COLLATERAL INVESTMENT
CORP.
THE SHAREHOLDERS OF COLLATERAL
INVESTMENT CORP.
LISTED ON THE SIGNATURE PAGES HERETO
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 ”).
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:
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.
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.”
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.
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.
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.
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.
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.
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 .
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 ;
G. without
limiting the generality of clauses (C) — (F) above, any
Lien for Taxes of, or attributable to, CIC or any of its past,
present or future Subsidiaries or Affiliates, for taxable periods
ending prior to, on or following the Closing Date, including any
Taxes resulting from the consummation of this Transaction or the
Liquidation;
H. any audit,
examination or investigation of this Transaction or the Liquidation
by any Governmental Authority, including the IRS or any other tax
authorities;
I. the bulk sales
Laws of any jurisdiction applicable to this Transaction and any
Laws of any jurisdiction imposing liability on Triad for
CIC’s Taxes, including the failure to comply with any such
Laws; or
J. any assertion
of appraisal or similar rights pursuant to any Law or otherwise by
any of the CIC Shareholders in their capacities as such.
8.3.
Indemnification by Triad . Triad agrees to indemnify CIC and
the Indemnifying CIC Shareholders against, and agrees to hold each
of them harmless from, any and all Losses incurred or suffered by
any or all of them 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
Triad in this Agreement or any Related Agreement; or
B. any breach (or
any third party claim involving an alleged breach) by Triad of or
failure (or any third party claim involving an alleged failure) by
Triad to perform any covenant, agreement or obligation of Triad in
this Agreement or any Related Agreement.
8.4. Claims
. As soon as is reasonably practicable after becoming aware of a
claim for indemnification under this Agreement or any Related
Agreement, or the commencement of any suit, action or proceeding,
of the type described in Section 8.5 or
Section 8.6 , the Indemnified Person shall give notice
to the Indemnifying Person of such claim; provided , that
the failure of the Indemnified Person to give notice shall not
relieve the Indemnifying Person of its obligations under this
Article VIII , except to the extent the Indemnifying
Person shall have been materially prejudiced thereby.
8.5. Notice of
Third Party Claims; Assumption of Defense . The Indemnified
Person shall give notice as promptly as is reasonably practicable
to the Indemnifying Person of the assertion of any claim, or the
commencement of any suit, action or proceeding, by any Person not a
party hereto (other than by a Governmental Authority with respect
to Taxes) in respect of which indemnity may be sought under this
Agreement or any Related Agreement; provided ,
that
the failure of
the Indemnified Person to give notice shall not relieve the
Indemnifying Person of its obligations under this
Article VIII , except to the extent the Indemnifying
Person shall have been materially prejudiced thereby. The
Indemnifying Person may, at its own expense, (a) participate in the
defense of any such claim, suit, action or proceeding and
(b) upon notice to the Indemnified Person and the Indemnifying
Person’s delivering to the Indemnified Person a written
agreement that the Indemnified Person is entitled to
indemnification pursuant to Section 8.2 or
Section 8.3 for all Losses arising out of such claim,
suit, action or proceeding and that the Indemnifying Person shall
be liable for the entire amount of any Loss resulting therefrom, at
any time during the course of any such claim, suit, action or
proceeding, assume the defense thereof, provided , that
(i) the Indemnifying Person’s counsel is reasonably
satisfactory to the Indemnified Person and (ii) the
Indemnifying Person shall thereafter consult with the Indemnified
Person upon the Indemnified Person’s reasonable request for
such consultation from time to time with respect to such claim,
suit, action or proceeding. If the Indemnifying Person assumes such
defense, the Indemnified Person shall have the right (but not the
duty) to participate in the defense thereof and to employ counsel,
at its own expense, separate from the counsel employed by the
Indemnifying Person. If, however, the Indemnified Person reasonably
determines in its judgment that representation by the Indemnifying
Person’s counsel of both the Indemnifying Person and the
Indemnified Person would present such counsel with a conflict of
interest, then such Indemnified Person may employ separate counsel
to represent or defend it in any such claim, action, suit or
proceeding and the Indemnifying Person shall pay the fees and
disbursements of such separate counsel. Whether or not the
Indemnifying Person chooses to defend or prosecute any such claim,
suit, action, proceeding, all of the parties hereto shall cooperate in the defense or
prosecution thereof.
8.6. Disputes
Related to Taxes . The Indemnified Person shall give notice as
promptly as is reasonably practicable to the Indemnifying Person of
the assertion of any claim, or the commencement of any suit, action
or proceeding against Triad, by any Governmental Authority with
respect to Taxes for which indemnity may be sought by any Triad
Indemnified Party under this Agreement or any Related Agreement;
provided , that the failure of the Triad Indemnified Party
to give notice shall not relieve the Indemnifying Person of its
obligations under this Article VIII except t
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