
parties, and documented in summary form by Triad to the reasonable satisfaction
of CIC, in connection with this Agreement and the Related Agreements and the
transactions provided for herein and therein. CIC and the Indemnifying CIC
Shareholders jointly and severally agree to pay all of their own expenses in
connection with this Agreement and the Related Agreements and the transactions
provided for herein and therein and to pay all sales, use, stamp, transfer,
service, recording and like Taxes, if any, imposed by any Governmental
Authority in connection with the transfer and assignment of the Old Triad
Shares or the New Triad Shares.
2.6.
CML Transaction; CIC Liquidation; Escrow Certificates.
A.
Prior to the Closing of this Transaction, CIC shall complete the CML
Transaction.
B.
Within sixty (60) days following the Closing and the consummation of this
Transaction and CIC’s and the Escrow Agent’s receipt of the CIC
Escrow Certificates pursuant to Section 2.4(B), CIC shall transfer
and distribute all of its remaining assets, including the New Triad Shares, to
the CIC Shareholders pursuant to
resolutions of the Board of
Directors of CIC (the “Plan of Liquidation”) furnished to
Triad.
C.
Upon consummation of the Liquidation, CIC shall deliver to Triad (i) a
written notice to Triad confirming that the Liquidation has occurred and
setting forth the number of New Triad Shares (other than the Escrow Shares)
that each CIC Shareholder is entitled to receive in connection with the
Liquidation (the “Liquidation Notice”) and (ii) certificates
registered in the name of CIC representing all of the New Triad Shares (other
than the Escrow Shares), which certificates shall be duly endorsed for transfer
or accompanied by duly executed stock powers. As soon as practicable following
Triad’s receipt of the Liquidation Notice and the certificates
representing the New Triad Shares (other than the Escrow Shares) together with
confirmation reasonably satisfactory to Triad of each CIC Shareholder’s
agreement to the Share Transfer Restriction Agreement and the Escrow Agreement,
Triad shall deliver to each such CIC Shareholder one or more certificates
registered in the name of each such CIC Shareholder, containing the Share
Transfer Restriction Agreement Legend, representing the number of New Triad
Shares (other than the Escrow Shares) entitled to be received by such CIC
Shareholder as designated by CIC pursuant to the Liquidation Notice.
D.
CIC shall effect the distribution of the Escrow Shares to the CIC Shareholders
in the Liquidation by (i) delivering to Triad and the Escrow Agent a
written notice confirming that the Liquidation has occurred and setting forth
the number of Escrow Shares that each CIC Shareholder is entitled to receive in
connection with the Liquidation (the “Escrow Liquidation Notice”)
and (ii) delivering to Triad such reasonable number of duly executed stock
powers (undated and in blank, with Medallion guarantee) from each CIC
Shareholder as Triad shall request, which stock powers shall relate to the
Escrow Shares to be received by such CIC Shareholder as designated by CIC
pursuant to the Escrow Liquidation Notice. As soon as practicable following
Triad’s receipt of the Escrow Liquidation Notice and the stock powers
from each CIC Shareholder relating to the Escrow Shares, (i) Triad shall
deliver to the Escrow Agent the certificates evidencing the Escrow Shares to
which the CIC Shareholders are entitled as designated by CIC pursuant to the
Escrow Liquidation Notice (each, a “CIC Shareholder Escrow Certificate”),
accompanied by each CIC Shareholder’s duly executed stock powers relating
to the Escrow Shares, which certificates shall replace the CIC Escrow
Certificates held by the Escrow Agent in the Escrow Fund (as defined in the
Escrow Agreement) and (ii) Triad and the Escrow Agent shall cause the CIC
Escrow Certificates to be cancelled.
2.7.
No Fractional Shares.
A.
No certificates representing fractional shares of Triad Common Stock shall be
issued in connection with this Transaction.
B.
In lieu of the distribution by CIC to the CIC Shareholders of any fractional
New Triad Shares in connection with the Liquidation, CIC shall specify the
manner of distributing the New Triad Shares to the CIC Shareholders such that
each CIC Shareholder shall receive a whole number of New Triad Shares.
C.
In lieu of the deposit by Triad, on behalf of CIC or the CIC Shareholders, as
the case may be, with the Escrow Agent of any fractional New Triad Shares
designated as Escrow Shares in connection with the Escrow Agreement,
the number of shares to be so deposited as Escrow Shares thereunder shall be
rounded up to the nearest whole share. The Escrow Liquidation Notice provided
by CIC to Triad and the Escrow Agent upon the consummation of the Liquidation
shall provide for each CIC Shareholder to be entitled to receive a whole number
of Escrow Shares.
2.8.
