UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of report (Date of earliest event reported): May 26, 2010

 

 

CORELOGIC, INC.

(Exact Name of the Registrant as Specified in Charter)

 

 

 

Delaware   001-13585   95-1068610

(State or Other Jurisdiction

of Incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

 

4 First American Way, Santa Ana, California   92707
(Address of Principal Executive Offices)   (Zip Code)

Registrant’s telephone number, including area code (714) 250-6400

Not Applicable.

(Former Name or Former Address, if Changed Since Last Report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 


Item 1.01 Entry into a Material Definitive Agreement.

On June 1, 2010, The First American Corporation (the “FAC”) completed a transaction (the “Separation”) by which it separated into two independent, publicly traded companies through a distribution (the “Distribution”) of all of the outstanding shares of its subsidiary, First American Financial Corporation (“FAFC”), to the holders of FAC’s common shares, par value $1.00 per share (the “Historic Common Stock”), as of May 26, 2010 (the “Record Date Shareholders”). After the Distribution, FAFC owned the businesses that comprised FAC’s financial services businesses and FAC retained its information solutions businesses.

On May 18, 2010, the shareholders of FAC approved a separate transaction pursuant to which FAC changed its place of incorporation from California to Delaware (the “Reincorporation”). The Reincorporation became effective June 1, 2010. To effect the Reincorporation, FAC and CoreLogic Inc. (“CoreLogic”), which was a wholly-owned subsidiary of FAC incorporated in Delaware, entered into an agreement and plan of merger (the “Merger Agreement”). Pursuant to the Merger Agreement, FAC merged with and into CoreLogic with CoreLogic continuing as the surviving corporation. As used herein, the term the “Company,” refers to FAC at all times prior to the Reincorporation and refers to CoreLogic, as successor to FAC, at all times subsequent to the Reincorporation. The Reincorporation became effective June 1, 2010. A copy of the Merger Agreement is attached hereto as Exhibit 2.1 and is incorporated herein by reference.

To effect the Separation, the Company and FAFC entered into a Separation and Distribution Agreement (the “Separation and Distribution Agreement”) that governs the rights and obligations of the Company and FAFC regarding the Distribution. It also governs the relationship between the Company and FAFC subsequent to the completion of the Separation and provides for the allocation between the Company and FAFC of FAC’s assets and liabilities. In connection with the Separation, the Company and FAFC also entered into a Tax Sharing Agreement dated June 1, 2010 (the “Tax Sharing Agreement”), a Restrictive Covenants Agreement dated June 1, 2010 (the “Restrictive Covenants Agreement”), and CoreLogic issued a promissory note to FAFC, dated June 1, 2010 (the “Promissory Note”).

The summary in this Item 1.01 of the Merger Agreement, Separation and Distribution Agreement, Tax Sharing Agreement, Promissory Note and Restrictive Covenants Agreement, is qualified in its entirety by reference to the complete terms and conditions of such agreements attached as Exhibits 2.1, 10.1, 10.2, 10.3 and 10.4, respectively.

Separation and Distribution Agreement

The Separation and Distribution Agreement sets forth the Company’s agreements with FAFC regarding the principal transactions necessary to separate FAFC from the Company. It also sets forth the terms of other agreements that govern certain aspects of FAFC’s relationship with the Company after the completion of the Separation.

Transfer of Assets and Assumption of Liabilities

The Separation and Distribution Agreement allocates assets, liabilities and contracts between FAFC and the Company as part of the Separation and describes the transfers, assumptions and assignments of such assets, liabilities and contracts. In particular, the Separation and Distribution Agreement provides that, subject to the terms contained in the Separation and Distribution Agreement:

 

   

All of the assets and liabilities primarily related to FAFC’s business—primarily the business and operations of FAC’s title insurance and services segment and specialty insurance segment—were retained by or transferred to FAFC;

 

   

All of the assets and liabilities primarily related to CoreLogic’s business—primarily the business and operations of FAC’s data and analytic solutions, information and outsourcing solutions and risk mitigation and business solutions segments—were retained by or transferred to the Company;

 

   

On the record date for the Distribution, the Company would issue to FAFC and its principal title insurance subsidiary, First American Title Insurance Company (“FATICO”), a number of shares of its common stock that would result in FAFC and its subsidiary collectively owning approximately $250 million of the Company’s issued and outstanding common shares following the Separation, which FAFC and FATICO are expected to dispose of within five years following the Separation. Pursuant to this provision, the Company issued 5,173,306 shares to FAFC and 7,759,959 shares to FATICO on May 26, 2010.

 

   

Each of the Company and FAFC assumed or retained any liabilities relating to their respective employees in respect of the period prior to, on or following the effective time of the Separation and Distribution Agreement;


   

FAFC effectively assumed $200 million of the outstanding liability for indebtedness under the Company’s senior secured credit facility. This assumption occured through FAFC drawing $200 million under its credit facility and transferring such funds to the Company in connection with the Separation. The remainder of the outstanding debt under FAC’s credit facility, as well as its publicly issued debt, remained with the Company. With respect to other outstanding indebtedness of FAC, each party or one of its subsidiaries assumed or retained the liability relating to any of its or its subsidiaries’ or controlled affiliates’ indebtedness; and

 

   

Subject to certain exceptions, including those set forth in the Tax Sharing Agreement, each of the Company and FAFC assumed 50% of certain contingent and other liabilities of FAC, which include certain legal contingencies and actions with respect to the Separation or the Distribution made or brought by any third party.

Further Assurances

To the extent that any transfers contemplated by the Separation and Distribution Agreement have not been consummated on or prior to June 1, 2010, the parties have agreed in the Separation and Distribution Agreement to cooperate to effect such transfers as promptly as practicable. In addition, each party has agreed to cooperate with the other and use reasonable best efforts to take or to cause to be taken all actions, and to do, or to cause to be done, all things reasonably necessary under applicable law or contractual obligations to consummate and make effective the transactions contemplated by the Separation and Distribution Agreement and the ancillary agreements.

The Distribution

The Separation and Distribution Agreement also governs the rights and obligations of the Company and FAFC regarding the Distribution. On June 1, 2010, the Company caused its agent to distribute to the Record Date Shareholders, including FAFC and FATICO, all of the outstanding shares of FAFC.

Right of First Refusal

The Separation and Distribution Agreement gives FAFC the right to purchase the equity or assets of the entity or entities directly or indirectly owning the real property databases owned by the Company upon the occurrence of certain triggering events. Each triggering event involves the direct or indirect purchase of the databases by a title insurance underwriter (or its affiliate) or an entity licensed as or acting in concert with a title insurance underwriter, including a transaction where a title insurance underwriter (or its affiliate) acquires control over CoreLogic. The purchase price would be paid in cash and the amount would be determined either by an appraisal or by reference to the purchase price offered by the title insurance underwriter. This purchase right expires June 1, 2020.

Releases and Indemnification

Except as otherwise provided in the Separation and Distribution Agreement or any ancillary agreement, each party has released and forever discharged each other party and its respective subsidiaries and affiliates from all liabilities existing or arising from any acts or events occurring or failing to occur or alleged to have occurred or to have failed to occur or any conditions existing or alleged to have existed on or before June 1, 2010. The releases do not extend to obligations or liabilities under any agreements between the parties that remain in effect following such date pursuant to the Separation and Distribution Agreement or any ancillary agreement or to ordinary course of business trade payables and receivables.

In addition, the Separation and Distribution Agreement provides for cross-indemnities principally designed to place financial responsibility for the obligations and liabilities of FAC’s financial services business with FAFC and financial responsibility for the obligations and liabilities of FAC’s information solutions business with the Company. Specifically, each party will, and will cause its subsidiaries and affiliates to, indemnify, defend and hold harmless the other party, its respective affiliates and subsidiaries and each of its respective officers, directors, employees and agents for any losses arising out of or otherwise in connection with:

 

   

the liabilities each such party assumed or retained pursuant to the Separation and Distribution Agreement; and

 

   

any breach by such party of the Separation and Distribution Agreement.

Employee Matters

The Separation and Distribution Agreement allocates liabilities and responsibilities relating to employee compensation and benefit plans and programs and other related matters in connection with the Separation, including the treatment of certain outstanding and long-term incentive awards, existing deferred compensation obligations and certain retirement and welfare benefit obligations.


The Separation and Distribution Agreement also adjusted outstanding FAC stock options and restricted stock unit awards as described below. All outstanding FAC equity-based awards, whether vested or unvested, other than those granted to FAC’s chairman and chief executive officer, converted into awards with respect to shares of common stock of the company that continues to employ the holder following the Separation. The number of shares underlying each such award and, with respect to options, the per share exercise price of each such award were adjusted to maintain, on a post-Separation basis, the pre-Separation value of such awards. With respect to outstanding FAC equity-based awards granted to FAC’s chairman and chief executive officer, half of the awards were converted into FAFC awards and the other half into the Company’s awards at the same time and in the same manner as other employees of FAFC and the Company, respectively. The number of shares of common stock subject to any adjusted stock option or adjusted RSU were rounded down to the nearest whole share, and the per share exercise price of each adjusted stock option were rounded up to the nearest whole cent.

Insurance

The Separation and Distribution Agreement provides that FAFC may report claims under insurance policies in effect as of the Separation for occurrences prior to the Separation and sets forth procedures for the administration of insured claims. In addition, the agreement allocates between the Company and FAFC the right to insurance policy proceeds based on reported claims and the obligations to incur deductibles under certain insurance policies retained by each of the Company and FAFC.

The Company and FAFC each maintain a variety of commercial insurance programs. All of these programs are subject to the terms and conditions, policy limits and deductibles of the applicable insurance policies. The facts and circumstances of each pre-Separation claim will govern the determination of whether the occurrence is covered by existing insurance policies.

Dispute Resolution

In the event of any dispute arising out of the Separation and Distribution Agreement, the Company’s and FAFC’s general counsels, chief financial officers and such other executive officers designated by each party will negotiate to resolve the dispute. If they are unable to resolve the dispute within 30 days then the general counsels, chief financial officers and chief executive officers of each party shall negotiate for an additional period of up to 15 days. If, after such period, such officers are unable to resolve the dispute then, unless agreed otherwise, the dispute will be resolved through binding arbitration. In all matters involving only claims for monetary damages, each party will be required to submit a proposed resolution and the arbitrators shall be limited to electing only one of the proposals submitted. The parties also mutually may elect to resolve any dispute by litigation.

Other Matters Governed by the Separation and Distribution Agreement

Other matters governed by the Separation and Distribution Agreement include access to financial and other information, intellectual property, confidentiality, access to and provision of records and treatment of outstanding guarantees and similar credit support.

Tax Sharing Agreement

The Tax Sharing Agreement governs the Company’s and FAFC’s respective rights, responsibilities, and obligations after the Distribution with respect to taxes, including ordinary course of business taxes and taxes, if any, incurred as a result of any failure of the Distribution to qualify as a tax-free distribution for U.S. federal income tax purposes within the meaning of Section 355 of the of the Internal Revenue Code of 1986, as amended (the “Code”), and taxes incurred in connection with certain internal transactions undertaken in anticipation of the Separation.

In general, pursuant to the Tax Sharing Agreement, the Company will prepare and file the consolidated federal income tax return, and any other tax returns that include both the Company (or any of its subsidiaries) and FAFC (or any of its subsidiaries) for all taxable periods ending on or prior to, or including, the date of the Distribution, with the appropriate tax authorities and will prepare and file all separate company tax returns of the Company and its subsidiaries. FAFC will prepare and file all tax returns that include solely FAFC and/or its subsidiaries for all taxable periods. In general, the Company controls all audits and administrative matters and other tax proceedings relating to the consolidated federal income tax return of the Company’s group and any other tax returns for which it is responsible, except that FAFC has certain participation rights to the extent that it is liable for any taxes shown on such returns.

The Tax Sharing Agreement generally provides that, with respect to any consolidated tax return that includes the members of the FAFC group and the Company’s group, (a) FAFC is generally responsible for all taxes that are attributable to members of the FAFC group of companies or the assets, liabilities or businesses of the FAFC group of companies (including any such liabilities arising from adjustments to prior year or partial year with respect to 2010), except with respect to the 2009 taxable year in which case FAFC is liable for 75% of such taxes as shown on the 2009 consolidated tax return, and (b) the Company is generally


responsible for all taxes attributable to members of the Company’s group of companies or the assets, liabilities or businesses of the Company’s group of companies (including any such liabilities arising from adjustments to prior year or partial year with respect to 2010), except with respect to the 2009 taxable year in which case the Company is additionally liable for 25% of all taxes attributable to the FAFC group as shown on the 2009 consolidated tax return. The FAFC group and the Company’s group will each be liable for taxes reflected in their respective separate group tax returns. Notwithstanding the foregoing, the Company and FAFC will each be liable for one-half of the taxes as shown on the applicable tax return arising from the internal transactions undertaken prior to the Distribution that are expected to be taxable. If the Distribution itself, or certain preparatory internal transactions that are undertaken in connection therewith and are expected to be tax-free become taxable for U.S. federal income tax purposes or if there is an increase in taxes resulting from the taxable internal transactions undertaken in connection with the Separation other than due to an action or omission of either party, the Company and FAFC will share the resulting tax liability equally. If such taxes arise as a result of action or omission of either party, such party will generally be liable for 100% of such taxes. To the extent that the parties have made any payments to each other prior to the Distribution on account of taxes for which they are liable under the Agreement, such payments will be treated as an offset to amounts owed under the Tax Sharing Agreement.

Under the Tax Sharing Agreement, the Company and FAFC generally may not (a) take or fail to take any action that would cause any representation, information or covenant contained in the separation documents or the documents relating to the IRS private letter ruling and the tax opinion regarding the Separation to be untrue, (b) take or fail to take any other action that would cause the Separation or any internal transaction expected to be tax-free to lose its tax favorable treatment under the Code, (c) sell, issue, redeem or otherwise acquire any of its equity securities (or equity securities of members of its group), except in certain specified transactions for a period of 25 months following the Separation and (d) other than in the ordinary course of business, sell or otherwise dispose of a substantial portion of its assets, liquidate, merge or consolidate with any other person for a period of 25 months following the Separation. During the 25-month period, the Company and FAFC may take certain actions otherwise prohibited by these covenants if (a) it obtains the other party’s prior written consent, or (b) it provides the other party with an IRS private letter ruling or an unqualified opinion of tax counsel to the effect that such actions will not affect the tax-free nature of the Separation.

Notwithstanding the receipt of any such IRS ruling or tax opinion, each party will be required to indemnify the other party for any taxes and related losses resulting from (a) any act or failure to act by such party described in the covenants above, (b) any acquisition of equity securities or assets of such party or any member of its group, or (c) any breach by such party or any member of its group of any representation or covenant contained in the separation documents or the documents relating to the IRS private letter ruling or tax opinion concerning the Separation.

The IRS private letter ruling includes a representation that FAFC and FATICO, will dispose of shares of the Company held by them as of the date of the Distribution as soon as such disposition is practicable and consistent with the business purposes of the retention of the stock (as set forth in the IRS private letter ruling), but in no event later than five years after the Distribution. In the event that either FAFC or FATICO holds the shares of the Company longer than such time, it is possible that the IRS may determine upon audit that the Distribution and/or the internal transactions could be treated as taxable to FAC and/or its shareholders. If such a determination were made, then pursuant to the Tax Sharing Agreement, FAFC would be responsible for all taxes imposed on the Company and FAFC due to its failure to dispose of the shares of the Company (unless the failure of FAFC or FATICO to dispose of such shares was attributable to the Company’s failure to comply with its obligations set forth in the Separation and Distribution Agreement to register such shares). Further, if FAFC fails to comply with any other of its representations in its private letter ruling and the IRS determines that the Distribution or the internal transactions are taxable, FAFC would likewise be responsible under the Tax Sharing Agreement for all taxes imposed on FAFC and the Company due to such failure.

The Tax Sharing Agreement also contains provisions regarding the apportionment of tax attributes of the Company’s consolidated federal income tax return group, the allocation of deductions with respect to compensatory equity interests, cooperation, and other customary matters.

Promissory Note

On June 1, 2010, the Company issued the Promissory Note, in the principal amount of $19,900,000, to FAFC. The Promissory Note accrues interest at 6.52% per annum. Interest is first due July 1, 2010 and payable quarterly thereafter. The Promissory Note, together with all accrued and unpaid interest, is due and payable on May 31, 2017.

Restrictive Covenants Agreement

Pursuant to the Restrictive Covenants Agreement, FAFC is restricted in certain respects from competing with the Company in its tax services business within the United States for a period of ten years.


Item 2.01 Completion of Acquisition or Disposition of Assets.

On June 1, 2010, the Company issued the Promissory Note, in the principal amount of $19,900,000, to FAFC. The information included in Item 1.01 is incorporated herein by reference.

 

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The information included in Item 1.01 is incorporated herein by reference.

 

Item 3.02. Unregistered Sales of Equity Securities.

On May 26, 2010, FAC issued an aggregate of 12,933,265 shares (the “Spin Shares”) of its common stock, par value $1.00 per share (the “Common Stock”) in satisfaction of the Company’s $250,000,000 obligation under the Separation and Distribution Agreement. The Spin Shares consisted of 5,173,306 shares of Common Stock issued to FAFC and 7,759,959 shares of Common Stock issued to First American Title Insurance Company (“FATICO”), a wholly-owned subsidiary of FAFC. FAC issued the Spin Shares pursuant to the exemption from the registration requirements afforded by Section 4(2) of the Securities Act of 1933, as amended.

As discussed in FAC’s Form 10-Q for the quarter ended March 31, 2010, FAC anticipated that FAC, FAFC and FATICO would enter into a voting agreement pursuant to which FAC’s board of directors would direct the vote of the Spin Shares. The voting agreement was thought to be necessary so that FAC could receive a private letter ruling from the Internal Revenue Service substantially to the effect that the separation of FAC into two independent companies would qualify as a tax-free transaction for U.S. federal income tax purposes under Sections 368(a)(1)(D) and 355 of the Internal Revenue Code of 1986, as amended. The private letter ruling FAC received from the Internal Revenue Service does not require a voting agreement with respect to the Spin Shares, and therefore FAC, FAFC and FATICO decided not to enter into a voting agreement.

On June 1, 2010, pursuant to the Reincorporation, each shareholder of FAC before the Reincorporation received one share of the common stock of CoreLogic, par value $0.00001 per share (“CoreLogic Stock”), in exchange for each outstanding common share of FAC. CoreLogic will issue a total of approximately 116,939,278 shares of CoreLogic Stock. The issuance is exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), pursuant to Section 3(a)(9) of the Securities Act.

 

Item 3.03. Material Modifications to Rights of Security Holders.

The information included in Item 1.01 is incorporated herein by reference.

Description of Capital Stock of CoreLogic, Inc.

The following is a description of the material terms of CoreLogic’s capital stock, as well as the material provisions of its amended and restated certificate of incorporation, effective May 28, 2010, and bylaws, effective June 1, 2010. In addition, the information provided by FAC in its revised definitive proxy statement, filed April 26, 2010, under the headings “The Charter and Bylaws of the Company and CoreLogic” and “Comparison between the Corporation Laws of California and Delaware” is incorporated herein by reference. The complete text of the amended and restated certificate of incorporation and bylaws of CoreLogic are filed as Exhibits 3.1 and 3.2, respectively, to this Current Report on Form 8-K and are incorporated herein by reference. The summary of such documents is qualified in its entirety by reference to such exhibits. As used herein, the terms “we,” “us” and “our” refer to CoreLogic, Inc.

Authorized Capitalization

As of the date of this filing, our authorized capital consists of 180,000,000 shares of our common stock, of which 116,939,278 are outstanding, and 500,000 shares of our preferred stock, of which none were outstanding, each class of shares having a $0.00001 par value. Each share of our common stock has the same relative rights and is identical in all respects with every other share of our common stock.

Common and Preferred Stock

Voting rights . Each stockholder is entitled to one vote for each share of our common stock. Stockholders are entitled to vote on all matters requiring stockholder approval under Delaware law and our amended and restated certificate of incorporation and bylaws, including the election of members of the board of directors. At each annual meeting of our stockholders, the entire board of directors is put up for election by the stockholders. The Delaware General Corporation Law (“DGCL”) provides that stockholders are denied the right to cumulate votes in the election of directors unless our amended and restated certificate of incorporation provides otherwise. Our amended and restated certificate of incorporation does not expressly address cumulative voting.


Dividend Rights . We pay dividends out of statutory surplus or from net profits if, as and when declared by our board of directors. If we issue shares of our preferred stock, the holders of the shares of our preferred stock may have a priority over the holders of the shares of our common stock with respect to dividends.

Liquidation Rights . If we are liquidated or dissolved, stockholders of common stock are entitled to receive all of our assets that remain after our debts and liabilities are paid. If we issue shares of our preferred stock, the holders of shares of our preferred stock may have a priority over the holders of shares of our common stock in the event of our liquidation or dissolution. As of the date of this filing, we have not issued any shares of our preferred stock.

Preemptive rights; redemption; nonassessability . Shares of our common stock have no preemptive rights. This means that our stockholders do not have a right to buy their proportional shares of any additional shares of our common stock we issue. There are no provisions for redemption, conversion rights, sinking funds, or liability for further calls or assessments on shares of our common stock. This means that we cannot ask you for more money for your shares of our common stock, we cannot force you to sell your shares of our common stock back to us (absent a separate agreement to do so) and your shares of our common stock cannot be exchanged for a different security. It also means that we do not set aside any money to buy your shares of our common stock from you.

Amendments to amended and restated certificate of incorporation or bylaws . Our board of directors has the power to adopt, amend or repeal our bylaws, except for the provision requiring directors to be elected by a majority of the votes cast at the annual meeting. The stockholders also may amend our bylaws, but the affirmative vote of the holders of at least a majority in voting power of the issued and outstanding stock entitled to vote generally in the election of directors, voting together as a single class, shall be required for the stockholders to amend or repeal, or adopt any provision inconsistent with, any provision of the bylaws.

Limitations on Liability and Indemnification of Officers and Directors . The DGCL authorizes corporations to limit or eliminate the personal liability of directors to corporations and their stockholders for monetary damages for breaches of directors’ fiduciary duties. Our amended and restated certificate of incorporation includes a provision that eliminates the personal liability of directors for monetary damages for breaches of fiduciary duty as a director.

Our bylaws provide for the indemnification by us of any person serving as a director, officer, employee or other agent to the fullest extent permissible under the DGCL. In addition, we have purchased a directors’ and officers’ insurance policy covering our officers and directors for liabilities that they may incur as a result of any action, or failure to act, in their capacity as officers and directors. We believe that these indemnification provisions and insurance are useful to attract and retain qualified directors and officers.

Authorized but Unissued Stock . Our authorized but unissued shares of our common stock and our preferred stock will be available for future issuance without the approval of holders of common stock. We may use these additional shares of our common stock and our preferred stock for a variety of corporate purposes, including future offerings to raise additional capital, corporate acquisitions and employee benefit plans.

Anti-takeover provisions

Our amended and restated certificate of incorporation authorizes the issuance of “blank check” shares of our preferred stock with such designations, rights and preferences as may be determined from time to time by our board of directors. Accordingly, our board is empowered, without further stockholder action, to issue shares or series of our preferred stock with dividend, liquidation, conversion, voting or other rights that could adversely affect the voting power or other rights, including the ability to receive dividends, of our common stockholders. The issuance of such shares of our preferred stock could be utilized, under certain circumstances, as a method of discouraging, delaying or preventing a change in control.

 

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Effective as of June 1, 2010, in connection with the Separation and prior to the Reincorporation, George L. Argyros, Bruce S. Bennett, Glenn C. Christenson, William G. Davis, James L. Doti, Lewis W. Douglas, Frank E. O’Bryan, Herbert B. Tasker and Virginia M. Ueberroth resigned as directors of FAC. They are expected to become directors of FAFC.

On June 1, 2010, as a result of the Reincorporation, the directors and executive officers of FAC immediately prior to the Reincorporation became the directors and executive officers of CoreLogic. The terms of the Company’s directors will expire upon the next annual meeting of the stockholders of CoreLogic. The CoreLogic board of directors is composed of: Parker S. Kennedy (Chairman), Matthew B. Botein, J. David Chatham, Christopher V. Greetham, Anand K. Nallathambi, Thomas C. O’Brien, John W. Peace, D. Van Skilling, David F. Walker and Mary Lee Widener. The information included under Item 1.01 and Item 3.03 is incorporated herein by reference.


The members of the audit committee of the board of directors are Messrs. David F. Walker (chair), J. David Chatham and D. Van Skilling. The members of the compensation committee of the board of directors are Messrs. D. Van Skilling (chair), J. David Chatham, Christopher V. Greetham and Thomas C. O’Brien. The members of the nominating and corporate governance committee are J. David Chatham (chair), Thomas C. O’Brien and D. Van Skilling. The members of the executive committee are Parker S. Kennedy, Anand K. Nallathambi, D. Van Skilling and Mary Lee Widener.

Effective as of June 1, 2010 and upon the Distribution, the following executive officers resigned from their positions with FAC: Parker S. Kennedy, Chief Executive Officer; Dennis J. Gilmore, Chief Executive Officer, FSG; Max O. Valdes, Senior Vice President and Chief Accounting Officer. Mr. Kennedy will continue on as Executive Chairman and Chairman of the Board of CoreLogic. Effective as of June 1, 2010 and upon the Distribution, Anand K. Nallathambi was appointed President and Chief Executive Officer and Michael A. Rasic was appointed Senior Vice President, Finance and Accounting. Anthony S. Piszel will continue as the Chief Financial Officer of CoreLogic. Mr. Piszel will receive a one-time cash bonus of $800,000 and Mr. Rasic will receive a one-time cash bonus of $225,000 in recognition of their significant efforts towards the consummation of the Separation. A description of Mr. Nallathambi’s service with FAC and his business experience can be found in the FAC definitive proxy statement filed on April 13, 2010 and is incorporated herein by reference. Mr. Rasic, 44, joined FAC in 2007 as Vice President and Director of SEC Reporting where he was responsible for overseeing the public filings required by the U.S. Securities and Exchange Commission, as well as accounting for the company’s mergers and acquisitions, establishment of accounting policies, and oversight of internal audit and compliance activities. Prior to joining FAC, Rasic worked as Chief Financial Officer of Metrocities Mortgage in Sherman Oaks, Calif., and also was a partner at PricewaterhouseCoopers, LLP, in Los Angeles from 2001 to 2006.

The information included in Item 1.02 is incorporated herein by reference.

Letter Agreement and Change in Control Agreement

In connection with the Separation, on May 31, 2010, FAC, FAFC and Mr. Kennedy entered into a letter agreement with respect to Mr. Kennedy’s post-separation benefits from FAFC and CoreLogic. The agreement generally establishes the benefits programs in which Mr. Kennedy will be permitted to participate following the separation, certain allocations of assets and liabilities associated with Mr. Kennedy’s benefits and certain reimbursement arrangements between FAFC and CoreLogic with respect thereto. The agreement also provides that half of Mr. Kennedy’s outstanding equity awards would be converted into FAFC awards and the other half into CoreLogic awards in connection with the Separation.

Pursuant to the letter agreement described above, FAC also entered into a change in control agreement with Mr. Kennedy and FAFC on May 31, 2010. Under the agreement a “change in control” means any one of the following: (a) a merger or consolidation of the Company in which the Company’s shareholders end up owning less than 50% of the voting securities of the surviving entity; (b) the sale, transfer or other disposition of all or substantially all of the Company’s assets or the complete liquidation or dissolution of the Company; (c) a change in the composition of the Company’s Board of Directors over a two-year period as a result of which fewer than a majority of the directors are incumbent directors, as defined in the agreement; or (d) the acquisition or accumulation by any person or group, subject to certain limited exceptions, of at least 25% of the Company’s voting securities.

Following a change in control of the Company, if the termination of Mr. Kennedy’s employment occurs without cause or if he terminates his employment for good reason or for any reason within 30 days following the first anniversary of the change in control, the Company will pay the following benefits in one lump sum within ten business days:

 

   

Mr. Kennedy’s base salary through and including the date of termination and any accrued but unpaid annual incentive bonus;

 

   

an annual incentive bonus for the year in which the termination occurs in an amount equal to the highest annual incentive bonus paid to the executive during the last four completed fiscal years of the Company, prorated through the date of termination;

 

   

accrued and unpaid vacation pay;

 

   

unreimbursed business expenses;

 

   

three times (or two times in the case of a termination by Mr. Kennedy for any reason during the 30-day period following the first anniversary of a change in control) the executive officer’s annual base salary in effect immediately prior to the date of termination; and


   

three times (or two times in the case of a termination by Mr. Kennedy for any reason during the 30-day period following the first anniversary of a change in control) the highest annual incentive bonus paid to the executive officer during the last four completed fiscal years.

In the event of a change in control and a related termination of employment from the Company while the agreement is in effect with respect to both the Company and FAFC the amounts described above will generally be calculated based on: (a) 50% of the combined compensation Mr. Kennedy receives from the Company and FAFC for post-Separation periods and/or (b) 100% of the compensation received from FAC for pre-Separation periods (to the extent applicable). In the event the agreement is in place with respect to the Company and not with respect to FAFC at the time the Company experiences a change in control, the benefit described above will generally be calculated based on: (i) 100% of Mr. Kennedy’s compensation from the Company for post-Separation periods and/or (ii) 50% of the compensation received from FAC for pre-Separation periods (to the extent applicable).

In addition, for a period of 24 months following such a termination, the Company will provide the same level of benefits and perquisites that Mr. Kennedy received at the time of termination or, if more favorable to Mr. Kennedy, at the time at which the change in control occurred. These benefits include tax-qualified and nonqualified savings plan benefits, medical insurance, disability income protection, life insurance coverage and death benefits. To the extent that Mr. Kennedy cannot participate in the plans previously available, the Company will provide such benefits on the same after-tax basis as if they had been available. These obligations are reduced by any welfare benefits made available from subsequent employers.

The change in control agreements provide that if any excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (or any similar tax), applies to the benefits payable under the agreement or otherwise, the Company will reimburse Mr. Kennedy for any such excise taxes, plus any additional excise or income taxes resulting from that payment.

The change in control agreement has an initial term through December 31, 2010 and automatically extends for additional one-year periods unless either party notifies the other not later than the preceding January 1 that it does not wish to extend the term. Upon the occurrence of a change in control, the term of the agreement is automatically extended until three years following the date of the change if control.

The information included in Item 1.01 is incorporated herein by reference.

The summary in this item 5.02 of the letter agreement and change in control agreement is qualified in its entirety by reference to the complete terms and conditions of such agreements attached hereto as Exhibits 10.5 and 10.6 respectively, and are incorporated herein by reference.

 

Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

The information included in Items 1.01 and 3.03 are incorporated herein by reference.

 

Item 8.01 Other Events.

In connection with the Separation, CoreLogic has revised its segment descriptions from those previously reported for FAC’s information solutions business to reflect the way management currently views the organization of CoreLogic as a stand-alone entity. In connection with the Separation, CoreLogic has also revised the description of certain risks related to CoreLogic’s operations as a standalone entity. The description below provides an overview of the revised segments and associated key products and services as well as a description of certain risks related to the business. The financial information provided is based on CoreLogic as a standalone Company.

Certain statements in this Current Report on Form 8-K are forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements can be identified by use of the words “believe,” anticipate,” “expect,” “plan,” “predict,” “project,” “will be,” “will continue,” “will likely result,” or other similar words and phrases. Risks and uncertainties exist that may cause results to differ


materially from those set forth in the forward-looking statements. Factors that could cause the anticipated results to differ from those described in the forward-looking statements include the factors described in this Current Report on Form 8-K, in Part I, Item 1A of our most recent Annual Report on Form 10-K, as updated by the risk factors set forth in Part II, Item 1A of our Quarterly Reports, if any filed subsequently to the date of our most recent Annual Report on Form 10-K. We do not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made.

Overview

We are a leading provider of property, financial and consumer information, analytics and services to mortgage originators and servicers, financial institutions and other businesses and government entities. Our data, query, analytical and business outsourcing services help our clients to identify, manage and mitigate credit and interest rate risk. In addition, our services enable clients to manage their hiring, marketing and litigation processes and decisions. We have more than one million users who rely on our data and predictive decision analytics to reduce risk, enhance transparency and improve the performance of their businesses.

We believe that we offer our clients the most comprehensive databases of public, contributory and proprietary data covering property and mortgage information, legal, parcel and geospatial data, motor vehicle records, criminal background records, national coverage eviction information, payday lending records, credit information, and tax records, among other data types. Our databases include over 500 million historical property transactions, over 70 million mortgage applications and property-specific data covering approximately 98% of U.S. residential properties. We believe that the quality of the data we offer is distinguished by our broad range of data sources and our core expertise in aggregating, organizing, normalizing, processing and delivering data to our clients.

With our data as a foundation, we have built strong analytics capabilities and a variety of value-added business services to meet our clients’ needs for mortgage and automotive credit reporting, property tax, property valuation, flood plain location determination and other geospatial data, data, analytics and related services.

Before June 1, 2010, we operated as The First American Corporation (“First American”). On June 1, 2010, we spun-off our financial services business, including our title insurance business, into a new publicly traded, New York Stock Exchange-listed company called First American Financial Corporation. In connection with the Separation, we transferred ownership of the “First American” name, trademarks and trading symbol “FAF” to First American Financial. We then changed our name to CoreLogic, Inc. and our trading symbol to “CLGX.”

We were originally incorporated in California in 1894 and were reincorporated in Delaware on June 1, 2010, immediately following the Separation. As used herein, the terms CoreLogic, the Company, we, our and us refer to CoreLogic, Inc., a Delaware corporation, and its consolidated subsidiaries, except where it is clear that the terms mean only CoreLogic, Inc. and excludes our subsidiaries Our executive offices are located at 4 First American Way, Santa Ana, California 92707-5913, our telephone number is (714) 250-6400 and our website is www.corelogic.com.

Our Data

The following table categorizes the data assets and information we own or license, which are the foundation of our products, analytics and services.

 

Real Estate Information

 

Mortgage Information

 

Consumer Information

Property ownership

  Asset-backed securities data   Data from credit bureaus

Property tax payment history

  Mortgage applications  

Non-prime credit records

Sales history

  Mortgage servicing   Delinquency and prepay data (covering home loans)

Geo-coded parcel maps

  Adjustable rate mortgage (ARM) riders   Payment histories and charge-off data

Foreclosure and pre-foreclosure

  Assignments   Criminal records

Liens (tax, HOA and mechanics)

  Release of mortgage   SSN verification

Landlord-tenant cases

   

Bankruptcy

Judgments

   

Sex offender registry

   

Divorce information


Products and Services

We manage our business in three segments: business and information services; data and analytics; and employer, legal and marketing services. These segments generated approximately 50%, 35% and 15% of our revenue, respectively, for the year ended December 31, 2009. The following table sets forth the key products and services we offer in each of these reportable segments.

 

     

Reporting Segment

  

Key Products and Services

  Business and Information Services   
          Mortgage Origination Services   

Tax services

Flood data services

Appraisal services

          Default and Technology Services   

Loss mitigation services

REO asset management

Default technology

Claims management

Broker price opinions Field services (property preservation)

  Data and Analytics   
          Risk and Fraud Solutions   

Information and analytics products

Property and mortgage securities information

Tenancy, data and analytics products

Non-traditional credit services

          Specialty Finance Solutions   

Credit solutions

Realtor solutions (MLS services)

  Employer, Legal and Marketing Services   
          Employer Services   

Background screening

Applicant tracking software (ATS) and candidate
relationship management (CRM)

Advanced biometrics

Tax consulting services

Candidate and employee assessments

Recruiting solutions

          Litigation Consulting   

eDiscovery

Computer forensics

Investigative services

          Lead Generation   

Core lead generation

eAdvertising

We believe that we hold the leading market share position for many of our products and services, including tax services, based on the number of loans under service; flood zone determinations, based on the number of flood zone certification reports issued; credit reporting services to the United States mortgage lending industry, based on the number of credit reports issued; tri-merge credit reports focusing on specialty borrowers in the United States, based on the number of credit reports issued; property data services, based on the number of inquiries; automated appraisals, based on the number of reports sold; and Multiple Listing Services (“MLS”), based on the number of active desktops.

Our Mortgage Origination Services, Default and Technology Services and Risk and Fraud Analytics lines of business are our three largest groups, together accounting for over approximately 64% of our 2009 revenues. We derived approximately 70% of our 2009 revenues from businesses whose volumes are related to mortgage originations, servicing and default. Traditionally, the greatest volume of mortgage and real estate activity, particularly residential resale, has occurred in the spring and summer months.


Business and Information Services Segment

Our business and information services segment provides tax monitoring, flood zone certification and monitoring, mortgage default management services, mortgage loan administration and production services, mortgage-related business process outsourcing and property valuation and management services. We are also an emerging provider of geospatial proprietary software and databases combining geographic mapping and data. The segment’s primary customers are large, national mortgage lenders and servicers, but we also serve regional mortgage lenders and brokers, credit unions, commercial banks, government agencies and property and casualty insurance companies. For the year ended December 31, 2009, this segment produced approximately 50%, of our revenue.

The products and services we provide in this segment typically fall into two categories – mortgage origination services and default and technology services.

Mortgage Origination Services

We provide mortgage companies loan origination and closing-related services, including tax services, flood data services and appraisal services.

Tax Services . We believe that we are currently the largest provider of property tax services in the United States. We procure and aggregate property tax information from over 20,000 taxing authorities to advise mortgage originators and servicers of the property tax payment status on their loans and to monitor that status for the life of the loans. If a mortgage lender requires tax payments to be impounded on behalf of its borrowers, we can also monitor and oversee the transfer of these funds to the taxing authorities and provide the lender payment confirmation.

Flood Data Services . We believe that we are currently the largest provider of flood zone determinations in the United States. We provide flood zone determinations and geospatial data to mortgage lenders and insurance companies. We typically furnish a mortgage originator or servicer with a report as to whether a property lies within a governmentally delineated flood hazard area and then monitor the property for flood hazard status changes for as long as the loan is active.

Appraisal Services . We provide appraisals and other property valuation products to mortgage lenders, real estate agents, investors and other businesses requiring real property valuations. These services generally consist of traditional appraisals, which require physical inspection and human analysis, or hybrid valuation products, which incorporate elements of automated valuation models (“AVMs”), broker price opinions (“BPOs”) and traditional appraisals.

Default and Technology Services

We provide analytical and outsourcing solutions primarily relating to defaulting and foreclosed mortgage loans to financial institutions, government bodies and other companies.

Loss Mitigation Services . We sell software and provide services that assist mortgage servicers and financial institutions with loss mitigation on mortgages in default, management of foreclosures, the maintenance and sale of real estate owned (“REO”) properties and processing foreclosure claims. Our loss mitigation services cover the lifecycle of the loss mitigation process and include portfolio analysis, data-driven workout options, collection campaign management and back-office fulfillment, including signature and recording services. Additionally, we provide flexible staffing models that give our clients the ability to respond to growing delinquency volumes while substantially eliminating capacity fluctuations.

REO Asset Management . We provide services to help shorten our clients’ time-to-market for REO properties, while optimizing the return and mitigating fraud. We first cure title issues, determine property tax status, and resolve any homeowners’ association and municipal code violations. We then provide property recovery services, including eviction logistics. We next value the asset using one or more of our full range of products, including AVMs, BPOs and appraisals. We also offer marketing and closing services. Our automated asset management system is available 24 hours a day, seven days a week to our clients.

Default Technology . We provide our clients with default management solutions that enable them to effectively and efficiently manage the default process from their desktop. Our services include evaluating loan properties, reviewing borrower interview results and financials, and generating a work-out plan in a default situation. We provide flexible tracking and communication functions that enable our clients to process data according to their own business practices, while decreasing processing time.

Claims Management . We provide mortgage insurance claims processing and investor billings solutions, including FHA conveyances and claims, Fannie Mae and Freddie Mac billings, VA conveyances and claims, conventional mortgage insurance claims and private investor billings. Our solutions help reduce our customers’ financial exposure, minimize staffing costs, expedite claims processing and provide flexible and scalable claims management solutions.


Broker Price Opinions . Through our BPO business, we offer a cost-saving alternative to traditional appraisals. BPOs validate subject information with “eyes on the property,” detail recent sales and competitive listings. They also provide a supported price opinion by local, licensed real estate professionals.

Field Services (Property Preservation) . We inspect, preserve, maintain and, where required, register vacant properties with local authorities on behalf of our mortgage servicer clients.

Data and Analytics Segment

Our data and analytics segment owns or licenses data assets including loan information, criminal and eviction records, employment verification, property characteristic information and information on mortgage-backed securities. We both license our data directly to our clients and provide our clients with analytical products for risk management, collateral assessment and fraud prediction. Our primary clients are commercial banks, mortgage lenders and brokers, investment banks, fixed-income investors, real estate agents, property and casualty insurance companies, title insurance companies and government-sponsored enterprises. For the year ended December 31, 2009, this segment produced approximately 35%, of our revenue.

The products and services we provide in this segment typically fall into two categories – risk and fraud analytics and specialty finance solutions.

Risk and Fraud Analytics

We provide collateral and mortgage data and analytics and real estate and mortgage-backed securities information to businesses and governments. We also provide consumer screening and risk management for the multifamily housing and non-traditional credit services industries.

Information and Analytics . We are a leading provider of fraud detection, collateral and mortgage performance analytics and real estate and mortgage-backed securities information. We gather data from over 4,000 disparate sources and standardize it for our use. We then use this data to link property, location and characteristics, real estate transactions, consumer and loan information to provide useful and novel analytical insights. Our clients span many industries, including mortgage lending, government, capital markets, consumer direct, property and casualty, direct marketing, utilities, and retail.

Tenancy Data and Analytics . We are a leading provider of screening and risk management services for the multifamily housing industry. We conduct over 6.5 million applicant screening transactions annually, and generate reports containing information about a prospective tenant’s eviction record, lease and payment performance history, credit standing, references and criminal records for residential property managers and owners in the U.S. We have the largest landlord-tenant database in the U.S. and process more than 300 million criminal records to power client configured, criminal background decision analytics. We also believe that we have the only statistically-validated applicant scoring models in this industry, assessing the risk of default by a prospective renter based on a statistical scoring model developed exclusively for the multifamily housing industry.

Non-Traditional Credit Services . We are the leading provider of credit reports for non-traditional or specialty borrowers, such as those seeking pay-day loans or transacting with rent-to-own retailers. Our clients range in size from single proprietorships to major credit card issuers. We process approximately 120 million applications for these services annually.

Specialty Finance Solutions

We provide credit reports and credit-related services to our clients, and also license real estate listing software systems to multiple listing service (MLS) clients and real estate brokers and agents.

Credit Solutions . We are a leading provider of credit services in the U.S. mortgage and transportation markets, providing comprehensive solutions that help our clients meet their lending, leasing and other consumer credit automation needs. We provide merged credit reports with information from each of the three U.S. primary credit bureaus within seconds after receiving a customer’s request. We deliver more than 35 million such credit reports each year to more than 4 million clients. Our credit report solution is integrated with all major mortgage loan origination systems and is integrated with more than 50 automobile dealership systems.

Realtor Solutions . We are the leading provider of real estate listing software systems, with more than 50% of all U.S. real estate agents having access to our product. Our software is customizable to meet our clients’ needs, while maintaining a single code base. We integrate client data with our robust property information, resulting in a comprehensive historical record on almost all properties.


Employer, Legal and Marketing Services Segment

Our employer, legal and marketing services segment provides information management and risk mitigation solutions to enable informed decision-making by our customers. We deliver our solutions through a collection of businesses that possess advanced technology, proprietary processes, unique structured and unstructured data sources, advanced analytics and proactive applications. These capabilities provide our clients with enhanced situational awareness and transparency. Our customers include leading financial institutions, Fortune 500 companies, AmLaw 100 law firms, and middle-market enterprises. For the year ended December 31, 2009, this segment produced approximately 15%, of our consolidated revenue.

This segment is composed of three principal business lines – employer services, litigation consulting, and lead generation.

Employer Services . Our employer services business helps clients reduce time and cost of hiring by providing employment screening, occupational health, and tax incentive services. We also provide applicant tracking software (ATS), recruitment marketing, background screening, fingerprinting, substance abuse testing, compliance tracking, candidate relationship management (CRM), job posting distribution technology, online assessments and tax consulting services. Our reports include information about a prospective employee’s criminal record, motor vehicle violations, credit standing and involvement in civil litigation. We can also check references and interview former employers, verify educational credentials and licenses, verify social security numbers and check industry specific records. Our clients can order any of these and other related services individually, as a package with our other employment services, or with other products we offer.