Transfer Legends. For so long as the restrictions described below are
applicable to such shares as determined by Triad in Triad’s reasonable
discretion: each certificate of Triad Common Stock representing New Triad
Shares (including the Escrow Shares) shall be stamped or otherwise imprinted
with a Share Transfer Restriction Agreement Legend in substantially the
following form:
“The sale, transfer or
other disposition of the shares represented by this certificate prior to
is subject to, and may not be made except in compliance with, the conditions
specified in a Share Transfer Restriction Agreement with Triad Guaranty Inc.
(the “Company”). A copy of the Share Transfer Restriction Agreement
is on file and may be inspected at the principal office of Triad and will be
furnished by Triad to the holder hereof upon request and without charge.”
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF CIC
AND THE INDEMNIFYING CIC SHAREHOLDERS
CIC
and the Indemnifying CIC Shareholders jointly and severally represent and
warrant to Triad as of the date of this Agreement as follows:
3.1.
Organization, Standing and Qualification of Company. CIC is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has the corporate power to own or lease its
properties and to carry on its business as now being conducted. CIC is duly qualified
as a foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of its properties owned or held under lease 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 CIC Material Adverse Effect.
3.2.
Company Subsidiaries. As of the Closing, CIC will have no Subsidiaries
and, except for the Old Triad Shares, CIC will have no other direct or indirect
equity or similar interest or other investment in any corporation, partnership,
joint venture, limited liability company or other entity. Any such other
interest or other investment shall, as of the Closing, have been transferred or
otherwise disposed of pursuant to the CML Transaction.
3.3.
Capital Stock. The authorized capital stock of CIC consists of 7,250
shares of voting common stock, $0.01 par value, and 72,500 shares of non-voting
common stock, $0.01 par value, of which 6,976.56 shares of voting common stock
and 68,257.70 shares of non-voting common stock (collectively, the “CIC
Common Stock”) are issued and outstanding as of the date
hereof. All of the issued and
outstanding shares of CIC Common Stock have been validly issued and are fully
paid and non-assessable and free of preemptive rights and all rights of first
refusal or first offer. Section 3.3 of the CIC Disclosure Schedule
contains a complete and correct list of each stockholder of CIC, the
corresponding number of shares of CIC Common Stock held by such stockholder and
the address for each stockholder. CIC has no stock option plan or stock option
agreement. Except as set forth above or as reflected in Section 3.3 of the
CIC Disclosure Schedule, there are outstanding (1) no shares of capital
stock or other voting securities of CIC, (2) no securities of CIC
convertible into, exercisable or exchangeable for shares of capital stock or
voting securities of CIC, (3) no options, warrants or other rights to
acquire from CIC, and no obligations of CIC to issue, any capital stock, voting
securities or securities convertible into, exercisable or exchangeable for
capital stock or voting securities of CIC, and (4) no equity equivalents,
or interests in the ownership or earnings, of CIC or other similar rights
(including stock appreciation rights) (collectively, “CIC Securities”).
There are no outstanding obligations of CIC or any CIC Shareholder to
repurchase, redeem or otherwise acquire any CIC Securities. Except as set forth
in Section 3.3 of the CIC Disclosure Schedule, there are no shareholder
agreements, voting trusts or other agreements or understandings to which CIC or
any CIC Shareholder is a party or by which either is bound relating to the
voting or disposition of any CIC Securities. No bonds, debentures, notes or
other indebtedness of CIC granted to the holders thereof the right to vote on
any matters on which holders of capital stock of CIC generally may vote.
3.4.
Authorization. The Board of Directors of CIC has (a) adopted resolutions
approving this Agreement, the Related Agreements, the CML Transaction and the
Plan of Liquidation and declaring their advisability and approving the
Transaction and all other transactions contemplated hereby and thereby and
(b) authorized the execution and delivery of this Agreement, the Related
Agreements, the documents related to the CML Transaction and the Plan of
Liquidation and has directed by resolution that this Agreement, the CML
Transaction and the Plan of Liquidation be submitted to a vote of the holders
of voting CIC Common Stock taken at a meeting called for the purpose of
considering and acting upon this Agreement, the CML Transaction and the Plan of
Liquidation (the “CIC Shareholder Meeting”), and has not
withdrawn or modified such approval or resolutions. CIC has all necessary
corporate power and authority to enter into this Agreement, the Related
Agreements, the CML Transaction and the Plan of Liquidation and, subject to
obtaining all required regulatory and stockholder approvals, to consummate the
transactions contemplated hereby and thereby. A vote by the majority of the
issued and outstanding shares of voting CIC Common Stock (the “CIC
Requisite Vote”) is the only vote of the holders of any class or
series of capital stock of CIC necessary to adopt this Agreement, the CML
Transaction and the Plan of Liquidation and approve the transactions
contemplated hereby and thereby. No other vote or consent of the stockholders
of CIC is required by Law, the certificate of incorporation or bylaws of CIC or
otherwise in order for CIC to adopt this Agreement, the CML Transaction and the
Plan of Liquidation or to approve the transactions contemplated hereby or
thereby. Subject to the CIC Requisite Vote, the execution and delivery of this
Agreement, the CML Transaction and the Plan of Liquidation have been duly
authorized by all necessary corporate action on behalf of CIC. Subject to the
CIC Requisite Vote, this Agreement, the CML Transaction and the Plan of
Liquidation have been duly and validly executed and delivered by CIC and
constitute the valid and legally binding obligations of CIC, enforceable
against it in accordance with their respective terms, except to the extent such
enforceability is limited by bankruptcy, receivership, insolvency, reorganization,
moratorium or
similar laws affecting or
relating to creditors rights generally and subject to general principles of
equity. The Principal CIC Shareholders have all necessary power and authority
to enter into this Agreement and the Related Agreements and, subject to
obtaining any required regulatory approvals, to consummate the transactions
contemplated hereby and thereby.