Litigation Consulting . Our computer forensic and electronic discovery experts and consultants assist our clients in business, legal and financial matters, including investigations and litigation arising from trade secret theft, software infringement, financial fraud, employee malfeasance and unfair competition. We also offer due diligence services for a variety of purposes and have a specialized database of hedge fund managers.

Lead Generation . We provide performance-based, internet marketing solutions connecting our clients directly to consumers buying through the web. Our primary service offerings are sales lead generation, list management and affiliate network marketing. Our clients include a wide variety of companies ranging from medium-sized businesses to Fortune 500 companies, including many service providers in the specialty and personal finance markets.

Patents, Trademarks and Other Intellectual Property

We rely on a combination of contractual restrictions, internal security practices, and copyright and trade secret law to establish and protect our software, technology, and expertise. Further, we have developed a number of brands that have accumulated goodwill in the marketplace, and we rely on trademark law to protect our rights in that area.

Employees

As of December 31, 2009, we employed 12,467 people on either a part-time or full-time basis. Of these employees, 42.8% were employed outside of the United States.

Risks Relating to Our Business

 

  1. We are dependent on our ability to access data from external sources to maintain and grow our businesses. If we are unable to access needed data from these sources, the quality and availability of our products and services may be harmed, which could have a material adverse impact on our business, financial condition, and results of operations.

We rely extensively upon data from external sources to maintain our proprietary and non-proprietary databases, including data from third-party suppliers and various government and public record sources. Our data sources could withdraw their data from us for a variety of reasons, including legislatively or judicially imposed restrictions on use. If a number of suppliers are no longer able or are unwilling to provide us with certain data, or if our public record sources of data become unavailable or uneconomical, we may need to find alternative sources. If we are unable to identify and contract with suitable alternative data suppliers and effectively integrate these data sources into our service offerings, we could experience service disruptions, increased costs and reduced quality of our services. Additionally, if one or more of our suppliers terminates our existing agreements, there is no assurance that we will obtain new agreements with third-party suppliers on terms favorable to us, if at all. Loss of such access or the availability of data in the future may reduce the quality and availability of our services and products, which could have a material adverse effect on our business, financial condition and results of operations.


  2. Regulatory developments with respect to use of consumer data and public records could have a material adverse effect on our business, financial condition and results of operation.

Because our databases include some personal, public and non-public information, we are subject to government regulation and potential adverse publicity concerning the use of consumer data. We provide many types of consumer data and related services that already are subject to regulation under the Fair Credit Reporting Act, Gramm-Leach-Bliley Act and Driver’s Privacy Protection Act and, to a lesser extent, various other federal, state, and local laws and regulations. These laws and regulations are designed to protect the privacy of the public and to prevent the misuse of personal information in the marketplace. Failure to comply with these laws by us could result in substantial regulatory and litigation expense and loss of revenue. The suppliers of data to us face similar burdens and, consequently, we may find it financially burdensome to acquire necessary data. Further, many consumer advocates, privacy advocates and government regulators believe that the existing laws and regulations do not adequately protect privacy. As a result, they are seeking further restrictions on the dissemination or commercial use of personal information to the public and private sectors. Any such restrictions may reduce the quality and availability of our products and services, which could have a material adverse effect on our business, financial condition and results of operations.

 

  3. If we are unable to protect our information systems against data corruption, cyber-based attacks or network security breaches, or if we are unable to provide adequate security in the electronic transmission of sensitive data, it could have a material adverse effect on our business, financial condition and results of operations.

We are highly dependent on information technology networks and systems, including the Internet, to securely process, transmit and store electronic information. In particular, we depend on our information technology infrastructure for business-to-business and business-to-consumer electronic commerce. Security breaches of this infrastructure can create system disruptions, shutdowns or unauthorized disclosure of confidential information. If we are unable to prevent such security or privacy breaches, our operations could be disrupted, or we may suffer financial loss because of lost or misappropriated information, including sensitive consumer data.

Likewise, our customers are increasingly imposing more stringent contractual obligations on us relating to the state of our information security protections. If we are unable to maintain protections and processes at a level commensurate with that required by our large customers, it could negatively affect our relationships with those customers and harm our business.

 

  4. Systems interruptions may impair the delivery of our products and services, causing potential customer and revenue loss.

System interruptions may impair the delivery of our products and services, resulting in a loss of customers and a corresponding loss in revenue. We depend heavily upon computer systems located in our data centers, including our centers in Santa Ana, California and Westlake, Texas. Certain events beyond our control, including natural disasters and telecommunications failures, could temporarily or permanently interrupt the delivery of products and services. These interruptions also may interfere with suppliers’ ability to provide necessary data and employees’ ability to attend work and perform their responsibilities. Such interruptions and intrusions may cause a loss of customers and a loss in revenue.

 

  5. Declines in the mortgage and consumer credit market, the securitization market and employment levels may materially adversely affect our business and results of operations.

Several of our lines of business, including our Mortgage Origination Services, Risk and Fraud Analytics and Specialty Finance Solutions groups, are sensitive to the level of mortgage originations, and to residential real estate and securitization transaction levels. In addition, higher rates of unemployment and underemployment negatively affect our Employer Services line of business. A worsening of these conditions could materially adversely affect our business, financial condition and results of operations.

 

  6. Increases in the size of our mortgage industry customers enhance their negotiating position with respect to pricing and terms, may decrease their need for our services, and may increase our exposure to loss or consolidation of such customers.

Many of our mortgage industry customers are increasing in size as a result of consolidation or the failure of their competitors. For example, we believe that three lenders collectively originate more than 50% of mortgage loans in the United States. As a result, we may derive a higher percentage of our revenues from a smaller base of larger customers, which would enhance the ability of these customers to negotiate more favorable pricing and more favorable terms for our products and services. These larger customers may also begin performing internally some or all of the services we provide and, consequently, their demand for our products and services may decrease. Any of these developments could adversely affect our revenues and profitability. In addition, changes in our relationship with one or more of our largest customers or the loss of all or a substantial portion of the business we derive from these customers could have a material adverse effect on our business and results of operations.


  7. Changes in government regulation could prohibit or limit our operations or make it more burdensome to conduct such operations, causing possible adverse effects on revenues, earnings and cash flows.

Many of our and our customers’ businesses are regulated by various federal, state, local and foreign governmental agencies. Changes in the applicable regulatory environment or interpretations of existing regulations or statutes or enhanced governmental oversight of us or our customers could negatively affect our operations. These changes may compel us to reduce our prices, may restrict our ability to implement price increases, may limit the manner in which we conduct our business or otherwise may have a negative impact on our ability to generate revenues, earnings and cash flows.

Likewise, Congress is considering wide-ranging and transformative legislation that would materially alter consumer and financial markets regulation. If we are unable to adapt our products and services to conform to these new laws, or if these laws have a negative impact on our customers, our business and results of operations could be negatively affected.

 

  8. We rely upon proprietary technology and information rights, and if we are unable to protect our rights, our business, financial condition and results of operations could be harmed.

Our success depends, in part, upon our intellectual property rights. We rely primarily on a combination of copyright, patent, trade secret, and trademark laws and nondisclosure and other contractual restrictions on copying and distribution to protect our proprietary technology and information. This protection is limited, and our intellectual property could be used by others without our consent. In addition, patents may not be issued with respect to our pending or future patent applications, and our patents may not be upheld as valid or may not prevent the development of competitive products. Any infringement, disclosure, loss, invalidity of, or failure to protect our intellectual property could negatively impact our competitive position, and ultimately, our business. Moreover, litigation may be necessary to enforce or protect our intellectual property rights, to protect our trade secrets, or to determine the validity and scope of the proprietary rights of others. Such litigation could be time-consuming, result in substantial costs and diversion of resources and could harm our business, financial condition, results of operations and cash flows.

 

  9. If our applications or services are found to infringe the proprietary rights of others, we may be required to change our business practices and may also become subject to significant costs and monetary penalties.

As our information technology applications and services develop, we may become increasingly subject to infringement claims from third parties. Any claims, whether with or without merit, could:

 

   

be expensive and time-consuming to defend;

 

   

cause us to cease making, licensing or using applications that incorporate the challenged intellectual property;

 

   

require us to redesign our applications, if feasible;

 

   

divert management’s attention and resources; and

 

   

require us to enter into royalty or licensing agreements in order to obtain the right to use necessary technologies.

 

  10. The agreement governing our credit facility subjects us to various restrictions that could limit our operating flexibility.

The agreement governing our credit facility imposes operating and financial restrictions on our activities. These restrictions include compliance with certain financial tests and ratios, including a minimum interest coverage ratio and maximum leverage ratio, and limit or prohibit our ability to, among other things:

 

   

create, incur or assume additional debt;


   

create, incur or assume certain liens;

 

   

redeem and/or prepay certain subordinated debt we might issue in the future;

 

   

pay dividends on our stock or repurchase stock;

 

   

make certain investments and acquisitions, including joint ventures;

 

   

enter into or permit to exist contractual limits on the ability of our subsidiaries to pay dividends to us;

 

   

enter into new lines of business;

 

   

engage in consolidations, mergers and acquisitions;

 

   

engage in specified sales of assets; and

 

   

enter into transactions with affiliates.

These restrictions on our ability to operate our business could impact our business by, among other things, limiting our ability to take advantage of financing, merger and acquisition and other corporate opportunities.

 

  11. We may not be able to successfully consummate or integrate acquisitions, which may harm our ability to develop and grow our business and operations.

We have in the past and may continue to expand our operations and business by acquiring additional businesses, products or technologies. We may not be able to identify suitable acquisition candidates, obtain the capital necessary to pursue acquisitions or complete acquisitions on satisfactory terms. A number of our competitors also have adopted the strategy of expanding and diversifying through acquisitions. We likely will experience competition in our effort to execute on any proposed acquisitions, and we expect the level of competition to increase. As a result, we may be unable to continue to make acquisitions or may be forced to pay more for the companies we are able to acquire, which could slow the growth of our business and operations.

Additionally, the obligations imposed on us to avoid certain transactions in respect of our capital stock and or assets in order to preserve the planned tax-free nature of the spin off may limit our ability to pursue our acquisition strategy without adversely impacting our financial condition, results of operations and cash flows.

Likewise, if we fail properly to integrate acquired businesses, products, technologies and personnel, it could impair relationships with employees, customers and strategic partners, distract management attention, result in control failures and otherwise disrupt our ongoing business and harm our results of operations.

 

  12. We may not be able to realize the benefits of our offshore strategy, which could have an adverse effect on our results of operations.

Over the last few years, we have reduced our costs by utilizing lower cost labor in foreign countries such as India and the Philippines. These countries are subject to relatively higher degrees of political and social instability and may lack the infrastructure to withstand natural disasters. Such disruptions can decrease efficiency and increase our costs in these countries. Weakness of the U.S. dollar in relation to the currencies used in these foreign countries may also reduce the savings achievable through this strategy. Furthermore, the practice of utilizing labor based in foreign countries has come under increased scrutiny in the United States and, as a result, some of our customers may require us to use labor based in the United States. We may not be able to pass on the increased costs of higher priced United States-based labor to our customers, which ultimately could have an adverse effect on our results of operations.


  13. We have substantial investments in recorded goodwill as a result of prior acquisitions and an impairment of these investments would require a write-down that would reduce our net income.

In accordance with generally accepted accounting principles (“GAAP”), existing goodwill is not amortized but instead is required to be assessed annually for impairment or sooner if circumstances indicate a possible impairment. Factors that could lead to impairment of goodwill include significant underperformance relative to historical or projected future operating results, a significant decline in our stock price and market capitalization and negative industry or economic trends. In the event that the book value of goodwill is impaired, any such impairment would be charged to earnings in the period of impairment. In the event of significant volatility in the capital markets or a worsening of current economic conditions, we may be required to record an impairment charge, which would negatively impact our results of operations. Possible future impairment of goodwill under accounting guidance may have a material adverse effect on our business, financial condition and results of operations.

Risks Relating to the Spin-off of First American Financial Corporation

 

  1. Our historical financial information may not be indicative of our future results as a stand-alone company.

The historical financial information we have included in prior filings for periods ending prior to June 1, 2010, and the unuaudited pro forma condensed consolidated financial statements as of and for the twelve months ended December 31, 2009 filed on Form 8-K on March 4, 2010, may not reflect what our results of operations, financial condition and cash flows would have been had we been a stand-alone company during the periods presented or be indicative of what our results of operations, financial condition and cash flows may be in the future now that we are a stand-alone company. Specifically, the pro forma financial information and the financial information does not reflect any increased costs associated with being a stand-alone company, including changes in our cost structure and personnel needs. Any difficulty in successfully integrating or managing the operations of the businesses on a stand-alone basis could have a material adverse effect on our business, financial condition, results of operations and liquidity, and could lead to a failure to realize any anticipated synergies.

 

  2. The separation transaction could give rise to liabilities, increased competition or other unfavorable effects that may not have otherwise arisen.

The separation transaction may lead to increased operating and other expenses, both of a non-recurring and a recurring nature, and changes to certain operations, which expenses or changes could arise pursuant to arrangements made with FAFC or the triggering of rights and obligations to third parties. In addition, FAFC may provide more competition in our lines of business than it would have if the companies remained together. While the extent of future competition between us and FAFC is unknown, both parties will own significant real property databases. With the exception of a noncompetition agreement related to the tax services business, there will be no prohibition on either us or FAFC competing with the other party. Litigation with FAFC or other third parties could also arise out of the transaction, and we could experience unfavorable reactions to the separation from customers, employees, ratings agencies or other interested parties.

 

  3. We will be responsible for a portion of FAFC’s contingent and other corporate liabilities, primarily those relating to stockholder litigation.

Under the Separation and Distribution Agreement and other agreements, subject to certain exceptions contained in the Tax Sharing Agreement, each of us and FAFC will agree to assume and be responsible for 50% of certain of FAC’s contingent and other corporate liabilities. All external costs and expenses associated with the management of these contingent and other corporate liabilities will be shared equally. These contingent and other corporate liabilities primarily relate to consolidated securities litigation and any actions with respect to the separation plan or the distribution brought by any third party. Contingent and other corporate liabilities that are specifically related to only the information solutions or financial services business will generally be fully allocated to us or FAFC, respectively.

If any party responsible for such liabilities were to default on its payment of any of these assumed obligations, the non-defaulting party may be required to pay the amounts in default. Accordingly, under certain circumstances, we may be obligated to pay amounts in excess of the agreed-upon share of the assumed obligations related to such contingent and other corporate liabilities, including associated costs and expenses.

 

  4. We will share responsibility for certain of income tax liabilities for tax periods prior to and including the distribution date.

Under the Tax Sharing Agreement, we are generally responsible for all taxes that are attributable to members of the information solutions group of companies or the assets, liabilities or businesses of the information group of companies and FAFC is generally responsible for all taxes attributable to members of the FAFC group of companies or the assets, liabilities or businesses of the FAFC group of companies. Generally, any liabilities arising from adjustments to prior year (or partial year with respect to 2010) consolidated tax returns will be shared in proportion to each company’s percentage of the tax liability for the relevant year (or partial year with respect to 2010), unless the adjustment is attributable to either party, in which case the adjustment will generally be for the


account of such party. In addition to this potential liability associated with adjustments for prior periods, if FAFC were to fail to pay any tax liability it is required to pay under the Tax Sharing Agreement, we could be legally liable under applicable tax law for such liabilities and required to make additional tax payments. Accordingly, under certain circumstances, we may be obligated to pay amounts in excess of our agreed-upon share of tax liabilities.

 

  5. If the distribution or certain internal transactions undertaken in anticipation of the separation are determined to be taxable for U.S. federal income tax purposes, we, our stockholders that are subject to U.S. federal income tax and FAFC will incur significant U.S. federal income tax liabilities.

In connection with the Spin-Off, we received a private letter ruling from the IRS to the effect that, among other things, certain internal transactions undertaken in anticipation of the separation will qualify for favorable treatment under the Code, the contribution by us of certain assets of the financial services businesses to FAFC, and the pro-rata distribution to our shareholders of the common stock of FAFC will, except for cash received in lieu of fractional shares, qualify as a transaction that is tax-free for U.S. federal income tax purposes under Sections 355 and 368(a)(1)(D) of the Code. In addition, we received opinions of tax counsel to similar effect. The ruling and opinions rely on certain facts, assumptions, representations and undertakings from us and FAFC regarding the past and future conduct of the companies’ respective businesses and other matters. If any of these facts, assumptions, representations or undertakings are incorrect or not otherwise satisfied, we and our stockholders may not be able to rely on the ruling or the opinions of tax counsel and could be subject to significant tax liabilities. Notwithstanding the private letter ruling and opinions of tax counsel, the IRS could determine on audit that the spin-off is taxable if it determines that any of these facts, assumptions, representations or undertakings are not correct or have been violated or if it disagrees with the conclusions in the opinions that are not covered by the private letter ruling, or for other reasons, including as a result of certain significant changes in the stock ownership of us or FAFC after the spin-off. If the Spin-Off is determined to be taxable for U.S. federal income tax purposes, we and our shareholders that are subject to U.S. federal income tax could incur significant U.S. federal income tax liabilities.

In addition, under the terms of the Tax Sharing Agreement, in the event the distribution were determined to be taxable and such determination was the result of actions taken after the distribution by us or FAFC, the party responsible for such failure would be responsible for all taxes imposed on us or FAFC as a result thereof

 

  6. In connection with the spin-off transaction, we entered into a number of agreements with FAFC setting forth rights and obligations of the parties post separation. In addition, certain provisions of these agreements provide protection to FAFC in the event of a change of control of us, which could reduce the likelihood of a potential change of control that our stockholders may consider favorable.

In connection with the spin-off transaction, we and FAFC entered into a number of agreements that set forth certain rights and obligations of the parties post separation, including the Separation and Distribution Agreement, the Tax Sharing Agreement, the Restrictive Covenants Agreement, certain transition services agreements and leases for our data center and headquarters facilities in Santa Ana. We possess certain rights under those agreements, including without limitation indemnity rights from certain liabilities allocated to FAFC. The failure of FAFC to perform its obligations under the agreements could have an adverse effect on our financial condition, results of operations and cash flows.

In addition, the Separation and Distribution Agreement gives FAFC the right to purchase the equity or assets of our entity or entities directly or indirectly owning the real property databases that we currently own upon the occurrence of certain triggering events. The triggering events include the direct or indirect purchase of the databases by a title insurance underwriter (or its affiliate) or an entity licensed as a title insurance underwriter, including a transaction where a title insurance underwriter (or its affiliate) acquires 25% or more of us. Such a triggering event also triggers the ability of FAFC to terminate our data center and headquarters leases upon 30 days’ notice. The purchase right expires June 1, 2020. Until the expiration of the purchase right, this provision could have the effect of limiting or discouraging an acquisition of us or preventing a change of control that our stockholders might consider favorable. Likewise, if a triggering event occurs, the loss of ownership of our real property database and our need to move our headquarters and data center very abruptly could have a material adverse effect on our financial condition, business and results of operations.

 

  7. As a stand-alone, publicly traded company, we may not enjoy the same benefits that we did when we were part of a larger organization that included the FAFC businesses.

There is a risk that, by spinning off FAFC, we may become more susceptible to market fluctuations and other adverse events than we would have been were we still a part of the former combined FAC organizational structure. As part of the FAC organizational structure, our businesses were able to enjoy certain benefits from the operating diversity, purchasing power, available capital for investments, flexibility in tax planning and opportunities to pursue integrated strategies with FAC’s other businesses. After the Spin-Off of FAFC, we will not have similar diversity or integration opportunities and may not have similar purchasing power, flexibility in tax planning or access to capital markets.


  8. Conflicts of interest may arise because certain of our directors and officers are also directors and officers of our related parties.

Because of their current or former positions with FAC prior to the Spin-Off, several of our executive officers, including our executive chairman, our president and chief executive officer, and most of our directors, beneficially own common shares of FAFC that they received in the Spin-Off transaction. Our executive chairman, who also serves as FAFC’s executive chairman, continues to own options to purchase common shares of FAFC and FAFC restricted stock units. These dual roles and equity interests may create, or appear to create, conflicts of interest when these individuals are faced with decisions that do not benefit us and FAFC in the same manner.

 

  9. We might not be able to engage in desirable strategic transactions and equity issuances following the separation because of restrictions relating to U.S. federal income tax requirements for tax-free distributions.

Our ability and FAFC’s ability to engage in significant equity transactions could be limited or restricted after the distribution in order to preserve for U.S. federal income tax purposes the tax-free nature of the distribution by FAC. Even if the distribution otherwise qualifies for tax-free treatment under Sections 368(a)(1)(D) and 355 of the Code, it may result in corporate level taxable gain to us under Section 355(e) of the Code if 50% or more, by vote or value, of our common stock or FAFC’s common stock are acquired or issued as part of a plan or series of related transactions that includes the distribution. For this purpose, any acquisitions or issuances of FAC’s common shares within two years before the distribution, and any acquisitions or issuances of our common stock or FAFC’s common stock within two years after the distribution, generally are presumed to be part of such a plan, although FAFC or we may be able to rebut that presumption. Prior to the distribution, FAC issued to FAFC and FAFC’s principal title insurance subsidiary a total of approximately 13 million shares, which represented approximately 11% of FAC’s shares outstanding at the time of the issuance. In addition, in November 2009 FAC issued approximately 9.5 million common shares in connection with its acquisition of the minority interest shares of its then publicly traded subsidiary, First Advantage Corporation. This represented approximately 9% of FAC’s shares currently outstanding. Both of these issuances could count towards the 50% limitation, which could hinder our ability to issue additional shares during the two year period following the distribution. If an acquisition or issuance of our common stock or FAFC’s common stock triggers the application of Section 355(e) of the Code, we would recognize taxable gain for which FAF could be wholly or partially liable as described above.

Under the Tax Sharing Agreement, there are restrictions on our ability and FAFC’s ability to take actions that could cause the distribution to fail to qualify as a tax-free transaction, including a redemption of equity securities, a sale or other disposition of a substantial portion of assets, an acquisition of a business or assets with equity securities. These restrictions will apply for 25 months following the distribution, unless the party seeking to engage in such activity obtains the consent of the other party or obtains a private letter ruling from the Internal Revenue Service or an unqualified opinion of a nationally recognized firm that such action will not cause the distribution to fail to qualify as a tax-free transaction, and such letter ruling or opinion, as the case may be, is acceptable to each party.

Moreover, the Tax Sharing Agreement generally provides that each party thereto is responsible for any taxes imposed on the other party as a result of the failure of the distribution to qualify as a tax-free transaction under the Code if such failure is attributable to post-distribution actions taken by or in respect of the responsible party or its stockholders, regardless of when the actions occur after the distribution, the other party consents to such actions or such party obtains a favorable letter ruling or opinion of tax counsel as described above. For example, we would be responsible for a third party’s acquisition of it at a time and in a manner that would cause such failure. These restrictions may prevent it from entering into transactions which might be advantageous to its stockholders.

 

  10. FAFC’s minority investment in us is subject to certain risks and uncertainties and the price of our common stock may be affected.

Pursuant to the private letter ruling received from the IRS in connection with the Spin-Off, FinCo will be required to dispose of its retained shares of our common stock no later than five years after the Spin-Off. As a result, FAFC may be required to sell some or all of its retained shares of our common stock at a time when it might not otherwise choose to do so. Furthermore, any such disposition by FAFC of its shares of our common stock in the public market, or the perception that such dispositions could occur, could adversely affect prevailing market prices of our common stock and adversely affect the value or the terms and conditions of such disposition.


Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

 

Exhibit
Number

  

Description

2.1    Agreement and Plan of Merger, dated May 28, 2010, by and between The First American Corporation and CoreLogic, Inc.
3.1    Amended and Restated Certificate of Incorporation of CoreLogic, Inc. dated May 28, 2010.
3.2    Bylaws of CoreLogic, Inc., effective June 1, 2010.
3.3    Specimen Stock Certificate of CoreLogic, Inc.
10.1    Separation and Distribution Agreement by and between FAC and FAFC dated as of June 1, 2010.
10.2    Tax Sharing Agreement by and between FAC and FAFC dated as of June 1, 2010.
10.3    Promissory Note issued by FAC to FAFC, dated June 1, 2010.
10.4    Restrictive Covenants Agreement among FAFC and FAC, dated June 1, 2010.
10.5    Letter Agreement among FAFC, FAC and Parker S. Kennedy, dated May 31, 2010.
10.6    Amended and Restated Change in Control Agreement among FAFC, FAC and Parker S. Kennedy, dated May 31, 2010.
10.7    Form of Notice of Performance-Based Restricted Stock Unit Grant (Employee) and Performance-Based Restricted Stock Unit Award Agreement (Employee).
10.8    Form of Notice of Nonqualified Stock Option Grant (Employee) and Nonqualifed Stock Option Grant (Employee).
99.1    Press Release.


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.

 

    CORELOGIC, INC.
Date: June 1, 2010     By:  

/s/ Stergios Theologides

    Name:   Stergios Theologides
    Title:   Senior Vice President, General Counsel and Secretary


Exhibit Index

 

Exhibit
Number

  

Description

2.1    Agreement and Plan of Merger, dated May 28, 2010, by and between The First American Corporation and CoreLogic, Inc.
3.1    Amended and Restated Certificate of Incorporation of CoreLogic, Inc. dated May 28, 2010.
3.2    Bylaws of CoreLogic, Inc., effective June 1, 2010.
3.3    Specimen Stock Certificate of CoreLogic, Inc.
10.1    Separation and Distribution Agreement by and between FAC and FAFC dated as of June 1, 2010.
10.2    Tax Sharing Agreement by and between FAC and FAFC dated as of June 1, 2010.
10.3    Promissory Note issued by FAC to FAFC, dated June 1, 2010.
10.4    Restrictive Covenants Agreement among FAFC and FAC, dated June 1, 2010.
10.5    Letter Agreement among FAFC, FAC and Parker S. Kennedy, dated May 31, 2010.
10.6    Amended and Restated Change in Control Agreement among FAFC, FAC and Parker S. Kennedy, dated May 31, 2010.
10.7    Form of Notice of Performance-Based Restricted Stock Unit Grant (Employee) and Performance-Based Restricted Stock Unit Award Agreement (Employee).
10.8    Form of Notice of Nonqualified Stock Option Grant (Employee) and Nonqualifed Stock Option Grant (Employee).
99.1    Press Release.

Exhibit 2.1

AGREEMENT AND PLAN OF MERGER

BY AND BETWEEN

THE FIRST AMERICAN CORPORATION AND CORELOGIC, INC.

This AGREEMENT AND PLAN OF MERGER dated as of May 28, 2010 (this “ Agreement ”) is entered into by and between The First American Corporation, a California corporation (“ First American ”) and CoreLogic, Inc., a Delaware corporation (“ CoreLogic ”).

RECITALS

WHEREAS, CoreLogic is a corporation duly organized and existing under the laws of the State of Delaware and has an authorized capital of 180,500,000 shares, $0.00001 par value, of which 180,000,000 shares are designated “Common Stock,” and 500,000 shares are designated “Preferred Stock.” As of May 26, 2010, 10 shares of Common Stock were issued and outstanding, all of which are held by First American, and no shares of Preferred Stock were issued and outstanding;

WHEREAS, First American is a corporation duly organized and existing under the laws of the State of California and has an authorized capital of 180,500,000 shares, $1.00 par value, of which 180,000,000 shares are designated “Common Stock,” and 500,000 shares are designated “Preferred Stock.” As of May 26, 2010, 116,939,278 shares of Common Stock were issued and outstanding, and no shares of Preferred Stock were issued and outstanding;

WHEREAS , CoreLogic is a wholly-owned subsidiary of First American;

WHEREAS , the parties hereto desire to effect a reorganization in which First American will be merged with and into CoreLogic (the “ Merger ”), as a result of which the separate existence of First American shall cease, and CoreLogic shall be the surviving corporation (sometimes referred to herein as the “ Surviving Corporation ”) and shall continue its existence under the laws of the State of Delaware; and

WHEREAS , the Merger shall be accomplished by the filing of a certificate of merger with the Secretary of State of the State of Delaware (the “ Certificate of Merger ”) and the filing of the Certificate of Merger, this Agreement and officers’ certificates of First American and CoreLogic with the Secretary of State of the State of California, each of which contain such provisions as are required by applicable law, consistent with the terms specified herein; and

WHEREAS , the Merger is intended to qualify as transaction governed by Section 368(a) of the Internal Revenue Code of 1986, as amended.

AGREEMENT

NOW, THEREFORE , in consideration of the foregoing premises and the representations, warranties, covenants and agreements herein contained, and intending to be legally bound hereby, the parties hereby agree as follows:


ARTICLE I

THE MERGER AND RELATED MATTERS

1.1      Filing of the Certificate of Merger; Effective Time .    The Merger will become effective at such time as the Certificate of Merger is duly filed with the Secretary of State of the State of Delaware (the “ Effective Time ”).

1.2      The Merger .    At the Effective Time, the separate existence of First American shall cease and CoreLogic, as the Surviving Corporation, shall (i) continue to possess all assets, rights, powers and property (real, personal and mixed) of First American as constituted immediately prior to the Effective Time, (ii) be subject to all actions previously taken by the board of directors and officers of First American, (iii) succeed, without other transfer, to all of the assets, rights, powers and property (real, personal and mixed) of First American, in the manner more fully set forth in Section 259 of the Delaware General Corporation Law (the “ DGCL ”), and (iv) succeed, without other transfer, to all of the debts, liabilities and obligations of First American in the same manner as if CoreLogic had itself incurred them, as more fully provided under the applicable provisions of the DGCL. At the Effective Time: (A) the corporate name of the Surviving Corporation shall be “CoreLogic, Inc.”, (B) the certificate of incorporation of CoreLogic in effect immediately prior to the Effective Time, which is attached hereto as Exhibit A , shall be the certificate of incorporation of the Surviving Corporation following the Merger unless and until the same shall be amended or repealed in accordance with the provisions thereof, (C) the bylaws of CoreLogic in effect immediately prior to the Effective Time, which are attached hereto as Exhibit B , shall be the bylaws of the Surviving Corporation following the Merger unless and until the same shall be amended or repealed in accordance with the provisions thereof, and (D) the officers and directors of the Surviving Corporation following the Merger shall be those persons who were the officers and directors of First American immediately prior to the Effective Time, and such persons shall serve in such offices or positions for the terms provided by law or in the bylaws or until their respective successors are elected or appointed, as applicable.

1.3      Conversion of Shares and Interests .    At the Effective Time, by virtue of the Merger and without any action by the owners of the outstanding shares of capital stock, or any other person, (i) all of the issued and outstanding shares of capital stock of CoreLogic shall be cancelled, (ii) each issued and outstanding share of capital stock of First American shall be converted into and become one fully paid and non-assessable share of Common Stock of the Surviving Corporation, and (iii) with respect to securities to acquire, or convertible into, First American Common Stock, each such option, warrant, purchase right, unit or other security issued and outstanding immediately prior to the Effective Time shall be converted into the right to acquire the same number of shares of CoreLogic Common Stock on the same terms as the number of shares of First American Common Stock that were acquirable pursuant to such security. The same number of shares of the Surviving Corporation’s Common Stock shall be reserved for purposes of the exercise of such options, warrants, purchase rights, units or other securities as is equal to the number of shares of First American Common Stock so reserved immediately prior to the Effective Time.

 

2


Each certificate representing Common Stock of the Surviving Corporation issued in the Merger shall bear the same legends, if any, with respect to the restrictions on transferability as the certificates of First American so converted and given in exchange therefor, unless otherwise determined by the board of directors of the Surviving Corporation in compliance with applicable laws. Each share of Common Stock of CoreLogic owned by First American shall no longer be outstanding and shall be cancelled and retired and shall cease to exist at the Effective Time.

1.4     Cooperation; Best Efforts.     Each of the parties will use its respective best efforts to consummate the transactions contemplated by this Agreement and the Certificate of Merger and will cooperate in any action necessary or advisable to facilitate such consummation including, without limitation, making all filings required in order to obtain any necessary consents or comply with law and providing any information required in connection therewith.

1.5     Change in Structure of Transactions .    Notwithstanding anything in this Agreement to the contrary, if at any time after the date hereof, it shall appear that a change in the structure of the transaction contemplated hereby shall be necessary or desirable in order to comply with applicable law or the requirements of regulatory authorities having jurisdiction over the transaction or for any other reason, the parties hereto agree to cooperate in making such changes in this Agreement, the Certificate of Merger and other documents contemplated hereby and in taking such other actions as may be required to effectuate such changes.

ARTICLE II

REPRESENTATIONS AND WARRANTIES

OF THE MERGING PARTIES

2.1      First American Representations and Warranties.     First American represents and warrants to, and covenants with, CoreLogic that the execution, delivery and performance of this Agreement and the Certificate of Merger have been duly and validly authorized and approved by the board of directors and shareholders of First American.

2.2     CoreLogic Representations and Warranties.     CoreLogic represents and warrants to, and covenants with, First American that the execution, delivery and performance of this Agreement and the Certificate of Merger have been duly and validly authorized and approved by the board of directors and the sole stockholder of CoreLogic.

ARTICLE III

TERMINATION OF THE AGREEMENT

3.1      Termination of Agreement and Abandonment of Merger.     Anything herein contained to the contrary notwithstanding, this Agreement and the Certificate of Merger may be terminated at any time before the filing of the Certificate of Merger, whether before or after approval by the boards of directors or shareholders of First American or CoreLogic, upon the written consent of the parties hereto.

 

3


ARTICLE IV

GENERAL

4.1      Amendments .    Subject to applicable law, this Agreement or the Certificate of Merger may be amended in writing, whether before or after the relevant approvals of the board of directors or shareholders.

4.2      Governing Law.     This Agreement and the legal relations between the parties shall be governed by and construed in accordance with the internal laws of the State of Delaware without taking into account provisions regarding choice of law and, as far as applicable, the merger provisions of the California General Corporation Law.

4.3     Notices .    Any notices or other communications required or permitted hereunder shall be sufficiently given if sent by registered or certified mail, postage prepaid, addressed:

If to CoreLogic:

CoreLogic, Inc.

4 First American Way

Santa Ana, CA 92707

Attn: General Counsel

If to First American:

The First American Corporation

1 First American Way

Santa Ana, CA 92707

Attn: General Counsel

or such other address as shall be furnished in writing by any such party, and any such notice or communication shall be deemed to have been given two business days after the date of such mailing (except that a notice of change of address shall not be deemed to have been given until received by the addressee). Notices may also be sent by facsimile, telegram, telex or hand delivery and in such event shall be deemed to have been given as of the date received.

4.4      Registered Office.     The registered office of the Surviving Corporation in the State of Delaware is located at 2711 Centerville Road, Suite 400, in the City of Wilmington, County of New Castle, Delaware 19808 and Corporation Service Company is the registered agent of the Surviving Corporation at such address.

4.5      No Assignment.     Neither this Agreement nor the Certificate of Merger may be assigned by the parties hereto, by operation of law or otherwise.

4.6      Headings .    The description headings of the Articles and Sections of this Agreement are inserted for convenience only and do not constitute a part of this Agreement.

4.7      Counterparts .    This Agreement may be executed by facsimile in two or more counterparts, all of which shall be considered one and the same agreement and shall become

 

4


effective when one or more counterparts have been signed by each of the parties and delivered to each of the other parties hereto.

4.8      Entire Agreement .    This Agreement and certificates required to be delivered hereunder and any amendments hereafter executed and delivered in accordance with Section 4.1, constitute the entire agreement of the parties hereto pertaining to the transaction contemplated hereby. This Agreement is not intended to confer upon any other person any rights or remedies hereunder.

4.9      Waiver .    Any party hereto may waive any of the conditions to its obligations. No waiver of a condition shall constitute a waiver of any of such party’s other rights or remedies, at law or in equity, or of any other conditions to such party’s obligations.

 

[signature page follows]

 

5


IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed on its behalf by its officers thereunto duly authorized, all as of the date set forth above.

 

 

 

THE FIRST AMERICAN CORPORATION

By:

 

        /s/ Kenneth DeGiorgio

 

Name:

 

 Kenneth DeGiorgio

 

Title:

 

 Senior Vice President, General Counsel

   

 and Secretary

CORELOGIC, INC.

By:

 

        /s/ Stergios Theologides

 

Name:

 

 Stergios Theologies

 

Title:

 

 Senior Vice President, General Counsel

   

 and Secretary

Exhibit 3.1

AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

OF

CORELOGIC, INC.

(a Delaware corporation)

(Pursuant to Section 242 and Section 245 of the

General Corporation Law of the State of Delaware)

CoreLogic, Inc., a corporation organized and existing under the General Corporation Law of the State of Delaware (the “Corporation”), does hereby certify:

FIRST:         The original name of the Corporation was First American Holding Corporation, and the date of filing of the original Certificate of Incorporation of the Corporation with the Secretary of State of Delaware was October 13, 2009.

SECOND:     The original Certificate of Incorporation of the Corporation was amended and restated pursuant to an Amended and Restated Certificate of Incorporation filed with the Secretary of State of Delaware on April 13, 2010.

THIRD:         This Amended and Restated Certificate of Incorporation was duly adopted by the Board of Directors and stockholders of the Corporation in accordance with the provisions of Sections 242 and 245 of the General Corporation Law of the State of Delaware, and it amends and restates the provisions of the Amended and Restated Certificate of Incorporation of the Corporation filed with the Secretary of State of Delaware on April 13, 2010.

FOURTH:     The text of the Amended and Restated Certificate of Incorporation of the Corporation filed with the Delaware Secretary of State on April 13, 2010 is hereby amended and restated to read in its entirety as follows:

ARTICLE I

NAME

The name of the corporation is CoreLogic, Inc. (the “Corporation”).

ARTICLE II

AGENT

The address of the Corporation’s registered office in the State of Delaware is 2711 Centerville Road, Suite 400, in the City of Wilmington, County of New Castle, Delaware 19808. The name of its registered agent at such address is Corporation Service Company.


ARTICLE III

PURPOSE

The purposes for which the Corporation is formed are to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware (the “DGCL”).

ARTICLE IV

STOCK

Section 4.1     Authorized Stock . The aggregate number of shares which the Corporation shall have authority to issue is 180,500,000, of which 180,000,000 shall be designated as Common Stock, par value $0.00001 per share (the “Common Stock”), and 500,000 shall be designated as Preferred Stock, par value $0.00001 per share (the “Preferred Stock”).

Section 4.2     Common Stock .

    (a)     Voting . Each holder of Common Stock, as such, shall be entitled to one (1) vote for each share of Common Stock held of record by such holder on all matters on which stockholders generally are entitled to vote; provided , however , that, except as otherwise required by law, holders of Common Stock, as such, shall not be entitled to vote on any amendment to this Certificate of Incorporation (including any Certificate of Designations relating to any series of Preferred Stock) that relates solely to the terms of one or more outstanding series of Preferred Stock if the holders of such affected series are entitled, either separately or together with the holders of one or more other such series, to vote thereon pursuant to this Certificate of Incorporation (including any Certificate of Designations relating to any series of Preferred Stock) or pursuant to the DGCL.

    (b)     Dividends . Subject to the rights, if any, of the holders of any outstanding series of Preferred Stock, the holders of shares of Common Stock shall be entitled to receive dividends out of any funds of the Corporation legally available therefor when, as and if declared by the Board of Directors.

    (c)     Liquidation . Upon the dissolution, liquidation or winding up of the Corporation, subject to the rights, if any, of the holders of any outstanding series of Preferred Stock, the holders of shares of Common Stock shall be entitled to receive the assets of the Corporation available for distribution to its stockholders ratably in proportion to the number of shares held by them.

Section 4.3     Preferred Stock . Subject to limitations prescribed by law and the provisions of this Article IV, the Board of Directors is hereby authorized to provide by resolution for the issuance of the shares of Preferred Stock in one or more series, and to establish from time to time the number of shares to be included in each such series, and to fix the designation, powers, privileges, preferences, and relative participating, optional or other rights, if any, of the shares of each such series and the qualifications, limitations or restrictions thereof.

The authority of the Board with respect to each series shall include, but not be limited to, determination of the following:

 

2


(i)      the number of shares constituting such series, including any increase or decrease in the number of shares of any such series (but not below the number of shares in any such series then outstanding), and the distinctive designation of such series;

(ii)      the dividend rate on the shares of such series, if any, whether dividends shall be cumulative, and, if so, from which date or dates, and the relative rights of priority, if any, of payment of dividends on shares of such series;

(iii)     whether the shares of such series shall have voting rights (including multiple or fractional votes per share) in addition to the voting rights provided by law, and, if so, the terms of such voting rights;

(iv)     whether the shares of such series shall have conversion privileges, and, if so, the terms and conditions of such privileges, including provision for adjustment of the conversion rate in such events as the Board of Directors shall determine;

(v)     whether or not the shares of such series shall be redeemable, and if so, the terms and conditions of such redemption, including the date or dates upon or after which they shall be redeemable, and the amount per share payable in case of redemption, which amount may vary under different conditions and at different redemption rates;

(vi)     whether a sinking fund shall be provided for the redemption or purchase of shares of such series, and, if so, the terms and the amount of such sinking fund;

(vii)     the rights of the shares of such series in the event of voluntary or involuntary liquidation, dissolution or winding up of the Corporation, and the relative rights of priority, if any, of payment of shares of such series; and

(viii)     any other relative rights, preferences and limitations of such series.

ARTICLE V

BOARD OF DIRECTORS

Section 5.1     Number . Except as otherwise provided for or fixed pursuant to the provisions of Article IV of this Certificate of Incorporation relating to the rights of holders of any series of Preferred Stock to elect additional directors in certain circumstances, the Board of Directors shall consist of such number of directors as is determined from time to time exclusively by resolution adopted by the affirmative vote of a majority of such directors then in office.

Section 5.2     Vacancies; Removal .

    (a)     Subject to the rights of the holders of any one or more series of Preferred Stock then outstanding, newly created directorships resulting from any increase in the authorized number of directors or any vacancies in the Board of Directors resulting from death, resignation, retirement, disqualification, removal from office or other cause shall, unless otherwise provided by law or by resolution of the Board of Directors, be filled solely by the affirmative vote of a majority of the remaining directors then in office, even though less than a quorum of the Board

 

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of Directors. Any director so chosen shall hold office until the next election of the class for which such director shall have been chosen and until his successor shall be elected and qualified. No decrease in the authorized number of directors shall shorten the term of any incumbent director.

    (b)     During any period when the holders of any series of Preferred Stock have the right to elect additional directors as provided for or fixed pursuant to the provisions of Article IV hereof, then upon commencement and for the duration of the period during which such right continues: (i) the then otherwise total authorized number of directors of the Corporation shall automatically be increased by such specified number of directors, and the holders of such Preferred Stock shall be entitled to elect the additional directors so provided for or fixed pursuant to said provisions and (ii) each such additional director shall serve until such director’s successor shall have been duly elected and qualified, or until such director’s right to hold such office terminates pursuant to said provisions, whichever occurs earlier, subject to his earlier death, disqualification, resignation or removal. Except as otherwise provided by the Board of Directors in the resolution or resolutions establishing such series, whenever the holders of any series of Preferred Stock having such right to elect additional directors are divested of such right pursuant to the provisions of such stock, the terms of office of all such additional directors elected by the holders of such stock, or elected to fill any vacancies resulting from the death, resignation, disqualification or removal of such additional directors, shall forthwith terminate and the total authorized number of directors of the Corporation shall be reduced accordingly.

Section 5.3     Powers . Except as otherwise expressly provided by the DGCL or this Certificate of Incorporation, the management of the business and the conduct of the affairs of the Corporation shall be vested in its Board of Directors.

Section 5.4     Election .

    (a)     Ballot Not Required . The directors of the Corporation need not be elected by written ballot unless the Bylaws of the Corporation so provide.

    (b)     Notice . Advance notice of stockholder nominations for the election of directors shall be given in the manner and to the extent provided in the Bylaws of the Corporation.

ARTICLE VI

STOCKHOLDER ACTION

Any action required or permitted to be taken at any annual or special meeting of the stockholders of the Corporation may be taken without a meeting if a consent or consents in writing, setting forth the action so taken, are signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted.

ARTICLE VII

EXISTENCE

The Corporation shall have perpetual existence.

 

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ARTICLE VIII

AMENDMENT

Section 8.1     Amendment of Certificate of Incorporation . The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by the laws of the State of Delaware, and all rights conferred herein are granted subject to this reservation.