3.5.
Certificate of Incorporation and Bylaws. CIC has delivered to Triad true
and complete copies of its certificate of incorporation and bylaws as in effect
as of the date hereof. CIC is not in default under its certificate of
incorporation or bylaws or any similar charter documents.
3.6.
Consents and Approvals. Except for filings, permits, authorizations, consents
and approvals as may be required under, and other applicable requirements of,
the Securities Act, state securities or blue sky laws and the consents and
approvals listed in Section 3.6 of the CIC Disclosure Schedule, no filing
with or notice to, and no permit, authorization, consent or approval of, any
local, state, federal or foreign court, government, governmental department,
commission, instrumentality, board, tribunal, administrative or regulatory
body, agency or authority, including the Internal Revenue Service and other
taxing authorities (a “Governmental Authority”), or any
other Person is necessary for the consummation by CIC of this Transaction, the
CML Transaction and the Liquidation. No filing in connection with the
Transaction or Liquidation is required of CIC or any Indemnifying CIC
Shareholder pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
3.7.
Defaults and Conflicts. Subject to the receipt of all consents and
approvals contemplated by this Agreement, the Related Agreements, including
Section 3.6 of the CIC Disclosure Schedule, neither the execution and
delivery of this Agreement nor the consummation of the transactions
contemplated hereby, including the CML Transaction and the Liquidation, or the
fulfillment of and compliance with the terms and provisions hereof or thereof
will: (a) violate any material judicial, administrative or arbitral order,
writ, decree, award, judgment, ordinance, injunction, decree, law, permit,
statute, rule or regulation enacted or promulgated by any Governmental
Authority or arbitrator (“Law”) applicable to CIC;
(b) conflict with or result in any breach of any provision of the
respective terms, conditions or provisions of the certificate of incorporation
or bylaws (or similar charter documents) of CIC; (c) conflict with, result
in a material breach of, constitute a default under or accelerate or permit the
acceleration of the performance required by, any indenture or any agreement or
other instrument to which CIC is a party or by which CIC is bound;
(d) result in the creation of any material Lien, charge or encumbrance
upon any of the assets of CIC under any such agreement or instrument; or
(e) terminate or give any party thereto the right to terminate any such indenture,
agreement or instrument. Except as set forth in Section 3.7 of the CIC
Disclosure Schedule, no consent of any third party to any indenture, agreement
or other instrument to which CIC is a party is required in connection with this
Transaction, the CML Transaction and the Liquidation.
3.8.
Title to Old Triad Shares. Except as set forth in Section 3.8 of
the CIC Disclosure Schedule, CIC owns all of the Old Triad Shares beneficially
and of record, and has full power and authority to convey, free and clear of
all Liens, the Old Triad Shares. At the Closing, upon the delivery and transfer
by Triad to CIC and the Escrow Agent, as provided in Section 2.4(B), of
certificates for the New Triad Shares, CIC will convey to Triad, and Triad will
receive, good, valid and marketable title to the Old Triad Shares, free and
clear of all Liens (other than those
which arise out of actions
taken exclusively by Triad). The assignments, endorsements, stock powers and
other instruments of transfer delivered by CIC to Triad at the Closing will be
sufficient to transfer to Triad the entire interest, legal and beneficial, in
the Old Triad Shares. Except for this Agreement, there is no subscription,
option, warrant, call, conversion or other right, commitment or contract of any
nature obligating CIC or any CIC Shareholder or any Affiliate of CIC or any CIC
Shareholder to transfer or sell, or cause the transfer or sale of, any Old
Triad Shares. There are no voting agreements, voting trust agreements, proxies
or shareholder or similar agreements relating to the Old Triad Shares.
3.9.
CIC Consolidated Financial Statements
A.
CIC has made available to Triad true, correct and complete copies of the
audited consolidated balance sheets, audited consolidated income statements,
audited consolidated statements of change in stockholders equity and audited
consolidated statements of cash flows of CIC and its Subsidiaries as of and for
the fiscal years ended December 31, 2004 and 2003 (all such financial
statements referred to in this paragraph (A), collectively, the “CIC
Consolidated Financial Statements”).