Section 8.2     Amendment of Bylaws . In furtherance and not in limitation of the powers conferred by the laws of the State of Delaware, the Board of Directors is expressly authorized to adopt, amend or repeal the Bylaws of the Corporation.

ARTICLE IX

LIABILITY OF DIRECTORS

Section 9.1     No Personal Liability . To the fullest extent permitted by the DGCL as the same exists or as may hereafter be amended, no director of the Corporation shall be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director.

Section 9.2     Amendment or Repeal . Any amendment, alteration or repeal of this Article IX that adversely affects any right of a director shall be prospective only and shall not limit or eliminate any such right with respect to any proceeding involving any occurrence or alleged occurrence of any action or omission to act that took place prior to such amendment or repeal.

ARTICLE X

BUSINESS COMBINATIONS WITH INTERESTED STOCKHOLDERS

The Corporation hereby expressly states that it shall not be bound or governed by, or otherwise subject to, Section 203 of the DGCL.

 

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IN WITNESS WHEREOF, the Corporation has caused this Amended and Restated Certificate of Incorporation to be signed this 28th day of May, 2010.

 

By:  

        /s/ Stergios Theologides

  Name:   Stergios Theologides
  Title:   Senior Vice President, General Counsel and Secretary

Exhibit 3.2

BYLAWS

OF

CORELOGIC, INC.

(a Delaware corporation)

ARTICLE I

CORPORATE OFFICES

Section 1.1      Registered Office . The registered office of the Corporation shall be fixed in the Certificate of Incorporation of the Corporation.

Section 1.2      Other Offices . The Corporation may also have an office or offices, and keep the books and records of the Corporation, except as may otherwise be required by law, at such other place or places, either within or without the State of Delaware, as the Board of Directors may from time to time determine or the business of the Corporation may require.

ARTICLE II

MEETINGS OF STOCKHOLDERS

Section 2.1      Annual Meeting . The annual meeting of stockholders, for the election of directors and for the transaction of such other business as may properly come before the meeting, shall be held at such place, if any, on such date, and at such time as may be determined by the Board of Directors.

Section 2.2      Special Meeting . A special meeting of the stockholders may be called at any time only by the holders of shares entitled to cast not less than 10% of the votes at that meeting, the Board of Directors, or by the Chairman of the Board of Directors or the Chief Executive Officer with the concurrence of a majority of the Board of Directors.

Section 2.3      Notice of Stockholders’ Meetings .

    (a)      Notice of the place, if any, date, and time of all meetings of the stockholders, and the means of remote communications, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such meeting, shall be given, not less than ten (10) nor more than sixty (60) days before the date on which the meeting is to be held, to each stockholder entitled to vote at such meeting, except as otherwise provided herein or required by law. Each such notice shall state the place, if any, date and hour of the meeting and, in the case of a special meeting, the purpose or purposes for which the meeting is called. Notice may be given personally, by mail or by electronic transmission in accordance with Section 232 of the General Corporation Law of the State of Delaware (the “DGCL”). If mailed, such notice shall be deemed given when deposited in the United States mail, postage prepaid, directed to each stockholder at such stockholder’s address appearing on the books of the Corporation or given by the stockholder for such purpose. Notice by electronic transmission shall be deemed given as provided in Section 232 of the DGCL. An affidavit of the mailing or other means of giving any notice of any stockholders’ meeting, executed by the Secretary, Assistant Secretary or


any transfer agent of the Corporation giving the notice, shall be prima facie evidence of the giving of such notice or report. Notice shall be deemed to have been given to all stockholders of record who share an address if notice is given in accordance with the “householding” rules set forth in Rule 14a-3(e) under the Exchange Act and Section 233 of the DGCL or any successor provisions.

    (b)      When a meeting is adjourned to another time or place, notice need not be given of the adjourned meeting if the place, if any, date and time thereof, and the means of remote communications, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such adjourned meeting are announced at the meeting at which the adjournment is taken; provided , however , that if the date of any adjourned meeting is more than thirty (30) days after the date for which the meeting was originally called, or if a new record date is fixed for the adjourned meeting, notice of the place, if any, date, and time of the adjourned meeting and the means of remote communications, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such adjourned meeting shall be given in conformity herewith.

    (c)      Notice of the time, place and purpose of any meeting of stockholders may be waived in writing, either before or after the meeting, and to the extent permitted by law, will be waived by any stockholder by attendance thereat, in person or by proxy, except when the person objects at the beginning of the meeting to the transaction of any business because the meeting is not lawfully called or convened.

Section 2.4      Organization .

    (a)      Meetings of stockholders shall be presided over by the Chairman of the Board of Directors, if any, or in his or her absence by a person designated by the Board of Directors, or in the absence of a person so designated by the Board of Directors, by a Chairman chosen at the meeting by the holders of a majority in voting power of the stock entitled to vote thereat, present in person or represented by proxy. The Secretary, or in his or her absence, an Assistant Secretary, or in the absence of the Secretary and all Assistant Secretaries, a person whom the Chairman of the meeting shall appoint, shall act as Secretary of the meeting and keep a record of the proceedings thereof.

    (b)      The Board of Directors shall be entitled to make such rules or regulations for the conduct of meetings of stockholders as it shall deem necessary, appropriate or convenient. Subject to such rules and regulations of the Board of Directors, if any, the Chairman of the meeting shall have the right and authority to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such Chairman, are necessary, appropriate or convenient for the proper conduct of the meeting, including, without limitation, establishing an agenda or order of business for the meeting, rules and procedures for maintaining order at the meeting and the safety of those present, limitations on participation in the meeting to stockholders of record of the Corporation, their duly authorized and constituted proxies and such other persons as the Chairman shall permit, restrictions on entry to the meeting after the time fixed for the commencement thereof, limitations on the time allotted to questions or comments by participants and regulation of the opening and closing of the polls for balloting and matters which are to be voted on by ballot.

 

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Section 2.5      List of Stockholders . A complete list of stockholders entitled to vote at any meeting of stockholders, arranged in alphabetical order for each class of stock and showing the address of each such stockholder and the number of shares registered in such stockholder’s name, shall be prepared by the Secretary or other officer having charge of the stock ledger and shall be open to the examination of any stockholder for a period of at least ten (10) days prior to the meeting in the manner provided by law. The stockholder list shall also be open to the examination of any stockholder during the whole time of the meeting as provided by law. Such list shall presumptively determine the identity of the stockholders entitled to vote in person or by proxy at the meeting and entitled to examine the list required by this Section 2.5.

Section 2.6      Quorum . At any meeting of stockholders, the holders of a majority in voting power of all issued and outstanding stock entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum for the transaction of business; provided that where a separate vote by a class or series is required, the holders of a majority in voting power of all issued and outstanding stock of such class or series entitled to vote on such matter, present in person or represented by proxy, shall constitute a quorum entitled to take action with respect to such matter. If a quorum is not present or represented at any meeting of stockholders, then the Chairman of the meeting or the holders of a majority in voting power of the stock entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time in accordance with Section 2.7, without notice other than announcement at the meeting and except as provided in Section 2.3(b), until a quorum is present or represented. If a quorum initially is present at any meeting of stockholders, the stockholders may continue to transact business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum, but if a quorum is not present at least initially, no business other than adjournment may be transacted.

Section 2.7      Adjourned Meeting . Any annual or special meeting of stockholders, whether or not a quorum is present, may be adjourned for any reason from time to time by either the Chairman of the meeting or the holders of a majority in voting power of the stock entitled to vote thereat, present in person or represented by proxy. At any such adjourned meeting at which a quorum may be present, any business may be transacted that might have been transacted at the meeting as originally called.

Section 2.8      Voting .

    (a)      Except as otherwise provided by law or the Certificate of Incorporation, each holder of stock of the Corporation shall be entitled to one (1) vote for each share of such stock held of record by such holder on all matters submitted to a vote of stockholders of the Corporation.

    (b)      Except as otherwise provided by law, the Certificate of Incorporation or these Bylaws, at each meeting of stockholders at which a quorum is present, all corporate actions to be taken by vote of the stockholders shall be authorized by the affirmative vote of the holders of a majority in voting power of the stock entitled to vote thereat, present in person or represented by proxy, and where a separate vote by class or series is required, if a quorum of such class or series is present, such act shall be authorized by the affirmative vote of the holders

 

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of a majority in voting power of the stock of such class or series entitled to vote thereat, present in person or represented by proxy.

Section 2.9        Proxies . Every person entitled to vote for directors, or on any other matter, shall have the right to do so either in person or by one or more agents authorized by a written proxy, which may be in the form of a telegram, cablegram or other means of electronic transmission, signed by the person and filed with the Secretary of the Corporation, but no such proxy shall be voted or acted upon after three (3) years from its date, unless the proxy provides for a longer period. A proxy shall be deemed signed if the stockholder’s name is placed on the proxy by the stockholder or the stockholder’s attorney-in-fact. A duly executed proxy shall be irrevocable if it states that it is irrevocable and if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power. A stockholder may revoke any proxy which is not irrevocable by attending the meeting and voting in person or by filing an instrument in writing revoking the proxy or by filing another duly executed proxy bearing a later date with the Secretary of the Corporation. A proxy is not revoked by the death or incapacity of the maker unless, before the vote is counted, written notice of such death or incapacity is received by the Corporation.

Section 2.10      Notice of Stockholder Business and Nominations .

    (a)         Annual Meeting .

        (i)        Nominations of persons for election to the Board of Directors of the Corporation and the proposal of business other than nominations to be considered by the stockholders may be made at an annual meeting of stockholders only (A) pursuant to the Corporation’s notice of meeting (or any supplement thereto), (B) by or at the direction of the Board of Directors or (C) by any stockholder of the Corporation who is a stockholder of record at the time the notice provided for in this Section 2.10(a) is delivered to the Secretary of the Corporation, who is entitled to vote at the meeting and who complies with the notice procedures set forth in this Section 2.10(a).

        (ii)        For nominations or other business to be properly brought before an annual meeting by a stockholder pursuant to clause (C) of the foregoing paragraph, the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation and such business must be a proper subject for stockholder action. To be timely, a stockholder’s notice must be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the ninetieth (90th) day nor earlier than the close of business on the one hundred twentieth (120th) day prior to the first anniversary of the preceding year’s annual meeting; provided , however , that in the event that the date of the annual meeting is more than thirty (30) days before or more than seventy (70) days after such anniversary date, notice by the stockholder to be timely must be so delivered not earlier than the close of business on the one hundred twentieth (120th) day prior to such annual meeting and not later than the close of business on the later of the ninetieth (90th) day prior to such annual meeting or the tenth (10th) day following the date on which public announcement (as defined below) of the date of such meeting is first made by the Corporation. In no event shall the public announcement of an adjournment or postponement of an annual meeting commence a

 

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new time period (or extend any time period) for the giving of a stockholder’s notice as described above. Such stockholder’s notice shall set forth:

(A)      as to each person whom the stockholder proposes to nominate for election or re-election as a director (1) all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors in an election contest, or is otherwise required, in each case pursuant to and in accordance with Regulation 14A under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), (2) such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected and (3) such other information as the Corporation may reasonably require to determine the eligibility of such proposed nominee to serve as a director of the Corporation;

(B)      as to any other business that the stockholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the text of the proposal or business (including the text of any resolutions proposed for consideration and in the event that such business includes a proposal to amend the Bylaws of the Corporation, the language of the proposed amendment), the reasons for conducting such business at the meeting and any material interest in such business of such stockholder and the beneficial owner (within the meaning of Section 13(d) of the Exchange Act), if any, on whose behalf the proposal is made;

(C)      as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made:

  (1)      the name and address of such stockholder, as they appear on the Corporation’s books, and the name and address of such beneficial owner,

  (2)      the class and number of shares of capital stock of the Corporation which are owned of record by such stockholder and such beneficial owner as of the date of the notice, and a representation that the stockholder will notify the Corporation in writing within five business days after the record date for such meeting of the class and number of shares of capital stock of the Corporation owned of record by the stockholder and such beneficial owner as of the record date for the meeting, and

  (3)      a representation that the stockholder intends to appear in person or by proxy at the meeting to propose such nomination or business;

(D)      as to the stockholder giving the notice or, if the notice is given on behalf of a beneficial owner on whose behalf the nomination or proposal is made, as to such beneficial owner:

 

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  (1)      the class and number of shares of capital stock of the Corporation which are beneficially owned by such stockholder or beneficial owner as of the date of the notice, and a representation that the stockholder will notify the Corporation in writing within five business days after the record date for such meeting of the class and number of shares of capital stock of the Corporation beneficially owned by such stockholder or beneficial owner as of the record date for the meeting,

  (2)      a description of any agreement, arrangement or understanding with respect to the nomination or other business between or among such stockholder or beneficial owner and any other person, including without limitation any agreements that would be required to be disclosed pursuant to Item 5 or Item 6 of Exchange Act Schedule 13D (regardless of whether the requirement to file a Schedule 13D is applicable to the stockholder or beneficial owner) and a representation that the stockholder will notify the Corporation in writing within five business days after the record date for such meeting of any such agreement, arrangement or understanding in effect as of the record date for the meeting,

  (3)      a description of any agreement, arrangement or understanding (including any derivative or short positions, profit interests, options, hedging transactions, and borrowed or loaned shares) that has been entered into as of the date of the stockholder’s notice by, or on behalf of, such stockholder or beneficial owner, the effect or intent of which is to mitigate loss, manage risk or benefit from changes in the share price of any class of the Corporation’s capital stock, or increase or decrease the voting power of the stockholder or beneficial owner with respect to shares of stock of the Corporation, and a representation that the stockholder will notify the Corporation in writing within five business days after the record date for such meeting of any such agreement, arrangement or understanding in effect as of the record date for the meeting,

  (4)      a representation whether the stockholder or the beneficial owner, if any, intends or is part of a group which intends (x) to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the Corporation’s outstanding capital stock required to elect the nominee or approve or adopt the proposal and/or (y) otherwise to solicit proxies from stockholders in support of such nomination or proposal.

The foregoing notice requirements of this Section 2.10(a)(ii) shall not apply to any stockholder proposal if (i) a stockholder has notified the Corporation of his or her intention to present such stockholder proposal at an annual meeting only pursuant to and in compliance with Rule 14a-8 under the Exchange Act and (ii) such proposal has been included in a proxy statement that has been prepared by the Corporation to solicit proxies for such annual meeting.

 

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    (b)       Special Meeting . Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the Corporation’s notice of meeting. Nominations of persons for election to the Board of Directors may be made at a special meeting of stockholders at which directors are to be elected pursuant to the Corporation’s notice of meeting (A) by or at the direction of the Board of Directors or (B) provided that the Board of Directors has determined that directors shall be elected at such meeting, by any stockholder of the Corporation who is a stockholder of record at the time the notice provided for in this Section 2.10(b) is delivered to the Secretary of the Corporation, who is entitled to vote at the meeting and upon such election and who complies with the notice procedures set forth in this Section 2.10. In the event the Corporation calls a special meeting of stockholders for the purpose of electing one or more directors to the Board of Directors, any such stockholder entitled to vote in such election of directors may nominate a person or persons (as the case may be) for election to such position(s) as specified in the Corporation’s notice of meeting, if the notice required by paragraph (a)(ii) of this Section 2.10 shall be delivered to the Secretary at the principal executive offices of the Corporation not earlier than the close of business on the one hundred twentieth (120th) day prior to such special meeting and not later than the close of business on the later of the ninetieth (90th) day prior to such special meeting or the tenth (10th) day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting. In no event shall the public announcement of an adjournment or postponement of a special meeting commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described above.

    (c)       General .

      (i)        Only such persons who are nominated in accordance with the procedures set forth in this Section 2.10 shall be eligible to be elected at an annual or special meeting of stockholders of the Corporation to serve as directors and only such business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with the procedures set forth in this Section 2.10. Except as otherwise provided by law, the Chairman of the Board of Directors shall have the power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with the procedures set forth in this Section 2.10 (including whether the stockholder or beneficial owner, if any, on whose behalf the nomination or proposal is made solicited (or is part of a group which solicited) or did not so solicit, as the case may be, proxies in support of such stockholder’s nominee or proposal in compliance with such stockholder’s representation as required by clause (a)(ii)(D)(4) of this Section 2.10). If any proposed nomination or business was not made or proposed in compliance with this Section 2.10, the Chairman of the meeting shall have the power and duty to declare that such nomination shall be disregarded or that such proposed business shall not be transacted. Notwithstanding the foregoing provisions of this Section 2.10, unless otherwise required by law, if the stockholder does not provide the information required under clauses (a)(ii)(C) and (a)(ii)(D) of this Section 2.10 to the Corporation within five business days following the record date for an annual or special meeting or if the stockholder (or a qualified representative of the stockholder) does not appear at the annual or special meeting of stockholders of the Corporation to present a nomination or

 

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proposed business, such nomination shall be disregarded and such proposed business shall not be transacted, notwithstanding that proxies in respect of such vote may have been received by the Corporation. For purposes of this Section 2.10, to be considered a qualified representative of the stockholder, a person must be a duly authorized officer, manager or partner of such stockholder or authorized by a writing executed by such stockholder (or a reliable reproduction or electronic transmission of the writing) delivered to the Corporation prior to the making of such nomination or proposal at such meeting by such stockholder stating that such person is authorized to act for such stockholder as proxy at the meeting of stockholders.

    (ii)        For purposes of this Section 2.10, a “public announcement” shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or a comparable national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Sections 13, 14 or 15(d) of the Exchange Act.

    (iii)      Notwithstanding the foregoing provisions of this Section 2.10, a stockholder shall comply with all applicable requirements of the Exchange Act and the rules and regulations promulgated thereunder with respect to the matters set forth in this Section 2.10. Nothing in this Section 2.10 shall be deemed to affect any rights of the holders of any series of Preferred Stock to elect directors pursuant to any applicable provisions of the Certificate of Incorporation.

Section 2.11      Action by Written Consent .

    (a)        Unless otherwise provided in the Certificate of Incorporation, any action required or permitted to be taken at any annual or special meeting of stockholders of the Corporation may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, are signed by the holders of issued and outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. To be effective, a written consent must be delivered to the Corporation by delivery to its registered office, its principal place of business or an officer or agent of the Corporation having custody of the books in which proceedings of meetings of stockholders are recorded. Delivery made to the Corporation’s registered office shall be by hand or by certified or registered mail, return receipt requested. Every written consent shall bear the date of signature of each stockholder who signs the consent and no written consent shall be effective to take the corporate action referred to therein unless, within sixty (60) days of the earliest dated consent delivered in the manner required by this Section 2.11 to the Corporation, written consents signed by a sufficient number of holders to take action are delivered to the Corporation in accordance with this Section 2.11.

    (b)        Any electronic transmission consenting to an action to be taken and transmitted by a stockholder or proxyholder, or by a person or persons authorized to act for a stockholder or proxyholder, shall be deemed to be written, signed and dated for purposes of this Section 2.11, provided that any such electronic transmission sets forth or is delivered with information from which the Corporation can determine (i) that the electronic transmission was

 

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transmitted by the stockholder or proxyholder or by a person or persons authorized to act for the stockholder or proxyholder and (ii) the date on which such stockholder or proxyholder or authorized person or persons transmitted such electronic transmission. The date on which such electronic transmission is transmitted shall be deemed to be the date on which such consent was signed. Except to the extent and in the manner authorized by the Board of Directors, no consent given by electronic transmission shall be deemed to have been delivered until such consent is reproduced in paper form and until such paper form shall be delivered to the Corporation by delivery to its registered office, its principal place of business or an officer or agent of the Corporation having custody of the books in which proceedings of meetings of stockholders are recorded. Delivery made to the Corporation’s registered office shall be made by hand or by certified or registered mail, return receipt requested.

    (c)        Any copy, facsimile or other reliable reproduction of a consent in writing may be substituted or used in lieu of the original writing for any and all purposes for which the original writing could be used, provided that such copy, facsimile or other reproduction shall be a complete reproduction of the entire writing.

    (d)        Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing and who, if the action had been taken at a meeting, would have been entitled to notice of the meeting if the record date of such meeting had been the date that written consents signed by a sufficient number of stockholders to take the action were delivered to the Corporation in the manner required by this Section 2.11.

Section 2.12       Inspectors of Election . Before any meeting of stockholders, the Board of Directors shall appoint one or more inspectors of election to act at the meeting or its adjournment. If any person appointed as inspector fails to appear or fails or refuses to act, then the Chairman of the meeting may, and upon the request of any stockholder or a stockholder’s proxy shall, appoint a person to fill that vacancy. Inspectors need not be stockholders. No director or nominee for the office of director shall be appointed such an inspector.

Such inspectors shall:

    (a)        determine the number of shares outstanding and the voting power of each, the number of shares represented at the meeting, the existence of a quorum, and the authenticity, validity, and effect of proxies;

    (b)        receive votes, ballots or consents;

    (c)        hear and determine all challenges and questions in any way arising in connection with the right to vote;

    (d)        count and tabulate all votes or consents;

    (e)        determine when the polls shall close;

    (f)        determine the result; and

 

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    (g)        do any other acts that may be proper to conduct the election or vote with fairness to all stockholders.

The inspectors of election shall perform their duties impartially, in good faith, to the best of their ability and as expeditiously as is practical. Any report or certificate made by the inspectors of election shall be prima facie evidence of the facts stated therein.

Section 2.13     Meetings by Remote Communications .   The Board of Directors may, in its sole discretion, determine that a meeting of stockholders shall not be held at any place, but may instead be held solely by means of remote communication in accordance with Section 211(a)(2) of the DGCL. If authorized by the Board of Directors in its sole discretion, and subject to such guidelines and procedures as the Board of Directors may adopt, stockholders and proxyholders not physically present at a meeting of stockholders may, by means of remote communication (a) participate in a meeting of stockholders and (b) be deemed present in person and vote at a meeting of stockholders whether such meeting is to be held at a designated place or solely by means of remote communication, provided that (i) the Corporation shall implement reasonable measures to verify that each person deemed present and permitted to vote at the meeting by means of remote communication is a stockholder or proxyholder; (ii) the Corporation shall implement reasonable measures to provide such stockholders and proxyholders a reasonable opportunity to participate in the meeting and to vote on matters submitted to the stockholders, including an opportunity to read or hear the proceedings of the meeting substantially concurrently with such proceedings; and (iii) if any stockholder or proxyholder votes or takes other action at the meeting by means of remote communication, a record of such vote or other action shall be maintained by the Corporation.

ARTICLE III

DIRECTORS

Section 3.1     Powers .   Subject to the provisions of the DGCL and to any limitations in the Certificate of Incorporation or these Bylaws relating to action required to be approved by the stockholders, the business and affairs of the Corporation shall be managed and shall be exercised by or under the direction of the Board of Directors. In addition to the powers and authorities these Bylaws expressly confer upon them, the Board of Directors may exercise all such powers of the Corporation and do all such lawful acts and things as are not by law, the Certificate of Incorporation or these Bylaws required to be exercised or done by the stockholders.

Section 3.2     Number, Term of Office and Election .   The number of directors shall be established in the manner set forth in the Corporation’s Certificate of Incorporation. With the exception of the first Board of Directors, which shall be elected by the incorporator, and except as provided in Section 3.3, directors shall be elected by the vote of the majority of the votes cast at the stockholders’ annual meeting with respect to the director nominee; provided , however , that if, as of a date that is five (5) business days in advance of the date that the Corporation files its definitive proxy statement with the Securities and Exchange Commission, regardless of whether or not thereafter revised or supplemented, the number of director nominees exceeds the number of directors to be elected, the directors (not exceeding the authorized number of directors as fixed by the Board of Directors in accordance with the Certificate of Incorporation) shall be elected by a plurality of votes of the voting shares present in person or represented by proxy at the meeting

 

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and entitled to vote on the election of directors. For purposes of this Section 3.2, a majority of the votes cast means that the number of shares voted ‘for’ a director must exceed the number of shares voted ‘against’ that director. If, for any cause, the entire Board of Directors shall not have been elected at an annual meeting, they may be elected as soon thereafter as convenient at a special meeting of the stockholders called for that purpose in the manner provided in these Bylaws. Directors need not be stockholders unless so required by the Certificate of Incorporation or these Bylaws, wherein other qualifications for directors may be prescribed.

Section 3.3       Vacancies .   Subject to the rights of the holders of any one or more series of Preferred Stock then outstanding, newly created directorships resulting from any increase in the authorized number of directors or any vacancies in the Board of Directors resulting from death, resignation, retirement, disqualification, removal from office or other cause shall, unless otherwise provided by law or by resolution of the Board of Directors, be filled solely by the affirmative vote of a majority of the remaining directors then in office, though less than a quorum, and directors so chosen shall hold office until the expiration of the term of office of the director whom he or she has replaced or until his or her successor shall be elected and qualified. No decrease in the authorized number of directors shall shorten the term of any incumbent director.

Section 3.4       Resignations and Removal .

(a)          Any director may resign at any time upon notice given in writing or by electronic transmission to the Board of Directors, the Chairman of the Board of Directors or the Secretary. Such resignation shall take effect at the time specified in such notice or, if the time be not specified, upon receipt thereof by the Board of Directors, the Chairman of the Board of Directors or the Secretary, as the case may be. Unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.

(b)          Unless otherwise restricted by law, the Certificate of Incorporation or these Bylaws, any director or the entire Board of Directors may be removed, with or without cause, by the holders of a majority in voting power of all issued and outstanding stock entitled to vote at an election of directors.

Section 3.5       Regular Meetings .   Regular meetings of the Board of Directors shall be held at such place or places, on such date or dates and at such time or times, as shall have been established by the Board of Directors and publicized among all directors; provided that no fewer than one regular meeting per year shall be held. A notice of each regular meeting shall not be required.

Section 3.6       Special Meetings .   Special meetings of the Board of Directors for any purpose or purposes may be called at any time by the Chairman of the Board of Directors, the Chief Executive Officer or a majority of the Board of Directors then in office. The person or persons authorized to call special meetings of the Board of Directors may fix the place and time of such meetings. Notice of each such meeting shall be given to each director, if by mail, addressed to such director as his or her residence or usual place of business, at least five (5) days before the day on which such meeting is to be held, or shall be sent to such director at such place by telecopy, telegraph, electronic transmission or other form of recorded communication, or be

 

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delivered personally or by telephone, in each case at least twenty-four (24) hours prior to the time set for such meeting. Notice of any meeting need not be given to any director who shall, either before or after the meeting, submit a waiver of such notice or who shall attend such meeting without protesting, prior to or at its commencement, the lack of notice to such director. A notice of special meeting need not state the purpose of such meeting, and, unless indicated in the notice thereof, any and all business may be transacted at a special meeting.

Section 3.7       Participation in Meetings by Conference Telephone .  Members of the Board of Directors, or of any committee thereof, may participate in a meeting of such Board of Directors or committee by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and such participation shall constitute presence in person at such meeting.

Section 3.8       Quorum .  Except as otherwise provided by law, the Certificate of Incorporation or these Bylaws, a majority of the authorized number of directors shall constitute a quorum for the transaction of business at any meeting of the Board of Directors, and the vote of a majority of the directors present at a duly held meeting at which a quorum is present shall be regarded as the act of the Board of Directors. The Chairman of the meeting or a majority of the directors present may adjourn the meeting to another time and place whether or not a quorum is present. At any adjourned meeting at which a quorum is present, any business may be transacted which might have been transacted at the meeting as originally called. If a quorum initially is present at any meeting of directors, the directors may continue to transact business, notwithstanding the withdrawal of enough directors to leave less than a quorum, upon resolution of at least a majority of the required quorum for that meeting prior to the loss of such quorum.

Section 3.9       Board of Directors Action by Written Consent Without a Meeting .  Any action required or permitted to be taken by the Board of Directors may be taken without a meeting, provided that all members of the Board of Directors consent in writing or by electronic transmission to such action, and the writing or writings or electronic transmission or transmissions are filed with the minutes or proceedings of the Board of Directors. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form. Such action by written consent shall have the same force and effect as a unanimous vote of the Board of Directors.

Section 3.10       Rules and Regulations .  The Board of Directors shall adopt such rules and regulations not inconsistent with the provisions of law, the Certificate of Incorporation or these Bylaws for the conduct of its meetings and management of the affairs of the Corporation as the Board of Directors shall deem proper.

Section 3.11       Fees and Compensation of Directors .  Directors and members of committees may receive such compensation, if any, for their services and such reimbursement of expenses as may be fixed or determined by resolution of the Board of Directors. This Section 3.11 shall not be construed to preclude any director from serving the Corporation in any other capacity as an officer, agent, employee or otherwise and receiving compensation for those services.

 

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Section 3.12     Emergency Bylaws .  In the event of any emergency, disaster or catastrophe, as referred to in Section 110 of the DGCL, or other similar emergency condition, as a result of which a quorum of the Board of Directors or a standing committee of the Board of Directors cannot readily be convened for action, then the director or directors in attendance at the meeting shall constitute a quorum. Such director or directors in attendance may further take action to appoint one or more of themselves or other directors to membership on any standing or temporary committees of the Board of Directors as they shall deem necessary and appropriate.

ARTICLE IV

COMMITTEES

Section 4.1       Committees of the Board of Directors .  The Board of Directors may, by resolution, designate one or more committees, including but not limited to an Executive Committee and an Audit Committee, each such committee to consist of one or more of the directors of the Corporation. The Board of Directors may designate one or more directors as alternate members of any committee to replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members present at any meeting and not disqualified from voting, whether or not he, she or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board of Directors establishing such committee, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to the following matters: (a) approving or adopting, or recommending to the stockholders, any action or matter (other than the election or removal of directors) expressly required by the DGCL to be submitted to stockholders for approval or (b) adopting, amending or repealing any bylaw of the Corporation. All committees of the Board of Directors shall keep minutes of their meetings and shall report their proceedings to the Board of Directors when requested or required by the Board of Directors.

Section 4.2       Meetings and Action of Committees .  Any committee of the Board may adopt such rules and regulations not inconsistent with the provisions of law, the Certificate of Incorporation or these Bylaws for the conduct of its meetings as such committee may deem proper.

ARTICLE V

OFFICERS

Section 5.1       Officers .  The officers of the Corporation shall consist of a Chairman of the Board of Directors, a Chief Executive Officer, a Chief Financial Officer, one or more Vice Presidents, a Secretary, a Treasurer and such other officers as the Board of Directors may from time to time determine, each of whom shall be elected by the Board of Directors, each to have such authority, functions or duties as set forth in these Bylaws or as determined by the Board of Directors. Each officer shall be chosen by the Board of Directors and shall hold office for such term as may be prescribed by the Board of Directors and until such person’s successor shall have been duly chosen and qualified, or until such person’s earlier death, disqualification, resignation

 

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or removal. Any two of such offices may be held by the same person; provided , however , that no officer shall execute, acknowledge or verify any instrument in more than one capacity if such instrument is required by law, the Certificate of Incorporation or these Bylaws to be executed, acknowledged or verified by two or more officers.

Section 5.2       Removal, Resignation and Vacancies . Any officer of the Corporation may be removed, with or without cause, by the Board of Directors, without prejudice to the rights, if any, of such officer under any contract to which he or she is a party. Any officer may resign at any time upon written notice to the Corporation, without prejudice to the rights, if any, of the Corporation under any contract to which such officer is a party. If any vacancy occurs in any office of the Corporation, the Board of Directors may elect a successor to fill such vacancy for the remainder of the unexpired term and until a successor shall have been duly chosen and qualified.

Section 5.3       Chairman of the Board of Directors . The Chairman of the Board of Directors shall be deemed an officer of the Corporation, and shall preside at meetings of the stockholders and of the Board of Directors and shall exercise and perform such other powers and duties as may be from time to time assigned to him or her by the Board of Directors.

Section 5.4       Chief Executive Officer . The Chief Executive Officer shall have general supervision, direction and control of the business and affairs of the Corporation and shall be responsible for corporate policy and strategy. The Chief Executive Officer shall, if present and in the absence of the Chairman of the Board of Directors, preside at meetings of the stockholders and of the Board of Directors.

Section 5.5       Chief Financial Officer . The Chief Financial Officer shall exercise all the powers and perform the duties of the office of the chief financial officer and in general have overall supervision of the financial operations of the Corporation. The Chief Financial Officer shall, when requested, counsel with and advise the other officers of the Corporation and shall perform such other duties as such officer may agree with the Chief Executive Officer or as the Board of Directors may from time to time determine.

Section 5.6       Vice Presidents . The Vice President shall have such powers and duties as shall be prescribed by his or her superior officer or the Chief Executive Officer. A Vice President shall, when requested, counsel with and advise the other officers of the Corporation and shall perform such other duties as such officer may agree with the Chief Executive Officer or as the Board of Directors may from time to time determine.

Section 5.7       Treasurer . The Treasurer shall supervise and be responsible for all the funds and securities of the Corporation, the deposit of all moneys and other valuables to the credit of the Corporation in depositories of the Corporation, borrowings and compliance with the provisions of all indentures, agreements and instruments governing such borrowings to which the Corporation is a party, the disbursement of funds of the Corporation and the investment of its funds, and in general shall perform all of the duties incident to the office of the Treasurer. The Treasurer shall, when requested, counsel with and advise the other officers of the Corporation

 

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and shall perform such other duties as such officer may agree with the Chief Executive Officer or as the Board of Directors may from time to time determine.

Section 5.8       Secretary . The powers and duties of the Secretary are: (i) to act as Secretary at all meetings of the Board of Directors, of the committees of the Board of Directors and of the stockholders and to record the proceedings of such meetings in a book or books to be kept for that purpose; (ii) to see that all notices required to be given by the Corporation are duly given and served; (iii) to act as custodian of the seal of the Corporation and affix the seal or cause it to be affixed to all certificates of stock of the Corporation and to all documents, the execution of which on behalf of the Corporation under its seal is duly authorized in accordance with the provisions of these Bylaws; (iv) to have charge of the books, records and papers of the Corporation and see that the reports, statements and other documents required by law to be kept and filed are properly kept and filed; and (v) to perform all of the duties incident to the office of Secretary. The Secretary shall, when requested, counsel with and advise the other officers of the Corporation and shall perform such other duties as such officer may agree with the Chief Executive Officer or as the Board of Directors may from time to time determine.

Section 5.9       Additional Matters . The Chief Executive Officer of the Corporation shall have the authority to designate employees of the Corporation to have the title of Vice President, Assistant Vice President, Assistant Treasurer or Assistant Secretary. Any employee so designated shall have the powers and duties determined by the officer making such designation. The persons upon whom such titles are conferred shall not be deemed officers of the Corporation unless elected by the Board of Directors.

Section 5.10     Checks; Drafts; Evidences of Indebtedness . From time to time, the Board of Directors shall determine by resolution which person or persons may sign or endorse all checks, drafts, other orders for payment of money, notes, bonds, debentures or other evidences of indebtedness that are issued in the name of or payable by the Corporation, and only the persons so authorized shall sign or endorse such instruments.

Section 5.11     Corporate Contracts and Instruments; How Executed . Except as otherwise provided in these Bylaws, the Board of Directors may authorize any officer or officers, or agent or agents, to enter into any contract or execute any instrument in the name of and on behalf of the Corporation. Such authority may be general or confined to specific instances. Unless so authorized or ratified by the Board of Directors or within the agency power of an officer, no officer, agent or employee shall have any power or authority to bind the Corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or for any amount.

Section 5.12     Action with Respect to Securities of Other Corporations . The Chief Executive Officer or any other officer of the Corporation authorized by the Board of Directors or the Chief Executive Officer is authorized to vote, represent, and exercise on behalf of the Corporation all rights incident to any and all shares of any other corporation or corporations standing in the name of the Corporation. The authority herein granted may be exercised either by such person directly or by any other person authorized to do so by proxy or power of attorney duly executed by the person having such authority.

 

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ARTICLE VI

INDEMNIFICATION

Section 6.1       Right to Indemnification . Each person who was or is made a party or is threatened to be made a party to or is otherwise involved in any action, suit, arbitration, alternative dispute mechanism, inquiry, administrative or legislative hearing, investigation or any other actual, threatened or completed proceeding, including any and all appeals, whether civil, criminal, administrative or investigative (hereinafter a “proceeding”), by reason of the fact that he or she is or was a director or an officer of the Corporation or while a director or officer of the Corporation is or was serving at the request of the Corporation as a director, officer, employee, agent or trustee of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to an employee benefit plan (hereinafter an “indemnitee”), whether the basis of such proceeding is alleged action in an official capacity as a director, officer, employee, agent or trustee or in any other capacity while serving as a director, officer, employee, agent or trustee, shall be indemnified and held harmless by the Corporation to the fullest extent authorized by the DGCL, as the same exists or may hereafter be amended, against all expense, liability and loss (including attorneys’ fees, judgments, fines, ERISA excise taxes or penalties and amounts paid in settlement) reasonably incurred or suffered by such indemnitee in connection therewith; provided , however , that, except as provided in Section 6.3 with respect to proceedings to enforce rights to indemnification, the Corporation shall indemnify any such indemnitee in connection with a proceeding (or part thereof) initiated by such indemnitee only if such proceeding (or part thereof) was authorized or ratified by the Board of Directors of the Corporation.

Section 6.2       Right to Advancement of Expenses . In addition to the right to indemnification conferred in Section 6.1, an indemnitee shall, to the fullest extent not prohibited by law, also have the right to be paid by the Corporation the expenses (including attorneys’ fees) incurred in defending any such proceeding in advance of its final disposition (hereinafter an “advancement of expenses”); provided , however , that, if the DGCL requires, an advancement of expenses incurred by an indemnitee in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such indemnitee, including, without limitation, service to an employee benefit plan) shall be made only upon delivery to the Corporation of an undertaking (hereinafter an “undertaking”), by or on behalf of such indemnitee, to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right to appeal (hereinafter a “final adjudication”) that such indemnitee is not entitled to be indemnified for such expenses under this Section 6.2 or otherwise.

Section 6.3       Right of Indemnitee to Bring Suit . If a claim under Section 6.1 or 6.2 of this Article VI is not paid in full by the Corporation within 60 days after a written claim has been received by the Corporation, except in the case of a claim for an advancement of expenses, in which case the applicable period shall be 20 days, the indemnitee may at any time thereafter bring suit against the Corporation in a court of competent jurisdiction in the State of Delaware to recover the unpaid amount of the claim. If successful in whole or in part in any such suit, or in a suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the indemnitee shall be entitled to be paid also the expense of prosecuting or defending such suit. In (a) any suit brought by the indemnitee to enforce a right to indemnification hereunder (but not in a suit brought by the indemnitee to enforce a right to an

 

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advancement of expenses) it shall be a defense that, and (b) any suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the Corporation shall be entitled to recover such expenses upon a final adjudication that, the indemnitee has not met any applicable standard for indemnification set forth in the DGCL. Neither the failure of the Corporation (including its directors who are not parties to such action, a committee of such directors, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such suit that indemnification of the indemnitee is proper in the circumstances because the indemnitee has met the applicable standard of conduct set forth in the DGCL, nor an actual determination by the Corporation (including its directors who are not parties to such action, a committee of such directors, independent legal counsel, or its stockholders) that the indemnitee has not met such applicable standard of conduct, shall create a presumption that the indemnitee has not met the applicable standard of conduct or, in the case of such a suit brought by the indemnitee, be a defense to such suit. In any suit brought by the indemnitee to enforce a right to indemnification or to an advancement of expenses hereunder, or brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the burden of proving that the indemnitee is not entitled to be indemnified, or to such advancement of expenses, under this Article VI or otherwise shall be on the Corporation.

Section 6.4       Non-Exclusivity of Rights . The rights to indemnification and to the advancement of expenses conferred in this Article VI shall not be exclusive of any other right which any person may have or hereafter acquire under any law, agreement, vote of stockholders or directors, provisions of the Certificate of Incorporation or these Bylaws or otherwise.

Section 6.5       Insurance . The Corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the DGCL.

Section 6.6       Indemnification of Employees and Agents of the Corporation . The Corporation may, to the extent authorized from time to time by the Board of Directors, grant rights to indemnification and to the advancement of expenses to any employee or agent of the Corporation to the fullest extent of the provisions of this Article VI with respect to the indemnification and advancement of expenses of directors and officers of the Corporation.

Section 6.7       Nature of Rights . All rights granted pursuant to this Article VI shall vest at the time a person becomes a director or officer of the Corporation and shall be deemed to be provided by a contract between the Corporation and each director or officer who serves in such capacity at any time while this Article VI is in effect. Any repeal or modification of the provisions of this Article VI shall be prospective only and shall not adversely affect the rights of any director or officer in effect hereunder at the time of any act or omission occurring prior to such repeal or modification. The rights granted pursuant to this Article VI shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director or officer and shall inure to the benefit of the heirs, executors and administrators of such a person.

 

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Section 6.8     Settlement of Claims . The Corporation shall not be liable to indemnify any indemnitee under this Article VI for any amounts paid in settlement of any action or claim effected without the Corporation’s written consent, which consent shall not be unreasonably withheld, or for any judicial award if the Corporation was not given a reasonable and timely opportunity, at its expense, to participate in the defense of such action.

Section 6.9     Subrogation . In the event of payment under this Article VI, the Corporation shall be subrogated to the extent of such payment to all of the rights of recovery of the indemnitee, who shall execute all papers required and shall do everything that may be necessary to secure such rights, including the execution of such documents necessary to enable the Corporation effectively to bring suit to enforce such rights.

Section 6.10     Procedures for Submission of Claims . The Board of Directors may establish reasonable procedures for the submission of claims for indemnification pursuant to this Article VI, determination of the entitlement of any person thereto and review of any such determination. Such procedures shall be set forth in an appendix to these Bylaws and shall be deemed for all purposes to be a part hereof.

ARTICLE VII

CAPITAL STOCK

Section 7.1     Certificates of Stock . The shares of the Corporation shall be represented by certificates, provided that the Board of Directors may provide by resolution or resolutions that some or all of any or all classes or series of stock shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the Corporation. Every holder of stock represented by certificates shall be entitled to have a certificate signed by or in the name of the Corporation by the Chairman of the Board of Directors or a Vice President, and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary, of the Corporation certifying the number of shares owned by such holder in the Corporation. Any or all such signatures may be facsimiles. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate has ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if such person were such officer, transfer agent or registrar at the date of issue.

Section 7.2     Special Designation on Certificates . If the Corporation is authorized to issue more than one class of stock or more than one series of any class, then the powers, the designations, the preferences, and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of the certificate that the Corporation shall issue to represent such class or series of stock; provided , however , that, except as otherwise provided in Section 202 of the DGCL, in lieu of the foregoing requirements there may be set forth on the face or back of the certificate that the Corporation shall issue to represent such class or series of stock a statement that the Corporation will furnish without charge to each stockholder who so requests the powers, the designations, the preferences, and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or

 

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rights. Within a reasonable time after the issuance or transfer of uncertificated stock, the Corporation shall send to the registered owner thereof a written notice containing the information required to be set forth or stated on certificates pursuant to this Section 7.2 or Section 156, 202(a) or 218(a) of the DGCL or with respect to this Section 7.2 a statement that the Corporation will furnish without charge to each stockholder who so requests the powers, the designations, the preferences, and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. Except as otherwise expressly provided by law, the rights and obligations of the holders of uncertificated stock and the rights and obligations of the holders of certificates representing stock of the same class and series shall be identical.

Section 7.3     Transfers of Stock . Transfers of shares of stock of the Corporation shall be made only on the books of the Corporation upon authorization by the registered holder thereof or by such holder’s attorney thereunto authorized by a power of attorney duly executed and filed with the Secretary or a transfer agent for such stock, and if such shares are represented by a certificate, upon surrender of the certificate or certificates for such shares properly endorsed or accompanied by a duly executed stock transfer power and the payment of any taxes thereon; provided , however , that the Corporation shall be entitled to recognize and enforce any lawful restriction on transfer.

Section 7.4     Lost Certificates . The Corporation may issue a new share certificate or new certificate for any other security in the place of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed, and the Corporation may require the owner of the lost, stolen or destroyed certificate or the owner’s legal representative to give the Corporation a bond (or other adequate security) sufficient to indemnify it against any claim that may be made against it (including any expense or liability) on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate. The Board of Directors may adopt such other provisions and restrictions with reference to lost certificates, not inconsistent with applicable law, as it shall in its discretion deem appropriate.

Section 7.5     Addresses of Stockholders . Each stockholder shall designate to the Secretary an address at which notices of meetings and all other corporate notices may be served or mailed to such stockholder and, if any stockholder shall fail to so designate such an address, corporate notices may be served upon such stockholder by mail directed to the mailing address, if any, as the same appears in the stock ledger of the Corporation or at the last known mailing address of such stockholder.

Section 7.6     Registered Stockholders . The Corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by law.

Section 7.7     Record Date for Determining Stockholders .

(a)      In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or entitled to receive

 

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payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date: (a) in the case of determination of stockholders entitled to vote at any meeting of stockholders or adjournment thereof shall, unless otherwise required by law, not be more than sixty (60) nor less than ten (10) days before the date of such meeting; and (b) in the case of any other action, shall not be more than sixty (60) days prior to such other action. If no record date is fixed: (i) the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held; and (ii) the record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided , however , that the Board of Directors may fix a new record date for the adjourned meeting.

(b)      The Board may fix a record date in order that the corporation may determine the stockholders entitled to consent to a corporate action in writing without a meeting, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board, and which date shall not be more than ten days after the date upon which the resolution fixing the record date is adopted by the Board. Any stockholder of record seeking to have the stockholders authorize or take corporate action by written consent shall, by written notice to the Secretary, request that the Board fix a record date. The Board shall promptly, but in all events within ten days after the date on which such written notice is received, adopt a resolution fixing the record date (unless a record date has previously been fixed by the Board). If no record date has been fixed by the Board or otherwise within ten days after the date on which such written notice is received, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the Board is required by Delaware law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the corporation. If no record date has been fixed by the Board and prior action by the Board is required by Delaware law, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be at the close of business on the day on which the Board adopts the resolution taking such prior action.

Section 7.8     Regulations . The Board of Directors may make such additional rules and regulations as it may deem expedient concerning the issue, transfer and registration of shares of stock of the Corporation.

ARTICLE VIII

GENERAL MATTERS

Section 8.1     Fiscal Year . The fiscal year of the Corporation shall begin on the first day of January of each year and end on the last day of December of the same year, or such other 12 consecutive months as the Board of Directors may designate.

 

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Section 8.2     Corporate Seal . The Board of Directors may provide a suitable seal, containing the name of the Corporation, which seal shall be in the charge of the Secretary. If and when so directed by the Board of Directors or a committee thereof, duplicates of the seal may be kept and used by the Treasurer or by an Assistant Secretary or Assistant Treasurer.

Section 8.3     Maintenance and Inspection of Records . The Corporation shall, either at its principal executive office or at such place or places as designated by the Board of Directors, keep a record of its stockholders listing their names and addresses and the number and class of shares held by each stockholder, a copy of these Bylaws as amended to date, accounting books and other records.

Section 8.4     Reliance Upon Books, Reports and Records . Each director and each member of any committee designated by the Board of Directors shall, in the performance of his or her duties, be fully protected in relying in good faith upon the books of account or other records of the Corporation and upon such information, opinions, reports or statements presented to the Corporation by any of its officers or employees, or committees of the Board of Directors so designated, or by any other person as to matters which such director or committee member reasonably believes are within such other person’s professional or expert competence and who has been selected with reasonable care by or on behalf of the Corporation.

Section 8.5     Subject to Law and Certificate of Incorporation . All powers, duties and responsibilities provided for in these Bylaws, whether or not explicitly so qualified, are qualified by the Certificate of Incorporation and applicable law.

ARTICLE IX

AMENDMENTS

Section 9.1     Amendments . In furtherance and not in limitation of the powers conferred by the laws of the State of Delaware, the Board of Directors is expressly authorized to adopt, amend or repeal these Bylaws, except that the portion of the second sentence of Section 3.2 providing that directors shall be elected by the vote of the majority of the votes cast at the stockholders’ annual meeting with respect to the director nominee may only be amended or repealed by the affirmative vote or written consent of the holders of at least a majority in voting power of the issued and outstanding stock entitled to vote. In addition to any requirements of law and any other provision of these Bylaws or the Certificate of Incorporation, and notwithstanding any other provision of these Bylaws, the Certificate of Incorporation or any provision of law which might otherwise permit a lesser vote or no vote, the affirmative vote of the holders of at least a majority in voting power of the issued and outstanding stock entitled to vote generally in the election of directors, voting together as a single class, shall be required for the stockholders to amend or repeal, or adopt any provision inconsistent with, any provision of these Bylaws.

The foregoing Bylaws were adopted by the Board of Directors on May 28, 2010 to be effective June 1, 2010.

 

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Exhibit 3.3

LOGO

 

COMMON STOCK COMMON STOCK

NUMBER SHARES

CL

INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE

CUSIP 21871D 10 3

SEE REVERSE FOR STATEMENTS RELATING TO RIGHTS, PREFERENCES, PRIVILEGES AND RESTRICTIONS, IF ANY

CoreLogic, Inc.

This Certifies that is the record holder of SHARES OF THE PAR VALUE OF $0.00001 EACH, OF THE COMMON STOCK, OF

CoreLogic, Inc., transferable on the books of the Corporation in person or by duly authorized attorney upon surrender of this certificate properly endorsed. This certificate is not valid unless countersigned by the Transfer Agent and registered by the Registrar.

Witness the facsimile seal of the Corporation and the facsimile signatures of its duly authorized officers. Dated:

CERTIFICATE OF STOCK

Parker S. Kennedy

CHAIRMAN OF THE BOARD

SECRETARY

Corelogic, Inc.

CORPORATE SEAL 2009 DELAWARE

COUNTERSIGNED AND REGISTERED:

WELLS FARGO BANK, N.A.

TRANSFER AGENT AND REGISTRAR

AUTHORIZED SIGNATURE


LOGO

 

The Corporation will furnish without charge to each shareholder who so requests a statement of the rights, preferences, privileges and restrictions granted to or imposed upon each class or series of stock authorized to be issued and upon the holders thereof. Such request may be made to the Secretary or Transfer Agent of the Corporation.

The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations:

TEN COM — as tenants in common

TEN ENT — as tenants by the entireties

JT TEN — as joint tenants with right of survivorship and not as tenants

in common

UNIF GIFT MIN ACT — Custodian

(Cust)(Minor)

under Uniform Gifts to Minors Act

(State)

UNIF TRF MIN ACT — Custodian (until age)

(Cust)

under Uniform Transfers

(Minor)

to Minors Act

(State)

Additional abbreviations may also be used though not in the above list.

For value received, hereby sell, assign and transfer unto

PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE

(PLEASE PRINT NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)

Shares of the common stock represented by the within Certificate, and do hereby irrevocably constitute and appoint

Attorney to transfer the said stock on the books of the within-named Corporation with full power of substitution in the premises.

Dated:

X

X

NOTICE: THE SIGNATURE(S) TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME(S) AS

WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT

ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.

Signature(s) Guaranteed:

By

THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15.

Exhibit 10.1

SEPARATION AND DISTRIBUTION AGREEMENT

by and between

THE FIRST AMERICAN CORPORATION

and

FIRST AMERICAN FINANCIAL CORPORATION

Dated as of June 1, 2010

© Copyright 2010


TABLE OF CONTENTS

 

               Page
ARTICLE I. DEFINITIONS AND INTERPRETATION    2
   Section 1.1    General    2
   Section 1.2    References; Interpretation    28
   Section 1.3    Effective Time    28
ARTICLE II. THE SEPARATION    28
   Section 2.1    General    28
   Section 2.2    Transfer of Assets    29
   Section 2.3    Assumption and Satisfaction of Liabilities    30
   Section 2.4    Intercompany Accounts    30
   Section 2.5    Limitation of Liability    31
   Section 2.6   

Transfers Not Effected On or Prior to the Effective Time; Transfers Deemed Effective as of the Effective Time

   32
   Section 2.7    Conveyancing and Assumption Instruments    34
   Section 2.8    Further Assurances    34
   Section 2.9    Novation of Liabilities    35
   Section 2.10    Guaranties    36
   Section 2.11    Disclaimer of Representations and Warranties    37
ARTICLE III. CERTAIN ACTIONS AT OR PRIOR TO THE DISTRIBUTIONS    37
   Section 3.1    Certificate of Incorporation; Bylaws    37
   Section 3.2    Directors    38
   Section 3.3    Resignations    38
   Section 3.4    Ancillary Agreements    38
ARTICLE IV. THE DISTRIBUTION    38
   Section 4.1    Stock Dividends to FAC Shareholders    38
   Section 4.2    Fractional Shares    38
   Section 4.3    Actions in Connection with the Distribution    39
   Section 4.4    Sole Discretion of FAC    40
   Section 4.5    Conditions to the Distribution    40
ARTICLE V. CERTAIN COVENANTS    41
   Section 5.1    Corporate Names and Trademarks    41
   Section 5.2    Financial Statements and Accounting    42
   Section 5.3    Certain Securities    43
   Section 5.4    Administration of Specified Shared Expenses    44
   Section 5.5    Cooperation    44
   Section 5.6    Periodic Meetings    44
ARTICLE VI. EMPLOYEE MATTERS    45
   Section 6.1    Stock Options    45
   Section 6.2    Restricted Stock Units    47

 

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               Page
   Section 6.3    Employee Stock Purchase Plan    48
   Section 6.4    Nonqualified Deferred Compensation Plans    49
   Section 6.5    Pension Plans    51
   Section 6.6    401(k) Savings Plans    52
   Section 6.7    Pension Restoration Plan    53
   Section 6.8    Health, Welfare and Fringe Benefit Plans    54
   Section 6.9    Cooperation and Administrative Provisions    58
   Section 6.10    Approval of Plans; Terms of Participation by Employees in Plans    61
   Section 6.11    Tax Consequences    62
   Section 6.12    International Regulatory Compliance    62
   Section 6.13    No Service Providers Are Third Party Beneficiaries    62
   Section 6.14    Indemnification    62
ARTICLE VII. CONTINGENT SHARED ASSETS AND CONTINGENT SHARED LIABILITIES    63
   Section 7.1    Contingent Shared Assets and Contingent Shared Liabilities    63
   Section 7.2    Management of Contingent Shared Assets and Contingent Shared Liabilities    64
   Section 7.3    Access to Information; Certain Services; Expenses    65
   Section 7.4    Notice Relating to Contingent Shared Assets and Contingent Shared Liabilities; Disputes    66
   Section 7.5    Cooperation with Governmental Entity    67
   Section 7.6    Default    67
   Section 7.7    Litigation Management Agreement    67
ARTICLE VIII. ISSUANCE OF FAC SHARES; REGISTRATION RIGHTS    67
   Section 8.1    Issuance of FAC Shares to FinCo    67
   Section 8.2    Cash Adjustment; Promissory Note    68
   Section 8.3    Right of First Offer    68
   Section 8.4    Registration Rights    69
ARTICLE IX. RES DATABASE PURCHASE RIGHT    77
   Section 9.1    Purchase Right    77
   Section 9.2    Cooperation    78
   Section 9.3    Procedure    79
   Section 9.4    Purchase Price    79
   Section 9.5    No Lien    80
   Section 9.6    FAC Use of RES Database    80
   Section 9.7    Transfer of Embodiments    80
   Section 9.8    Transferees    80
   Section 9.9    Effect of Not Following Procedure    80
   Section 9.10    FinCo Assignment; Change in Control    80
   Section 9.11    Remedies    81
ARTICLE X. INDEMNIFICATION    81
   Section 10.1    Release of Pre-Distribution Claims    81

 

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               Page
   Section 10.2    Indemnification by FAC    83
   Section 10.3    Indemnification by FinCo    83
   Section 10.4    Procedures for Indemnification    84
   Section 10.5    Cooperation in Defense and Settlement    86
   Section 10.6    Indemnification Payments    86
   Section 10.7    Contribution    87
   Section 10.8    Indemnification Obligations Net of Insurance Proceeds and Other Amounts    87
   Section 10.9    Additional Matters; Survival of Indemnities    88
ARTICLE XI. CONFIDENTIALITY; ACCESS TO INFORMATION    88
   Section 11.1    Provision of Corporate Records    88
   Section 11.2    Access to Information    89
   Section 11.3    Witness Services    89
   Section 11.4    Reimbursement; Other Matters    89
   Section 11.5    Confidentiality    90
   Section 11.6    Privileged Matters    91
   Section 11.7    Ownership of Information    93
   Section 11.8    Other Agreements    93
ARTICLE XII. DISPUTE RESOLUTION    93
   Section 12.1    Negotiation Period    93
   Section 12.2    Arbitration    94
   Section 12.3    Arbitration with Respect to Monetary Damages    94
   Section 12.4    Arbitration Period    95
   Section 12.5    Treatment of Negotiations and Arbitration    95
   Section 12.6    Continuity of Service and Performance    95
   Section 12.7    Consolidation    95
   Section 12.8    Exception to Arbitration    95
ARTICLE XIII. INSURANCE    96
   Section 13.1    Policies and Rights Included Within Assets    96
   Section 13.2    [Reserved]    96
   Section 13.3    [Reserved]    96
   Section 13.4    Administration; Other Matters    96
   Section 13.5    Agreement for Waiver of Conflict and Shared Defense    97
   Section 13.6    Cooperation    97
   Section 13.7    Certain Matters Relating to FAC’s Organizational Documents    97
ARTICLE XIV. MISCELLANEOUS    98
   Section 14.1    Complete Agreement; Construction    98
   Section 14.2    Ancillary Agreements    98
   Section 14.3    Counterparts    98
   Section 14.4    Survival of Agreements    98
   Section 14.5    Expenses    98
   Section 14.6    Notices    99
   Section 14.7    Waivers and Consents    99

 

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               Page
   Section 14.8    Amendments    99
   Section 14.9    Assignment    99
   Section 14.10    Successors and Assigns    100
   Section 14.11    Certain Termination and Amendment Rights    100
   Section 14.12    Payment Terms    100
   Section 14.13    No Circumvention    100
   Section 14.14    Subsidiaries    100
   Section 14.15    Third Party Beneficiaries    101
   Section 14.16    Title and Headings    101
   Section 14.17    Exhibits and Schedules    101
   Section 14.18    Governing Law    101
   Section 14.19    Consent to Jurisdiction    101
   Section 14.20    Specific Performance    101
   Section 14.21    Waiver of Jury Trial    101
   Section 14.22    Severability    102
   Section 14.23    Force Majeure    102
   Section 14.24    Interpretation    102
   Section 14.25    No Duplication; No Double Recovery    102

 

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              Page
   List of Schedules
   Schedule 1.1(a)   Contingent Shared Assets   
   Schedule 1.1(b)   Contingent Shared Liabilities   
   Schedule 1.1(c)   Continuing Arrangements   
   Schedule 1.1(d)   FAC Equity Plans   
   Schedule 1.1(e)   FAC Group   
   Schedule 1.1(f)   FAC Retained Assets   
   Schedule 1.1(g)   FAC Retained Liabilities   
   Schedule 1.1(h)   FinCo Assets   
   Schedule 1.1(i)   FinCo Group   
   Schedule 1.1(j)   FinCo Liabilities   
   Schedule 1.1(k)   Former Corporate Employees   
   Schedule 1.1(l)   Former FAC Employees   
   Schedule 1.1(m)   Former FinCo Employees   
   Schedule 1.1(n)   Specified Shared Expenses   
   Schedule 2.2(b)   Shared Contracts   
   Schedule 2.10(a)   Guaranties Not Removed   
   Schedule 2.10(a)(i)   FAC Removed Guaranties   
   Schedule 2.10(a)(ii)   FinCo Removed Guaranties   
   Schedule 3.3   FAC Employees/Directors Not Resigning   
   Schedule 6.1(c)   FAC/FinCo Employees   
   Schedule 6.1(d)   Additional FAC Option Holders   
   Schedule 6.3   Employees Eligible for ESPP   
   Schedule 6.4(a)   FinCo Deferred Compensation Plans   
   Schedule 6.4(b)   FAC Deferred Compensation Plans   
   Schedule 6.6(b)   Employees Eligible for FAC/First Advantage 401(k) Plans   
   Schedule 6.9(c)   FinCo Employees on International Assignment   
   Schedule 6.10(c)   Service Credits Under Plans   
   Schedule 12.8   Exceptions to Arbitration   

 

© Copyright 2010

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SEPARATION AND DISTRIBUTION AGREEMENT

SEPARATION AND DISTRIBUTION AGREEMENT (this “ Agreement ”), dated as of June 1, 2010, by and between The First American Corporation, a California corporation (“ FAC ”) and First American Financial Corporation, a Delaware corporation (“ FinCo ”). Each of FAC and FinCo is sometimes referred to herein as a “ Party ” and collectively as the “ Parties .”

W I T N E S S E T H:

WHEREAS, FAC, acting through its direct and indirect Subsidiaries, currently conducts (i) the FinCo Business (as defined herein) and (ii) the FAC Retained Business (as defined herein);

WHEREAS, the Board of Directors of FAC has determined that it is appropriate, desirable and in the best interests of FAC and its shareholders to separate FAC into two separate, publicly traded companies, one for the FinCo Business, which shall be owned and conducted, directly or indirectly, by FinCo, and one for the FAC Retained Business, which shall be owned and conducted, directly or indirectly, by FAC;

WHEREAS, in order to effect such separation, the Board of Directors of FAC has determined that it is appropriate, desirable and in the best interests of FAC and its shareholders (i) to enter into a series of transactions whereby (A) FAC and/or one or more members of the FAC Group will, collectively, own all of the FAC Retained Assets and assume (or retain) all of the FAC Retained Liabilities and (B) FinCo and/or one or more members of the FinCo Group will, collectively, own all of the FinCo Assets and assume (or retain) all of the FinCo Liabilities and (ii) for FAC to distribute to the holders of FAC Common Shares on a pro rata basis (in each case without consideration being paid by such shareholders) all of the outstanding shares of common stock, par value $0.00001 per share, of FinCo (the “ FinCo Common Stock ”) (such transactions as they may be amended or modified from time to time, collectively, the “ Plan of Separation ”);

WHEREAS, each of FAC and FinCo has determined that it is necessary and desirable, on or prior to the Effective Time (as defined herein), to allocate and transfer to the applicable Party or its Subsidiaries the FAC Retained Assets and the FinCo Assets, and to allocate and assign to the applicable Party or its Subsidiaries responsibility for the FAC Retained Liabilities and the FinCo Liabilities;

WHEREAS, it is the intention of the Parties that the contributions of Assets to, and the assumption of Liabilities by FinCo, together with the corresponding distribution of all of the FinCo Common Stock, qualifies as a reorganization within the meaning of Sections 368(a)(1)(D) and 355 of the Internal Revenue Code of 1986, as amended (the “ Code ”);

WHEREAS, it is the intention of the Parties that the distribution of the FinCo Common Stock to the shareholders of FAC will qualify as tax-free under Section 355(a) of the Code to such shareholders, and as tax-free to FAC under Section 361(c) of the Code;

WHEREAS, each of FAC and FinCo has determined that it is necessary and desirable to set forth the principal corporate transactions required to effect the Plan of Separation and the

 

© Copyright 2010

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Distribution and to set forth other agreements that will govern certain other matters following the Effective Time.

NOW, THEREFORE, in consideration of the foregoing and the mutual agreements, provisions and covenants contained in this Agreement, the Parties hereby agree as follows:

ARTICLE I.

DEFINITIONS AND INTERPRETATION

Section 1.1 General . As used in this Agreement, the following terms shall have the following meanings:

2010 Internal Control Audit and Management Assessments ” shall have the meaning set forth in Section 5.2(a) .

Acquiring Title Underwriter ” shall mean any Title Underwriter that is a party to a transaction with FAC or any member of the FAC Group that results in the occurrence of a Triggering Event.

Action ” shall mean any demand, action, claim, suit, countersuit, arbitration, inquiry, subpoena, proceeding or investigation by or before any court or grand jury, any Governmental Entity or any arbitration or mediation tribunal.

Active Trade or Business Assets ” shall mean any Assets that FinCo relied upon to satisfy the active trade or business requirement of Section 355(b) of the Code in connection with the Distribution-Related Transactions.

Affiliate ” shall mean, when used with respect to a specified Person, a Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with such specified Person. For the purposes of this definition, “control,” when used with respect to any specified Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or other interests, by Contract or otherwise. It is expressly agreed that no Party or member of any Group shall be deemed to be an Affiliate of another Party or member of such other Party’s Group by reason of having one or more directors in common. For the avoidance of doubt, the Parties shall constitute Affiliates of one another prior to, but not after, the Effective Time.

Agreement ” shall have the meaning set forth in the preamble.

Agreement Disputes ” shall have the meaning set forth in Section 12.1 .

Allocable Portion of Insurance Proceeds ” shall have the meaning set forth in Section 13.4(b) .

Allocable Share of the Deductible ” shall have the meaning set forth in Section 13.4(c) .

 

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Ancillary Agreements ” shall mean all of the written Contracts, instruments, assignments, licenses, guaranties, indemnities or other arrangements (other than this Agreement) entered into in connection with the transactions contemplated hereby, including the Conveyancing and Assumption Instruments, the Tax Sharing Agreement, the Transition Services Agreements, the Litigation Management Agreement, the License Agreement and the Non-Compete Agreement.

Annual Reports ” shall have the meaning set forth in Section 5.2(c) .

Applicable FAC Percentage ” shall mean fifty percent (50%).

Applicable FinCo Percentage ” shall mean fifty percent (50%).

Applicable Percentage ” shall mean (i) as to FAC, the Applicable FAC Percentage and (ii) as to FinCo, the Applicable FinCo Percentage.

Assets ” shall mean assets, properties, claims and rights (including goodwill), wherever located (including in the possession of vendors or other third parties or elsewhere), of every kind, character and description, whether real, personal or mixed, tangible, intangible or contingent, in each case whether or not recorded or reflected or required to be recorded or reflected on the Records or financial statements of any Person, including the following:

(i) all accounting and other legal and business books, records, ledgers and files, whether printed, electronic or written;

(ii) all apparatuses, computers and other electronic data processing and communications equipment, fixtures, machinery, equipment, furniture, office equipment, automobiles, trucks, aircraft and other transportation equipment, special and general tools, test devices, molds, tooling, dies, prototypes and models and other tangible personal property;

(iii) all inventory, including supplies, parts, goods, raw materials and products;

(iv) all interests in and rights with respect to real property of whatever nature, including easements, whether as owner, mortgagee or holder of a Security Interest in real property, lessor, sublessor, lessee, sublessee or otherwise;

(v) all interests in any capital stock or other equity interests of any Subsidiary or any other Person, all bonds, notes, debentures or other securities issued by any Subsidiary or any other Person, all loans, advances or other extensions of credit or capital contributions to any Subsidiary or any other Person and all other investments in securities of any Person;

(vi) all license Contracts, leases of personal property, open purchase orders for services, supplies, parts, goods, raw materials or products, unfilled orders from customers and other Contracts or commitments;

 

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(vii) all deposits, letters of credit and performance and surety bonds;

(viii) all written (including in electronic form) technical information, data, specifications, research and development information, engineering drawings and specifications, operating and maintenance manuals, and materials and analyses prepared by consultants and other third parties;

(ix) all Intellectual Property;

(x) all Software;

(xi) all cost information, sales and pricing data, customer prospect lists, supplier records, customer and supplier lists, customer and vendor data, correspondence and lists, product data and literature, artwork, design, development and business process files and data, vendor and customer drawings, specifications, quality records and reports and other books, records, studies, surveys, reports, plans and documents;

(xii) all prepaid expenses, trade accounts and other accounts and notes receivable;

(xiii) all rights under Contracts, all claims or rights against any Person, choses in action or similar rights, whether accrued or contingent;

(xiv) all rights under insurance policies and all rights in the nature of insurance, indemnification or contribution;

(xv) all licenses, permits, approvals and authorizations that have been issued by any Governmental Entity;

(xvi) all cash or cash equivalents, bank accounts, lock boxes and other third-party deposit arrangements; and

(xvii) all interest rate, currency, commodity or other swap, collar, cap or other hedging or similar Contracts or arrangements.

Assume ” shall have the meaning set forth in Section 2.3 ; and the terms “ Assumed ” and “ Assumption ” shall have their correlative meanings.

Audited Party ” shall have the meaning set forth in Section 5.2(b) .

Business ” shall mean the FAC Retained Business or the FinCo Business, as applicable.

Business Day ” means any day that is not a Saturday, a Sunday or any other day on which banks are required or authorized by Law to be closed in the State of California.

Business Entity ” shall mean any corporation, partnership, limited liability company, joint venture or other entity that may legally hold title to Assets.

 

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California Courts ” shall have the meaning set forth in Section 14.19 .

Cash Value Appraiser ” shall have the meaning set forth in Section 9.4(b) .

Change in Control ” shall mean the happening of any of the following:

(i) The consummation of a merger or consolidation of a Party with or into another entity or any other corporate reorganization, if fifty percent (50%) or more of the combined voting power of the continuing or surviving entity’s securities outstanding immediately after such merger, consolidation, or other reorganization is owned by Persons who were not shareholders of such Party immediately prior to such merger, consolidation, or other reorganization.

(ii) The sale, Transfer, or other disposition of all or substantially all of a Party’s assets or the complete liquidation or dissolution of a Party.

(iii) Any transaction as a result of which any Person becomes the “beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange Act of 1934), directly or indirectly, of securities of a Party representing at least fifty percent (50%) of the total voting power of such Party’s then outstanding voting securities.

A transaction shall not constitute a Change in Control if its sole purpose is to change the state of a Party’s incorporation or to create a holding company that will be owned in substantially the same proportions by the persons who held such Party’s securities immediately before such transaction.

Claims Administration ” shall mean the processing of claims made under the Shared Policies, including the reporting of claims to the insurance carriers, management and defense of claims and the provision of appropriate releases upon settlement of claims.

Closing Ex-Distribution FAC Share Price ” shall mean the last per share trading price of the “ex-distribution” common shares of FAC on the Distribution Date.

Closing FAC Share Price ” shall mean the last per share trading price of “regular-way” FAC Common Shares on the Distribution Date.

COBRA ” means the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.

Code ” shall have the meaning set forth in the recitals.

Commission ” shall mean the United States Securities and Exchange Commission.

Confidential Business Information ” shall mean all Information, data or material other than Confidential Operational Information, including (i) earnings reports and forecasts, (ii) macro-economic reports and forecasts, (iii) business plans, (iv) general market evaluations and surveys and (v) financing and credit-related information.

 

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Confidential Information ” shall mean Confidential Business Information and Confidential Operational Information concerning a Party and/or its Subsidiaries that, prior to or following the Effective Time, has been disclosed by a Party or its Subsidiaries to the other Party or its Subsidiaries in written, oral (including by recording), electronic, or visual form, or has otherwise come into the possession of the other, including pursuant to the access provisions of Section 11.1 or Section 11.2 or any other provision of this Agreement (except to the extent that such information can be shown to have been (i) in the public domain through no fault of such Party or its Subsidiaries or (ii) lawfully acquired by such Party or its Subsidiaries from other sources; provided , however , that in the case of clause (ii) , to the knowledge of the Party or Subsidiary whose information was disclosed, such disclosing sources did not provide such information in breach of any confidentiality obligations).

Confidential Operational Information ” shall mean all operational Information, data or material including (i) specifications, ideas and concepts for services and products, (ii) quality assurance policies, procedures and specifications, (iii) customer information, (iv) Software, (v) training materials and information and (vi) all other know-how, methodology, procedures, techniques and trade secrets related to design, development and operational processes.

Consents ” shall mean any consents, waivers or approvals from, or notification requirements to, any Person other than a Governmental Entity.

Contingent Shared Assets ” shall mean (i) any of the Assets set forth on Schedule 1.1(a) (Contingent Shared Assets) , (ii) any and all Assets relating to, arising out of or resulting from the business or operations of FAC or any of its predecessor companies or businesses or any of its Affiliates, Subsidiaries and divisions other than any claim or right (against any Person other than any member of the FAC Group or FinCo Group) that is a FinCo Asset or FAC Retained Asset (or is otherwise specifically allocated to any Party or Parties under this Agreement or any Ancillary Agreement), if and to the extent such claim or other right has accrued as of the Effective Time (or relates to any events or circumstances prior to the Effective Time), or if such claim or other right were known and fixed prior to the Effective Time, would have been reflected on the consolidated balance sheet of FAC prior to the Effective Time or (iii) any Assets relating to, arising from or involving a general corporate matter of FAC, including any Assets to the extent relating to, arising out of or resulting from any terminated or divested Business Entity, business or operation formerly owned or managed by FAC or any of its Affiliates prior to the Effective Time (other than any Asset to the extent relating to any terminated Business Entity, business or operation formerly and primarily owned and managed by or associated with any member of the FinCo Group or the FAC Group, as the case may be, or any of their respective Businesses), and, in each case of subclauses (i) , (ii)  and (iii) , which is not otherwise a FinCo Asset or FAC Retained Asset. An Asset meeting the foregoing definition shall be considered a Contingent Shared Asset regardless of whether as of the Effective Time there is any Action pending, threatened or contemplated with respect thereto. For purposes of the foregoing, an Asset shall be deemed to have accrued as of the Effective Time if all the elements of the claim necessary for its assertion shall have occurred on or prior to the Effective Time, such that the Asset, were it asserted in an Action on or prior to the Effective Time, would not be dismissed by a court on ripeness or similar grounds.

 

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Notwithstanding anything to the contrary in this definition of “Contingent Shared Assets,” Contingent Shared Assets shall not include any Assets related to, attributable to or arising in connection with Taxes or Tax Returns, which are expressly governed by the Tax Sharing Agreement.

The term “Contingent” as used in this definition of “Contingent Shared Asset” is a term of convenience only and shall not otherwise limit the type or manner of Assets that would otherwise be within the provisions of clauses (i) (iii)  of this definition.

Contingent Shared Liabilities ” shall mean (i) any of the Liabilities set forth on Schedule 1.1(b) (Contingent Shared Liabilities) , (ii) any and all Liabilities relating to, arising out of or resulting from the business or operations of FAC, any of its predecessor companies or businesses or any of its Affiliates, Subsidiaries and divisions, other than any obligation (against any Person other than any member of the FAC Group or FinCo Group) that is a FinCo Liability or FAC Retained Liability (or is otherwise specifically allocated to any Party or Parties under this Agreement or any Ancillary Agreement), if and to the extent such obligation has accrued as of the Effective Time (or relates to any events or circumstances prior to the Effective Time), or if such obligation were known and fixed prior to the Effective Time, would have been reflected on the consolidated balance sheet of FAC prior to the Effective Time or (iii) any Liabilities relating to, arising from or involving a general corporate matter of FAC, including any Liabilities to the extent relating to, arising out of or resulting from any terminated or divested Business Entity, business or operation formerly owned or managed by FAC or any of its Affiliates prior to the Effective Time (other than any Liability to the extent relating to any terminated Business Entity, business or operation formerly and primarily owned and managed by or associated with any member of the FinCo Group or the FAC Group, as the case may be, or any of their respective Businesses), and, in each case of subclauses (i) , (ii)  and (iii) , which is not otherwise a FinCo Liability or FAC Retained Liability. A Liability meeting the foregoing definition shall be considered a Contingent Shared Liability regardless of whether as of the Effective Time there is any Action pending, threatened or contemplated with respect thereto. For purposes of the foregoing, a Liability shall be deemed to have accrued as of the Effective Time if all the elements of the claim necessary for its assertion shall have occurred on or prior to the Effective Time, such that were the Liability asserted in an Action on or prior to the Effective Time, it would not be dismissed by a court on ripeness or similar grounds.

Notwithstanding anything to the contrary in this definition of “Contingent Shared Liabilities,” Contingent Shared Liabilities shall not include any Liabilities related to or attributable to or arising in connection with Taxes or Tax Returns, which are expressly governed by the Tax Sharing Agreement.

The term “Contingent” as used in this definition of “Contingent Shared Liabilities” is a term of convenience only and shall not otherwise limit the type or manner of Liabilities that would otherwise be within the provisions of clauses (i) (iii)  of this definition.

Continuing Arrangements ” shall mean those arrangements set forth on Schedule 1.1(c) (Continuing Arrangements) and any Contracts among a third party and each of the Parties or a member of each Party’s respective Group (it being understood that to the extent that the rights and obligations of the Parties and the members of their respective Groups under

 

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any such Contracts constitute FinCo Assets or FinCo Liabilities or FAC Retained Assets or FAC Retained Liabilities, such Contracts shall be assigned or retained pursuant to ARTICLE II ).

Contract ” shall mean any agreement, contract, obligation, indenture, instrument, lease, promise, arrangement, release, warranty, commitment or undertaking (whether written or oral and whether express or implied).

Conveyancing and Assumption Instruments ” shall mean, collectively, the various Contracts and other documents heretofore entered into and to be entered into to effect the Transfer of Assets and the Assumption of Liabilities in the manner contemplated by this Agreement and the Plan of Separation, or otherwise relating to, arising out of or resulting from the transactions contemplated by this Agreement, in such form or forms as the applicable Parties thereto agree.

Data Tree ” shall mean Data Tree LLC, a California limited liability company.

Disclosure Documents ” shall mean any registration statement (including any registration statement on Form 10) filed with the Commission by or on behalf of any Party or any of its controlled Affiliates, and also includes any information statement, prospectus, offering memorandum, offering circular (including franchise offering circular or any similar disclosure statement) or similar disclosure document, whether or not filed with the Commission or any other Governmental Entity, which offers for sale or registers the Transfer or distribution of any security of such Party or any of its controlled Affiliates.

Dispute Notice ” shall have the meaning set forth in Section 12.1 .

Distribution ” shall mean the distribution, on the Distribution Date, to holders of record of FAC Common Shares as of the Distribution Record Date, of the FinCo Common Stock owned by FAC on the basis of one (1) share of FinCo Common Stock for each outstanding FAC Common Share.

Distribution Agent ” shall mean Wells Fargo Shareowner Services.

Distribution Date ” shall mean the date on which FAC distributes all of the issued and outstanding shares of FinCo Common Stock to the holders of FAC Common Shares.

Distribution Record Date ” shall mean such date as may be determined by FAC’s Board of Directors as the record date for the Distribution.

Distribution-Related Transactions ” shall mean the (i) Distribution and (ii) the distribution by FATICO of all of the issued and outstanding stock of CoreLogic Holdings II, Inc., a Delaware corporation, to FAC.

Effective Time ” shall mean 10:00 a.m, Eastern Time, on the Distribution Date.

Election Notice ” shall have the meaning set forth in Section 9.3(a) .

 

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ERISA ” means the Employee Retirement Income Security Act of 1974, as amended.

ESPP ” shall have the meaning set forth in Section 6.3 .

Exchange Act ” shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time that reference is made thereto.

FAC ” shall have the meaning set forth in the preamble.

FAC Balance Sheet ” shall mean the combined balance sheet of the FAC Group prepared to give effect to the transactions contemplated hereby, including the notes thereto, as of March 31, 2010; provided , that to the extent any Assets or Liabilities are Transferred by FinCo or any member of its Group to FAC or any member of the FAC Group or vice versa in connection with the Plan of Separation and prior to the Distribution Date, such Assets and/or Liabilities shall be deemed to be included or excluded from the FAC Balance Sheet, as the case may be.

FAC Common Shares ” shall mean the issued and outstanding common shares of FAC, par value $1.00 per share, or the securities of any successor issuer into which such shares are converted or exchanged.

FAC Deferred Compensation Plans ” shall mean the nonqualified deferred compensation plans as set forth in Section 6.4(b) and any other legacy nonqualified deferred compensation plan sponsored by members of the FAC Group.

FAC Directors ” shall mean members of the Board of Directors of FAC.

FAC Disability Plans ” shall mean the short-term disability program and long-term disability program to be established by FAC under Section 6.8(d) , to be effective no later than the Distribution Date.

FAC Employee ” shall mean an active employee or an individual on vacation or leave of absence (including maternity, paternity, parental, family, short-term or long-term sick leave, qualified military service and other leaves) who is employed by FAC or any member of the FAC Group immediately following the Distribution Date. FAC Employee shall also include any employee of an entity in the FAC Group who, as of the Distribution Date, is receiving short-term or long-term disability benefits or workers’ compensation benefits.

FAC Equity Plans ” shall mean, collectively, the equity-based plans set forth on Schedule 1.1(d) (FAC Equity Plans) .

FAC Fringe Benefit Plans ” shall mean the fringe benefit plans to be established by FAC under Section 6.8(f) .

FAC Group ” shall mean FAC and each Person that is a direct or indirect Subsidiary of FAC immediately after the Effective Time, and each Business Entity that becomes

 

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a Subsidiary of FAC after the Effective Time, which shall include those entities identified as such on Schedule 1.1(e) (FAC Group) .

FAC Group Insurance Plans ” shall mean the basic life insurance, dependent life insurance, optional life insurance, accidental death and dismemberment insurance, business travel accident insurance and executive group universal life insurance program to be established by FAC under Section 6.8(e) and to be effective no later than the Distribution Date.

FAC Health Plans ” shall mean the FAC employee health benefit plans, any other medical, HMO, prescription drugs, vision, and dental plans and any similar or successor plans to be established by FAC under Section 6.8(b) .

FAC Health & Welfare Plans ” shall mean the FAC Health Plans, FAC Section 125 Plan, FAC Disability Plans, FAC Group Insurance Plans, FAC Fringe Benefit Plans, and any other plan, program or arrangement sponsored by FAC and described or addressed under Section 6.8 .

FAC Indemnitees ” shall mean FAC, each member of the FAC Group, each of their respective directors, officers, employees and agents and each of the heirs, executors, successors and assigns of any of the foregoing, except the FinCo Indemnitees.

FAC Option ” means an option to purchase from FAC a stated number of FAC Common Shares at a specified price.

FAC Plans ” shall mean the employee benefit plans, policies, programs, payroll practices, and arrangements retained by the FAC Group under this Agreement for the benefit of FAC Employees and, where applicable, Former FAC Employees.

FAC Restoration Plan ” shall mean the new plan to which the portion of The First American Corporation Pension Restoration Plan relating to FAC Employees and Former FAC Employees are to be transferred pursuant to Section 6.7(a) .

FAC Restricted Stock Unit ” shall mean a unit granted by FAC pursuant to one of the FAC Equity Plans representing a general unsecured promise by FAC to deliver a FAC Common Share.

FAC Retained Assets ” shall mean:

(i) the ownership interests in those Business Entities that are included in the definition of FAC Group, including those Business Entities set forth on Schedule 1.1(e) (FAC Group) pursuant to the definition of FAC Group;

(ii) all FAC Retained Contracts, any rights or claims arising thereunder, and any other rights or claims or contingent rights or claims primarily relating to or arising from any FAC Retained Asset or the FAC Retained Business;

(iii) any and all Assets reflected on the FAC Balance Sheet or the accounting records supporting such balance sheet and any Assets acquired by or for FAC

 

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or any member of the FAC Group subsequent to the date of such balance sheet that, had they been so acquired on or before such date and owned as of such date, would have been reflected on such balance sheet if prepared on a consistent basis, subject to any dispositions of any of such Assets subsequent to the date of such balance sheet;

(iv) subject to ARTICLE XIII , any rights of any member of the FAC Group under any Policies, including any rights thereunder;

(v) any and all Assets owned or held immediately prior to the Effective Time by FAC or any of its Subsidiaries primarily relating to or used in the FAC Retained Business. The intention of this clause (v)  is only to rectify any inadvertent omission of the Transfer of any Asset that, had the Parties given specific consideration to such Asset as of the date hereof, would have otherwise been classified as a FAC Retained Asset. No Asset shall be deemed a FAC Retained Asset solely as a result of this clause (v) unless a claim with respect thereto is made by FAC within the applicable time period(s) established by Section 2.6(d) ;

(vi) the Assets set forth on Schedule 1.1(f) (FAC Retained Assets) and any and all Assets that are expressly contemplated by this Agreement or any Ancillary Agreement as Assets that have been or are to be Transferred to FAC or any other member of the FAC Group; and

(vii) the Applicable FAC Percentage of any Contingent Shared Asset.

Notwithstanding the foregoing, the FAC Retained Assets shall not include: (a) any Assets that are expressly contemplated by this Agreement or any Ancillary Agreement (or the Schedules hereto or thereto) as Assets to be retained by or Transferred to any member of the FinCo Group; nor (b) any Liabilities expressly assumed by FinCo pursuant to Section 2.3 of this Agreement.

In the event of any inconsistency or conflict that may arise in the application or interpretation of any of the foregoing provisions, for the purpose of determining what is and is not a FAC Retained Asset, any item explicitly included on a Schedule referred to in this definition shall take priority over any provision of the text hereof, and clause (v) shall take priority over clause (iii) of this definition of “FAC Retained Assets” and over clause (iii) of the definition of “FinCo Assets.”

FAC Retained Business ” shall mean (i) the business and operations of the segments of FAC comprising the information solutions group of FAC as described in the FAC Annual Report on Form 10-K for the year ended December 31, 2009 (specifically excluding the financial services businesses of FinCo as described in the FinCo Registration Statement) (ii) the business and operations conducted by the FAC Group, (iii) any other business conducted primarily through the use of the FAC Retained Assets prior to the Effective Time and (iv) the businesses and operations of Business Entities acquired or established after the Distribution Date by or for the information solutions group of FAC in connection with the operation of the FAC Retained Business.

 

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FAC Retained Contracts ” shall mean the following Contracts to which FAC or any of its Affiliates is a party or by which it or any of its Affiliates or any of their respective Assets is bound, whether or not in writing, except for any such Contract or part thereof that is expressly contemplated not to be Transferred by any member of the FinCo Group to FAC or that is expressly contemplated to be Transferred to (or remain with) any member of the FinCo Group, in each case, pursuant to any provision of this Agreement or any Ancillary Agreement:

(i) any Contract entered into in the name of, or expressly on behalf of, any division, business unit or member of the FAC Group;

(ii) any Contract that relates primarily to the FAC Retained Business;

(iii) any Contract representing capital or operating equipment lease obligations reflected on the FAC Balance Sheet;

(iv) any Contract or part thereof that is otherwise expressly contemplated pursuant to this Agreement (including pursuant to Section 2.2(b) ) or any of the Ancillary Agreements to be assigned to any member of the FAC Group; and

(v) any guaranty, indemnity, representation or warranty of or in favor of any member of the FAC Group.

FAC Retained Liabilities ” shall mean:

(i) any and all Liabilities that are expressly contemplated by this Agreement or any Ancillary Agreement (or the Schedules hereto or thereto) as Liabilities to be Assumed by any member of the FAC Group, and all obligations and Liabilities expressly Assumed by any member of the FAC Group under this Agreement or any of the Ancillary Agreements;

(ii) any and all Liabilities primarily relating to, arising out of or resulting from:

(A) the operation or conduct of the FAC Retained Business, as conducted at any time prior to, on or after the Effective Time (including any Liability relating to, arising out of or resulting from any act or failure to act by any director, officer, employee, agent or representative (whether or not such act or failure to act is or was within such Person’s authority));

(B) the operation or conduct of any business conducted by any member of the FAC Group at any time after the Effective Time (including any Liability relating to, arising out of or resulting from any act or failure to act by any director, officer, employee, agent or representative (whether or not such act or failure to act is or was within such Person’s authority)); or

(C) any FAC Retained Asset, whether arising before, on or after the Effective Time;

 

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(iii) any Liabilities to the extent relating to, arising out of or resulting from any terminated or divested Business Entity, business or operation (A) formerly and primarily owned or managed by or associated with any member of the FAC Group as it relates to the FAC Retained Business or (B) set forth on Schedule 1.1(g) (FAC Retained Liabilities) ;

(iv) the Applicable FAC Percentage of any Contingent Shared Liability;

(v) any Liabilities relating to Former FAC Employees and employees of the FAC Group who do not become FinCo Employees immediately following the Effective Time;

(vi) all Liabilities relating to, arising out of or resulting from the 7.55% Senior Debentures Due 2028 or 5.70% Senior Notes Due 2014 issued under the Senior Indenture, dated as of April 7, 1998, between FAC and Wilmington Trust Company (“ Wilmington ”), as trustee (as amended by the First Supplemental Indenture, dated as of July 26, 2004); the 8.50% Junior Subordinated Deferrable Interest Debentures issued under the Junior Subordinated Debenture Indenture, dated as of April 22, 1997, between FAC and Wilmington, as trustee; and the Guarantee Agreement, dated as of September 18, 1997, between Wilmington and FAC, as payment guarantor of the 8.5% Capital Securities issued by First American Capital Trust I and any tender offer in connection with any of the foregoing;

(vii) any Liabilities relating to, arising out of or resulting from the Amended and Restated Credit Agreement dated as of April 12, 2010 between FAC, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent, as amended from time to time;

(viii) any Liabilities relating to, arising out of or resulting from any indebtedness (including debt securities and asset-backed debt) of any member of the FAC Group or indebtedness (regardless of the issuer of such indebtedness) exclusively relating to the FAC Retained Business or any indebtedness (regardless of the issuer of such indebtedness) secured exclusively by any of the FAC Retained Assets (including any Liabilities relating to, arising out of or resulting from a claim by a holder of any such indebtedness, in its capacity as such);

(ix) Specified Shared Expenses, to the extent provided in Section 5.4 ; and

(x) all Liabilities reflected as liabilities or obligations on the FAC Balance Sheet or the accounting records supporting such balance sheet, and all Liabilities arising or Assumed after the date of such balance sheet that, had they arisen or been Assumed on or before such date and been retained as of such date, would have been reflected on such balance sheet if prepared on a consistent basis, subject to any discharge of such Liabilities subsequent to the date of the FAC Balance Sheet.