B.
The CIC Consolidated Financial Statements (including the notes thereto) have
been prepared in accordance with GAAP and are accurate, complete and present
fairly, in all material respects, the financial condition of CIC and its
Subsidiaries on a consolidated basis as at such dates and the results of
operations, changes in stockholder equity and cash flows of CIC and its
Subsidiaries on a consolidated basis for such periods.
C.
Since December 31, 2004, there has not been a CIC Material Adverse Effect.
3.10.
Undisclosed Liabilities. Neither CIC nor any of its Subsidiaries has any
Liability (and to the knowledge of CIC and the Indemnifying CIC Shareholders,
there is no basis for any present or future charge, complaint, action, suit,
proceeding, hearing, investigation, claim, or demand against any of them giving
rise to any Liability), except for (i) Liabilities set forth in the CIC
Consolidated Financial Statements, and (ii) Liabilities which have arisen
since December 31, 2004 in the ordinary course of business consistent with past
practice (none of which relates to any breach of contract, breach of warranty,
tort, infringement, or violation of Law or arose out of any charge, complaint,
action, suit, proceedings, hearing, investigation, claim, or demand or could,
individually or in the aggregate, reasonably be likely to have a CIC Material
Adverse Effect).
3.11.
Environmental Issues. Neither CIC nor any of its Subsidiaries has any
Liabilities or obligations of any nature, whether or not accrued, contingent or
otherwise, including under any federal, state, and local laws, regulations and
requirements currently in force relating to the protection of natural resources,
the environment and public and employee health and safety or pollution or the
release of or exposure to hazardous materials (collectively, “Environmental
Laws”).
3.12.
Litigation. Except as set forth in Section 3.12 of the CIC Disclosure
Schedule, there is no action, suit, arbitration, mediation, investigation or
proceeding pending against or, to the knowledge of CIC and the Indemnifying CIC
Shareholders, threatened against or affecting CIC, any of its Subsidiaries or
the Old Triad Shares, at law or in equity, or before any Governmental Authority
or administrative body or agency or before any arbitrator, including under any
Environmental Laws. Neither CIC nor any of its Subsidiaries is in default with
respect to any order, writ, award, judgment, injunction or decree of any
Governmental Authority or arbitrator applicable to it.
3.13.
Compliance with Laws. CIC and each of its Subsidiaries has complied and
is currently in compliance in all material respects with all Laws applicable to
their respective businesses, properties and assets.
3.14.
Employee Benefit Plans. Except as set forth in Section 3.14 of the
CIC Disclosure Schedule, CIC and its Subsidiaries have no employee benefit
plan, as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended (“ERISA”), nor any other plan,
arrangement and agreement providing employee benefits, that covers current or
former employees of CIC or any Affiliate thereof and is presently maintained by
CIC or any Affiliate thereof or by any trade or business, whether or not
incorporated, which together with CIC or any of its Subsidiaries would be
deemed a “single employer” within the meaning of Section 4001
of ERISA.
3.15.
Taxes.
A.
All Tax Returns required to be filed with the appropriate taxing authorities
have been duly and timely filed or will be filed timely by or on behalf of CIC
and each of its Subsidiaries and all Taxes have been paid or provided for in
full, and all such filed Tax Returns are true, complete and accurate in all
material respects;
B.
There are no Liens for Taxes upon the assets of CIC or any of its Subsidiaries
except statutory liens for Taxes not yet due;
C.
There are no outstanding deficiencies in respect of Taxes asserted or
threatened or assessments of Taxes made or threatened, nor any administrative
or judicial proceedings pending or threatened concerning Taxes, with respect to
CIC or any of its Subsidiaries;
D.
There are no outstanding agreements or waivers extending the statutory period
of limitations applicable to any Tax Returns required to be filed with respect
to CIC or any of its Subsidiaries;
E.
Neither CIC nor any of its Subsidiaries has taken, agreed to take or will take
any action that would prevent this Transaction and the Liquidation from
constituting a reorganization qualifying under the provisions of Section 368(a)
of the Code; and
F.
Neither CIC nor any of its Subsidiaries currently is, has been within the last
five (5) years, or anticipates becoming, a “United States real
property holding corporation” within the meaning of Section 897(c) of the
Code.
3.16.
Finder and Investment Bankers. Except as set forth in Section 3.16
of the CIC Disclosure Schedule, CIC has not retained any broker, finder or
other agent or incurred any Lien for any brokerage fees, commissions or
finders’ fees with respect to this Transaction.
3.17.
Investment Company. Neither CIC nor any of its Subsidiaries is, nor as a
result of the Transaction and/or the CML Transaction will be, an
“investment company” as defined under the Investment Company Act of
1940, as amended.
3.18.
Historical Operations. CIC has never conducted any business or
operations other than operating as a holding company with respect to certain
Subsidiaries of CIC and holding real estate assets comprised of mortgage loans
and residual securities issued pursuant to the securitization of real estate
assets, all of which operations are reflected in the CIC Financials.