 

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Notwithstanding anything to the contrary herein, the FAC Retained Liabilities shall not include: (a) any Liabilities that are expressly contemplated by this Agreement or any Ancillary Agreement (or the Schedules hereto or thereto) as Liabilities to be retained or Assumed by any member of the FinCo Group or for which any such Party is liable; (b) any Contracts expressly Assumed by any member of the FinCo Group under this Agreement or any of the Ancillary Agreements; or (c) any Liabilities expressly assumed by FinCo pursuant to Section 2.3 of this Agreement.

In the event of any inconsistency or conflict that may arise in the application or interpretation of any of the foregoing provisions, for the purpose of determining what is and is not a FAC Retained Liability, any item explicitly included on a Schedule referred to in this definition shall take priority over any provision of the text hereof, and clause (ii) shall take priority over clause (x) of this definition of “FAC Retained Liabilities” and over clause (viii) of the definition of “FinCo Liabilities.”

For the sake of clarity, no Liability shall be a FAC Retained Liability solely as a result of FAC being named as party to or in any Action due to FAC’s status as the remaining and legacy Business Entity, or as a result of its status as the direct or indirect holder of the securities of any Business Entity (unless such entity is (A) a member of the FAC Group and (B) such Liability primarily relates to the FAC Retained Business or otherwise fits within one of the categories of FAC Retained Liabilities in clauses (i) through (x)  above).

FAC Savings Plans ” shall mean the First Advantage Savings Plan, and any other savings plans in the United States or any other country covering FAC Employees, and all related trusts and other funding arrangements, other than the FinCo Savings Plans and trusts and other funding arrangements related thereto that FAC shall retain pursuant to Section 6.6(b)(i) .

FAC Section 125 Plan ” shall mean the flexible spending account or flexible benefit plan qualified under Section 125 of the Code to be established by FAC under Section 6.8(c) .

FAC Shares ” shall have the meaning set forth in Section 8.1(a) .

FACL ” shall mean First American CoreLogic, Inc., a Delaware corporation, and any successors thereof.

FACL Change in Control ” shall mean the happening of any of the following:

(i) The entry into a definitive agreement relating to, or the consummation of a merger or consolidation of (A) FAC, (B) the entity that has direct ownership of the RES Database or any portion thereof or (C) any entity that has indirect ownership of the RES Database or any portion thereof, with or into a Title Underwriter or any Affiliate thereof or an entity acting in concert with a Title Underwriter or an Affiliate thereof, if fifty percent (50%) or more of the combined voting power of the continuing or surviving entity’s securities outstanding immediately after such merger, consolidation or other reorganization is owned by Persons who were not shareholders of such entity immediately prior to such merger, consolidation or other reorganization.

 

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(ii) The sale, Transfer, or other disposition of all or substantially all of the Assets of (A) FAC, (B) the entity that has direct ownership of the RES Database or any portion thereof or (C) any entity that has indirect ownership of the RES Database or any portion thereof, or the complete liquidation or dissolution of such entity, whereby a Title Underwriter or any Affiliate thereof or an entity acting in concert with a Title Underwriter or an Affiliate thereof gains control of such Assets or entities.

(iii) Any transaction as a result of which any Title Underwriter or any Affiliate thereof or an entity acting in concert with a Title Underwriter or an Affiliate thereof becomes the “beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange Act of 1934), directly or indirectly, of securities of (A) FAC, (B) the entity that has direct ownership of the RES Database or any portion thereof or (C) any entity that has indirect ownership of the RES Database or any portion thereof, representing at least twenty-five percent (25%) of the total voting power of such entity’s then outstanding voting securities.

FATICO ” means First American Title Insurance Company, a California corporation.

FinCo ” shall have the meaning set forth in the preamble.

FinCo Assets ” shall mean:

(i) the ownership interests in those Business Entities that are included in the definition of FinCo Group including those Business Entities set forth on Schedule 1.1(i) (FinCo Group) pursuant to the definition of FinCo Group;

(ii) all FinCo Contracts, any rights or claims arising thereunder, and any other rights or claims or contingent rights or claims primarily relating to or arising from any FinCo Asset or the FinCo Business;

(iii) any and all Assets reflected on the FinCo Balance Sheet or the accounting records supporting such balance sheet and any Assets acquired by or for FinCo or any member of the FinCo Group subsequent to the date of such balance sheet that, had they been so acquired on or before such date and owned as of such date, would have been reflected on such balance sheet if prepared on a consistent basis, subject to any dispositions of any of such Assets subsequent to the date of such balance sheet;

(iv) subject to ARTICLE XIII , any rights of any member of the FinCo Group under any Policies;

(v) any and all Assets owned or held immediately prior to the Effective Time by FAC or any of its Subsidiaries primarily relating to or used in the FinCo Business. The intention of this clause (v)  is only to rectify any inadvertent omission of the Transfer of any Asset that, had the Parties given specific consideration to such Asset as of the date hereof, would have otherwise been classified as a FinCo Asset. No Asset shall be deemed a FinCo Asset solely as a result of this clause (v)  unless a claim with respect thereto is made by FinCo within the applicable time period(s)

 

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established by Section 2.6(d) ;

(vi) the Assets set forth on Schedule 1.1(h) (FinCo Assets) and any and all Assets that are expressly contemplated by this Agreement or any Ancillary Agreement as Assets that have been or are to be Transferred to FinCo or any other member of the FinCo Group; and

(vii) the Applicable FinCo Percentage of any Contingent Shared Asset.

Notwithstanding the foregoing, the FinCo Assets shall not include any: (a) Assets that are expressly contemplated by this Agreement or any Ancillary Agreement (or the Schedules hereto or thereto) as Assets to be retained by or Transferred to any member of the FAC Group and (b) any Liabilities expressly assumed by FAC pursuant to Section 2.3 of this Agreement.

In the event of any inconsistency or conflict that may arise in the application or interpretation of any of the foregoing provisions, for the purpose of determining what is and is not a FinCo Asset, any item explicitly included on a Schedule referred to in this definition shall take priority over any provision of the text hereof, and clause (v) shall take priority over clause (iii) of this definition of “FinCo Assets” and clause (iii) of the definition of “FAC Retained Assets.”

FinCo Balance Sheet ” shall mean the combined balance sheet of the FinCo Group, including the notes thereto, as of March 31, 2010, as filed with the Commission; provided , that to the extent any Assets or Liabilities are Transferred by FAC or any member of its Group to FinCo or any member of the FinCo Group or vice versa in connection with the Plan of Separation and prior to the Distribution Date, such Assets and/or Liabilities shall be deemed to be included or excluded from the FinCo Balance Sheet, as the case may be.

FinCo Business ” shall mean (i) the business and operations described in the FinCo Registration Statement, (ii) the business and operations conducted by the FinCo Group (iii) any other business conducted primarily through the use of the FinCo Assets prior to the Effective Time and (iv) the businesses and operations of Business Entities acquired or established by or for FinCo or any of its Subsidiaries after the date of this Agreement.

FinCo Common Stock ” shall have the meaning set forth in the recitals hereto.

FinCo Contracts ” shall mean the following Contracts to which FAC or any of its Affiliates is a party or by which it or any of its Affiliates or any of their respective Assets is bound, whether or not in writing, except for any such Contract or part thereof that is expressly contemplated not to be Transferred by any member of the FAC Group to the FinCo Group or that is expressly contemplated to be Transferred to (or remain with) any member of the FAC Group pursuant to any provision of this Agreement or any Ancillary Agreement:

(i) any Contract entered into in the name of, or expressly on behalf of, any division, business unit or member of the FinCo Group;

(ii) any Contract that relates primarily to the FinCo Business;

 

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(iii) any Contract representing capital or operating equipment lease obligations reflected on the FinCo Balance Sheet;

(iv) any Contract or part thereof, that is otherwise expressly contemplated pursuant to this Agreement (including pursuant to Section 2.2(b) ) or any of the Ancillary Agreements to be assigned to any member of the FinCo Group; and

(v) any guaranty, indemnity, representation or warranty of or in favor of any member of the FinCo Group.

FinCo Deferred Compensation Plans ” shall mean the nonqualified deferred compensation plans as set forth in Section 6.4(a) (and Schedule 6.4(a) (FinCo Deferred Compensation Plans) thereto) and any other legacy nonqualified deferred compensation plan sponsored by members of the FinCo Group.

FinCo Directors ” shall mean members of the Board of Directors of FinCo.

FinCo Disability Plans ” shall mean the short-term disability program and long-term disability program to be established by FinCo under Section 6.8(d) .

FinCo Employee ” shall mean an active employee or an individual on vacation or on leave of absence (including maternity, paternity, parental, family, short-term or long-term sick leave, qualified military service and other leaves) who immediately following the Distribution Date is employed by FinCo or any member of the FinCo Group. FinCo Employee shall also include any employee of an entity in the FinCo Group who, as of the Distribution Date, is receiving short-term or long-term disability benefits or workers’ compensation benefits.

FinCo Fringe Benefit Plans ” shall mean the fringe benefit plans to be established by FinCo under Section 6.8(f).

FinCo Group ” shall mean FinCo and each Person that is a direct or indirect Subsidiary of FinCo immediately after the Effective Time, and each Person that becomes a Subsidiary of FinCo after the Effective Time, which shall include those entities identified as such on Schedule 1.1(i) (FinCo Group) .

FinCo Group Insurance Plans ” shall mean the basic life insurance, dependent life insurance, optional life insurance, accidental death and dismemberment insurance, business travel accident insurance and executive group universal life insurance program to be established by FinCo under Section 6.8(e)

FinCo Health Plans ” shall mean employee health benefit plans, any other medical, HMO, prescription drugs, vision, and dental plans and any similar or successor plans program to be established by FinCo under Section 6.8(a) .

FinCo Health & Welfare Plans ” shall mean the FinCo Health Plans, FinCo Section 125 Plan, FinCo Disability Plans, FinCo Group Insurance Plans, FinCo Fringe Benefit Plans, and any other plan, program or arrangement sponsored by FinCo and described or addressed under Section 6.8 .

 

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FinCo Incentive Compensation Plan ” shall have the meaning set forth in Section 6.1(a)(iv) .

FinCo Indemnitees ” shall mean each member of the FinCo Group and each of their Affiliates and each of their respective Affiliates’ respective directors, officers, employees and agents and each of the heirs, executors, successors and assigns of any of the foregoing.

FinCo Information Statement ” shall mean the information statement attached as an exhibit to the FinCo Registration Statement, as sent to the holders of FAC Common Shares in connection with the Distribution, including any amendment or supplement thereto.

FinCo Liabilities ” shall mean:

(i) any and all Liabilities that are expressly contemplated by this Agreement or any Ancillary Agreement (or the Schedules hereto or thereto) as Liabilities to be Assumed by any member of the FinCo Group, and all obligations and Liabilities expressly Assumed by any member of the FinCo Group under this Agreement or any of the Ancillary Agreements;

(ii) any and all Liabilities primarily relating to, arising out of or resulting from:

(A) the operation or conduct of the FinCo Business, as conducted at any time prior to, on or after the Effective Time (including any Liability relating to, arising out of or resulting from any act or failure to act by any director, officer, employee, agent or representative (whether or not such act or failure to act is or was within such Person’s authority));

(B) the operation or conduct of any business conducted by any member of the FinCo Group at any time after the Effective Time (including any Liability relating to, arising out of or resulting from any act or failure to act by any director, officer, employee, agent or representative (whether or not such act or failure to act is or was within such Person’s authority)); or

(C) any FinCo Asset, whether arising before, on or after the Effective Time;

(iii) any Liabilities to the extent relating to, arising out of or resulting from any terminated or divested Business Entity, business or operation (A) formerly and primarily owned or managed by or associated with any member of the FinCo Group or any FinCo Business or (B) set forth on Schedule 1.1(j) (FinCo Liabilities) ;

(iv) the Applicable FinCo Percentage of any Contingent Shared Liability;

(v) any Liabilities relating to any FinCo Employee or Former FinCo Employee in respect of the period prior to, on or after the Effective Time;

 

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(vi) any Liabilities relating to, arising out of or resulting from any indebtedness (including debt securities and asset-backed debt) of any member of the FinCo Group or indebtedness (regardless of the issuer of such indebtedness) exclusively relating to the FinCo Business or any indebtedness (regardless of the issuer of such indebtedness) secured exclusively by any of the FinCo Assets (including any Liabilities relating to, arising out of or resulting from a claim by a holder of any such indebtedness, in its capacity as such);

(vii) Specified Shared Expenses to the extent provided in Section 5.4 ;

(viii) all Liabilities reflected as liabilities or obligations on the FinCo Balance Sheet or the accounting records supporting such balance sheet, and all Liabilities arising or Assumed after the date of such balance sheet that, had they arisen or been Assumed on or before such date and been retained as of such date, would have been reflected on such balance sheet if prepared on a consistent basis, subject to any discharge of such Liabilities subsequent to the date of the FinCo Balance Sheet.

Notwithstanding anything to the contrary herein, the FinCo Liabilities shall not include: (a) any Liabilities that are expressly contemplated by this Agreement or any Ancillary Agreement (or the Schedules hereto or thereto) as Liabilities to be retained or Assumed by any member of the FAC Group or for which any such Party is liable; (b) any Contracts expressly Assumed by any member of the FAC Group under this Agreement or any of the Ancillary Agreements; and (c) any Liabilities expressly assumed by FAC pursuant to Section 2.3 of this Agreement.

In the event of any inconsistency or conflict that may arise in the application or interpretation of any of the foregoing provisions, for the purpose of determining what is and is not a FinCo Liability, any item explicitly included on a Schedule referred to in this definition shall take priority over any provision of the text hereof and clause (ii) shall take priority over clause (viii) of this definition of “FinCo Liabilities” and over clause (x) of the definition of “FAC Retained Liabilities.”

For the sake of clarity, no Liability shall be a FinCo Liability as a result of FinCo’s status as the direct or indirect holder of the securities of any Business Entity (unless such entity is (A) a member of the FinCo Group and (B) such Liability primarily relates to the FinCo Business or otherwise fits within one of the categories of FinCo Liabilities in clauses (i) through (viii)  above).

FinCo Option ” shall have the meaning set forth in Section 6.1(a)(i) .

FinCo Pension Plan ” shall mean the Pre-Distribution Pension Plan that FinCo shall Assume under Section 6.5(a) .

FinCo Plans ” shall mean the employee benefit plans, policies, programs, payroll practices, and arrangements established or assumed by the FinCo Group under this Agreement for the benefit of FinCo Employees and where applicable, Former FinCo Employees.

 

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FinCo Policies ” shall mean all Policies, current or past, that are owned or maintained by or on behalf of FAC or any Subsidiary of FAC, that relate exclusively to the FinCo Business and that are either maintained by FinCo or a member of the FinCo Group or assignable to FinCo or a member of the FinCo Group.

FinCo Registration Statement ” shall mean the registration statement on Form 10 filed by FinCo, in connection with the Distribution, with, and declared effective by, the Commission.

FinCo Restoration Plan ” shall mean the portion of The First American Corporation Pension Restoration Plan relating to FinCo Employees and Former FinCo Employees.

FinCo Restricted Stock Unit ” shall mean a unit representing a general unsecured promise by FinCo to deliver a share of FinCo Common Stock, which unit is granted pursuant to the FinCo Incentive Compensation Plan as part of the adjustment to FAC Restricted Stock Units being made in connection with the Distribution.

FinCo Savings Plans ” shall mean the Pre-Distribution Savings Plans and any other savings plans in the United States or any other country covering FinCo Employees, and all related trusts and other funding arrangements, other than the FAC Savings Plans and trusts and other funding arrangements related thereto that FinCo shall Assume under Section 6.6(a)(i) .

FinCo Section 125 Plan ” shall mean the flexible spending account or flexible benefit plan qualified under Section 125 of the Code to be assumed by FinCo under Section 6.8(c) .

FinCo Shared Policies ” shall mean all Policies, current or past, that are owned or maintained by or on behalf of FAC or any Subsidiary of FAC and that relate to the FinCo Business, other than FinCo Policies.

First Advantage Directors ” shall mean members of the Board of Directors of First Advantage Corporation, a Delaware corporation.

First Advantage Savings Plan ” shall mean the First Advantage Corporation 401(k) Savings Plan.

Force Majeure ” shall mean, with respect to a Party, an event beyond the control of such Party (or any Person acting on its behalf), that by its nature could not have been foreseen by such Party (or such Person), or, if it could have been foreseen, was unavoidable, and includes, without limitation, acts of God, storms, floods, riots, labor unrest, pandemics, nuclear incidents, fires, sabotage, civil commotion or civil unrest, interference by civil or military authorities, acts of war (declared or undeclared), armed hostilities or other national or international calamities or one or more acts of terrorism or failure of energy sources or distribution facilities. Notwithstanding the foregoing, the receipt by a Party of a hostile takeover offer, even if unforeseen or unavoidable, and such Party’s response thereto, shall not be deemed an event of Force Majeure.

 

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Former Corporate Employee ” shall mean those individuals identified on Schedule 1.1(k) (Former Corporate Employees) , any former employee who terminated employment with all members of the FAC Group before the Distribution Date (other than a Former FAC Employee or Former FinCo Employee).

Former FAC Employee ” shall mean any former employee who terminated employment with all members of the FAC Group before the Distribution Date and who was last employed by a member of the FAC Group or in the FAC Business, including, without limitation, the individuals listed on Schedule 1.1(l) (Former FAC Employees) .

Former FAC Director ” shall mean any individual who was not an employee of FAC and who formerly served as a FAC Director and terminated service with all members of the FAC Group before the Distribution Date.

Former First Advantage Director ” shall mean any former member of the Board of Directors of First Advantage Corporation, a Delaware corporation, who terminated service with all members of the FAC Group before the Distribution Date.

Former FinCo Employee ” shall mean any former employee who prior to the Distribution Date terminated employment with all members of the group comprised of FAC and its Affiliates (as of prior to the Distribution Date) and was last employed by a member of the FinCo Group or in the FinCo Business, including, without limitation, the individuals listed on Schedule 1.1(m) (Former FinCo Employees) .

Go Shop Period ” has the meaning set forth in Section 8.3(b)(ii) .

Governmental Approvals ” shall mean any notices or reports to be submitted to, or other filings to be made with, or any consents, registrations, approvals, permits or authorizations to be obtained from, any Governmental Entity.

Governmental Entity ” shall mean any nation or government, any state, municipality or other political subdivision thereof and any entity, body, agency, commission, department, board, bureau or court, whether domestic, foreign or multinational, exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government and any executive official thereof.

Group ” shall mean (i) with respect to FAC, the FAC Group and (ii) with respect to FinCo, the FinCo Group.

Guaranty Release ” shall have the meaning set forth in Section 2.10(b) .

Income Taxes ” shall have the meaning set forth in the Tax Sharing Agreement.

Indemnifiable Loss ” and “ Indemnifiable Losses ” shall mean any and all damages, losses, deficiencies, Liabilities, obligations, penalties, judgments, settlements, claims, payments, fines, interest, costs and expenses (including the costs and expenses of any and all Actions and demands, assessments, judgments, settlements and compromises relating thereto and the reasonable costs and expenses of attorneys’, accountants’, consultants’ and other

 

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professionals’ fees and expenses incurred in the investigation or defense thereof or the enforcement of rights hereunder), excluding special, consequential, indirect, punitive damages (other than special, consequential, indirect and/or punitive damages awarded to any third party against an Indemnitee) and/or Taxes (which, for the avoidance of doubt, are governed exclusively by the Tax Sharing Agreement).

Indemnifying Party ” shall have the meaning set forth in Section 10.4(b) .

Indemnitee ” shall have the meaning set forth in Section 10.4(b) .

Indemnity Payment ” shall have the meaning set forth in Section 10.8(a) .

Information ” shall mean information, whether or not patentable or copyrightable, in written, oral, electronic or other tangible or intangible forms, stored in any medium, including studies, reports, records, books, contracts, instruments, surveys, discoveries, ideas, concepts, trade secrets, know-how, techniques, designs, specifications, drawings, blueprints, diagrams, models, prototypes, samples, flow charts, data, computer data, disks, diskettes, tapes, computer programs or other software, marketing plans, customer names, communications by or to attorneys (including attorney-client privileged communications), memos and other materials prepared by attorneys or under their direction (including attorney work product), communications and materials otherwise related to or made or prepared in connection with or in preparation for any legal proceeding, and other technical, financial, employee or business information or data.

Insurance Administration ” shall mean, with respect to each Shared Policy, (i) the accounting for premiums, retrospectively-rated premiums, defense costs, indemnity payments, deductibles and retentions, as appropriate, under the terms and conditions of each of the Shared Policies (ii) the reporting to excess insurance carriers of any losses or claims that may cause the per-occurrence, per-claim or aggregate limits of any Shared Policy to be exceeded, and (iii) the distribution of Insurance Proceeds as contemplated by this Agreement.

Insurance Proceeds ” shall mean those amounts (i) received by an insured from an insurance carrier, including due to premium adjustments, whether or not retrospectively rated, or (ii) paid by an insurance carrier on behalf of an insured, in either case net of any applicable premium deductible or self-insured retention. For the avoidance of doubt, “Insurance Proceeds” shall not include any costs or expenses incurred by a Party in pursuing insurance coverage.

Insured Claims ” shall mean those Liabilities that, individually or in the aggregate, are covered within the terms and conditions of any of the Shared Policies, whether or not subject to deductibles, co-insurance, self-insured retentions, or uncollectibility due to insurer insolvency.

Intellectual Property ” shall mean all intellectual property and industrial property rights of any kind or nature, including all U.S. and foreign (i) patents, patent applications, patent disclosures, derivative patents and all related continuations, continuations-in-part, divisionals, reissues, re-examinations, substitutions and extensions thereof, (ii) Trademarks, (iii) copyrights and copyrightable subject matter, (iv) rights of publicity, (v) moral rights and rights of attribution and integrity, (vi) rights in Software, (vii) trade secrets and all other confidential information,

 

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know-how, inventions, proprietary processes, formulae, models and methodologies, (viii) rights of privacy and rights to personal information, (ix) telephone numbers and Internet protocol addresses, (x) all rights in the foregoing and in other similar intangible assets, (ix) all applications and registrations for the foregoing and (xii) all rights and remedies against past, present, and future infringement, misappropriation, or other violation of the foregoing.

IRS Ruling ” shall have the meaning set forth in Section 4.5(c) .

Law ” shall mean any U.S. or non-U.S. federal, national, supranational, state, provincial, local or similar statute, law, ordinance, regulation, rule, code, income tax treaty, order, requirement or rule of law (including common law).

Liabilities ” shall mean (i) any and all debts, liabilities, costs, expenses, interest and obligations, whether accrued or fixed, absolute or contingent, matured or not matured, reserved or unreserved, or determined or determinable, including those arising under any Law, claim, demand, Action, whether asserted or unasserted, (ii) any order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Entity and those arising under any Contract or (iii) any fines, damages or equitable relief that may be imposed and including all costs and expenses related thereto.

Liable Party ” shall have the meaning set forth in Section 2.9(b) .

License Agreement ” shall mean the license agreement or agreements related to use of certain Intellectual Property to be entered between FAC and FinCo (or their designees) as licensor or licensee, as applicable.

Litigation Management Agreement ” shall mean that certain Litigation Management and Coordination Agreement between FAC and FinCo dated as of the date hereof.

Managing Party ” shall have the meaning set forth in Section 7.2(a) .

Non-Cash Consideration ” shall have the meaning set forth in Section 9.4(b) .

Non-Employee Directors ” shall have the meaning set forth in Section 6.1(d)(ii) .

NYSE ” shall mean the New York Stock Exchange.

Offer to Purchase ” shall have the meaning set forth in Section 8.3(b) .

Other Party ” shall have the meaning set forth in Section 2.9(a) .

Other Party Marks ” shall have the meaning set forth in Section 5.1(d) .

Other Party’s Auditors ” shall have the meaning set forth in Section 5.2(b) .

Party ” and “ Parties ” shall have the meanings set forth in the preamble.

 

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Person ” shall mean any natural person, firm, individual, corporation, business trust, joint venture, association, company, limited liability company, partnership or other organization or entity, whether incorporated or unincorporated, or any Governmental Entity.

PHI ” shall have the meaning set forth in Section 6.9(d) .

Plan of Separation ” shall have the meaning set forth in the recitals.

Plan Transfer Date ” shall have the meaning set forth in Section 6.8(a)(i) .

Policies ” shall mean insurance policies and insurance Contracts of any kind (other than life and benefits policies or Contracts), including primary, excess and umbrella policies, comprehensive general liability policies, director and officer liability, fiduciary liability, automobile, aircraft, marine, property and casualty, workers’ compensation and employee dishonesty insurance policies, self-insurance and captive insurance company arrangements, together with the rights, benefits and privileges thereunder.

Pre-Distribution Deferred Compensation Plans ” shall mean The First American Corporation Deferred Compensation Plan, The First American Corporation Executive Supplemental Benefit Plan and The First American Corporation Management Supplemental Benefit Plan.

Pre-Distribution Disability Plans ” shall mean any short-term disability program and long-term disability program sponsored by FAC in place prior to the effective date of the FAC Disability Plans.

Pre-Distribution FinCo Stock Price ” shall have the meaning set forth in Section 6.1(a)(ii) .

Pre-Distribution Fringe Benefit Plans ” shall mean any fringe benefit plan sponsored by FAC in place prior to the effective date of the FinCo Fringe Benefit Plans and/or FAC Fringe Benefit Plans.

Pre-Distribution Group Insurance Plans ” shall mean any basic life insurance, dependent life insurance, optional life insurance, accidental death and dismemberment insurance, business travel accident insurance and executive group universal life insurance programs sponsored by FAC in place prior to the effective date of the FAC Group Insurance Plans.

Pre-Distribution Health Plans ” shall mean the FAC employee health benefit plans, any other medical, HMO, prescription drugs, vision, and dental plans and any similar or successor plans in place prior to the effective date of the FAC Health Plans.

Pre-Distribution Pension Plan ” shall mean The First American Corporation Pension Plan.

Pre-Distribution Restoration Plan ” shall mean The First American Corporation Pension Restoration Plan.

 

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Pre-Distribution Savings Plan ” shall mean The First American Corporation 401(k) Savings Plan.

Pre-Distribution Section 125 Plan ” shall mean the flexible spending account or flexible benefit plan qualified under Section 125 of the Code sponsored by FAC in place prior to the effective date of the FAC Section 125 Plan.

Pre-Distribution Trust ” shall have the meaning set forth in Section 6.9(g) .

Prime Rate ” shall mean the rate per annum publicly announced by JPMorgan Chase & Co. (or the successor thereto) from time to time as its prime rate in effect at its principal office in New York City. For purposes of this Agreement, any change in the Prime Rate shall be effective on the date such change in the Prime Rate is publicly announced as effective.

Proposed Sale ” shall have the meaning set forth in Section 8.3(a) .

Proposed Sale Notice ” shall have the meaning set forth in Section 8.3(a) .

Prospectus ” means the prospectus (including any preliminary prospectus and any final prospectus) included in any Registration Statement, as amended or supplemented by any free writing prospectus, whether or not required to be filed with the Commission, any prospectus supplement with respect to the terms of the offering of any portion of the Registrable Securities covered by the Registration Statement and by all other amendments and supplements to the prospectus, and all material incorporated by reference in such prospectus or prospectus supplement.

Purchase Right ” shall have the meaning set forth in Section 9.1 .

Records ” shall mean any Contracts, documents, books, records or files.

Registrable Securities ” means (i) the FAC Shares and (ii) FAC Common Shares issued or issuable, directly or indirectly, in exchange for or with respect to the FAC Shares. Any particular Registrable Securities shall cease to be Registrable Securities when (A) a registration statement with respect to the sale of such securities shall have been declared effective under the Securities Act and such securities shall have been disposed of in accordance with such registration statement, (B) such securities shall have been sold to the public pursuant to Rule 144 (or any successor provision) under the Securities Act or (C) such securities may be resold to the public without volume or method of sale restrictions pursuant to Rule 144(k) (or any successor provision) under the Securities Act.

Registration Statement ” means (i) a shelf registration statement filed by FAC under the Securities Act permitting resales of the Registrable Securities on a delayed or continuous basis pursuant to the provisions of Section 8.4(a)(i) , (ii) in the circumstances contemplated by Section 8.4(a)(ii) , a registration statement filed by FAC under the Securities Act meeting the requirements of Section 8.4(a)(ii) , or (iii) in the circumstances contemplated by Section 8.4(b)(ii) , a registration statement on Form S-1 or S-3 or an equivalent general form then in effect filed by FAC, and in each case including the Prospectus contained therein, any amendments and supplements to such Registration Statement, including post-effective

 

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amendments, and all exhibits and all material incorporated by reference in such Registration Statement; provided , that with respect to any Registration Statement filed pursuant to Section 8.4(a) that includes a plan of distribution, such plan of distribution must be approved by FinCo.

RES Assets ” shall mean all of the Assets (including the RES Database) held by the entity or entities that directly own the RES Database; provided , that the RES Assets shall not include any Active Trade or Business Assets, as reasonably determined by FinCo.

RES Database ” shall mean all databases, collections of data or other data or information owned or controlled by FACL and/or any of its Subsidiaries as of March 29, 2010 that are sold or licensed (in whole or in part) to third parties or used by FACL and/or any of its Subsidiaries (in whole or in part) for the purpose of producing products or services that are sold, licensed or provided to third parties (the “ Historical Data ”), together with all databases, collections of data or other data and information (i) of the nature of or substantially similar to the Historical Data or (ii) that would have been classified as Historical Data had it been owned or controlled by FACL and/or any of it Subsidiaries as of March 29, 2010, that is collected, acquired or developed by FACL or any of its Affiliates after March 29, 2010 through the date on which FinCo no longer has a Purchase Right pursuant to ARTICLE IX .

Rules ” shall have the meaning set forth in Section 12.2 .

Run-out ” shall have the meaning set forth in Section 6.8(a)(ii) .

Securities Act ” shall mean the Securities Act of 1933, as amended, and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time that reference is made thereto.

Security Interest ” shall mean any mortgage, security interest, pledge, lien, charge, claim, option, right to acquire, voting or other restriction, right-of-entry, covenant, condition, easement, encroachment, restriction on transfer, or other encumbrance of any nature whatsoever, excluding restrictions on transfer under securities Laws.

Shared Contract ” shall have the meaning set forth in Section 2.2(b)(i) .

Shared Policies ” shall mean all Policies, current or past, that are owned or maintained by or on behalf of FAC or any of its Subsidiaries and that relate to one or both the FAC Retained Business and the FinCo Business.

Software ” shall mean all computer programs (whether in source code, object code or other form), algorithms, databases, compilations and data, and technology supporting the foregoing, and all documentation related to any of the foregoing, including flowcharts and other logic and design diagrams, technical, functional and other specifications, and user and training materials.

Specified Shared Expenses ” shall mean any costs and expenses relating to the items or categories set forth on Schedule 1.1(n) (Specified Shared Expenses) and shall be shared in the manner specified in Section 5.4 .

 

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Subsidiary ” shall mean with respect to any Person (i) a corporation, more than fifty percent (50%) of the voting or capital stock of which is, as of the time in question, directly or indirectly owned by such Person or (ii) any other partnership, joint venture, association, joint stock company, trust, unincorporated organization or other entity in which such Person, directly or indirectly, owns more than fifty percent (50%) of the equity economic interest thereof or for which such Person, directly or indirectly, has the power to elect or direct the election of more than fifty percent (50%) of the members of the governing body or over which such Person otherwise has control (e.g., as the managing partner of a partnership).

Suspension Period ” shall have the meaning set forth in Section 8.4(a)(iii) .

Tax ” shall have the meaning set forth in the Tax Sharing Agreement.

Tax Contest ” shall have the meaning of the definition of “Proceeding” as set forth in the Tax Sharing Agreement.

Tax Return ” shall include and have the meaning set forth in the Tax Sharing Agreement for “Income Tax Return” and “Other Tax Return.”

Tax Sharing Agreement ” shall mean the Tax Sharing Agreement by and between FAC and FinCo, in the form attached hereto as Exhibit A .

Tax-Free Treatment ” shall mean the qualification of each of the Distribution-Related Transactions, as the case may be, (i) as a transaction described in Sections 355(a) and 368(a)(1)(D) of the Code, (ii) as transactions in which the stock distributed thereby is “qualified property” for purposes of Section 361(c) of the Code and (iii) as transactions in which FAC and any of its Affiliates or FinCo and any of its Affiliates recognize no income or gain, other than intercompany items or excess loss accounts required to be taken into account pursuant to U.S. Treasury Regulations promulgated under Section 1502 of the Code.

Third Party Claim ” shall have the meaning set forth in Section 10.4(b) .

Third Party Proceeds ” shall have the meaning set forth in Section 10.8(a) .

Title Underwriter ” shall mean any Person that (i) directly or indirectly or through an Affiliate is engaged in the business of underwriting title insurance policies or (ii) is, or has an Affiliate that is, licensed as an underwriter of title insurance policies.

Trademarks ” shall mean all U.S. and foreign trademarks, service marks, corporate names, trade names, domain names, logos, slogans, designs, trade dress and other similar designations of source or origin, together with the goodwill symbolized by any of the foregoing.

Transfer ” shall mean transfer, contribute, assign and convey or cause to be transferred, contributed, assigned and conveyed, and the term “ Transferred ” shall have its correlative meaning.

Transfer Notice ” shall have the meaning set forth in Section 9.3(a) .

 

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Transition Services Agreements ” shall mean the agreements between a member of the FAC Group and a member of the FinCo Group dated as of the date hereof which provide for transition services.

Triggering Event ” shall mean the happening of any of the following:

(i) FAC or an Affiliate thereof has finalized the terms of an agreement or the definitive documentation with respect to, has entered into an agreement with respect to or is otherwise prepared to consummate in a single transaction or series of transactions, (A) the sale of FAC, whether through a merger, stock sale, asset sale or otherwise, (B) the sale of any entity that has direct ownership of the RES Database or any portion thereof, whether through a merger, stock sale, asset sale or otherwise or (C) the sale of any entity that has indirect ownership of the RES Database or any portion thereof, whether through a merger, stock sale, asset sale or otherwise, in each case, directly or indirectly to a Title Underwriter or an entity acting in concert with a Title Underwriter;

(ii) FAC or any Affiliate thereof has finalized the terms of an agreement or the definitive documentation with respect to, has entered into an agreement with respect to or is otherwise prepared to consummate the direct or indirect sale of the RES Database or any portion thereof to a Title Underwriter or an entity acting in concert with a Title Underwriter; or

(iii) a FACL Change in Control has occurred.

Section 1.2 References; Interpretation . References in this Agreement to any gender include references to all genders, and references to the singular include references to the plural and vice versa. Unless the context otherwise requires, the words “include,” “includes” and “including” when used in this Agreement shall be deemed to be followed by the phrase “without limitation.” Unless the context otherwise requires, references in this Agreement to Articles, Sections, Annexes, Exhibits and Schedules shall be deemed references to Articles and Sections of, and Annexes, Exhibits and Schedules to, this Agreement. Unless the context otherwise requires, the words “hereof,” “hereby” and “herein” and words of similar meaning when used in this Agreement refer to this Agreement in its entirety and not to any particular Article, Section or provision of this Agreement.

Section 1.3 Effective Time . This Agreement shall be effective as of the Effective Time.

ARTICLE II.

THE SEPARATION

Section 2.1 General . Subject to the terms and conditions of this Agreement, the Parties shall use, and shall cause their respective Affiliates to use, their respective commercially reasonable best efforts to consummate the transactions contemplated hereby, a portion of which have already been implemented prior to the date hereof. It is the intent of the Parties that, after consummation of the transactions contemplated hereby FAC shall be restructured, to the extent necessary, such that following the consummation of such restructuring, subject to Section 2.6 , (a) all of FAC’s and its Subsidiaries’ right, title and interest in and to the FinCo Assets will be owned

 

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or held by a member of the FinCo Group, the FinCo Business will be conducted by the members of the FinCo Group and all of the FinCo Liabilities will be Assumed directly or indirectly by (or remain with) a member of the FinCo Group, and (b) all of FAC’s and its Subsidiaries’ right, title and interest in and to the FAC Retained Assets will be owned or held by a member of the FAC Group, the FAC Retained Business will be conducted by the members of the FAC Group and all of the FAC Retained Liabilities will be Assumed directly or indirectly by (or remain with) a member of the FAC Group.

Section 2.2 Transfer of Assets .

(a) On or prior to the Effective Time and to the extent not already completed (and it being understood that some of such Transfers may occur following the Effective Time in accordance with Section 2.6 ), pursuant to the Conveyancing and Assignment Documents:

(i) FAC shall, on behalf of itself and its Subsidiaries, as applicable, Transfer to FinCo or another member of the FinCo Group all of its and its Subsidiaries’ right, title and interest in and to the FinCo Assets; and

(ii) FinCo shall, on behalf of itself and its Subsidiaries, as applicable, Transfer to FAC or another member of the FAC Group all of its and its Subsidiaries’ right, title and interest in and to the FAC Retained Assets.

(b) Treatment of Shared Contracts . Without limiting the generality of the obligations set forth in Section 2.2(a) :

(i) Unless the Parties otherwise agree or the benefits of any Contract described in this Section 2.2(b)(i) are expressly conveyed to the applicable Party pursuant to an Ancillary Agreement, (A) any Contract that is (1) listed on Schedule 2.2(b) (Shared Contracts) , (2) a FAC Retained Asset but inures in part to the benefit or burden of any member of the FinCo Group or (3) a FinCo Asset but inures in part to the benefit or burden of any member of the FAC Group (each, a “ Shared Contract ”), shall be assigned in part to the applicable member(s) of the applicable Group, if so assignable, or appropriately amended prior to, on or after the Effective Time, so that each Party or the members of their respective Groups as of the Effective Time shall be entitled to the rights and benefits, and shall Assume the related portion of any Liabilities, inuring to their respective Businesses; provided , however , that (x) in no event shall any member of any Group be required to assign (or amend) any Shared Contract in its entirety or to assign a portion of any Shared Contract (including any Policy) that is not assignable (or cannot be amended) by its terms (including any terms imposing consents or conditions on an assignment where such consents or conditions have not been obtained or fulfilled) and (y) if any Shared Contract cannot be so partially assigned by its terms or otherwise, or cannot be amended or if such assignment or amendment would impair the benefit the parties thereto derive from such Shared Contract, the Parties shall, and shall cause each of their respective Subsidiaries to, take such other reasonable and permissible actions to cause a member of the FinCo Group or the FAC Group, as the case may be, to receive the benefit of that portion of each Shared Contract that relates to the FinCo Business or the FAC

 

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Retained Business, as the case may be (in each case, to the extent so related) as if such Shared Contract had been assigned to (or amended to allow) a member of the applicable Group pursuant to this Section 2.2 and to bear the burden of the corresponding Liabilities (including any Liabilities that may arise by reason of such arrangement) as if such Liabilities had been Assumed by a member of the applicable Group pursuant to this Section 2.2 .

(ii) Each of FAC and FinCo shall, and shall cause the members of its Group to, (A) treat for all Income Tax purposes the portion of each Shared Contract inuring to its respective Businesses as Assets owned by, and/or Liabilities of, as applicable, such Party not later than the Effective Time and (B) neither report nor take any Income Tax position (on a Tax Return or otherwise) inconsistent with such treatment (unless required by a change in applicable Tax Law or good faith resolution of a Tax Contest relating to Income Taxes).

(iii) Nothing in this Section 2.2(b) shall require any member of a Group to make any payment (except to the extent advanced, Assumed or expressly agreed in advance to be reimbursed by any member of the other Group or as otherwise provided on Schedule 1.1(b) (Contingent Shared Liabilities) ), incur any material non-financial obligation or grant any material concession for the benefit of any member of the other Group in order to effect any transaction contemplated by this Section 2.2(b) .

(c) Consents . The Parties shall use their commercially reasonable best efforts to obtain the required Consents to Transfer any and all Assets, Contracts, licenses, permits and authorizations issued by any Governmental Entity or parts thereof, as contemplated by this Agreement.

Section 2.3 Assumption and Satisfaction of Liabilities . Except as otherwise specifically set forth in any Ancillary Agreement, from and after the Effective Time (a) FAC shall, or shall cause a member of the FAC Group to, accept, assume (or, as applicable, retain) and perform, discharge and fulfill, in accordance with their respective terms (“ Assume ”), all of the FAC Retained Liabilities and (b) FinCo shall, or shall cause a member of the FinCo Group to, Assume all the FinCo Liabilities, in each case, regardless of (i) when or where such Liabilities arose or arise, (ii) whether the facts upon which they are based occurred prior to, on or subsequent to the Effective Time, (iii) where or against whom such Liabilities are asserted or determined or (iv) whether arising from or alleged to arise from negligence, recklessness, violation of Law, fraud or misrepresentation by any member of the FAC Group or the FinCo Group, as the case may be, or any of their respective past or present directors, officers, employees, agents, Subsidiaries or Affiliates.

Section 2.4 Intercompany Accounts .

(a) All intercompany receivables, payables and loans and other intercompany balances between any member of the FAC Group, on the one hand, and any member of the FinCo Group, on the other hand, that exist and are reflected in the accounting records of the Parties as of the Effective Time (other than receivables, payables and loans otherwise specifically provided for under this Agreement, under any Ancillary Agreement or

 

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under any Continuing Arrangements, including payables created or required hereby or by any Ancillary Agreement or any Continuing Arrangements, and other than bona fide receivables, payables or loans that exist and are reflected in the accounting records of the Parties as of the Effective Time), shall be eliminated as discovered as of the Effective Time, subject to the Parties’ agreement (i) as to the most cost efficient means of effecting such elimination, and (ii) to share any incremental costs arising as a result of such elimination; provided , however , that in any event any such means of elimination shall place the Parties in the same position as if the means were economically equivalent to an elimination of such amount as of the Effective Time.

(b) As between the Parties (and the members of their respective Groups) all payments and reimbursements received after the Effective Time by either Party (or member of its Group) that relate to a Business, Asset or Liability of the other Party (or member of its Group), shall be held by such Party in trust for the use and benefit of the Party entitled thereto (at the expense of the Party entitled thereto) and, promptly upon discovery of receipt by such Party of any such payment or reimbursement, such Party shall pay or shall cause the applicable member of its Group to pay over to the other Party the amount of such payment or reimbursement without right of set-off.

(c) On and prior to the twenty-four (24) month anniversary following the Effective Time, if either Party discovers that an intercompany receivable, payable, loan or other intercompany balance between a member of the FAC Group and a member of the FinCo Group was wrongly eliminated pursuant to Section 2.4(a), such receivable, payable, loan or other balance shall be reinstated on the books of the applicable members of the FAC and FinCo Groups upon the mutual agreement of the Parties.

Section 2.5 Limitation of Liability .

(a) Except in the case of any knowing violation of Law, fraud or intentional misrepresentation where such violation of Law, fraud or intentional misrepresentation gave rise to or increased the amount of a Liability (in which case such Liability shall exist only to such extent), no Party shall have any Liability to the other Party in the event that any Information exchanged or provided pursuant to this Agreement after the Effective Time is found to be inaccurate.