3.19.
No Assets/Liabilities. As of the Closing, CIC shall have no assets or
liabilities, except for (i) the Old Triad Shares, (ii) cash and
(iii) certain Tax liabilities. Such cash shall be in an amount sufficient
to cover such Tax liabilities.
3.20.
No Extraordinary Distributions. Except as set forth in Section 3.20
of the CIC Disclosure Schedule, within the past three years CIC has made no
distributions or dividends to its shareholders and has not authorized any such
distribution or dividend, other than the distribution of the New Triad Shares
to the CIC Shareholders as contemplated by the Plan of Liquidation.
3.21.
Reorganization. This Transaction and the Liquidation will qualify as a
reorganization under Section 368(a)(1)(C) and Section 368(a)(2)(G) that
is tax-free to CIC and Triad.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF TRIAD
Triad
hereby represents and warrants to CIC and each of the Indemnifying CIC
Shareholders as follows:
4.1.
Organization of Triad. Triad is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
the requisite corporate power to own or lease its properties and to carry on
its business as now being conducted.
4.2.
Capital Stock. The authorized capital stock of Triad consists of
32,000,000 shares of Triad Common Stock, of which approximately 14,684,645
shares are issued and outstanding as of April 1, 2005 and 1,000,000 shares
of preferred stock, par value $.01 per share of which no shares are issued and
outstanding as of the date hereof. The New Triad Shares, when issued and
delivered to CIC as consideration for the Old Triad Shares pursuant to the
terms of this Agreement, will be (i) validly issued and outstanding, fully
paid and nonassessable, (ii) free of preemptive rights and (iii) free
and clear of any and all Liens (other than Liens, if any, which arise under any
securities Law or the terms of the Escrow Agreement or the Share Transfer
Restriction Agreement or which arise out of other actions taken by CIC or the
Principal CIC Shareholders).
4.3.
Authorization. The Board of Directors of Triad (upon the advice of the
Special Committee to the Board of Directors) (a) has adopted resolutions
approving this Agreement and the Related Agreements to which Triad is a party
and declaring their advisability and approving the Transaction and all other
transactions contemplated hereby and thereby and (b) has authorized the
execution and delivery of this Agreement and the Related Agreements to which
Triad is a party by Triad. Triad has all necessary corporate power and
authority to enter into this Agreement and the Related Agreements to which
Triad is a party and, subject to obtaining all required regulatory approvals,
to consummate the transactions contemplated hereby and thereby. This Agreement
and the Related Agreements to which Triad is a party have been duly executed
and delivered by Triad and constitutes the valid and legally binding obligation
of Triad, enforceable against Triad in accordance with its terms, except to the
extent such enforceability is limited by bankruptcy, receivership, insolvency,
reorganization, moratorium or similar laws affecting or relating to creditors
rights generally and subject to general principles of equity.
4.4.
Regulatory Consents and Approvals. Except for filings, permits,
authorizations, consents and approvals as may be required under, and other
applicable requirements of, the Securities Act, the Exchange Act, state
securities or blue sky laws, and the consents and approvals listed in
Section 4.4 of the schedule delivered by Triad to CIC concurrently with
the execution of this Agreement (the “Triad Disclosure Schedule”),
no filing with or notice to, and no permit, authorization, consent or approval
of, a Governmental Authority is necessary for the consummation by Triad of the
transactions contemplated hereby.
4.5.
Defaults and Conflicts. Subject to the receipt of all consents and
approvals contemplated by this Agreement or Section 4.4 of the Triad Disclosure
Schedule, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby or the fulfillment of and
compliance with the terms and provisions hereof will: (a) violate any
material Law applicable to Triad; (b) conflict with or result in any
breach of any provision of the respective terms, conditions or provisions of
the certificate of incorporation or bylaws of Triad; (c) conflict with or
result in any material breach of any provision of the respective terms,
conditions or provisions of any license, certificate, authorization, or permit
of Triad; or (d) conflict with, result in a material breach of, constitute a
default under or accelerate or permit the acceleration of the performance
required by, any indenture or any material agreement or other instrument to
which Triad is a party or by which Triad is bound.
4.6.
SEC Reports. Since January 1, 2003, Triad has made all required
filings with the Securities Exchange Commission (the “SEC”)
under the Securities Act and the Exchange Act (“Triad SEC Reports”).
As of their respective filing dates, each of the Triad SEC Reports complied as
to form in all material respects with the requirements of the Securities Act
and the Exchange Act, and did 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 were made, not misleading.
4.7.
Finder and Investment Bankers. Except as set forth in Section 4.7
of the Triad Disclosure Schedule, neither Triad nor any of its Subsidiaries has
retained any broker, finder or other agent or incurred any liability for any
brokerage fees, commissions or finders’ fees with respect to this
Transaction.