(b) No Party or any Subsidiary thereof shall be liable to the other Party or any Subsidiary of the other Party based upon, arising out of or resulting from any Contract, arrangement, course of dealing or understanding existing on or prior to the Effective Time (other than this Agreement, any Ancillary Agreement, any Continuing Arrangements, any Shared Contract specified on Schedule 2.2(b) (Shared Contracts) or any Contract entered into in connection herewith or in order to consummate the transactions contemplated hereby or thereby or by the Plan of Separation) and each Party hereby terminates, as of the Effective Time, any and all Contracts, arrangements, courses of dealing or understandings between or among it or any member of its Group and the other Party or any member of the other Party’s Group (other than this Agreement, any Ancillary Agreement, any Continuing Arrangements, any Shared Contract specified on Schedule 2.2(b) (Shared Contracts) or any Contract entered into in connection herewith or in order to consummate the transactions contemplated hereby or thereby or by the Plan of Separation), and each Party hereby agrees to use commercially reasonable best efforts to

 

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obtain any third party waivers, consents or similar items required in connection with such terminations. It is the Parties’ intent that no such terminated Contract, arrangement, course of dealing or understanding (including any provision thereof that purports to survive termination) shall be of any further force or effect after the Effective Time. In the event a Contract, arrangement, course of dealing or understanding that should have continued in full force and effect following the Effective Time is terminated in accordance with the foregoing provisions, such Contract, arrangement, course of dealing or understanding shall, pursuant to the express mutual agreement of the relevant Parties, be reinstated, renewed or revived in accordance with its terms. In the event a Party is the majority partner, member or shareholder of an entity that is party to a Contract to be terminated pursuant to this Section 2.5 and (i) such Contract cannot be terminated without the consent of the respective minority partner, member or shareholder and such consent has not been obtained, or (ii) a Liability arises with respect to the rights or asserted rights of the minority partner, member or shareholder, then the Party that is such majority partner, member or shareholder shall indemnify and hold harmless the other Party and all members of the other Party’s Group from such Liability or place the other Party in the same economic position as if such Contract were terminated.

Section 2.6 Transfers Not Effected On or Prior to the Effective Time; Transfers Deemed Effective as of the Effective Time .

(a) To the extent that any Transfers contemplated by this ARTICLE II shall not have been consummated on or prior to the Effective Time, the Parties shall use commercially reasonable best efforts to effect such Transfers as promptly following the Effective Time as shall be practicable. Nothing herein shall be deemed to require the Transfer of any Assets or the Assumption of any Liabilities that by their terms or operation of Law cannot be Transferred; provided , however , that the Parties and their respective Subsidiaries shall cooperate and use commercially reasonable best efforts to seek to obtain any necessary Consents or Governmental Approvals for the Transfer of all Assets and Assumption of all Liabilities contemplated to be Transferred and Assumed pursuant to this ARTICLE II . In the event that any such Transfer of Assets or Assumption of Liabilities has not been consummated, from and after the Effective Time, (i) the Party retaining such Asset shall thereafter hold such Asset for the use and benefit of the Party entitled thereto (at the expense of the Person entitled thereto) and (ii) the Party intended to Assume such Liability shall, or shall cause the applicable member of its Group to, pay or reimburse the Party retaining such Liability for all amounts paid or incurred in connection with the retention of such Liability. In addition, the Party retaining such Asset or Liability shall, insofar as reasonably possible and to the extent permitted by applicable Law, treat such Asset or Liability in the ordinary course of business in accordance with past practice and take such other actions as may be reasonably requested by the Party to which such Asset is to be Transferred or by the Party Assuming such Liability so as to place such Party, insofar as reasonably possible, in the same position as if such Asset or Liability had been Transferred or Assumed as contemplated hereby and so that all the benefits and burdens relating to such Asset or Liability, including possession, use, risk of loss, potential for gain, and dominion, control and command over such Asset or Liability, are to inure from and after the Effective Time to the member or members of the FAC Group or the FinCo Group entitled to the receipt of such Asset or required to Assume such Liability. In furtherance of the foregoing, the Parties agree that, as of the Effective Time, each Party shall be deemed to have acquired complete and sole beneficial ownership over all of the Assets, together with all rights, powers and privileges incident thereto, and shall be deemed

 

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to have Assumed in accordance with the terms of this Agreement all of the Liabilities, and all duties, obligations and responsibilities incident thereto, that such Party is entitled to acquire or required to Assume pursuant to the terms of this Agreement.

(b) If and when the Consents, Governmental Approvals and/or conditions, the absence or non-satisfaction of which caused the deferral of the Transfer of any Asset or the deferral of the Assumption of any Liability pursuant to Section 2.6(a) , are obtained or satisfied, the Transfer, assignment, Assumption or novation of the applicable Asset or Liability shall be effected in accordance with and subject to the terms of this Agreement and/or the applicable Ancillary Agreement.

(c) The Party retaining any Asset or Liability due to the deferral of the Transfer of such Asset or the deferral of the Assumption of such Liability pursuant to Section 2.6(a) or otherwise shall not be obligated, in connection with the foregoing, to expend any money unless the necessary funds are advanced, assumed, or expressly mutually agreed in advance to be reimbursed by the Party entitled to such Asset or the Person intended to be subject to such Liability and any such expenditures shall be promptly reimbursed by the Party entitled to such Asset or the Person intended to be subject to such Liability.

(d) On and prior to the twenty-four (24) month anniversary following the Effective Time, if either Party discovers that any Party owns any Asset that, although not Transferred pursuant to this Agreement, is agreed by such Party and the other Party in their good faith judgment to be an Asset that more properly belongs to the other Party or a Subsidiary of the other Party, or an Asset that such other Party or Subsidiary was intended to have the right to continue to use (other than (for the avoidance of doubt), any Asset acquired from an unaffiliated third party by a Party or member of such Party’s Group following the Effective Time), then the Party owning such Asset shall, as applicable (i) Transfer any such Asset to the Party identified as the appropriate transferee and following such Transfer, such Asset shall be a FinCo Asset or FAC Retained Asset, as the case may be, or (ii) grant such mutually agreeable rights with respect to such Asset to permit such continued use, subject to, and consistent with this Agreement, including with respect to the Assumption of associated Liabilities, with respect to clauses (i)  and (ii)  above, subject to the Parties’ agreement (A) as to the most cost efficient means of effecting such Transfer or grant of rights and (B) to share any incremental costs arising as a result of such Transfer or grant of rights; provided , that if the relevant Parties cannot agree on a means of effecting the Transfer or grant of rights within thirty (30) days from the date that both Parties have notice of the discovery of such Asset, then the Asset shall be immediately Transferred or such rights shall be immediately granted in accordance with Section 2.2(b) and Section 2.6(a) .

(e) After the Effective Time, either Party (or any member of its Group) may receive mail, packages and other communications properly belonging to the other Party (or any member of its Group). Accordingly, at all times after the Effective Time, each Party authorizes the other Party to receive and open all mail, packages and other communications received by such Party, subject to the Confidentiality provisions and restrictions in Section 11.5 , and to the extent that they do not relate to the business of the receiving Party, the receiving Party shall promptly deliver such mail, packages or other communications (or, in case the same relate to both businesses, copies thereof) to the other Party as provided for in Section 14.6 . The provisions of this Section 2.6(e) are not intended to, and shall not, be deemed to constitute an

 

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authorization by any Party to permit the other to accept service of process on its behalf and no Party is or shall be deemed to be the agent of any other Party for service of process purposes.

(f) With respect to the Assets and Liabilities described in Section 2.6(a) , each of FAC and FinCo shall, and shall cause the members of its respective Group to, (i) treat for all Income Tax purposes (A) the deferred Assets as assets having been Transferred to and owned by the Party entitled to such Assets not later than the Effective Time and (B) the deferred Liabilities as liabilities having been Assumed and owned by the Person intended to be subject to such Liabilities not later than the Effective Time and (ii) neither report nor take any Income Tax position (on a Tax Return or otherwise) inconsistent with such treatment (unless required by a change in applicable Tax Law or good faith resolution of a Tax Contest relating to Income Taxes).

Section 2.7 Conveyancing and Assumption Instruments . In connection with, and in furtherance of, the Transfers of Assets and the acceptance and Assumptions of Liabilities contemplated by this Agreement, the Parties shall execute or cause to be executed, on or after the date hereof by the appropriate entities, any Conveyancing and Assumption Instruments necessary to evidence the valid and effective Assumption by the applicable Party of its Assumed Liabilities and the valid Transfer to the applicable Party or member of such Party’s Group of all right, title and interest in and to its accepted Assets for Transfers and Assumptions to be effected pursuant to California Law or the Laws of one of the other states of the United States or, if not appropriate for a given Transfer or Assumption, and for Transfers or Assumptions to be effected pursuant to non-U.S. Laws, in such other form as the Parties shall reasonably agree, including the Transfer of real property with deeds as may be appropriate. The Transfer of capital stock shall be effected by means of executed stock powers and notation on the stock record books of the corporation or other legal entities involved, or by such other means as may be required in any non-U.S. jurisdiction to Transfer title to stock and, only to the extent required by applicable Law, by notation on public registries.

Section 2.8 Further Assurances .

(a) In addition to and without limiting the actions specifically provided for elsewhere in this Agreement, including Section 2.6 , the Parties shall cooperate with each other and use (and will cause their respective Subsidiaries and Affiliates to use) commercially reasonable best efforts, on and after the Effective Time, to take or cause to be taken, all actions, and to do or cause to be done, all things reasonably necessary on their part under applicable Law or contractual obligations to consummate and make effective the transactions contemplated by this Agreement and the Ancillary Agreements.

(b) Without limiting the foregoing, following the Effective Time, each Party shall cooperate with the other Party, and without any further consideration, but at the expense of the requesting Party (for requests made following the Effective Time), to execute and deliver, or use commercially reasonable best efforts to cause to be executed and delivered, all instruments, including instruments of Transfer or title, and to make all filings with, and to obtain all Consents and/or Governmental Approvals, any permit, license, Contract, indenture or other instrument (including any Consents or Governmental Approvals), and to take all such other actions as such Party may reasonably be requested to take by the other Party from time to time, consistent with

 

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the terms of this Agreement and the Ancillary Agreements, in order to effectuate the provisions and purposes of this Agreement and the Ancillary Agreements and the Transfers of the applicable Assets and the assignment and Assumption of the applicable Liabilities and the other transactions contemplated hereby and thereby. Without limiting the foregoing, each Party will, at the reasonable request, cost and expense of the other Party, take such other actions as may be reasonably necessary to vest in such other Party such title as possessed by the transferring Party to the Assets allocated to such other Party under this Agreement or any of the Ancillary Agreements, free and clear of any Security Interest, if and to the extent it is practicable to do so.

Section 2.9 Novation of Liabilities .

(a) Each Party, at the request of the other Party, shall use commercially reasonable best efforts to obtain, or to cause to be obtained, any Consent, substitution or amendment required to novate or assign all obligations under Contracts, licenses and other obligations or Liabilities for which a member of such Party’s Group and a member of the other Party’s Group are jointly or severally liable and that do not constitute Liabilities of such other Party as provided in this Agreement (such other Party, the “ Other Party ”), or to obtain in writing the unconditional release of all parties to such arrangements (other than any member of the Group who Assumed or retained such Liability as set forth in this Agreement), so that, in any such case, the members of the applicable Group will be solely responsible for such Liabilities; provided , however , that no Party shall be obligated to pay any consideration therefor to any third party from whom any such Consent, substitution or amendment is requested unless the requesting Party advances the funds.

(b) If the Parties are unable to obtain, or to cause to be obtained, any such required Consent, release, substitution or amendment, the Other Party or a member of such Other Party’s Group shall continue to be bound by such Contract, license or other obligation that does not constitute a Liability of such Other Party and, unless not permitted by Law or the terms thereof, as agent or subcontractor for such Party, the Party (the “ Liable Party ”) or member of such Party’s Group who Assumed or retained such Liability as set forth in this Agreement shall, or shall cause a member of its Group to, pay, perform and discharge fully all the obligations or other Liabilities of such Other Party or member of such Other Party’s Group thereunder from and after the Effective Time. The Liable Party shall indemnify the Other Party and hold it harmless against any Liabilities (other than Liabilities of such Other Party) arising in connection therewith; provided , that the Liable Party shall have no obligation to indemnify the Other Party with respect to any matter to the extent that such Other Party has engaged in any knowing violation of Law, fraud or intentional misrepresentation in connection therewith where such violation of Law, fraud or intentional misrepresentation gave rise to or increased the amount of such Liability. The Other Party shall, without further consideration, promptly pay and remit, or cause to be promptly paid or remitted, to the Liable Party or to another member of the Liable Party’s Group, all money, rights and other consideration received by it or any member of its Group in respect of such performance by the Liable Party (unless any such consideration is an Asset of the Other Party pursuant to this Agreement). If and when any such Consent, release, substitution or amendment shall be obtained or such agreement, lease, license or other rights or obligations shall otherwise become assignable or able to be novated, the Other Party shall promptly Transfer all rights, obligations and other Liabilities thereunder of any member of the Other Party’s Group to the Liable Party or to another member of the Liable Party’s Group without

 

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payment of any further consideration and the Liable Party, or another member of such Liable Party’s Group, shall Assume such rights and Liabilities without the payment of any further consideration,.

Section 2.10 Guaranties .

(a) Except for those guaranties set forth on Schedule 2.10(a) (Guaranties Not Removed) where FAC shall remain as guarantor and FinCo shall indemnify and hold harmless the FAC Indemnitees for any Indemnifiable Loss arising from or relating thereto (in accordance with the provisions of ARTICLE VIII ) or as otherwise specified in any Ancillary Agreement, on or prior to the Effective Time (or as soon as practicable thereafter), (i) FAC shall (with the reasonable cooperation of the applicable member of the FinCo Group) use its commercially reasonable best efforts to have any member of the FinCo Group removed as guarantor of or obligor for any FAC Retained Liability, including in respect of those guaranties set forth on Schedule 2.10(a)(i) (FAC Removed Guaranties) , to the extent that they relate to FAC Retained Liabilities and (ii) FinCo shall (with the reasonable cooperation of the applicable member of the FAC Group) use its commercially reasonable best efforts to have any member of the FAC Group removed as guarantor of or obligor for any FinCo Liability, including in respect of those guaranties set forth on Schedule 2.10(a)(ii) (FinCo Removed Guaranties) , to the extent that they relate to FinCo Liabilities.

(b) On or prior to the Effective Time, to the extent required to obtain a release from a guaranty pursuant to Section 2.10(a) (a “ Guaranty Release ”):

(i) of any member of the FAC Group, FinCo shall execute a guaranty agreement in the form of the existing guaranty or such other as restrictive or less restrictive form as is agreed to by the relevant parties to such guaranty agreement, except to the extent that such existing guaranty contains representations, covenants or other terms or provisions either (A) with which FinCo would be reasonably unable to comply or (B) that would be reasonably expected to be breached; and

(ii) of any member of the FinCo Group, FAC shall execute a guaranty agreement in the form of the existing guaranty or such other as restrictive or less restrictive form as is agreed to by the relevant parties to such guaranty agreement, except to the extent that such existing guaranty contains representations, covenants or other terms or provisions either (A) with which FAC would be reasonably unable to comply or (B) that would be reasonably expected to be breached.

(c) If FAC or FinCo is unable to obtain, or to cause to be obtained, any such required removal as set forth in Section 2.10(a) and Section 2.10(b) , (i) the Party that has assumed (or whose Group member has assumed) the Liability with respect to such guaranty shall indemnify and hold harmless or cause such Group member to indemnify and hold harmless the guarantor or obligor for any Indemnifiable Loss arising from or relating thereto (in accordance with the provisions of ARTICLE X ) and shall or shall cause one of its Subsidiaries, as agent or subcontractor for such guarantor or obligor, to pay, perform and discharge fully all the obligations or other Liabilities of such guarantor or obligor thereunder and (ii) each of FAC and FinCo, on behalf of themselves and the members of their respective Groups, agree not to renew

 

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or extend the term of, increase its obligations under (other than customary increases in payment terms under contracts occurring in the ordinary course of business), or Transfer to a third party, any loan, guaranty, lease, contract or other obligation for which the other Party or member of such other Party’s Group is or may be liable unless all obligations of such other Party and the other members of such other Party’s Group with respect thereto are thereupon terminated by documentation reasonably satisfactory in form and substance to such other Party; provided , however , with respect to leases, in the event a Guaranty Release is not obtained and the relevant beneficiary wishes to extend the term of such guarantied lease, then such beneficiary shall have the option of extending the term if it provides such security as is reasonably satisfactory to the guarantor under such guarantied lease.

Section 2.11 Disclaimer of Representations and Warranties . EACH OF FAC (ON BEHALF OF ITSELF AND EACH MEMBER OF THE FAC GROUP) AND FINCO (ON BEHALF OF ITSELF AND EACH MEMBER OF THE FINCO GROUP) UNDERSTANDS AND AGREES THAT, EXCEPT AS EXPRESSLY SET FORTH HEREIN, IN ANY ANCILLARY AGREEMENT OR IN ANY CONTINUING ARRANGEMENT, NO PARTY TO THIS AGREEMENT, ANY ANCILLARY AGREEMENT OR ANY OTHER AGREEMENT OR DOCUMENT CONTEMPLATED BY THIS AGREEMENT, ANY ANCILLARY AGREEMENTS OR OTHERWISE, IS REPRESENTING OR WARRANTING IN ANY WAY AS TO THE ASSETS, BUSINESSES OR LIABILITIES CONTRIBUTED, TRANSFERRED OR ASSUMED AS CONTEMPLATED HEREBY OR THEREBY, AS TO ANY CONSENTS OR GOVERNMENTAL APPROVALS REQUIRED IN CONNECTION HEREWITH OR THEREWITH, AS TO THE VALUE OR FREEDOM FROM ANY SECURITY INTERESTS OF, OR ANY OTHER MATTER CONCERNING ANY ASSETS OF SUCH PARTY, OR AS TO THE ABSENCE OF ANY DEFENSES OR RIGHT OF SETOFF OR FREEDOM FROM COUNTERCLAIM WITH RESPECT TO ANY ACTION OR OTHER ASSET, INCLUDING ACCOUNTS RECEIVABLE, OF ANY PARTY, OR AS TO THE LEGAL SUFFICIENCY OF ANY CONTRIBUTION, ASSIGNMENT, DOCUMENT, CERTIFICATE OR INSTRUMENT DELIVERED HEREUNDER TO CONVEY TITLE TO ANY ASSET OR THING OF VALUE UPON THE EXECUTION, DELIVERY AND FILING HEREOF OR THEREOF. EXCEPT AS MAY EXPRESSLY BE SET FORTH HEREIN OR IN ANY ANCILLARY AGREEMENT, ALL SUCH ASSETS ARE BEING TRANSFERRED ON AN “AS IS,” “WHERE IS” BASIS (AND, IN THE CASE OF ANY REAL PROPERTY, BY MEANS OF A QUITCLAIM OR SIMILAR FORM DEED OR CONVEYANCE) AND THE RESPECTIVE TRANSFEREES SHALL BEAR THE ECONOMIC AND LEGAL RISKS THAT (I) ANY CONVEYANCE SHALL PROVE TO BE INSUFFICIENT TO VEST IN THE TRANSFEREE GOOD TITLE, FREE AND CLEAR OF ANY SECURITY INTEREST AND (II) ANY NECESSARY CONSENTS OR GOVERNMENTAL APPROVALS ARE NOT OBTAINED OR ANY REQUIREMENTS OF LAWS OR JUDGMENTS ARE NOT COMPLIED WITH.

ARTICLE III.

CERTAIN ACTIONS AT OR PRIOR TO THE DISTRIBUTIONS

Section 3.1 Certificate of Incorporation; Bylaws . On or prior to the Distribution Date, all necessary actions shall be taken to adopt the form of Certificate of Incorporation and Bylaws

 

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filed by FinCo with the Commission as exhibits to the FinCo Registration Statement.

Section 3.2 Directors . On or prior to the Distribution Date, FAC shall take all necessary action to cause the Board of Directors of FinCo to consist of the individuals identified in the FinCo Information Statement as director nominees of FinCo.

Section 3.3 Resignations .

(a) Except as set forth on Schedule 3.3 (FAC Employees/Directors Not Resigning) , on or prior to the Distribution Date, (i) FAC shall remove or cause all its employees and any employees of its Affiliates (excluding any employees of any member of the FinCo Group) to resign, effective as of the Distribution Date, from all positions as officers or directors of any member of the FinCo Group in which they serve, and (ii) FinCo shall remove or cause all its employees and any employees of its Affiliates to resign, effective as of the Distribution Date, from all positions as officers or directors of any members of the FAC Group in which they serve.

(b) No Person shall be required by any Party to resign from any position or office with another Party if such Person is disclosed in the FinCo Information Statement as the Person who is to hold such position or office following the Distribution.

Section 3.4 Ancillary Agreements . On or prior to the Effective Time, each of FAC and FinCo shall enter into, and where applicable shall cause a member or members of their respective Groups to enter into, the Ancillary Agreements and any other Contracts in respect of the Distributions reasonably necessary or appropriate in connection with the transactions contemplated hereby and thereby.

ARTICLE IV.

THE DISTRIBUTION

Section 4.1 Stock Dividends to FAC Shareholders . On the Distribution Date, FAC will cause the Distribution Agent to distribute all of the outstanding shares of FinCo Common Stock then owned by FAC to the holders of FAC Common Shares as of the Distribution Record Date, and to credit the appropriate class and number of such shares of FinCo Common Stock to book entry accounts for each such holder or designated transferee or transferees of such holder of FinCo Common Stock. For shareholders of FAC who own FAC Common Shares through a broker or other nominee, their shares of FinCo Common Stock will be credited to their respective accounts by such broker or nominee. Each holder of FAC Common Shares on the Distribution Record Date (or such holder’s designated transferee or transferees) will be entitled to receive in the Distribution one (1) share of FinCo Common Stock for every one (1) FAC Common Share held by such shareholder. No action by any such shareholder shall be necessary for such shareholder (or such shareholder’s designated transferee or transferees) to receive the applicable number of shares of (and, if applicable, cash in lieu of any fractional shares) FinCo Common Stock such shareholder is entitled to in the Distribution.

Section 4.2 Fractional Shares . FAC shareholders holding on the Distribution Record Date a number of FAC Common Shares that would entitle such shareholders to receive less than one whole share of FinCo Common Stock in the Distribution, will receive cash in lieu of

 

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fractional shares. Fractional shares of FinCo Common Stock will not be distributed in the Distribution nor credited to book-entry accounts. The Distribution Agent shall, as soon as practicable after the Distribution Date (a) determine the number of whole shares and fractional shares of FinCo Common Stock allocable to each holder of record or beneficial owner of FAC Common Shares as of the close of business on the Distribution Record Date, (b) aggregate all such fractional shares into whole shares and sell the whole shares obtained thereby in open market transactions, in each case at then prevailing trading prices on behalf of holders who would otherwise be entitled to fractional share interests, and (c) distribute to each such holder, or for the benefit of each such beneficial owner, such holder or owner’s ratable share of the net proceeds of such sale (after making appropriate deductions for any amount required to be withheld for United States federal income tax purposes). These sales of fractional shares shall occur as soon after the Distribution Date as practicable and as determined by the Distribution Agent. None of FAC, FinCo or the Distribution Agent will guarantee any minimum sale price for the fractional shares of FinCo Common Stock. Neither FAC nor FinCo will pay any interest on the proceeds from the sale of fractional shares. The Distribution Agent acting on behalf of the applicable Party will have the sole discretion to select the broker-dealers through which to sell the aggregated fractional shares and to determine when, how and at what price to sell such shares. Neither the Distribution Agent nor the broker-dealers through which the aggregated fractional shares are sold will be Affiliates of FAC or FinCo.

Section 4.3 Actions in Connection with the Distribution .

(a) FinCo shall file such amendments and supplements to its Registration Statement as FAC may reasonably request prior to the Effective Time, and such amendments as may be necessary in order to cause the same to become and remain effective as required by Law, including filing such amendments and supplements to its Registration Statement as may be required by the Commission or federal, state or foreign securities Laws.

(b) FinCo shall mail to the holders of FAC Common Shares, at such time on or prior to the Distribution Date as FAC shall determine, the FinCo Information Statement, as well as any other information concerning FinCo, its business, operations and management, the Plan of Separation and such other matters as FAC shall reasonably determine are necessary and as may be required by Law.

(c) FinCo shall also, prior to the Effective Time, cooperate with FAC in preparing, filing with the Commission or similar (U.S. or international) authority and causing to become effective registration statements or amendments thereof that are required to reflect the establishment of, or amendments to, any employee benefit and other plans necessary or appropriate in connection with the Plan of Separation or other transactions contemplated by this Agreement and the Ancillary Agreements.

(d) Promptly after receiving a request from FAC, to the extent requested, FinCo shall prepare and, in accordance with applicable Law, file with the Commission or similar authority any such documentation that FAC determines is necessary or desirable to effectuate the Distribution, and FAC and FinCo shall each use commercially reasonable best efforts to obtain all necessary approvals from the Commission with respect thereto as soon as practicable.

 

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(e) Promptly after receiving a request from FAC prior to the Effective Time, FinCo shall prepare and file, and shall use commercially reasonable best efforts to have approved and made effective, an application for the original listing of the FinCo Common Stock to be distributed in the Distribution on the NYSE, subject to official notice of distribution.

(f) Each Party shall provide all cooperation reasonably requested by the other Party that is necessary or desirable in connection with the Financing Arrangements.

(g) Nothing in this Section 4.3 shall be deemed, by itself, to shift Liability to FAC for any portion of the FinCo Registration Statement or FinCo Information Statement.

Section 4.4 Sole Discretion of FAC . FAC shall, in its sole and absolute discretion, determine the Distribution Date and all terms of the Distribution, including the form, structure and terms of any transactions and/or offerings to effect the Distribution and the timing of and conditions to the consummation thereof. In addition, FAC may, in accordance with Section 14.11 , at any time and from time to time until the completion of Distribution, decide to abandon the Distribution or modify or change the terms of the Distribution, including by accelerating or delaying the timing of the consummation of the Distribution.

Section 4.5 Conditions to the Distribution . Subject to Section 4.4 , the following are conditions to the consummation of the Distribution. The conditions are for the sole benefit of FAC and shall not give rise to or create any duty on the part of FAC or the Board of Directors of FAC to waive or not waive any such condition.

(a) The FinCo Registration Statement shall have been declared effective by the Commission, with no stop order in effect with respect thereto, and the FinCo Information Statement shall have been mailed to the holders of FAC Common Shares;

(b) The FinCo Common Stock to be delivered in the Distribution shall have been approved for listing on the NYSE, subject to official notice of distribution;

(c) FAC shall have received a private letter ruling from the Internal Revenue Service (the “ IRS Ruling ”), substantially to the effect that the distribution will qualify as a tax-free transaction for U.S. federal income tax purposes under Sections 368(a)(1)(D) and 355 of the Code;

(d) FAC shall have received the opinion of Deloitte Tax LLP, in form and substance reasonably satisfactory to FAC, regarding the qualification of the Distribution as a tax-free transaction for federal income tax purposes under Sections 368(a)(1)(D) and 355 of the Code, confirming the tax-free status of the Distribution for U.S. federal income tax purposes to the extent that such qualification is not addressed by the IRS Ruling, which opinion shall not have been withdrawn or modified;

(e) The Board of Directors of FAC shall have received an opinion from Duff & Phelps, LLC, in form and substance reasonably satisfactory to the Board of Directors, regarding FAC’s solvency and adequacy of capital immediately after the Distribution and an opinion from in-house counsel that, upon the Distribution, the shares of FinCo Common Stock will be validly issued, fully paid and non-assessable;

 

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(f) Any material Governmental Approvals and other Consents necessary to consummate the Distribution or any portion thereof shall have been obtained and be in full force and effect;

(g) No order, injunction or decree issued by any Governmental Entity of competent jurisdiction or other legal restraint or prohibition preventing the consummation of all or any portion of the Distribution shall be in effect, and no other event outside the control of FAC that prevents the consummation of all or any portion of the Distribution shall have occurred or failed to occur;

(h) The financing transactions described in the FinCo Information Statement as having occurred in connection with the Distribution shall be in place or have been consummated on or prior to the Distribution; and

(i) The Board of Directors of FAC shall have approved the Distribution, which approval may be given or withheld at its absolute and sole discretion.

ARTICLE V.

CERTAIN COVENANTS

Section 5.1 Corporate Names and Trademarks .

(a) Corporate Names . As of the Effective Time and subject to Section 5.2(b) , the Parties shall adopt and conduct business under their respective identities and Trademarks. Further, as of the Effective Time, the Parties shall cease to hold themselves out as having any affiliation with any of the other Parties or such Parties’ Affiliates (except as permitted or required under any Continuing Arrangement or Ancillary Agreement or applicable Law); provided , however , that for a period of five (5) years following the Distribution Date, the foregoing shall not prohibit any Party or any member of a Party’s Group from stating in any advertising or any other communication that it is formerly a FAC Affiliate or FinCo Affiliate, as applicable.

(b) FAC and Data Tree Name Changes . FAC agrees to use commercially reasonable best efforts to obtain the approval of its shareholders to change the name of FAC to a name that does not include the word “First” or “American” and further agrees, upon receipt of such shareholder approval, to take any and all actions necessary to effect such name change, including making all required filings in connection therewith, promptly following the Effective Time. FAC agrees to change the name of Data Tree to a name that does not include the word “Data” or “Tree” and to take any and all actions necessary to effect such name change, including making all required filings in connection therewith, promptly following the Effective Time.

(c) First American Trademark . Except as otherwise specifically provided for in the Ancillary Agreements (including the License Agreement), FAC shall, and shall cause its Affiliates to, as of the Effective Time, cease making any use of “First American” or any derivative thereof. FAC agrees that a License Agreement with FinCo, the owner of the “First American” Trademark, is required for any use by FAC or its Affiliates of such Trademark.

 

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(d) Other Party Marks . The Parties agree that nothing in the relationship of the Parties nor past use of any Trademarks (other than those described in Section 5.1(a) ) belonging to the other Party’s Group (“ Other Party Marks ”) prior to the Effective Time shall constitute an implied or express license or right to continued use of the Other Party Marks after the Effective Time and no Party’s Group shall have any right to use the Other Party Marks except to the extent expressly set forth in the License Agreement.

Section 5.2 Financial Statements and Accounting . Each Party agrees to provide the following assistance of access set forth in clauses (a) , (b)  and (c)  of this Section 5.2 , (i) during the three hundred and sixty-five (365) days following the Effective Time in connection with the preparation and audit of each of the Party’s financial statements for the year ended December 31, 2010, the printing, filing and public dissemination of such financial statements, the audit of each Party’s internal control over financial reporting and management’s assessment thereof and management’s assessment of each Party’s disclosure controls and procedures, if required, in each case made as of December 31, 2010; (ii) until the second anniversary of the Effective Time, with the consent of the other Party (not to be unreasonably withheld or delayed) for reasonable business purposes; (iii) in the event that any Party changes its auditors within two (2) years of the Effective Time, then such Party may request reasonable access on the terms set forth in this Section 5.2 for a period of up to one hundred and eighty (180) days from such change; and (iv) from time to time following the Effective Time, to the extent reasonably necessary to respond (and for the limited purpose of responding) to any written request or official comment from a Governmental Entity, such as in connection with responding to a comment letter from the Commission:

(a) Annual Financial Statements . Each Party shall provide or provide access to the other Party on a timely basis all Information timely requested and reasonably required to meet its schedule for the preparation, printing, filing, and public dissemination of its annual financial statements and for management’s assessment of the effectiveness of its disclosure controls and procedures and its internal control over financial reporting in accordance with Items 307 and 308, respectively, of Regulation S-K and, to the extent applicable to such Party, its auditor’s audit of its internal control over financial reporting and management’s assessment thereof in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 and the Commission’s and Public Company Accounting Oversight Board’s rules and auditing standards thereunder, if required (such assessments and audit being referred to as the “ 2010 Internal Control Audit and Management Assessments ”). Without limiting the generality of the foregoing, upon reasonable advance notice, each Party will provide to its auditors all required financial and other Information with respect to itself and its Subsidiaries in a sufficient and reasonable time and in sufficient detail to permit its auditors to take all steps and perform all reviews necessary to provide sufficient assistance to the other Party’s auditors with respect to Information to be included or contained in such other Party’s annual financial statements and to permit such other Party’s auditors and management to complete the 2010 Internal Control Audit and Management Assessments, if required.

(b) Access to Personnel and Records . Each Party shall authorize its respective auditors to make reasonably available to the other Party’s auditors (the “ Other Party’s Auditors ”), upon reasonable advance notice, both the personnel who performed or are performing the annual audits of such audited Party (the “ Audited Party ”) and work papers related

 

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to the annual audits of the Audited Party, in all cases within a reasonable time prior to the Audited Party’s auditors’ opinion date, so that the Other Party’s Auditors are able to perform the procedures they reasonably consider necessary to take responsibility for the work of the Audited Party’s auditors as it relates to their auditors’ report on such other Party’s financial statements, all within sufficient time to enable such other Party to meet its timetable for the printing, filing and public dissemination of its annual financial statements. Each Party shall, upon reasonable advance notice, make available to the Other Party’s Auditors and management its personnel and Records in a reasonable time prior to the Other Party’s Auditors’ opinion date and other Parties’ management’s assessment date so that the Other Party’s Auditors and other Parties’ management are able to perform the procedures they reasonably consider necessary to conduct the 2010 Internal Control Audit and Management Assessments.

(c) Annual Reports . Each Party will, upon request, deliver to the other Party a substantially final draft, as soon as the same is prepared, of the first report to be filed with the Commission (or otherwise) that includes their respective financial statements (in the form expected to be covered by the audit report of such Party’s independent auditors) for the year ended December 31, 2010 (such reports, collectively, the “ Annual Reports ”); provided , however , that each Party may continue to revise its respective Annual Report prior to the filing thereof, which changes will be delivered to the other Party as soon as reasonably practicable; provided further , that each Party’s personnel will actively consult with the other Party’s personnel prior to the anticipated filing with the Commission regarding any material changes that they may consider making to their respective Annual Reports and related disclosures that could reasonably be expected to have a significant effect upon the other Party’s financial statements or related disclosures.

Section 5.3 Certain Securities . Subject to the provisions of Section 6.1 as applicable, following the Distribution Date, FinCo agrees that, upon exercise of any option, warrant or similar security to purchase FAC Common Shares or the conversion of any note or other security of FAC convertible into FAC Common Shares (in each case that is not otherwise adjusted pursuant to the provisions of Section 6.1 , as applicable), in each case that FAC has issued to third Persons prior to the Distribution, FinCo shall, upon request by FAC, promptly (and in any event within any time periods required by the terms of any such option, warrant, note or similar security) issue to FAC, as agent for the holder thereof, such number of shares of FinCo Common Stock that FAC would otherwise be required to deliver to such holder pursuant to the terms of any such security and FAC shall promptly deliver such shares to such holder. It is further agreed that with respect to such options, warrants, notes or similar securities, FinCo shall keep reserved for issuance a sufficient number of shares of its Common Stock to satisfy any future exercises of such options or warrants or conversion of such notes or other securities. In connection with the foregoing, FAC will promptly following receipt of notice that a holder desires to exercise any such options, warrants or similar security or convert such note or other security, in each case of the type described in this Section 5.3 , notify FinCo, in writing, so that it may comply with the terms of this Section 5.3 ; provided , that FinCo shall have no additional Liability beyond the obligation to deliver shares as set forth in this Section 5.3 . FinCo hereby assumes the obligations set forth in this Section 5.3 . For purposes of this Section 5.3 and similar provisions in this Agreement, any references to “option” or “options” shall not include any options described in Section 6.1 and the treatment of such options described in Section 6.1 shall be governed by the provisions of Section 6.1 .

 

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Section 5.4 Administration of Specified Shared Expenses . The Party so designated on Schedule 1.1(n) (Specified Shared Expenses) shall be responsible for administering each Specified Shared Expense. Each Party shall be responsible for payment of 50% of any Specified Shared Expense, except with respect to certain Specified Shared Expenses that are otherwise allocated between the Parties pursuant to the Tax Sharing Agreement or as otherwise provided on Schedule 1.1(n) (Specified Shared Expenses) . The designated administering Party shall invoice the other Party on a quarterly basis, which other Party shall, promptly following receipt of such invoice, reimburse the administering Party for its allocable share of such Specified Shared Expenses. In addition, the administering Party shall, in connection with the receipt of such invoice, provide to the other Party a quarterly estimated budget (for informational and planning purposes only) of Specified Shared Expenses for the proceeding quarter. This Section 5.4 shall not apply to any expenses relating to any compensatory or benefit plan, program or arrangement addressed in ARTICLE VI .

Section 5.5 Cooperation . From and after the Effective Time, the Parties shall, and shall cause each of their respective Affiliates and employees to (a) provide reasonable cooperation and assistance to the other Party (and any member of its Groups) in connection with the completion of the Plan of Separation (including assisting in the preparation of the Distributions), (b) provide reasonable knowledge transfer regarding its applicable Business or FAC’s historical business and (c) assist the other Party in the orderly and efficient transition in becoming an independent company; in each case, except as may otherwise be agreed to by the Parties in writing, at no additional cost to the Party requesting such assistance other than for the actual out-of-pocket costs (which shall not include the costs of salaries and benefits of employees of such Party or any pro rata portion of overhead or other costs of employing such employees that would have been incurred by such employees’ employer regardless of the employees’ service with respect to the foregoing) incurred by any such Party, if applicable. The cooperation and assistance provided for in this Section 5.5 shall not be required to the extent such cooperation and assistance would result in an undue burden on any Party or would unreasonably interfere with any of its employees’ normal functions and duties. In furtherance of, and without limiting, the foregoing, each Party shall make reasonably available for advisory purposes those employees with particular knowledge of any function or service of which the other Party was not allocated the employees, agents or consultants involved in such function or service in connection with the Plan of Separation (including, employee benefits functions, risk management, etc.).

Section 5.6 Periodic Meetings . Unless otherwise agreed to by the Parties, at least once during each fiscal quarter during the three (3) year period following the Distribution Date and upon the request of one of the Parties within the seven (7) years thereafter, the Parties will hold a meeting for the purpose of sharing Information related to this Agreement, any Contingent Shared Liabilities or the preparation of any Party’s financial statements. Each Party will designate between one (1) and three (3) persons as its standing representatives for such meetings. Initially, the general counsels of FAC and FinCo shall be responsible for scheduling such meeting at reasonably consistent and convenient times and on no less than thirty (30) days’ notice. The Parties’ standing representatives and others may participate in such meetings in person or other medium by which all participants may hear each other.

ARTICLE VI.

 

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EMPLOYEE MATTERS

Section 6.1 Stock Options .

(a) FinCo Options .

(i) On behalf of all FinCo Employees who hold FAC Options, prior to the Distribution, FAC shall take all actions necessary such that each FAC Option held by a FinCo Employee that is outstanding immediately prior to the Distribution, whether vested or unvested, other than any FAC Option subject to the provisions of Section 6.1(c) below, shall, coincident with the consummation of the Distribution on the Distribution Date, be converted into an option to acquire FinCo Common Stock (a “ FinCo Option ”) in accordance with the succeeding paragraphs of this Section 6.1(a) .

(ii) The number of shares subject to the FinCo Option shall equal the number of FAC Common Shares subject to the FAC Option multiplied by a fraction, the numerator of which is the Closing FAC Share Price and the denominator of which is the last per share trading price of FinCo Common Stock when-issued in the last trade on the NYSE on the Distribution Date (the “ Pre-Distribution FinCo Stock Price ”), with the resulting number of shares subject to the FinCo Option being rounded down to the nearest whole share.

(iii) The per share exercise price of the FinCo Option shall be equal to the product of (A) the original exercise price of the FAC Option multiplied by (B) a fraction, the numerator of which shall be the Pre-Distribution FinCo Stock Price and the denominator of which shall be the Closing FAC Share Price, which product shall be rounded up to the nearest cent.

(iv) Prior to the Distribution Date, FAC shall cause FinCo to adopt the First American Financial Corporation 2010 Incentive Compensation Plan (the “ FinCo Incentive Compensation Plan ”), effective as of the Effective Time, shall ensure or cause FinCo to ensure that the shares issuable under such plan have been registered on Form S-8 (or successor form) promulgated by the Commission under the Securities Act, and shall approve, as the sole stockholder of FinCo, the adoption of the FinCo Incentive Compensation Plan. On or prior to the Effective Time, FAC shall take all actions deemed necessary and appropriate to revise awards issued with respect to any FAC Option converted to a FinCo Option to ensure that the terms and conditions of the FinCo Options described in this Section 6.1(a) are substantially similar to the terms and conditions applicable to the corresponding FAC Option, including the terms and conditions relating to vesting and the post-termination exercise period, and comply with the applicable provisions of Sections 424(a) and 409A of the Code.

(b) FAC Options .

(i) On behalf of all FAC Employees who hold FAC Options prior to the Distribution, FAC shall take all actions necessary such that each FAC Option that is outstanding immediately prior to the Distribution, whether vested or unvested, other than any FAC Option subject to the provisions of Section 6.1(c) below, shall, coincident with

 

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the consummation of the Distribution on the Distribution Date, be adjusted such that the number of shares subject to each FAC Option and the per-share exercise price reflect the impact of the Distribution in accordance with the succeeding paragraphs of this Section 6.1(b) .

(ii) The adjusted number of shares subject to the FAC Option shall equal the original number of FAC Common Shares subject to the FAC Option multiplied by a fraction, the numerator of which is the Closing FAC Share Price, and the denominator of which is the Closing Ex-Distribution FAC Share Price in the last trade on the Distribution Date, with the resulting number of shares subject to the FAC Option being rounded down to the nearest whole share.

(iii) The per share exercise price of the FAC Option shall be equal to the product of (A) the original exercise price of the FAC Option multiplied by (B) a fraction, the numerator of which is the Closing Ex-Distribution FAC Share Price and the denominator of which is the Closing FAC Share Price, which product shall be rounded up to the nearest cent.

(c) FAC Options for Certain FAC Option Holders . On behalf of all employees listed in Schedule 6.1(c) (FAC/FinCo Employees) and Former Corporate Employees, if any, who hold FAC Options granted prior to the Distribution, FAC shall take all actions necessary such that each such FAC Option that is outstanding immediately prior to the Distribution, whether vested or unvested, shall, coincident with the consummation of the Distribution on the Distribution Date be treated as described in this Section 6.1(c) . Each FAC Option subject to this Section 6.1(c) will be split into two separate FAC Options, each covering 50% of the shares subject to the original FAC Option and each with a per share exercise price equal to the per share exercise price of the original FAC Option. One of two resulting FAC Options will be converted into a FinCo Option in the same manner as the FAC Options held by FinCo Employees as described in Section 6.1(a) . The other resulting FAC Option will be adjusted in the same manner as the FAC Options held by FAC Employees as described in Section 6.1(b) .

(d) Former Employees and Former FAC Directors .

(i) FAC Options held by Former FinCo Employees shall be treated in the same manner as options described in Section 6.1(a) ; and FAC Options held by Former FAC Employees and any other individuals listed on Schedule 6.1(d) (Additional FAC Option Holders) shall be treated in the same manner as options described in Section 6.1(b) .

(ii) FAC Options held by individuals who are not employees of either FinCo or FAC (“ Non-Employee Directors ”) and who formerly served as FAC Directors or First Advantage Directors and on and after the Distribution Date are serving as FinCo Directors shall be treated in the same manner as described in Section 6.1(a) above. FAC Options held by Non-Employee Directors who continue to serve as FAC Directors on and after the Distribution Date, shall be treated in the same manner as described in Section 6.1(b) above.

 

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(iii) FAC Options held by Former FAC Directors shall be treated in the same manner as options described in Section 6.1(c) .

(iv) FAC Options held by Former First Advantage Directors shall be treated in the same manner as options described in Section 6.1(b) .

(e) Adjustments to Equity Awards in Connection With the Distribution . Notwithstanding any other provision of this Agreement, FAC shall have the authority to make any appropriate adjustments necessary to satisfy the requirements of U.S. Treasury Regulation Section 1.424-1 for each option award (without regard to whether such options would otherwise be subject to such regulation) in accordance with the anti-dilution provisions of the governing plan.

(f) Settlement of Options . Subject to the terms of this Agreement and any other agreement made by the Parties from time to time, upon the exercise of any FAC Options or FinCo Options, each of FAC and FinCo, respectively, shall be solely responsible to issue shares in settlement of such options without reimbursement, recourse or other compensation from the other Party. Neither Party shall have any power or authority to amend the vesting schedule or exercise period or any other term of an option granted by the other Party.

(g) Notwithstanding any of the foregoing in this Section 6.1 , if the Board of Directors of FAC declares a reverse stock split in conjunction with the Distribution, FAC Options converted or adjusted pursuant to the preceding sections of this Section 6.1 will be adjusted as deemed necessary by the Parties to reflect the reverse stock split.

Section 6.2 Restricted Stock Units .