4.8.
Fairness Opinion. The Special Committee of the Board of Directors of
Triad has received a fairness opinion acceptable to it from Cochran Coronia
& Co. with respect to the Transaction.
ARTICLE V.
COVENANTS
5.1.
Registration of New Triad Stock; No-Action Letter.
A.
Triad agrees to use commercially reasonable efforts to obtain a no-action
letter (the “No-Action Letter”) from the SEC expressing the
SEC staff’s position that:
(i)
The Reorganization is not a “sale” of securities under
Section 2(3) of the Securities Act, and that Rule 145 of the
Securities Act does not apply to the Reorganization; or confirm that it will
not recommend to the Commission any enforcement action if the Reorganization is
effected without registration of the New Triad Shares under Section 5 of
the Securities Act; and
(ii)
The CIC stockholders, as well as any transferees (such as trust beneficiaries)
who are entitled to tack such stockholders’ holding periods, may tack the
holding period of CIC for the Old Triad Shares and New Triad Shares when
determining their own holding period under Rule 144(d) and Rule 144(k) of the
Securities Act for the New Triad Shares received by such stockholders in the
Liquidation.
B.
If Triad is unable to obtain the No-Action Letter, Triad shall file a
registration statement (the “Registration Statement”) under
the Securities Act on the appropriate form covering Triad’s issuance of
the New Triad Shares, CIC’s distribution of the New Triad Shares to the
CIC Shareholders in the Liquidation and/or the resale of the New Triad Shares
by the CIC Shareholders following the Liquidation, as may be applicable, and
use commercially reasonable efforts to cause such Registration Statement to
become effective prior to the Closing Date.
5.2.
Implementing Agreement. Subject to the terms and conditions hereof, each
party hereto shall take all action required of it to fulfill its obligations
under the terms of this Agreement and the Related Agreements and shall
otherwise use all commercially reasonable efforts, including meeting with
rating agencies to review the effect of the Transaction on Triad, to facilitate
the consummation of the transactions contemplated hereby and thereby. Each
party hereto agrees that he, she or it will take no action that would have the
effect of preventing or impairing the performance by any party hereto of its
respective obligations under this Agreement or the Related Agreements.
5.3.
Press Release. Promptly following the execution of this Agreement, Triad
shall issue a press release to announce this Transaction in consultation with,
and with the reasonable approval of, CIC. Neither CIC nor any of the Principal
CIC Shareholders shall make any public announcement regarding this Transaction
without obtaining Triad’s prior written consent.
5.4.
Tax Matters. Prior to and following the Closing, CIC and the
Indemnifying CIC Shareholders shall use their respective best efforts to ensure
that the Transaction is tax-free to CIC and Triad. Following the Closing, CIC
and the Indemnifying CIC Shareholders shall make available to Triad such
records as Triad may request for the preparation of any Tax Returns or other
similar reports or forms required to be filed by Triad and such records as
Triad may require in connection with the defense of any audit,
appeal or litigation of any such Tax Return or other similar report or form, in
each case relating to CIC, this Transaction, the Old Triad Shares. CIC, the Indemnifying
CIC Shareholders and Triad shall cooperate with one another in any such audit,
examination, appeal or litigation. CIC, the Indemnifying CIC Shareholders and
Triad agree to file all Tax Returns consistent with this Transaction and the
Liquidation qualifying as a reorganization under Section 368(a)(1)(C) and
Section 368(a)(2)(G) of the Code that is tax-free to CIC and Triad.
5.5.
Shareholder Transfer Restriction Agreement and Escrow Agreement.
Following the Closing and prior to the distribution of the New Triad Shares by
CIC to the CIC Shareholders in the Liquidation, CIC shall use commercially
reasonable efforts to obtain the signature of each CIC Shareholder evidencing
such CIC Shareholder’s agreement to the terms of the Share Transfer Restriction
Agreement and the Escrow Agreement and shall provide Triad with copies thereof.
It shall be a condition to the obligation of Triad to issue certificates for
New Triad Shares to such CIC Shareholder as contemplated by
Sections 2.6(C) and (D) above that it has obtained such agreement
from the CIC Shareholder.
ARTICLE VI.
CLOSING
6.1.
Closing. The closing of this Transaction (the “Closing”)
shall take place (i) at the offices of Lord, Bissell & Brook LLP,
following satisfaction or waiver of the last condition to the Closing set forth
in Article VII, or (ii) at such other place, time or date as
the parties may mutually determine in writing.
6.2.