(a) General Treatment of Restricted Stock Units . Each FAC Restricted Stock Unit award that is outstanding immediately prior to the Distribution shall, coincident with the consummation of the Distribution on the Distribution Date, be converted into Restricted Stock Units as follows:

(i) On behalf of all FinCo Employees who hold such FAC Restricted Stock Units, FAC shall convert such Units into Restricted Stock Units payable in FinCo shares that shall retain the vesting schedule associated with such original FAC Restricted Stock Unit award. The number of FinCo Restricted Stock Units shall equal the number of outstanding FAC Restricted Stock Units as of the Distribution Date, multiplied by a fraction, the numerator of which is the Closing FAC Share Price and the denominator of which is the Pre-Distribution FinCo Stock Price, which product shall be rounded down to the nearest whole number of units.

(ii) On behalf of all FAC Employees who hold such FAC Restricted Stock Units, FAC shall retain such Units as Restricted Stock Units payable in FAC Common Shares that shall retain the vesting schedule associated with such original FAC Restricted Stock Unit award. The number of adjusted FAC Restricted Stock Units shall equal the original number of outstanding FAC Restricted Stock Units as of the Distribution Date, multiplied by a fraction, the numerator of which is the Closing FAC Share Price and the denominator of which is the Closing Ex-Distribution FAC Share

 

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Price, which product shall be rounded down to the nearest whole number of units.

(iii) On behalf of all employees listed in Schedule 6.1(c) (FAC/FinCo Employees) and any Former Corporate Employees, if any, who hold FAC Restricted Stock Units granted prior to the Distribution, FAC shall take all actions necessary such that each such award of FAC Restricted Stock Units that is outstanding immediately prior to the Distribution, whether vested or unvested, shall, coincident with the consummation of the Distribution on the Distribution Date, be treated as described in this Section 6.2(a)(iii) . Each award of FAC Restricted Stock Unit subject to this Section 6.2(a)(iii) will be split into two separate awards of FAC Restricted Stock Units, each covering 50% of the shares subject to the original award of FAC Restricted Stock Units. One of two resulting awards of FAC Restricted Stock Units will be converted into an award of FinCo Restricted Stock Units in the same manner as the FAC Restricted Stock Units held by FinCo Employees as described in Section 6.2(a)(i) . The other resulting award of FAC Restricted Stock Units will be adjusted in the same manner as the FAC Restricted Stock Units held by FAC Employees as described in Section 6.2(a)(ii) .

(iv) FAC Restricted Stock Units held by Former FinCo Employees shall be treated in the same manner as restricted stock units described in Section 6.2(a)(i) ; and FAC Restricted Stock Units held by Former FAC Employees shall be treated in the same manner as restricted stock units described in Section 6.2(a)(ii) .

(v) FAC Restricted Stock Units held by Non-Employee Directors who formerly served as FAC Directors and on and after the Distribution Date are serving as FinCo Directors shall be treated in the same manner as described in Section 6.2(a)(i) above. FAC Restricted Stock Units held by Non-Employee Directors who continue to serve as FAC Directors on and after the Distribution Date, shall be treated in the same manner as described in Section 6.2(a)(ii) above.

(vi) Notwithstanding the foregoing, if the Board of Directors of FAC declares a reverse stock split in conjunction with the Distribution, Restricted Stock Unit awards converted or adjusted pursuant to this Section 6.2(a) will be adjusted as deemed necessary by the Parties to reflect the reverse stock split.

(b) Grant and Settlement of Awards . Subject to the terms of this Agreement and any other agreement in force between the Parties from time to time, upon the vesting or payment of any FAC Restricted Stock Unit award or FinCo Restricted Stock Unit award, each of FAC and FinCo, respectively, shall be solely responsible to issue its shares in settlement of the respective awards payable in its shares without reimbursement, recourse or other compensation from the other Party. Neither Party shall have any power or authority to amend the vesting schedule or exercise period or any other term of an award of Restricted Stock Units granted by the other Party.

Section 6.3 Employee Stock Purchase Plan . Effective May 1, 2010, FAC temporarily discontinued the purchase of common shares under The First American Corporation 2001 Employee Stock Purchase Plan (the “ ESPP ”). Any contributions received subsequent to that date will be returned to employees in accordance with the terms of the ESPP. FinCo may adopt a

 

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new employee stock purchase plan effective after the Distribution Date and FAC may reactivate the ESPP effective after the Distribution Date. For the avoidance of doubt, following the Distribution Date, the employees listed in Schedule 6.3 (Employees Eligible for ESPP) shall continue to be eligible to participate in the ESPP, as well as any employee stock purchase plan maintained by FinCo for so long as such employees meet the eligibility criteria for each such plan.

Section 6.4 Nonqualified Deferred Compensation Plans .

(a) FinCo Deferred Compensation Plans .

(i) Effective as of the Distribution Date, FinCo (or any one of its Subsidiaries or Affiliates) shall be solely responsible for the satisfaction of all Liabilities under the FinCo Deferred Compensation Plans listed in Schedule 6.4(a) (FinCo Deferred Compensation Plans) , and any other nonqualified deferred compensation plans in the United States or any other country covering FinCo Employees or Former FinCo Employees, other than those listed in Schedule 6.4(b) (FAC Deferred Compensation Plans) and specifically identified as FAC Deferred Compensation Plans. In this connection, FinCo (or any one of its Subsidiaries or Affiliates), shall maintain (and rename) the Pre-Distribution Deferred Compensation Plans as in effect prior to the Distribution Date (subject to such amendments as FinCo may wish to make that are not inconsistent with the terms of the relevant FinCo Deferred Compensation Plan).

(ii) All elections by FinCo Employees and Former FinCo Employees that were in effect under the terms of the applicable FinCo Deferred Compensation Plan immediately prior to the Distribution Date shall continue in effect from and after the Distribution Date until a new election that by its terms supersedes the prior election is made by such FinCo Employee or Former FinCo Employee in accordance with the terms of the applicable FinCo Deferred Compensation Plan and consistent with the provisions of Section 409A of the Code to the extent applicable.

(iii) As of the Distribution Date, FinCo shall be solely responsible for the management and administration of the FinCo Deferred Compensation Plans.

(iv) Payments to FinCo Employees and Former FinCo Employees under the FinCo Deferred Compensation Plans shall be made by FinCo or one of its Subsidiaries or Affiliates as determined in the sole discretion of FinCo.

(b) FAC Deferred Compensation Plans .

(i) Effective as of the Distribution Date, FAC (or any one of its Subsidiaries or Affiliates) shall be solely responsible for the satisfaction of all Liabilities under the FAC Deferred Compensation Plans listed in Schedule 6.4(b) (FAC Deferred Compensation Plans) and any nonqualified deferred compensation plan benefits covering FAC Employees and Former FAC Employees under the FAC Deferred Compensation Plans. In this connection, FAC (or any one of its Subsidiaries or Affiliates) shall maintain one or more nonqualified deferred compensation plans that shall contain terms that are substantially similar to the terms and conditions of the Pre-Distribution Deferred

 

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Compensation Plans as in effect prior to the Distribution Date (subject to such amendments as FAC may wish to make that are not inconsistent with the terms of the relevant FAC Deferred Compensation Plan).

(ii) All elections by FAC Employees and Former FAC Employees that were in effect under the terms of the applicable FAC Deferred Compensation Plan immediately prior to the Distribution Date shall continue in effect from and after the Distribution Date until a new election that by its terms supersedes the prior election is made by such FAC Employee or Former FAC Employee in accordance with the terms of the applicable FAC Deferred Compensation Plan and consistent with the provisions of Section 409A of the Code to the extent applicable.

(iii) As of the Distribution Date, FAC shall be solely responsible for the management and administration of the FAC Deferred Compensation Plans.

(iv) Payments to FAC Employees and Former FAC Employees under the FAC Deferred Compensation Plans shall be made by FAC or one of its Affiliates as determined in the sole discretion of FAC.

(c) Handling of Nonqualified Deferred Compensation for Certain Employees . Any employee listed in Schedule 6.1(c) (FAC/FinCo Employees) who continues to be employed by both FinCo and FAC after the Distribution Date and any Former Corporate Employee whose benefits under the Pre-Distribution Deferred Compensation Plans have not been distributed in full from such plans on or before the Distribution Date shall be provided with benefits under both the active FinCo Deferred Compensation Plans in the United States and the active FAC Deferred Compensation Plans in the United States, to the extent and according to the terms of this Section 6.4(c) . Effective as of the Distribution Date, the following shall apply for such listed employees and for such Former Corporate Employees: (i) for any applicable account-based defined contribution plan, each such employee shall have fifty percent (50%) of his or her account balance in each such nonqualified deferred compensation plan sponsored by FAC immediately prior to the Distribution Date in which such employee participates retained by such FinCo Deferred Compensation Plan and the remaining fifty percent (50%) shall be transferred to the comparable FAC Deferred Compensation Plan, so that upon the completion of such actions, such employee shall have the same aggregate account balances under the relevant nonqualified deferred compensation plans both immediately before and immediately after the Distribution, (ii) for any applicable defined benefit plan, each such employee shall have fifty percent (50%) of his or her Distribution Date accrued benefit, fifty percent (50%) of his or her includable compensation for periods prior to the Distribution Date, plus one hundred percent (100%) of his or her service and plan participation for all applicable periods prior to the Distribution allocated to the calculation of his or her benefits under each such FinCo Deferred Compensation Plan and FAC Deferred Compensation Plan, respectively, so that upon the completion of such actions, such employee shall have the same aggregate accrued benefits under the relevant FinCo Deferred Compensation Plans and FAC Deferred Compensation Plans, both immediately before and immediately after the Distribution, (iii) for any applicable defined benefit plan, each such listed employee shall have one hundred percent (100%) of his or her respective includable compensation, service and plan participation for all applicable periods after the Distribution, for services rendered to FAC or FinCo, as the case may be, allocated to the calculation of his or her

 

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benefits solely under each such FinCo Deferred Compensation Plan or FAC Deferred Compensation Plan, as appropriate, and (iv) with respect to the distribution and administration of benefits addressed by this Section 6.4 , each such Former Corporate Employee shall be treated as a Former FinCo Employee with respect to his or her benefits under a FinCo Deferred Compensation Plan and as a Former FAC Employee with respect to his or her benefits under a FAC Deferred Compensation Plan. Effective as of the Distribution Date, an individual’s benefit shall be paid solely from the applicable FinCo Deferred Compensation Plan and/or FAC Deferred Compensation Plan in which such individual participates.

(d) Continued Employment . Consistent with Section 409A of the Code, the Parties agree that FinCo Employees who participate in the Pre-Distribution Deferred Compensation Plans immediately prior to the Distribution Date and who participate in the FinCo Deferred Compensation Plans immediately following the Distribution Date, shall not experience a termination of employment or separation from service as a result of the transactions contemplated herein.

(e) Division of Assets and Liabilities . In connection with the Distribution, any assets held in trust to satisfy the Liabilities of a given Pre-Distribution Deferred Compensation Plan prior to the Distribution shall be allocated by value between such FAC Deferred Compensation Plan and its comparable FinCo Deferred Compensation Plan in proportion to the Liabilities allocated to such plans. Any assets held by any Party or Affiliate of a Party to satisfy the Liabilities of a given Pre-Distribution Deferred Compensation Plan prior to the Distribution shall be allocated by value between such FAC Deferred Compensation Plan and its comparable FinCo Deferred Compensation Plan in proportion to the Liabilities allocated to those plans. To the extent that assets cannot be divided according to the principles of the preceding sentences after taking commercially reasonable actions, the Parties shall cooperate to divide such assets as closely as reasonably possible according to those principles, and the Party sponsoring the Plan that receives a disproportionately greater allocation of the assets shall reimburse the other Party for any difference. For the avoidance of doubt, the FAC Deferred Compensation Plans shall assume one hundred percent (100%) of the Liabilities of FAC Employees and Former FAC Employees, as well as fifty percent (50%) of the Liabilities of Former Corporate Employees and any employee listed in Schedule 6.1(c) (FAC/FinCo Employees) , and the FinCo Deferred Compensation Plans shall assume one hundred percent (100%) of the Liabilities of FinCo Employees and Former FinCo Employees, as well as fifty percent (50%) of the Liabilities of Former Corporate Employees and any employee listed in Schedule 6.1(c) (FAC/FinCo Employees) .

Section 6.5 Pension Plans .

(a) On or prior to the Distribution Date, (i) FAC or one of its Affiliates shall issue and deliver a promissory note to FinCo in the aggregate principal amount to be mutually agreed between the Parties in the form attached hereto as Exhibit B covering FAC’s share of the underfunded portion of the FinCo Pension Plan (as defined below) benefit liability and plan administration costs and (ii) FinCo shall Assume sponsorship of and be solely responsible for the management, administration and funding of, and be solely responsible for all Assets and Liabilities under, the Pre-Distribution Pension Plan (to be hereinafter referred to as the FinCo Pension Plan), including with respect to FAC Employees, Former FAC Employees and Former

 

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Corporate Employees, and FAC shall have no obligation with respect thereto, except that FAC shall, and hereby does, retain and assume one-half of the Liability associated with the administration of the Pre-Distribution Pension Plan including with respect to any breach or alleged breach of fiduciary duty in connection therewith.

(b) As of the Distribution Date, FinCo shall take all such actions necessary to (i) become the sole plan sponsor and administrator of the FinCo Pension Plan and the sponsoring employer under the Trust holding the assets of such Plan and (ii) appoint members of the Plan investment committee and administrative committee.

(c) Following the Distribution Date, eligible participants (whether employed by FAC or FinCo or their adopting affiliates) shall continue to participate in the FinCo Pension Plan in accordance with the terms and conditions of the FinCo Pension Plan; provided , however , that the foregoing shall in no way alter any right of FinCo, subsequent to the Distribution Date, to amend or terminate the FinCo Pension Plan in accordance with its terms and applicable Law. FinCo and FAC shall reasonably cooperate with each other in order to facilitate the foregoing provisions of this Section 6.5 .

(d) As of the Distribution Date, FinCo shall be solely responsible for the adjudication of all FinCo Pension Plan claims filed by FinCo Pension Plan participants (whether employees of FinCo, FAC, or an affiliated entity), including, but not limited to, claims filed before the Distribution Date under such Plan as in effect on the date such claim was filed.

Section 6.6 401(k) Savings Plans .

(a) FinCo 401(k) Savings Plans .

(i) As of the Distribution Date, FinCo shall Assume sponsorship of (and rename) and be solely responsible for the management and administration of all Assets and Liabilities under the Pre-Distribution Savings Plan, any other savings plans in the United States or any other country covering FinCo Employees, and all related trusts and other funding arrangements, other than the FAC Savings Plans and trusts and other funding arrangements related thereto (which shall be referred to as the FinCo Savings Plans).

(ii) Prior to the Distribution Date, FinCo shall take all such actions necessary to become the plan sponsor of the FinCo Savings Plans and appoint named fiduciaries of the FinCo Savings Plans, as appropriate.

(iii) As of the Distribution Date, FinCo shall be solely responsible for the adjudication of claims filed by FinCo Employees, Former FinCo Employees, Former Corporate Employees, if any, and all employees listed in Schedule 6.1(c) (FAC/FinCo Employees) under any FinCo Savings Plan.

(iv) Nothing contained in this Agreement shall alter in any way the right of FinCo, subsequent to the Distribution Date, to amend or terminate any or all of the FinCo Savings Plans in accordance with the terms thereof and applicable Law.

 

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(b) FAC 401(k) Savings Plans .

(i) As of the Distribution Date, FAC shall Assume or shall have previously Assumed sponsorship of and be solely responsible for the management and administration of all Assets and Liabilities under the First Advantage Savings Plan. Following the Distribution Date, FAC shall retain sole responsibility for all benefit obligations incurred prior to the Distribution Date and Liabilities under the First Advantage Savings Plan, and any other savings plans in the United States or any other country covering FAC Employees, and all related trusts and other funding arrangements, other than the FinCo Savings Plans and trusts and other funding arrangements related thereto (which shall be referred to as the FAC Savings Plans).

(ii) As of the Distribution Date, FAC shall cause or shall have caused the Assets and Liabilities of the Pre-Distribution Savings Plan attributable to FAC Employees and Former FAC Employees to be Assumed by the First Advantage Savings Plan and transferred to the trust maintained under the First Advantage Savings Plan in a “transfer of assets or liabilities” in accordance with Section 414( l ) of the Code and Section 208 of ERISA and the respective rules and regulations promulgated thereunder. The Assets to be transferred will be in the form of cash or other property, as FAC and FinCo shall mutually agree prior to such transfer. For the avoidance of doubt, the Assets and Liabilities of the Pre-Distribution Savings Plan attributable to FinCo Employees, Former FinCo Employees, Former Corporate Employees, if any, and all employees listed in Schedule 6.1(c) (FAC/FinCo Employees) shall not be Assumed by the First Advantage 401(k) Plan or transferred to the trust maintained under the First Advantage 401(k) Plan; provided , however , that following the Distribution Date, the employees listed on Schedule 6.6(b) (Employees Eligible for FAC/First Advantage 401(k) Plans) shall be permitted to participate in both the Pre-Distribution Savings Plan and the First Advantage 401(k) Plan for so long as such employees meet the eligibility criteria for each such plan.

(iii) As of the Distribution Date, FAC shall be solely responsible for the adjudication of claims filed by FAC Employees or Former FAC Employees under any FAC Savings Plan

(iv) Nothing contained in this Agreement shall alter in any way the right of FAC, subsequent to the Distribution Date, to amend or terminate the FAC Savings Plan in accordance with its terms and applicable Law.

Section 6.7 Pension Restoration Plan .

(a) Subject to Section 6.7(e) , as of the Distribution Date, (i) FinCo shall Assume sponsorship of and be solely responsible for the management and administration of, and be solely responsible for, all Liabilities under the FinCo Restoration Plan, and FAC shall have no obligation with respect thereto; and (ii) FAC shall retain and be solely responsible for the management, administration, and Liabilities of the FAC Restoration Plan and FinCo shall have no obligation with respect thereto.

(b) Effective as of the Distribution Date, (i) FinCo shall take all such actions

 

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necessary to become the sole plan sponsor of the FinCo Restoration Plan and appoint the members of the Plan Administration Committee, and (ii) FAC shall take all such actions necessary to become the sole plan sponsor of the FAC Restoration Plan and appoint members of the Plan Administration Committee.

(c) Following the Distribution Date, (i) eligible participants shall continue to participate in the FinCo Restoration Plan in accordance with its terms; provided , however , that the foregoing shall in no way alter any right of FinCo, subsequent to the Distribution Date, to amend or terminate the FinCo Restoration Plan in accordance with its terms and applicable Law, and (ii) eligible participants shall continue to participate in the FAC Restoration Plan in accordance with its terms; provided , however , that the foregoing shall in no way alter any right of FAC, subsequent to the Distribution Date, to amend or terminate the FAC Restoration Plan in accordance with its terms and applicable Law. FinCo and FAC shall reasonably cooperate with each other in order to facilitate the foregoing provisions of this Section 6.7 .

(d) As of the Distribution Date, (i) FinCo shall be solely responsible for the adjudication of all FinCo Restoration Plan claims filed by FinCo Restoration Plan participants, including but not limited to claims filed before the Distribution Date under such Plan, provided that the claim relates to Liabilities assumed by FinCo under this Section 6.7 , and (ii) FAC shall be solely responsible for the adjudication of all FAC Restoration Plan claims filed by FAC Restoration Plan participants, including but not limited to claims filed before the Distribution Date under such Plan; provided that the claim relates to Liabilities assumed by FAC under this Section 6.7 .

(e) Notwithstanding anything herein to the contrary, any Pre-Distribution Restoration Plan participant who continues to be employed by both FinCo and FAC after the Distribution Date, or who is a Former Corporate Employee, shall have fifty percent (50%) of his or her Distribution Date accrued benefit, fifty percent (50%) of his or her includable compensation for periods prior to the Distribution Date, plus one hundred percent (100%) of his or her service and plan participation for all applicable periods prior to the Distribution Date allocated to the calculation of his or her benefits under such FinCo Restoration Plan or FAC Restoration Plan, respectively, so that upon the completion of such actions, such employee shall have the same aggregate accrued benefits under the FinCo Restoration Plan and FAC Restoration Plan, both immediately before and immediately after the Distribution Date.

Section 6.8 Health, Welfare and Fringe Benefit Plans .

(a) FinCo Health Plans .

(i) Effective as of April 1, 2010, FinCo shall Assume sponsorship of the Pre-Distribution Health Plans (which shall be referred to as the FinCo Health Plans upon and following the time of the transfer thereof to FinCo), and FinCo Employees shall continue to participate in such FinCo Health Plans on and after the transfer thereof to FinCo. After the date of the transfer thereof to FinCo (the “ Plan Transfer Date ”), FinCo shall assume sole responsibility for all Liabilities under the FinCo Health Plans and sole responsibility for the payment of all employer-related costs in maintaining the FinCo Health Plans, and for the collection and remittance of participant contributions and

 

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premiums, and shall appoint the members of the FinCo Health Plan benefits review committee.

(ii) Upon the Plan Transfer Date, FinCo shall become solely responsible for the adjudication and payment of any claims incurred by a FinCo Employee, Former FinCo Employee, FAC Employee or Former FAC Employee before the Plan Transfer Date under a Pre-Distribution Health Plan that have not been finally adjudicated by FAC on the day immediately preceding the Plan Transfer Date (including, without limitation, any COBRA or retiree medical claims) (the “ Run-out ”), but FAC must reimburse FinCo for the Run-out FinCo pays for FAC Employees and Former FAC Employees on or after April 1, 2010.

(iii) Any determination made or settlements entered into by FAC prior to the Plan Transfer Date with respect to claims incurred under the Pre-Distribution Health Plans shall be final and binding.

(iv) As of the Plan Transfer Date, any Liabilities under COBRA and/or retiree medical Liabilities attributable to any FinCo Employee or Former FinCo Employees (or a qualified beneficiary of such individuals) shall become a FinCo Liability. Effective as of the Plan Transfer Date, FinCo shall be solely responsible for compliance with the health care continuation coverage requirements of COBRA and the FinCo Health Plans and with the retiree medical obligations under the FinCo Health Plans for FinCo Employees, Former FinCo Employees and their qualified beneficiaries (as such term is defined under COBRA).

(v) Notwithstanding anything to the contrary in this Section 6.8 , on and after the Plan Transfer Date, Former Corporate Employees and any employee listed on Schedule 6.1(c) (FAC/FinCo Employees) shall participate in the FinCo Health & Welfare Plans according to their terms, and FAC shall reimburse FinCo for 50% of the sum of (A) the accrual rates for any self-insured Health & Welfare Plan in which such Former Corporate Employees and/or FAC/FinCo Employees participates, (B) any claims in excess of those accrual rates that are not covered by stop loss insurance that any such employee incurs under such self-insured plan, and (C) the cost of any employer subsidy for any insured welfare plan that FinCo subsidizes (after taking into account any employee premiums paid under such plans), for so long as a Schedule 6.1(c) (FAC/FinCo Employees) employee continues to be a co-employee of both FinCo and FAC and continues to participate in the FinCo Health & Welfare Plans or a Former Corporate Employee continues to participate in the FinCo Health & Welfare Plans.

(b) FAC Health Plans .

(i) Effective as of April 1, 2010, FAC shall establish the FAC Health Plans, and FAC Employees shall cease participating in the Pre-Distribution Health Plans as of the effective date of the FAC Health Plan, and shall instead participate in the FAC Health Plans in accordance with their terms. As of the effective date of the FAC Health Plans (except as otherwise provided below): FAC shall be solely responsible for the management and administration of the FAC Health Plans and solely responsible for the

 

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payment of all employer-related costs in establishing and maintaining the FAC Health Plans, paying all benefits thereunder, and for the collection and remittance of participant contributions and premiums and shall establish and appoint members to a benefits review committee to review FAC Health Plan claims.

(ii) Effective as of the transfer of the Pre-Distribution Health Plans to FinCo, FinCo shall become solely responsible for the adjudication and payment of any Pre-Distribution Health Plan claims incurred by a FAC Employee or Former FAC Employee but not finally adjudicated by FAC on the day immediately preceding the effective date of the FAC Health Plans (including, without limitation, any COBRA or retiree medical claims).

(iii) Following the effective date of the FinCo Health Plans, any determination made or settlements entered into by FinCo with respect to claims incurred under the Pre-Distribution Health Plans by FAC Employees and Former FAC Employees shall be final and binding.

(iv) Effective for claims incurred on or after the effective date of the FAC Health Plans, FAC shall be solely responsible for compliance with the health care continuation coverage requirements of COBRA and the FAC Health Plans and with the retiree medical obligations under the FAC Health Plans for FAC Employees, Former FAC Employees and their qualified beneficiaries (as such term is defined under COBRA). Notwithstanding the foregoing, for avoidance of doubt, FinCo (as successor to the Pre-Distribution Health Plans) shall be and remain responsible for all COBRA and retiree medical Run-out with respect to any FAC Employee or Former FAC Employee, but FAC must reimburse FinCo for the Run-out FinCo pays for FAC Employees and Former FAC Employees on or after April 1, 2010.

(v) The FAC Health Plan shall provide that each eligible FAC Employee or Former FAC Employee will receive credit in 2010 for any co-payments and deductibles paid during 2010 under a Pre-Distribution Health Plan prior to the effective date of the FAC Health Plans in satisfying any applicable 2010 deductible or out-of-pocket requirements under the FAC Health Plan. The FAC Health Plan shall also provide that it shall cover any pre-existing conditions and pre-authorized medical procedures that are recognized under the Pre-Distribution Health Plan, and shall take into account all financial accumulators (including without limitation any prior expenses charged against any annual or lifetime or other plan maximums) accounted for under the Pre-Distribution Health Plans.

(vi) The FinCo Health Plans and the FAC Health Plans will provide that each eligible FAC Employee or Former FAC Employee participating in the FAC Health Plans on or after April 1, 2010, and each eligible FinCo Employee or Former FinCo Employee participating in the FinCo Health Plans on or after April 1, 2010, will receive credit in 2010 for any co-payments and deductibles paid during 2010 under the applicable Health Plan, if before the Distribution Date such Employee thereafter transfers to either the FinCo Health Plans or FAC Health Plans, as the case may be, and that this credit shall apply in satisfying any applicable 2010 deductible or out-of-pocket

 

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requirements under the FinCo Health Plans, or FAC Health Plans, as the case may be.

(vii) The FinCo Health Plans and FAC Health Plan shall cover any pre-existing conditions and pre-authorized medical procedures to the extent these are recognized under the FinCo Health Plans or FAC Health Plan, as the case may be, for each eligible FAC Employee or Former FAC Employee participating in the FAC Health Plan on or after April 1, 2010, and each eligible FinCo Employee or Former FinCo Employee participating in the FinCo Health Plans on or after April 1, 2010, that transfers to either the FinCo Health Plans or FAC Health Plan after April 1, 2010 and before the Distribution Date, and in those cases, with respect to such transferring employees, the Plans shall also take into account all financial accumulators (including, without limitation, any prior expenses charged against any annual or lifetime or other plan maximums) accounted for under the FinCo Health Plans or FAC Health Plan, as the case may be.

(viii) Any accumulated premiums collected from January 1, 2010 through March 31, 2010, shall be used to pay Pre-Distribution Health Plan expense until such time; whereupon any excess accumulated premiums remaining thereafter shall be allocated between and proportionate to the Liabilities of the respective FinCo Health Plans and FAC Health Plans.

(c) Section 125 Plans . Effective as of April 1, 2010, FinCo will assume responsibility for sponsorship and administration of the Pre-Distribution Section 125 Plan with respect to FinCo Employees and Former FinCo Employees, and FAC will establish or cause to be established a FAC Section 125 Plan with respect to FAC Employees and Former FAC Employees. On and after that date, (i) FAC shall be solely responsible for the management and administration of the FAC Section 125 Plan, and (ii) FinCo will transfer all FAC Employee and Former FAC Employee Section 125 accounts (including without limitation Flexible Spending Accounts (“ FSA ”)) from the FinCo Section 125 Plan to the FAC Section 125 Plan.

(d) Disability Plans . Effective not later than the Distribution Date, (i) FinCo shall assume responsibility for the sponsorship and administration of the Pre-Distribution Disability Plans (which shall be known as the FinCo Disability Plans), and (ii) FAC shall establish the FAC Disability Plans. On and after that date, FAC Employees shall cease participating in the Pre-Distribution Disability Plans and/or FinCo Disability Plans, and shall begin participating in the FAC Disability Plans. On and after the effective date of the FAC Disability Plans: (i) FAC shall be solely responsible for the management and administration of the FAC Disability Plans and solely responsible for the payment of all employer-related costs in establishing and maintaining the FAC Disability Plans, and (ii) FinCo shall assume sole responsibility for all disability Liabilities under the FinCo Disability Plans and shall be solely responsible for the payment of all employer-related costs in maintaining the FinCo Disability Plans. In the event that a FinCo Disability Plan is self-funded, FAC shall reimburse FinCo for the cost of providing disability benefits to an FAC Employee or Former FAC Employee for time periods occurring on or after the Distribution Date.

(e) Group Insurance Plans . Effective no later than the Distribution Date, (i) FinCo shall assume responsibility for the sponsorship and administration of the Pre-Distribution

 

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Group Insurance Plans (which shall be known as the FinCo Group Insurance Plans), and (ii) FAC shall establish the FAC Group Insurance Plans. FAC Employees shall cease participating in the Pre-Distribution Group Insurance Plans and/or FinCo Group Insurance Plans as of such date, and shall begin participating in the FAC Group Insurance Plans. On and after the effective date of the FAC Group Insurance Plans: (i) FAC shall be solely responsible for the management and administration of the FAC Group Insurance Plans and solely responsible for the payment of all employer-related costs in establishing and maintaining the FAC Group Insurance Plans, and (ii) FinCo shall assume sole responsibility for all Liabilities under the FinCo Group Insurance Plans and shall be solely responsible for the payment of all employer-related costs in maintaining the FinCo Group Insurance Plans.

(f) Fringe Benefits . Effective no later than the Distribution Date, FinCo shall be responsible for establishing the FinCo Fringe Benefits Plans (as necessary) and FAC shall be responsible for establishing the FAC Fringe Benefits Plans (as necessary) and each party shall maintain its own fringe benefit plans, policies and arrangements, including any employee assistance program, educational assistance program and any other fringe benefit plans, programs and arrangements. FinCo shall be solely responsible for the management and administration of all related obligations and responsibilities with respect to claims for such fringe benefits by FinCo Employees and Former FinCo Employees (i) incurred under the FinCo Fringe Benefit Plans on and after the effective date of the FinCo Fringe Benefit Plans and (ii) incurred but not paid under the Pre-Distribution Fringe Benefit Plans prior to the effective date of the FinCo Fringe Benefit Plans. FAC shall retain financial and administrative Liability and all related obligations and responsibilities with respect to claims for such fringe benefits incurred by FAC Employees and Former FAC Employees at any time.

(g) Paid Time Off and Payroll . Effective as of the Distribution Date, each Party shall establish or retain their own paid time off policy and (i) any earned but unused paid time off (including vacation pay) that a FinCo Employee is entitled to as of the Distribution Date will be credited to the FinCo Employee under the FinCo paid time off policy and provided in accordance with that policy; and (ii) any earned but unused paid time off (including vacation pay) that a FAC Employee is entitled to as of the Distribution Date will be continued by the FAC paid time off policy and provided in accordance with that policy. On and after the Distribution Date, each Party shall have no liability for paid time off on behalf of the other Party’s employees.

(h) Annual Bonus Plans . With respect to any annual bonus or incentive plan not otherwise described in this Agreement, each Party (or their applicable Affiliate or Subsidiary) shall be responsible for all Liabilities and fully perform, pay and discharge all annual bonus obligations relating to any annual incentive plan for their respective employees and former employees for 2010 and thereafter.

Section 6.9 Cooperation and Administrative Provisions .

(a) Notwithstanding anything herein to the contrary, the Parties shall reasonably cooperate and work together to unify, consolidate and share (to the extent permissible under applicable privacy/data protection laws) all relevant documents, Board resolutions, government filings, data, payroll and employment Information on regular timetables, make certain that each applicable entity’s data and records are correct and updated on a timely basis,

 

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and cooperate as needed with respect to (i) any litigation with respect to an employee benefit plan or arrangement contemplated by this Agreement, (ii) an audit of an employee benefit plan or arrangement contemplated by this Agreement by the Internal Revenue Service, Department of Labor or any other Government Entity, (iii) seeking a determination letter, private letter ruling or advisory opinion from the Internal Revenue Service or Department or Labor on behalf of any employee benefit plan or arrangement contemplated by this Agreement, and (iv) any filings that are required to be made or supplemented to the Internal Revenue Service, Pension Benefit Guaranty Corporation, Department of Labor or any other Government Entity; provided , however , that requests for cooperation must be reasonable and not interfere with daily business operations.

(b) Notwithstanding anything herein to the contrary, the Parties agree that they shall share all necessary data elements to administer the FAC and FinCo equity plans described in Section 6.1 and Section 6.2 for up to a period not to exceed ten (10) years following the Distribution Date. This data shall be made available in the formats that exist at the time of the distribution or in any other mutually agreeable format. Data shall be transmitted to these administrators via a mutually agreeable method of data transmission. Each Party also agrees to ensure that their plan administrator will make available all necessary data elements required now or in the future including but not limited to, exercise, lapse and tax data, in a timely fashion and to withhold appropriate taxes at the direction of the employer company of the individual for the time period covered under this provision.

(c) With respect to any employees on international assignment who are listed on Schedule 6.9(c) (FinCo Employees on International Assignment) and who become FinCo Employees, (i) if such employees are repatriated to their home countries or initiate the process of repatriation prior to the Distribution Date, FAC shall pay the costs of repatriation; and (ii) if such employees remain on international assignment through the Distribution Date, (A) FAC shall pay the cost of assignment up to the Distribution Date except that the tax obligation for the year of separation shall be prorated between FAC and FinCo, as set forth in Schedule 6.9(c) (FinCo Employees on International Assignment) , and (B) any costs related to repatriation initiated at some future date shall be the responsibility of FinCo.

(d) The Parties shall share, or cause to be shared, all Information on participants in the FinCo Plans and FAC Plans that is necessary and appropriate for the efficient and accurate administration of the FinCo Plans and FAC Plans, including (but not limited to) Information reasonably necessary to timely respond to claims for benefits made by participants and Information on expenses incurred by FinCo Plans prior to the Distribution Date so that FinCo may invoice and pay administrative expenses from their respective plan trusts as described below. The Parties and their respective authorized agents shall, subject to applicable laws of confidentiality and data protection and transfer, be given reasonable and timely access to, and may make copies of, all Information relating to the subjects of this ARTICLE VI to the extent necessary or appropriate for such administration. The Parties agree, upon reasonable request, to provide financial, operational and other Information on each FinCo Plan and FAC Plan, including (but not limited to) Information on a plan’s assets and liabilities, at a level of detail reasonably necessary and appropriate for the efficient and accurate administration of each of the FinCo Plans and FAC Plans. Notwithstanding the foregoing, if any such Information described in this Section 6.9(d) cannot be reasonably obtained without additional cost, each Party

 

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shall agree to reimburse the other Party for all additional third-party costs and such other reasonable costs of obtaining the Information. To the extent that the FinCo Health Plans and the FAC Health Plans share protected health Information (“ PHI ”), the FinCo Health Plans and FAC Health Plans hereby agree to enter into appropriate business associate agreements to cover the sharing of PHI, as required by the Health Insurance Portability and Accountability Act of 1996.

(e) To the extent not covered elsewhere in this Agreement, with respect to expenses and costs incurred on behalf of a FinCo Plan or FAC Plan: (i) FinCo shall be responsible, through either direct payment or reimbursement to FAC for its allocable share of actual third party and/or vendor costs and expenses incurred by any member of the FAC Group or the FAC Plans relating to FinCo Employees or Former FinCo Employees, and (ii) FAC shall be responsible, through either direct payment or reimbursement to FinCo for its allocable share of actual third party and/or vendor costs and expenses incurred by any member of the FinCo Group or the FinCo Plans relating to FAC Employees or Former FAC Employees. An allocable share of any such costs and expenses will be determined in a manner consistent with the manner in which the allocable share of such costs and expenses was determined prior to the Distribution Date. The Parties agree to pay their allocable share for any third-party costs associated partially or entirely with their respective employee benefit plans associated with this Distribution following the Distribution Date.

(f) To the extent not covered elsewhere in this Agreement, with respect to all employee benefit plans, policies, programs, payroll practices, and arrangements maintained outside of the United States, the Parties agree that they shall reasonably cooperate and work together to facilitate any transfer of employee benefit plans, policies, programs, payroll practices, and arrangements as necessary and in accordance with applicable Law.

(g) To the extent not otherwise provided in this Agreement, the Parties agree that if an amount in the nature of a recovery (including without limitation, a litigation recovery, premium or other fee or cost rebate, or demutualization proceeds) becomes payable as the result of the maintenance of an employee benefit plan covered by this Agreement and such recovery is attributable to events that occurred prior to the Distribution, then (i) to the extent that the recovery is payable with respect to the maintenance or management of the assets of a pre-Distribution master trust or other trust (a “ Pre-Distribution Trust ”) that was split into two trusts maintained by the Parties as a result of the Distribution, such recovery will be allocated to the appropriate post-Distribution trusts in the same proportion as was applicable to the Pre-Distribution Trust split; (ii) to the extent that the recovery is payable with respect to the maintenance or management of the assets of a Pre-Distribution Trust that was not split as a result of the Distribution, such recovery will be allocated solely to that trust; (iii) notwithstanding (i)  or (ii) , to the extent attributable to a FAC Employee or Former FAC Employee, allocated to FAC and to the extent attributable to a FinCo Employee or Former FinCo Employee, allocated to FinCo; and (iv) to the extent that a recovery is not covered by subclauses (i) , (ii)  or (iii)  above, the Parties will reasonably cooperate with each other and, subject to any applicable fiduciary duties under ERISA or otherwise, determine a fair allocation of the recovery among the appropriate post-Distribution employee benefit plans, associated trusts and/or plan participants.

(h) To the extent not covered elsewhere in this Agreement, the Parties (and their Subsidiaries and Affiliates) are hereby authorized to implement the provisions of this

 

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ARTICLE VI , including by making appropriate adjustments to employee benefits provided for in this Agreement; provided such adjustments are intended for administrative or recordkeeping purposes to retain the value of benefits provided in accordance with the provisions of this Agreement.

Section 6.10 Approval of Plans; Terms of Participation by Employees in Plans .

(a) Approval of Plans . On or prior to the Distribution Date, the Parties shall take all actions as may be necessary to approve the stock-based employee benefit plans of FinCo in order to satisfy the requirements of Rule 16b-3 under the Exchange Act and the applicable rules and regulations of the NYSE.

(b) Non-Duplication of Benefits . The FinCo Plans and FAC Plans shall not provide benefits that duplicate benefits provided to a participant by a corresponding FinCo Plan or FAC Plan. The Parties shall agree on methods and procedures, including amending the respective plan documents, to prevent FinCo Employees, Former FinCo Employees, FAC Employees and Former FAC Employees from receiving duplicate benefits from the FinCo Plans, and FAC Plans; provided , that nothing shall prevent FinCo from unilaterally amending the FinCo Plans to avoid such duplication and nothing shall prevent FAC from unilaterally amending the FAC Plans to avoid such duplication.

(c) Service Credits under Plans . Except as may be specified in Schedule 6.10(c) (Service Credits Under Plans) , service with FAC or any of its Subsidiaries shall be credited under the FinCo Plans and FAC Plans to the extent and for the express purposes set forth (including, as applicable and without limitation: eligibility, vesting, company match levels, subsidies, recognition of pre-existing credit and credit for amounts of co-pays, out-of-pocket maximums and deductibles, but not for benefit accrual purposes under pension plans not in existence on the Distribution Date) under the applicable FinCo Plan or FAC Plan, except to the extent duplication of benefits would result; provided , however , that in the event an employee or former employee of one of the Parties (or its Subsidiaries or Affiliates) becomes employed by the other Party (or its Subsidiaries or Affiliates) after December 31, 2010, such employee or former employee’s service with any member of the FAC controlled group prior to the Distribution Date need not be credited by the new employer except to the extent required by Law. Notwithstanding the foregoing, in the event of any conflict between this Section 6.10(c) and the terms of any FinCo Plan or FAC Plan, the express terms of such plan shall govern.

(d) Plan Elections . Except as may be specifically provided otherwise under this Agreement or applicable Law, all participant elections (including, without limitation, enrollment elections, deferral elections, investment elections, benefit elections, FSA elections, payment elections, beneficiary designations, qualified domestic relations orders, qualified medical child support orders and loan agreements) with respect to the participation of a FinCo Employee, Former FinCo Employee, FAC Employee or Former FAC Employee in a FAC employee benefit arrangement shall be transferred to and be in full force and effect under the FinCo Plan or FAC Plan, as applicable, in accordance with the terms of such plan and to the extent permissible under such plan, until such elections are replaced or revoked by the employee who made such election.

 

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(e) Amendment and Termination . No provision in this Agreement shall prohibit the Parties, subsequent to the Distribution Date, from amending or terminating the employee benefit plans, policies and programs described herein in accordance with the provisions of such plans, policies and programs and applicable Law.

Section 6.11 Tax Consequences . For Tax purposes, the Parties agree that the treatment of all of the equity compensation and deferred compensation arrangements set forth in this ARTICLE VI shall be treated in accordance with Paragraph 11 of the Tax Sharing Agreement.

Section 6.12 International Regulatory Compliance . The Parties shall have the authority to adjust the treatment otherwise described in this ARTICLE VI in order to ensure compliance with the applicable laws or regulations of countries outside the United States or to preserve the tax benefits provided under local tax law or regulation prior to the Distribution.

Section 6.13 No Service Providers Are Third Party Beneficiaries . This Agreement is solely for the benefit of the Parties and should not be deemed to confer upon third parties, including, but not limited to, any FinCo Employee, Former FinCo Employee, FAC Employee, or Former FAC Employee, any remedy, claim, liability, reimbursement, claim of action or other right based upon one or more of the provisions of this ARTICLE VI .

Section 6.14 Indemnification .

(a) Notwithstanding any other provision set forth in this Agreement, (i) FinCo hereby indemnifies and holds harmless FAC and its Subsidiaries and Affiliates and the FAC Savings Plans, the FAC Restoration Plan, and the FAC Health & Welfare Plans (and each of their respective officers, directors, employees, agents and fiduciaries) with respect to any and all Liabilities relating to the FinCo Savings Plans, FinCo Restoration Plan, and FinCo Health & Welfare Plans, respectively; and (ii) FAC hereby indemnifies and holds harmless FinCo and its Subsidiaries and Affiliates and the FinCo Savings Plans, the FinCo Restoration Plan and the FinCo Health & Welfare Plans (and each of their respective officers, directors, employees, agents and fiduciaries) with respect to any and all Liabilities relating to the FAC Savings Plans, the FAC Restoration Plan, and FAC Health & Welfare Plans, respectively. Furthermore, FinCo agrees to hold FAC harmless with respect to any Liabilities related to actions taken to establish the FinCo Plans (and related third party administrative agreements) on or prior to the Distribution Date. FAC agrees to hold FinCo harmless with respect to any Liabilities related to actions taken to establish the FAC Plans (and related third party administrative agreements) on or prior to the Distribution Date.

(b) Notwithstanding any other provision set forth in this Agreement, as of the Distribution Date, FinCo hereby indemnifies and holds harmless FAC (and its affiliates, Subsidiaries, officers, directors, employees, agents and fiduciaries) with respect to any and all Liabilities in respect of the FinCo Pension Plan, but FAC must, and hereby does, retain and assume one-half of the Liability associated with the administration of the Pre-Distribution Pension Plan including with respect to any breach or alleged breach of fiduciary duty in connection therewith.

 

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ARTICLE VII.

CONTINGENT SHARED ASSETS AND CONTINGENT SHARED LIABILITIES

Section 7.1 Contingent Shared Assets and Contingent Shared Liabilities .

(a) Contingent Shared Assets . To the extent that a Party or any member of its Group receives from a third party any proceeds of any kind arising out of a Contingent Shared Asset, to the extent necessary, such Party shall, or shall cause the applicable member of its Group to, promptly (but in no event later than thirty (30) days following receipt thereof, unless there is a good faith open question as to whether such proceeds are in fact Contingent Shared Assets and the matter has been submitted for resolution pursuant to the terms of this Agreement, in which case, promptly following the final determination thereof) Transfer such amount to the other Party pursuant to and in accordance with their respective Applicable Percentage. Transfers under this Section 7.1(a) are subject to the Parties’ agreement (i) as to the most cost efficient means of effecting such Transfer and (ii) to share any incremental costs arising as a result of such Transfer; provided , that if the Parties cannot agree on a means of effecting the Transfer within thirty (30) days from the date that the Parties have notice of the discovery of such proceeds, then the proceeds shall be immediately Transferred.