Deliveries by CIC. At the Closing, in addition to any other documents or
agreements required under this Agreement, CIC and the Principal CIC
Shareholders shall deliver to Triad the following:
A.
certificates registered in the name of CIC representing all of the Old Triad
Shares, which certificates shall be duly endorsed for transfer or accompanied
by duly executed stock powers;
B.
the Escrow Agreement, duly executed by CIC, each Principal CIC Shareholder and
the Escrow Agent;
C.
the Share Transfer Restriction Agreement, duly executed by each Principal CIC
Shareholder and CIC;
D.
a certificate of the Secretary of CIC certifying resolutions of the board of
directors and shareholders of CIC approving and authorizing the execution,
delivery and performance of this Agreement and the Related Agreements to which
it is a party and the
consummation of the
transactions contemplated hereby and thereby and approving and adopting the
Plan of Liquidation and approving the CML Transaction (together with an
incumbency and signature certificate regarding the officer(s) signing any
documents or agreements on behalf of CIC);
E.
the certificate of incorporation of CIC certified by the Secretary of State or
equivalent Person of the State of Delaware, and the by-laws or similar
instrument of CIC, certified by its Secretary;
F.
a certificate of good standing of CIC from the State of Delaware;
G.
an opinion, dated the Closing Date, of Maynard, Cooper & Gale, P.C., 2400
AmSouth/Harbert Plaza, 1901 Sixth Avenue North, Birmingham, Alabama 35203,
counsel to CIC and the Principal CIC Shareholders, to the effect set forth in
Exhibit C attached hereto (which opinion shall include any certificates of
CIC or the Principal CIC Shareholders to be relied upon in such opinion);
H.
documentation reasonably satisfactory to Triad confirming completion of the CML
Transaction;
I.
payment to Triad by check or wire transfer covering all costs and expenses
required to be reimbursed by CIC pursuant to Section 2.5 of this
Agreement and not previously paid; provided, that only those costs and expenses
set forth in a written notification received by CIC no later than two
(2) Business Days prior to Closing must be paid at Closing;
J.
the compliance certificate described in Section 7.2(C); and
K.
such other documents and instruments as may be required by any other provision
of this Agreement, or any other agreement related to this Transaction or as may
reasonably be required to consummate the transactions contemplated by this
Agreement.
6.3.
Deliveries by Triad.
A.
At the Closing, Triad shall deliver to CIC and the Principal CIC Shareholders
the following:
(i)
certificates registered in the name of CIC representing all of the New Triad
Shares (other than the Escrow Shares);
(ii)
the Escrow Agreement, duly executed by Triad;
(iii)
the Share Transfer Restriction Agreement, duly executed by Triad;
(iv)
a certificate of the Secretary of Triad certifying resolutions of the board of
directors of Triad approving and authorizing the execution, delivery and
performance of this Agreement and the Related Agreements and the consummation
of the transactions contemplated hereby and thereby (together with
an incumbency and signature
certificate regarding the officer(s) signing any documents or agreements on
behalf of Triad); and
(v)
the compliance certificate described in Section 7.3(C).
B.
At the Closing, Triad shall deliver to the Escrow Agent certificates registered
in the name of CIC representing the Escrow Shares.
ARTICLE VII.
CONDITIONS TO CLOSING
7.1.
Conditions Precedent to Obligations of Each Party. The respective
obligations of each party to consummate the Closing are subject to satisfaction
or waiver of the following conditions on or prior to the Closing Date:
A.
No Injunctions or Restraints. No preliminary or permanent injunction or
order shall be in effect that prevents or makes illegal the consummation of the
Closing.
B.
Consents and Approvals of Governmental Authorities. All consents,
approvals, authorizations, licenses, permits and orders of, and registrations
and filings with, and notices to, any Governmental Authority required in
connection with the consummation of this Transaction, the CML Transaction and
the Liquidation shall have been duly obtained, made or given and shall be in
full force and effect at the Closing and all statutory waiting periods in
respect thereof shall have expired.
7.2.
Conditions Precedent to Obligation of Triad. The obligation of Triad to
consummate the Closing is subject to satisfaction or waiver by Triad of the
following conditions on or prior to the Closing Date:
A.
Representations and Warranties. The representations and warranties of
CIC and the Indemnifying CIC Shareholders set forth in this Agreement shall be
true and correct in all material respects (without giving effect to any
limitation as to “materiality” or “CIC Material Adverse
Effect” contained therein) as of the date hereof and as of the Closing
Date (except to the extent any such representation and warranty speaks as of an
earlier date, in which event such representation and warranty shall be true and
correct as of such date).
B.
Performance of Obligations by CIC and the Principal CIC Shareholders.
All of the terms, covenants and conditions of this Agreement to be complied
with and performed by CIC and the Principal CIC Shareholders on and/or prior to
the Closing Date shall have been complied with and performed by CIC and the
Principal CIC Shareholders in all material respects.
C.
Compliance Certificate. CIC and the Indemnifying CIC Shareholders shall
have delivered to Triad a certificate dated the Closing Date and signed by or
on behalf of CIC and each Indemnifying CIC Shareholder certifying that the
conditions specified in Section 7.2(A) and Section 7.2(B)
have been fulfilled.
D.
Consents. CIC and the Principal CIC Shareholders shall have received all
consents, authorizations and/or approvals necessary for the consummation of the
Transaction, the CML Transaction and the Liquidation, including those described
in Section 3.6 or Section 3.7 of the CIC Disclosure Schedule, no such
consent, authorization or approval shall have been revoked and no such consent,
authorization or approval shall impose any condition or limitation on CIC or
the Principal CIC Shareholders that would adversely affect the ability of CIC
and the Principal CIC Shareholders to consummate this Transaction, the CML
Transaction and the Liquidation.
E.
No Proceedings. There shall not be pending any action, suit, proceeding
or investigation by any Person that, in the reasonable opinion of Triad’s
outside counsel has a reasonable possibility of an adverse outcome, and which
if successful would (i) prohibit this Transaction, the CML Transaction or
the Liquidation and/or (ii) have a CIC Material Adverse Effect.
F.
Registration Rights Agreement. The Registration Agreement dated
October 18, 1993 by and among Triad, CIC and CML shall have been amended
to the extent necessary to eliminate the New Triad Shares.
G.
Transaction Documents. CIC and each of the Principal CIC Shareholders
shall have executed and delivered each of the Related Agreements.
H.
Closing Deliveries. CIC shall have delivered all the items set forth in Section 6.2.
7.3.
Conditions Precedent to Obligations of CIC and the Principal CIC
Shareholders. The obligation of CIC and the Principal CIC Shareholders to
consummate the Closing is subject to satisfaction or waiver by CIC and the
Principal CIC Shareholders of the following conditions on or prior to the
Closing Date:
A.
Representation and Warranties. The representations and warranties of
Triad set forth in this Agreement shall be true and correct (without giving
effect to any limitation as to “materiality” or “Triad
Material Adverse Effect” contained therein) in all material respects as
of the date hereof and as of the Closing Date (except to the extent any such
representation and warranty speaks as of an earlier date, in which event such
representation and warranty shall be true and correct as of such date).
B.
Performance of Obligations by Triad. All of the terms, covenants and
conditions of this Agreement to be complied with and performed by Triad on
and/or prior to the Closing Date shall have been complied with and performed by
Triad in all material respects.
C.
Compliance Certificate. Triad shall have delivered to CIC a certificate
dated the Closing Date and signed by an officer of Triad certifying that the
conditions specified in Section 7.3(A) and Section 7.3(B)
have been fulfilled.
D.
No-Action Letter; Registration Statement. Triad shall have obtained the
No-Action Letter or, alternatively, the Registration Statement shall have been
declared effective by the SEC and no stop order shall be in effect.
E.
Transaction Documents. Triad shall have executed and delivered this
Agreement and each of the Related Agreements.
F.
Closing Deliveries. Triad shall have delivered all the items set forth
in Section 6.3.
ARTICLE VIII.
INDEMNIFICATION
8.1.
Survival. All of the representations and warranties, covenants and
agreements of the parties hereto contained herein and in the Related
Agreements, other than the Share Transfer Restriction Agreement, shall survive
forever.
8.2.
Indemnification by CIC and the Indemnifying CIC Shareholders. CIC and
the Indemnifying CIC Shareholders jointly and severally agree to indemnify each
of the Triad Indemnified Parties against, and agree to hold each of the Triad
Indemnified Parties harmless from, any and all Losses incurred or suffered by
any or all of the Triad Indemnified Parties arising out of or in connection
with any of the following:
A.
any breach of or any inaccuracy in (or any third party claim involving an
alleged breach of or inaccuracy in) any representation or warranty made by CIC
or any Indemnifying CIC Shareholder in this Agreement or any Related Agreement;
provided, however, for the purpose of identifying breaches of or inaccuracies
with respect to representations and warranties, any materiality or material
adverse effect qualifications to such representations and warranties shall be
ignored;
B.
any breach (or any third party claim involving an alleged breach) by CIC or any
Principal CIC Shareholder of or failure (or any third party claim involving an
alleged failure) by CIC or any Principal CIC Shareholder to perform any
covenant, agreement or obligation of CIC or any CIC Shareholder in this
Agreement or any Related Agreement or pursuant to the Plan of Liquidation or any
agreement relating to the CML Transaction;
C.
any Lien of CIC or any of its past, present or future Subsidiaries or
Affiliates, including any Lien that relates to, or that arises out of, any act,
omission or event that occurred or any condition, situation or set of
circumstances that existed prior to, on or following the Closing Date;
D.
any act or omission of, or any event, condition, situation or set of
circumstances relating to or involving, CIC or any of its past, present or
future Subsidiaries or Affiliates, or any of their respective officers,
directors, shareholders, employees, agents or representatives in their
capacities as such;
E.
the Transaction, except to the extent Triad is required to indemnify CIC or the
Indemnifying CIC Shareholders therefor pursuant to Section 8.3;
F.
the CML Transaction;
G. without limiting the generality of