(b) Contingent Shared Liabilities . Except as otherwise expressly set forth in this ARTICLE VII or the Tax Sharing Agreement (with respect to Taxes) and without limiting the indemnification provisions hereof, FAC and FinCo shall each be responsible for its Applicable Percentage of the Contingent Shared Liabilities (in addition to, without duplication, each such Party’s Applicable Percentage of any Indemnifiable Losses in respect of any such Contingent Shared Liabilities pursuant to and in accordance with the relevant provisions of ARTICLE X ). Any amount owed in respect of any Contingent Shared Liabilities (including reimbursement for the out-of-pocket costs and expenses of defending, managing or providing assistance to the Managing Party pursuant to Section 7.3(b) with respect to any Third Party Claim that is a Contingent Shared Liability, which shall include any amounts with respect to a bond, prepayment or similar security or obligation required (or determined to be advisable by the Managing Party) to be posted by the Managing Party in respect of any claim) shall be remitted promptly after the Party entitled to such amount provides an invoice (including reasonable supporting Information with respect thereto) to the Party owing such amount and such out-of-pocket costs and expenses shall be included in the calculation of the amount of the applicable Contingent Shared Liability in determining the reimbursement obligations of the other Party with respect thereto; provided , however , in the event that an amount in excess of $1,000,000, is owed by the Parties to any third party or parties, in lieu of remitting amounts directly to the Party providing the invoice, the owing Party may remit the owed amount directly to the appropriate third party or parties or to a trust established by the invoicing Party, in such invoicing Party’s

 

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name (but for the benefit of the third party or parties), and each Party shall contribute its Applicable Percentage of the owed amount to such trust account. In furtherance of the foregoing, the Managing Party shall be entitled to reimbursement by the other Party (in an amount of one-half each and when invoiced) of any out-of-pocket costs and expenses (which shall include the pro rata portion of the costs of salaries and benefits of employees attributed to the management or defense of such Contingent Shared Liability) related to or arising out of defending or managing any such Contingent Shared Liability, in advance of a final determination or resolution of any Action related to a Contingent Shared Liability. For U.S. federal income Tax purposes, the Parties shall treat the payment of Contingent Shared Liabilities (and costs and expenses relating to Contingent Shared Liabilities, as the case may be) as set forth in the Tax Sharing Agreement. It shall not be a defense to any obligation by the non-managing Party to pay any amounts, whether pursuant to this ARTICLE VII or in respect of Indemnifiable Losses pursuant to ARTICLE X , in respect of any Contingent Shared Liability that (i) such Party was not consulted in the defense or management thereof, (ii) that such Party’s views or opinions as to the conduct of such defense were not accepted or adopted, (iii) that such Party does not approve of the quality or manner of the defense thereof or (iv) that such Contingent Shared Liability was incurred by reason of a settlement rather than by a judgment or other determination of Liability (even if, subject to Section 10.4(b)(v) , such settlement was effected without the consent or over the objection of such Party).

Section 7.2 Management of Contingent Shared Assets and Contingent Shared Liabilities .

(a) For purposes of this ARTICLE VII , “ Managing Party ” shall initially mean FinCo; provided , however , that under certain circumstances FAC may become the Managing Party as may be otherwise agreed to in writing by the Parties or as set forth on Schedule 1.1(b) (Contingent Shared Liabilities) .

(b) Except as provided in the Tax Sharing Agreement (with respect to management of Tax Contests), the Managing Party shall, on behalf of the other Party, have sole and exclusive authority to commence, prosecute, manage, control, conduct or defend (or assume the defense of) or otherwise determine all matters whatsoever (including, as applicable, litigation strategy and choice of legal counsel or other professionals) with respect to any Contingent Shared Asset and, on behalf of the other Party, any Action or Third Party Claim with respect to a Contingent Shared Liability (including with respect to those Contingent Shared Assets set forth on Schedule 1.1(a) (Contingent Shared Assets) and Contingent Shared Liabilities set forth on Schedule 1.1(b) (Contingent Shared Liabilities) ). The Managing Party shall use its commercially reasonable best efforts to promptly notify the other Party in the event that it commences an Action with respect to a Contingent Shared Asset; provided , that the failure to provide such notice shall not give rise to any rights on the part of the other Party against the Managing Party or affect any other provision of this Section 7.2 . So long as the Managing Party has assumed and is actively and diligently conducting the defense of any Contingent Shared Liability in accordance with this Section 7.2(b) , the other Party will not consent to the entry of any judgment or enter into any settlement with respect to the Contingent Shared Liability without the prior written consent of the Managing Party.

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pursue any Contingent Shared Asset for any reason whatsoever (including a different assessment of the merits of any Action, claim or right than the other Party might make or any business reasons that may be in the best interests of the Managing Party or a member of such Managing Party Group, without regard to the best interests of any member of the other Party’s Group) and that no member of the Managing Party Group shall have any Liability to any Person (including any member of the other Party’s Group) as a result of any such determination. If the Managing Party elects not to pursue a Contingent Shared Asset, the Managing Party shall promptly notify the other Party in writing of such election. At any time after receipt of such notice, the other Party may elect to pursue such Contingent Shared Asset and be deemed the Managing Party with respect thereto.

(d) The Managing Party shall on a monthly basis, or if a material development occurs as soon as reasonably practicable after such occurrence, fully inform the other Party of the status of and developments relating to any matter involving a Contingent Shared Asset or Contingent Shared Liability and provide copies of any material document, notices or other materials related to such matters. The other Party shall cooperate fully with the Managing Party in its management of any of such Contingent Shared Asset or Contingent Shared Liability and shall take such actions in connection therewith that the Managing Party reasonably requests (including providing access to such Party’s Records and employees as set forth in Section 7.3 ).

(e) Neither FAC nor FinCo shall take, nor permit any member of its respective Group to take, any action (including commencing any Action) or omit to take any action that may interfere with or that may adversely affect the rights and powers of the Managing Party pursuant to this ARTICLE VII .

(f) In the event of any dispute as to whether any claim, obligation, Asset or Liability is a Contingent Shared Asset or a Contingent Shared Liability, or whether such claim, obligation, Asset or Liability is an Asset or Liability allocated to one of the Parties pursuant to this Agreement or an Ancillary Agreement as set forth in Section 7.4(b) , the Managing Party may, but shall not be obligated to, commence prosecution or other assertion of such claim or right pending resolution of such dispute. In the event that the Managing Party commences any such prosecution or assertion and, upon resolution of the dispute (pursuant to ARTICLE X or otherwise), it is determined that such Asset or Liability is not a Contingent Shared Asset or a Contingent Shared Liability and that such Asset or Liability belongs to the other Party, pursuant to the provisions of this Agreement or any Ancillary Agreement, the Managing Party shall have the right to cease the prosecution or assertion of such right or claim and the other Party shall cooperate to transfer the control thereof to the other Party. In such event, the other Party shall promptly reimburse the Managing Party for all out-of-pocket costs and expenses incurred to such date in connection with the prosecution or assertion of such claim or right.

Section 7.3 Access to Information; Certain Services; Expenses .

(a) Access to Information and Employees by the Managing Party . Unless otherwise prohibited by Law or more specifically provided in the Tax Sharing Agreement with respect to Tax Contests and access to information related thereto, in connection with the management and disposition of any Contingent Shared Asset or any Contingent Shared Liability,

 

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the other Party shall make readily available to and afford to the Managing Party and its authorized accountants, counsel and other designated representatives reasonable access, subject to appropriate restrictions for classified, privileged or confidential information, to the employees, properties, and Information of such Party and the members of such Party’s Group insofar as such access relates to the relevant Contingent Shared Asset or Contingent Shared Liability; provided , that it is understood by the Parties that such access as well as any services provided pursuant to Section 7.3(b) below may require a significant time commitment on the part of such Party’s employees and that any such commitment shall not otherwise limit any of the rights or obligations set forth in this ARTICLE VII ; provided , further , that it is also understood that such access and such services provided shall not unreasonably interfere with any of such Party’s employees’ normal functions. Nothing in this Section 7.3(a) shall require any Party to violate any agreement with any third party regarding the confidentiality of confidential and proprietary information relating to that third party or its business; provided , however , that in the event that a Party is required to disclose any such Information, such Party shall use commercially reasonable best efforts to seek to obtain such third party’s written Consent to the disclosure of such Information.

(b) Certain Services . Each of FAC and FinCo shall make available to the other, upon reasonable written request, its and its Subsidiaries’ officers, directors, employees and agents to assist in the management (including, if applicable, as witnesses in any Action) of any Contingent Shared Liabilities and Contingent Shared Assets to the extent that such Persons may reasonably be required in connection with the prosecution, defense or day-to-day management of any Contingent Shared Asset or Contingent Shared Liability. In respect of the foregoing, Schedule 1.1(a) (Contingent Shared Assets) and Schedule 1.1(b) (Contingent Shared Liabilities) set forth certain identified Contingent Shared Assets and Contingent Shared Liabilities, respectively, and may identify (but do not limit) those employees and agents who shall assist the Managing Party in its management of such Contingent Shared Liabilities and Contingent Shared Assets.

Section 7.4 Notice Relating to Contingent Shared Assets and Contingent Shared Liabilities; Disputes .

(a) In the event that any Party or any member of such Party’s Group or any of their respective Affiliates, becomes aware of (i) any Asset or Liability that may be a Contingent Shared Asset or Contingent Shared Liability, (ii) any matter or occurrence that has given or could give rise to a Contingent Shared Liability or Contingent Shared Asset or (iii) any matter reasonably relevant to the Managing Party’s ongoing or future management, prosecution, defense and/or administration of any Contingent Shared Liability or Contingent Shared Asset, such Party shall promptly (but in any event within thirty (30) days of becoming aware of such Asset, Liability or related matter, unless, by its nature the subject matter of such notice would require earlier notice) notify the other Party of any such matter (setting forth in reasonable detail the subject matter thereof); provided , however , that the failure to provide such notice shall not release any Party from any of its obligations under this ARTICLE VII except and solely to the extent that any such Party shall have been actually prejudiced as a result of such failure.

(b) In the event that any Party disagrees whether a claim, obligation, Asset or Liability is a Contingent Shared Asset or a Contingent Shared Liability or whether such claim,

 

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obligation, Asset or Liability is an Asset or Liability allocated to one of the Parties pursuant to this Agreement or any Ancillary Agreement, then such matter shall be resolved pursuant to and in accordance with the dispute resolution provisions set forth in ARTICLE X .

Section 7.5 Cooperation with Governmental Entity . If, in connection with any Contingent Shared Asset or Contingent Shared Liability, the Non-Managing Party is required by Law to respond to or cooperate with a Governmental Entity, such Party shall be entitled to cooperate and respond to such Governmental Entity after, to the extent practicable under the specific circumstances, consultation with the Managing Party of such Contingent Shared Asset or Contingent Shared Liability; provided , that to the extent such consultation was not practicable such Party shall promptly inform the Managing Party of such cooperation or response to the Governmental Entity and the subject matter thereof. In the event that the Non-Managing Party is requested or required by any Governmental Entity to take any action in connection with any Contingent Shared Asset or Contingent Shared Liability pursuant to written or oral question or request for Information or documents in any legal or administrative proceeding, review, interrogatory, subpoena, investigation, demand or similar process, such Party will notify the Managing Party promptly of the request or requirement and such Party’s response thereto.

Section 7.6 Default . In the event that a Party defaults in any full or partial payment in respect of any Contingent Shared Liability (as provided in this ARTICLE VII and in ARTICLE X ), including the payment of the costs and expenses of the Managing Party, then the non-defaulting Party may exercise any available legal remedies available against such defaulting Party; provided , further , that interest shall accrue on any such defaulted amounts at a rate per annum equal to the then applicable Prime Rate plus four percent (4%) (or the maximum legal rate, whichever is lower). In connection with the foregoing, it is expressly understood that a defaulting Party’s share of the proceeds from any Contingent Shared Asset may be used via a right of offset to satisfy, in whole or in part, the obligations of such defaulting Party.

Section 7.7 Litigation Management Agreement . Notwithstanding anything to the contrary in this Agreement, the Parties acknowledge and agree that the Litigation Management Agreement (as the same may be formally or informally amended from time to time to include additional litigation matters) shall govern with respect to all matters specifically set forth therein or covered by the terms thereof (including, but not limited to, any Contingent Shared Liabilities that consist of litigation). In the event of a conflict between the provisions of the Litigation Management and the provisions of this Agreement with respect to such matters the Litigation Management Agreement shall control.

ARTICLE VIII.

ISSUANCE OF FAC SHARES; REGISTRATION RIGHTS

Section 8.1 Issuance of FAC Shares to FinCo.

(a) On the Distribution Record Date, FAC shall issue 5,173,306 FAC Common Shares to FinCo and 7,759,959 FAC Common Shares to FATICO (collectively, the “ FAC Shares ”), determined by (i) dividing $250 million by the ex-distribution FAC closing share price on the Distribution Record Date if FAC’s Common Shares are trading ex-distribution on

 

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the Distribution Record Date or (ii) if there is no such closing share price on the Distribution Record Date, by dividing $250 million by a reasonable estimate of the ex-distribution FAC closing share price as determined in good faith by the Board of Directors of FAC on the Distribution Record Date, with each of FinCo’s and FATICO’s proportional ownership of the FAC Shares to be determined by FinCo prior to the issuance. The issuance of any FAC Shares to FATICO shall be subject to the terms of the purchase agreement between FAC and FATICO, dated as of June 1, 2010. Within five (5) years of the Distribution Date, FinCo shall, and shall cause FATICO to, dispose of the FAC Shares; provided , however , that FAC has complied with the requirements set forth in Section 8.4 .

(b) Promptly following the Distribution Date, each of FinCo and FATICO shall cancel any shares of FinCo Common Stock received by them in the Distribution due to their ownership of the FAC Shares.

Section 8.2 Cash Adjustment; Promissory Note . If the value of the FAC Shares on the Distribution Date (determined solely by reference to the Closing Ex-Distribution FAC Share Price) exceeds $250,000,000, then each of FinCo and FATICO shall pay to FAC its pro rata portion of an adjustment equal to the amount of such excess. If the value of the FAC Shares on the Distribution Date (determined solely by reference to the Closing Ex-Distribution FAC Share Price) is less than $250,000,000, then FAC shall pay to each of FinCo and FATICO its pro rata portion of an adjustment equal to the amount of such deficiency. The payment of the adjustment set forth in this Section 8.2 shall be paid by FAC or FinCo and FATICO, as the case may be within ten Business Days following the Distribution Date, in the form of (a) a cash payment to the other party or parties up to $10,000,000 (or, with respect to FinCo and FATICO, up to $10,000,000 in the aggregate) and (b) a promissory note or notes in the form set forth as Exhibit C hereto issued to the other party or parties with an aggregate principal amount equal to the amount of the adjustment (if any) in excess of $10,000,000.

Section 8.3 Right of First Offer .

(a) If FinCo or FATICO desires to Transfer or otherwise directly or indirectly dispose of one percent (1%) or more of the total number of FAC Common Shares then outstanding, in one (1) transaction or a series of transactions during any ten (10) day period (a “ Proposed Sale ”), then FinCo (or FATICO) shall first notify FAC in writing. FinCo’s (or FATICO’s) notice to FAC (the “ Proposed Sale Notice ”) shall state FinCo’s or FATICO’s intention to transfer the FAC Shares and the amount of FAC Shares to be sold. Notwithstanding the foregoing, FinCo and FATICO shall be limited to a maximum of three (3) Proposed Sales per year through the fourth anniversary of the Distribution Date; thereafter there shall be no limits on the number of Proposed Sales FinCo and FATICO may initiate.

(b) In the event FAC wishes to purchase the FAC Shares, FAC shall notify FinCo in writing of its desire to purchase or to designate another Person to purchase, all of the FAC Shares covered by the Proposed Sale Notice (an “ Offer to Purchase ”) within two (2) Business Days of receipt of a Proposed Sale Notice for $100 million or less of FAC Shares (based on the last per share trading price of FAC Common Shares on the day prior to receipt of the Proposed Sale Notice) and within five (5) Business Days of receipt of a Proposed Sale Notice for more than $100 million of FAC Shares (based on the last per share trading price of FAC

 

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Common Shares on the day prior to receipt of the Proposed Sale Notice).

(i) An Offer to Purchase shall (A) state the proposed price (which shall be payable in immediately available funds and solely in U.S. dollars) at which FAC is offering to purchase the FAC Shares (which price may be stated either as a dollar amount or as tied to a specific or average closing price of FAC Common Shares for a particular day or a specified period of time), (B) state the material terms and conditions of the purchase of the FAC Shares, (C) provide that the closing of any sale upon acceptance of an Offer to Purchase shall take place no more than ten (10) Business Days following such acceptance and (D) state that the Offer to Purchase is irrevocable for a period of seventy-five (75) Business Days from the date of FinCo’s receipt of such Offer to Purchase.

(ii) During the seventy-five (75) Business Days following receipt of an Offer to Purchase, FinCo and/or FATICO shall have the opportunity to seek alternative purchasers for the FAC Shares (the “ Go Shop Period ”); provided that during the Go Shop Period, FinCo can only sell the FAC Shares to an alternative purchaser if the terms offered by such alternative purchaser are superior, in the good faith determination of FinCo, to the terms of such Offer to Purchase.

(iii) In the event that FinCo and/or FATICO do not enter into an agreement for the sale of FAC Shares to an alternative purchaser during the Go-Shop Period, the right of first offer provided hereunder shall be deemed to be revived and such FAC Shares shall not be offered unless first reoffered to FAC. For the avoidance of doubt, FinCo and FATICO have no obligation to accept the Offer to Purchase prior to or following the expiration of the Go Shop Period.

(iv) In the event that FinCo and/or FATICO enter into an agreement for the sale of FAC Shares to an alternative purchaser, the registration rights set forth in Section 8.4 shall transfer with the FAC Shares to such alternative purchaser, and FAC, FinCo and FATICO shall execute such documention as is reasonably necessary for the assignment and assumption of the rights and obligations set forth in Section 8.4 .

(c) In the event FAC does not deliver an Offer to Purchase to FinCo pursuant to Section 8.3(b) above, FinCo shall have a period of seventy-five (75) Business Days to enter into a definitive agreement with respect to a Proposed Sale of the FAC Shares; provided , however , that in the event the Proposed Sale is covered by a registration statement, the seventy-five (75) Business Day period shall be extended for each day the effectiveness of the registration statement is suspended or the Proposed Sale is otherwise not permitted pursuant to the registration statement. FinCo may affect the Proposed Sale of the FAC Shares during this period on any terms and subject to any conditions that it desires.

Section 8.4 Registration Rights .

(a) Demand Registration .

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effective a shelf Registration Statement, and to file such supplements or amendments to such Registration Statement as may be necessary or appropriate in order to keep such shelf Registration Statement continuously effective and useable, for the resale of Registrable Securities under the Securities Act, and in conjunction with the procedures set forth in Section 8.4(c) , FAC will use its commercially reasonable best efforts to effect such registration to permit the sale of such Registrable Securities in accordance with the intended method or methods of disposition thereof.

(ii) If FAC is no longer eligible to use a shelf Registration Statement, FAC agrees that, within thirty (30) days of FinCo’s and FATICO’s written request to register the resale of a specified amount of Registrable Securities (which shall represent at least $20 million of FAC Common Shares, or during the six (6) month period immediately prior to the fifth anniversary of the Distribution Date, such lesser amount as FATICO and FinCo have in their possession) under the Securities Act, FAC will file a Registration Statement, on an appropriate form, to register the resale of such Registrable Securities, which Registration Statement will (if specified in FinCo’s and FATICO’s notice) contemplate the ability of FinCo and FATICO to effect an underwritten offering, and will use its commercially reasonable best efforts to cause such Registration Statement to become or be declared effective, and to file such supplements or amendments to such Registration Statement as may be necessary or appropriate in order to keep such Registration Statement effective and useable, for the resale of Registrable Securities under the Securities Act, through the completion of the offering thereof.

(iii) Notwithstanding anything to the contrary contained in this Agreement, FAC shall be entitled, from time to time (but not during the six (6) month period immediately prior to the fifth anniversary of the Distribution Date), by providing prior written notice to FinCo and FATICO, to require FinCo and FATICO to suspend the use of the Prospectus included in any Registration Statement for resales of Registrable Securities under any shelf Registration Statement pursuant to Section 8.4(a)(i) or to postpone the filing or suspend the use of any Registration Statement pursuant to Section 8.4(a)(ii) for a reasonable period of time not to exceed sixty (60) days in succession (or a longer period of time with the prior written consent of FinCo and FATICO, which consent shall not be unreasonably withheld) and not more than twice in any one (1) year period (a “ Suspension Period ”) if (A) the Board of Directors of FAC determines in good faith that effecting the registration (or permitting sales under an effective registration) would materially and adversely affect an offering of FAC securities, (B) FAC is in possession of material non-public information and the Board of Directors of FAC determines in good faith that the disclosure of such information during the period specified in such notice would be materially detrimental to FAC, or (C) FAC shall determine that it is required to disclose in any such Registration Statement a contemplated financing, acquisition, corporate reorganization or other similar transaction or other material event or circumstance affecting FAC or its securities, and the Board of Directors of FAC determines in good faith that the disclosure of such information at such time would be materially detrimental to FAC.

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practicable prepare a Registration Statement or post-effective amendment or supplement to the applicable shelf Registration Statement or Prospectus, or any document incorporated therein by reference, or file any other required document so that, as thereafter delivered to purchasers of the Registrable Securities included therein, the Prospectus will not include a material misstatement or omission or be not effective and useable for resale of Registrable Securities.

(v) If at any time or from time to time FinCo and FATICO desire to sell Registrable Securities representing at least $50 million in FAC Common Shares in an underwritten offering, the managing underwriter or underwriters for such offering shall be selected by FinCo. FinCo will provide FAC with prior written notice of any such underwritten offering, such notice to be provided as soon as reasonably practicable after FinCo and FATICO determine to proceed with such offering. FAC shall use its commercially reasonable best efforts to assist such managing underwriter or underwriters in their efforts to sell Registrable Securities pursuant to such Registration Statement and shall use commercially reasonable best efforts to make senior executives with appropriate seniority and expertise reasonably available for “road show” or other presentations during the marketing period.

(b) Piggyback Registration Rights .

(i) FAC shall not, without the prior written consent of FinCo and FATICO (which consent may be withheld in FinCo’s and FATICO’s sole discretion), grant or enter into any agreement or undertaking that would permit any Person to include any FAC Common Shares in a Registration Statement filed pursuant to Section 8.4(a) .

(ii) If, at any time when FinCo or FATICO holds Registrable Securities, FAC proposes or is required to register any of its equity securities under the Securities Act on a Registration Statement (other than pursuant to registrations relating solely to employee benefit plans or dividend reinvestment plans or registrations on Form S-4 or Form S-8 or any successor or similar form that is then in effect), whether or not for its own account, FAC shall give prompt written notice of its intention to do so to FinCo and/or FATICO, as applicable. Upon the written request of FinCo and/or FATICO, as applicable, made within fifteen (15) days following the receipt of any such written notice (which request shall specify the number of Registrable Securities intended to be disposed of by FinCo and/or FATICO, as applicable, and the intended method of disposition thereof), FAC shall cause all such Registrable Securities to be included in the Registration Statement with the securities that FAC at the time proposes to register.

(c) Registration Procedures . Whenever FAC is required by the provisions of this Agreement to use commercially reasonable best efforts to effect or cause the registration of any Registrable Securities under the Securities Act as provided in this ARTICLE VIII , FAC will as expeditiously as possible use its commercially reasonable best efforts to:

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or underwriters, if any, copies of all such documents proposed to be filed, which documents will be subject to the review of FinCo and FATICO and the managing underwriter or underwriters, and FAC will not file any Registration Statement or amendment thereto or any Prospectus or any supplement thereto (excluding such documents incorporated by reference and proposed to be filed after the initial filing of the Registration Statement) to which FinCo and FATICO or the managing underwriter or underwriters, if any, shall reasonably and timely object; provided , that FAC may assume, for the purposes of this Section 8.4(c)(i) , that objections to the inclusion of information (A) requested by the staff of the Commission to be included in the Registration Statement or other documents, (B) required, in the opinion of counsel to FAC, to be in the Registration Statement or other documents, or (C) required by the Securities Act to be in the Registration Statement or other documents, shall not be deemed to be reasonable objections; and, provided , further , that FAC shall, to the extent reasonably practicable in light of the circumstances, consult with FinCo and FATICO and the managing underwriter or underwriters as to any document that is to be incorporated by reference in the Registration Statement during the marketing period of any underwritten offering until the closing of such underwritten offering;

(ii) prepare and file with the Commission such amendments and post-effective amendments to the Registration Statement, and such supplements to the Prospectus, as may be required by the federal securities Laws or the instructions applicable to the registration form utilized by FAC for registration or otherwise necessary to keep the Registration Statement effective and cause the Prospectus as so supplemented to be filed pursuant to Rule 424 under the Securities Act; and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such Registration Statement in accordance with the intended methods of disposition by the sellers thereof set forth in such Registration Statement or supplement to the Prospectus;

(iii) notify FinCo and FATICO and the managing underwriter or underwriters, if any, promptly, and confirm such advice in writing,

(A) when the Registration Statement, any pre-effective amendment thereto, the Prospectus or any prospectus supplement or post-effective amendment to the Registration Statement has been filed, and, with respect to the Registration Statement or any post-effective amendment, when the same has become effective,

(B) of any comments by the Commission and the “Blue Sky” or securities commissioner or regulator of any state with respect to the Registration Statement, the Prospectus or any prospectus supplement or any request by the Commission for amendments or supplements to the Registration Statement, the Prospectus or any prospectus supplement or for additional information,

(C) of the issuance by the Commission or any other regulatory authority of any stop order suspending the effectiveness of the Registration Statement or the initiation or threatening of any proceedings for that purpose,

 

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(D) if at any time the representations and warranties of FAC contemplated by Section 8.4(c)(xiii) below cease to be true and correct,

(E) of the receipt by FAC of any notification with respect to the suspension of the qualification of the Registrable Securities for sale under the securities or “Blue Sky” laws of any jurisdiction or the initiation or threatening of any proceeding for such purpose, and

(F) of the existence of any fact which results in the Registration Statement, any amendment or post-effective amendment thereto, the Prospectus, any prospectus supplement, or any document incorporated therein by reference containing an untrue statement of material fact or omitting to state a material fact required to be stated therein or necessary to make the statements therein not misleading;

(iv) make every commercially reasonable best effort to obtain the withdrawal of any order suspending the effectiveness of the Registration Statement at the earliest possible moment;

(v) if requested by the managing underwriter or underwriters or FinCo and FATICO, as soon as practicable incorporate in a Prospectus supplement or post-effective amendment such information as the managing underwriter or underwriters or FinCo and FATICO reasonably request to be included therein relating to the sale of the Registrable Securities, including without limitation, information with respect to the amount of Registrable Securities being sold to such underwriter or underwriters, the purchase price being paid therefor by such underwriter or underwriters and with respect to any other terms of the underwritten offering (including whether such underwriting commitment is on a firm commitment or best efforts basis) of the Registrable Securities to be sold in such offering; and make all required filings of such Prospectus supplement or post-effective amendment promptly upon notice of the matters to be incorporated in such Prospectus supplement or post-effective amendment;

(vi) furnish to FinCo and FATICO and to each managing underwriter or underwriters, without charge, at least one signed copy of the Registration Statement and any post-effective amendment thereto, including financial statements and schedules, all documents incorporated therein by reference and all exhibits (including those incorporated by reference therein);

(vii) deliver to FinCo and FATICO and each underwriter, if any, without charge, as many copies (including an electronic copy) of the Prospectus (including each preliminary prospectus) and any amendment or supplement thereto as such Persons may reasonably request; FAC consents to the use of the Prospectus or any amendment or supplement thereto by FinCo and FATICO and each underwriter, if any, in connection with the offering and sale of the Registrable Securities covered by the Prospectus or any amendment or supplement thereto;

(viii) prior to any public offering of Registrable Securities, use its

 

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commercially reasonable best efforts to register or qualify or cooperate with FinCo and FATICO, the managing underwriter or underwriters, if any, and their respective counsel in connection with the registration or qualification of such Registrable Securities for offer and sale under the securities or “Blue Sky” laws of such jurisdictions as FinCo and FATICO or any underwriter reasonably requests in writing and do any and all other acts or things necessary or advisable to enable the disposition in such jurisdictions of the Registrable Securities covered by the Registration Statement; provided that FAC will not be required to qualify generally to do business in any jurisdiction where it is not then so qualified or to take any action which would subject it to general service of process in any such jurisdiction where it is not then so subject;

(ix) cooperate with FinCo and FATICO and the managing underwriter or underwriters, if any, to facilitate the timely preparation and delivery of the Registrable Securities to be sold; and enable such Registrable Securities to be in such denominations and registered in such names as FinCo and FATICO or the managing underwriter or underwriters, if any, may request at least two (2) business days’ prior to any delivery of Registrable Securities;

(x) use its commercially reasonable best efforts to cause the Registrable Securities covered by the applicable Registration Statement to be registered with or approved by such other governmental agencies or authorities, federal, state or local, as may be necessary to enable the seller or sellers thereof or the underwriter or underwriters, if any, to consummate the disposition of such Registrable Securities;

(xi) except as permitted by Section 8.4(a)(iii) , if any fact contemplated by Section 8.4(c)(iii)(F) above shall exist, prepare a post-effective amendment or supplement to the Registration Statement or the related Prospectus or any document incorporated therein by reference or file any other required document so that the Prospectus, as thereafter delivered to the purchasers of the Registrable Securities, will not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading;

(xii) use its commercially reasonable best efforts to cause all Registrable Securities covered by the Registration Statement to be listed on each securities exchange on which the FAC Common Shares are then listed, if any;

(xiii) enter into such customary agreements (including a customary underwriting agreement with the underwriter or underwriters, if any) and take all such other actions in connection therewith in order to expedite or facilitate the disposition of such Registrable Securities and in such connection, whether or not an underwriting agreement is entered into and whether or not the Registrable Securities are to be sold in an underwritten offering:

(A) make such representations and warranties to FinCo and FATICO and the underwriter or underwriters, if any, in form, substance and scope as are customarily made by issuers to underwriters in underwritten offerings of equity securities;

 

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(B) cause to be delivered to FinCo and FATICO and the underwriter or underwriters, if any, opinions of counsel to FAC, dated, in the case of an underwritten offering, the date of delivery of any Registrable Securities sold pursuant thereto which counsel and opinions (in form, scope and substance) shall be reasonably satisfactory to the managing underwriter or underwriters, if any, and FinCo and FATICO, addressed to FinCo and FATICO and each underwriter, if any, covering the matters customarily covered in opinions requested in underwritten offerings of common stock and such other matters as may be reasonably requested by FinCo and FATICO or the appointed representative of or counsel to FinCo and FATICO (it being agreed that the matters to be covered by such opinions shall include and shall cover both the date of the first contract to sell the Registrable Securities and the date of delivery of any Registrable Securities sold pursuant thereto);

(C) cause to be delivered, in the case of an underwritten offering, at the time of delivery of any Registrable Securities sold pursuant thereto, letters from FAC’s independent certified public accountants addressed to FinCo and FATICO and each underwriter, if any, in customary form and covering such financial and accounting matters as are customarily covered by letters of independent certified public accountants delivered in connection with underwritten public offerings of common stock;

(D) if an underwriting agreement is entered into, the same shall provide for indemnification of the underwriters by FAC in customary form; and

(E) FAC shall deliver such documents and certificates as may be reasonably requested by FinCo and FATICO or the managing underwriter or underwriters, if any, to evidence compliance with Section 8.4(c)(iii)(A) above and with any customary conditions contained in the underwriting agreement, if any, or other agreement entered into by FAC in connection with such offering.

The above shall be done at each closing under such underwriting or similar agreement or as and to the extent required thereunder;

(xiv) otherwise use its commercially reasonable best efforts to comply with all applicable rules and regulations under the federal securities Laws, and make generally available to its security holders earnings statements satisfying the provisions of Section 11(a) of the Securities Act, no later than forty (40) days after the end of any twelve (12) month period (or sixty (60) days, if such period is a fiscal year) commencing on the date of the filing of any Prospectus relating to the sale of Registrable Securities, which statements shall cover a twelve (12) month period.

FAC may require FinCo and FATICO to furnish to FAC such information regarding the distribution of such securities as FAC may from time to time reasonably request in writing and as shall be required by law or by the Commission in connection with any registration.

 

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FinCo agrees that, upon receipt of any notice from FAC of the happening of any event of the kind described in Section 8.4(c)(iii)(F) hereof, FinCo will, and FinCo will cause FATICO to, forthwith discontinue disposition of Registrable Securities until FinCo’s and FATICO’s receipt of the copies of the supplemented or amended Prospectus contemplated by Section 8.4(c)(xi) hereof, or until it is advised in writing by FAC that the use of the Prospectus may be resumed.

(d) Registration Expenses . All expenses incident to FAC’s performance of or compliance with this Section 8.4 , or in connection with an offering effected under Section 8.4(b)(ii) , including without limitation:

(i) all registration and filing fees (including fees with respect to filings required to be made with the Financial Industry Regulatory Authority), unless the required filing or filings arise solely by reason of the status of FinCo and FATICO or any of its Affiliates, or their intended use of proceeds of the offering (in which case such fees shall be the responsibility of FinCo and FATICO);

(ii) fees and expenses of compliance with securities or “Blue Sky” laws (including reasonable fees and disbursements of one counsel for FinCo and FATICO and the underwriter or underwriters in connection with the registration or qualification of the Registrable Securities under applicable state securities laws and determination of their eligibility for investment under the laws of such jurisdictions as FinCo and FATICO, the managing underwriter or underwriters may designate);

(iii) all printing, messenger, telephone and delivery expenses of FAC, including, without limitation, the expenses of printing the Registration Statement and the Prospectus, the expenses of preparing the Registrable Securities for delivery and the expenses of printing or producing any agreement(s) among underwriters, underwriting agreement(s) and “Blue Sky” or legal investment memoranda, any selling agreements and any other documents in connection with the offering, sale or delivery of Registrable Securities to be disposed of;

(iv) fees, disbursements and expenses of counsel for FAC;

(v) fees and disbursements of all independent certified public accountants of FAC (including the expenses of any special audit and accountants’ letters required by or incident to such performance);

(vi) all fees and expenses incurred by FAC in connection with the listing of the Registrable Securities on any securities exchange pursuant to Section 8.4(c)(xii) ; and

(vii) fees and expenses of other Persons retained by FAC;

will be borne by FAC, whether or not the Registration Statement becomes effective; provided , that FAC shall not be required to bear such expenses for more than three (3) Registration Statements that become effective pursuant to Section 8.4(a)(ii) . In connection with any offering effected pursuant to Section 8.4(a)(ii) following the time that FinCo and FATICO shall have

 

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completed three (3) Registration Statements that have become effective pursuant hereto, all such out-of-pocket expenses reasonably incurred by FAC shall be borne by FinCo and FATICO, in proportion to the Registrable Securities sold by each of them in such offering. FAC will, in any event, pay its internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit and the fees and expenses of any Person, including special experts, retained by FAC.

(e) Rule 144 . FAC covenants that it shall use its commercially reasonable best efforts to file the reports required to be filed by it under the Securities Act and the Exchange Act and it will take such further action as FinCo and FATICO may reasonably request, all to the extent required from time to time to enable FinCo and FATICO to sell Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by (i) Rule 144 under the Securities Act, as such rule may be amended from time to time, or (ii) any similar rule or regulation hereafter adopted by the Commission. Upon the reasonable request of FinCo and FATICO, FAC will deliver to FinCo and FATICO a written statement as to whether it has complied with such information and requirements.

ARTICLE IX.

RES DATABASE PURCHASE RIGHT

Section 9.1 Purchase Right . Upon the occurrence of a Triggering Event prior to the tenth anniversary of the Distribution Date, FinCo or its designee shall have the right to purchase at its option (the “ Purchase Right ”) from any or all of FAC, an Affiliate of FAC or such other Person that directly or indirectly owns the RES Database, as applicable:

(a) the RES Assets (which shall exclude, for the avoidance of doubt, assets that are Active Trade or Business Assets, as reasonably determined by FinCo); or

(b) all of the capital stock owned by FAC or an Affiliate of FAC of the entity that directly owns the RES Database or any portion thereof; provided , that such entity shall Transfer out of such entity Active Trade or Business Assets, as reasonably determined by FinCo, prior to the closing of the Purchase Right;

provided , that in either case such purchase will not, as reasonably determined by FinCo, cause the Distribution-Related Transactions to fail to qualify for Tax-Free Treatment; provided , further , that if FinCo reasonably determines that such purchase will cause the Distribution-Related Transactions to fail to qualify for Tax-Free Treatment, FinCo shall have the right to specify assets to be excluded from the RES Assets or to cause to be Transferred out of the entity specified in Section 9.1(b) so that such purchase will not cause the Distribution-Related Transactions to fail to qualify for Tax-Free Treatment. FAC shall be liable for any Taxes resulting from the transaction contemplated by this Section 9.1 (including the purchase transaction, the distribution of assets in contemplation of the transaction, and the failure of the Distribution-Related Transactions to qualify for Tax-Free Treatment); provided, however, that to the extent that FinCo determines that the purchase contemplated by this section will not cause the Distribution-Related Transactions to fail to qualify for Tax-Free Treatment and the Internal Revenue Service successfully challenges such position, FinCo shall be liable for any Taxes and

 

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costs resulting from the failure of the Distribution-Related Transaction to qualify for Tax-Free Treatment but only if and to the extent that FinCo did not act in good faith in making such determination.

Section 9.2 Cooperation .

(a) FAC, on behalf of itself and all of its Affiliates, agrees to cooperate in good faith with FinCo and timely provide to FinCo all documents and information (including, without limitation, any Information) that FinCo reasonably requires to make any determination under this ARTICLE IX , including, without limitation, whether the exercise of the Purchase Right will cause the Distribution-Related Transactions to fail to qualify for Tax-Free Treatment, assets that must be excluded from the RES Assets or that must be Transferred out of the entity specified in Section 9.1(b) so that the exercise of the Purchase Right will not cause the Distribution-Related Transactions to fail to qualify for Tax-Free Treatment, and whether assets are Active Trade or Business Assets. Upon reasonable notice, FAC shall make its, or shall cause its Affiliates, as applicable, to make their, employees and facilities available on a mutually convenient basis to provide explanation of any documents or information provided hereunder.

(b) FinCo shall have the right to obtain a private letter ruling (or, if applicable, a supplemental private letter ruling) or opinion of counsel or tax advisors in its sole discretion to make any determination under this ARTICLE IX , including, without limitation, whether the exercise of the Purchase Right will cause the Distribution-Related Transactions to fail to qualify for Tax-Free Treatment, assets that must be excluded from the RES Assets or that must be Transferred out of the entity specified in Section 9.1(b) so that the exercise of the Purchase Right will not cause the Distribution-Related Transactions to fail to qualify for Tax-Free Treatment, and whether assets are Active Trade or Business Assets. If FinCo determines to obtain a private letter ruling or opinion of counsel or tax advisors, FAC shall (and shall cause each of its Affiliates) to cooperate with FinCo and take any and all actions reasonably requested by FinCo in connection with obtaining the opinion private letter ruling (including, without limitation, by making any representation or covenant or providing any materials or information requested by any tax authority, counsel or tax advisors. FinCo shall reimburse FAC for all reasonable costs and expenses incurred by FAC in cooperating with FinCo’s request for a private letter ruling within 10 (ten) Business Days after receiving an invoice from FAC therefor.

(c) FAC (and its Affiliates) shall execute and deliver to FinCo (or any FinCo Affiliates as FinCo shall designate) any power of attorney or other document requested by FinCo (or such designee) in connection with any determination under this ARTICLE IX (including any a private letter ruling request or tax opinion under this Section 9.2 ).

(d) FAC (and its Affiliates) shall cooperate with FinCo (and its Affiliates) in good faith to structure the purchase made pursuant to ARTICLE IX in a manner so as to enable FinCo to reasonably determine that the exercise of the Purchase right will not cause the Distribution-Related Transactions to fail to qualify for Tax-Free Treatment, including excluding certain assets from the RES Assets or causing certain RES Assets to be Transferred out of the entity specified in Section 9.1(b) so that the exercise of the Purchase Right will not cause the Distribution-Related Transactions to fail to qualify for Tax-Free Treatment and make such representations and covenants (as set forth in Section 9.2(b) ) in order to allow FinCo (or its

 

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advisors) to make such determination.

(e) In the event that FinCo reasonably determines the exercise of the Purchase Right will not cause the Distribution-Related Transaction to fail to qualify for Tax-Free Treatment, neither party shall or shall permit any of its Affiliates to take any action or position contrary to such determination.

Section 9.3 Procedure .

(a) Upon the occurrence of a Triggering Event, FAC will notify FinCo in writing (pursuant to the instructions set forth in Section 14.6 ) within two (2) Business Days thereafter of its intention to effect such transaction or that it has become aware of a Triggering Event, describing the purchase price (or other consideration) and the other material terms and conditions of the proposed Transfer, including the identity of the prospective buyer or buyers, and a true and complete copy of any and all available documents constituting the pending transaction (the “ Transfer Notice ”).

(b) After receipt of the Transfer Notice or upon FinCo becoming aware of the occurrence of a Triggering Event, FinCo or its designee will have the right, but not the obligation, to exercise the Purchase Right by delivering a written notice (pursuant to the instructions set forth in Section 14.6 ) of such election (the “ Election Notice ”) to FAC within one hundred twenty (120) days of receipt of the Transfer Notice. The Election Notice shall set forth a date not later than one hundred twenty (120) days from the delivery of the Election Notice on which the purchase pursuant to this Section 9.3(b) shall be consummated; provided , however , that with respect to a purchase subject to Section 9.4(b) below, the closing shall be consummated within the later of sixty (60) days following the determination of value by the Cash Value Appraiser or one hundred twenty (120) days from the delivery of the Election Notice and; provided further , that the parties shall exercise commercially reasonable best efforts to negotiate, execute and deliver appropriate documentation (in form and substance acceptable to FinCo) to evidence such purchase.

(c) The failure of FinCo or its designee to deliver a timely Election Notice shall constitute a waiver of the Purchase Right to which FinCo is entitled pursuant to this ARTICLE IX .

(d) If FinCo fails to timely exercise the Purchase Right, the applicable selling entity may consummate the sale to the Title Underwriter specified in the Transfer Notice on the terms and conditions set forth in the Transfer Notice within ninety (90) days after the Election Notice was first delivered to FinCo. If the applicable selling entity fails to consummate the sale to the Title Underwriter specified in the Transfer Notice within such ninety (90) day period, then the Purchase Right will be reinstated in full force and effect.

Section 9.4 Purchase Price . If FinCo or its designee exercises the Purchase Right, the purchase price will be determined as follows:

(a) If FinCo or its designee elects to purchase the same entity or collection of Assets that is the subject of the Transfer Notice (or is otherwise the subject of the transaction that resulted in a Triggering Event), then the purchase price for such entity or Assets shall be the

 

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amount agreed upon with such Title Underwriter (as set forth in the Transfer Notice).

(b) If FinCo or its designee elects to purchase an entity or collection of Assets that is not the entity or collection of Assets that is the subject of the Transfer Notice (or is otherwise the subject of the transaction that resulted in a Triggering Event) (the “ Non-Cash Consideration ”), or if the Purchase Right with respect to such entity or Assets arises from a FACL Change in Control, then the Parties shall designate a mutually acceptable appraiser who is not affiliated with either FAC or FinCo and has substantial professional experience with regard to the valuation of the Non-Cash Consideration involved, and if they cannot agree on an appraiser within twenty (20) days after the Election Notice is delivered, each shall select an appraiser of recognized standing and the two appraisers shall designate a third appraiser of recognized standing (the “ Cash Value Appraiser ”). The Cash Value Appraiser shall make the relevant determination of value of the Non-Cash Consideration as soon as practicable following the designation of the Cash Value Appraiser. Any decision of the Cash Value Appraiser shall be final, conclusive and binding, and neither FAC nor FinCo may contest any action by the other Party in accordance with the decision of the Cash Value Appraiser. All fees, costs and expenses of the Cash Value Appraiser relating to the procedures set forth in this ARTICLE IX shall be governed by Section 5.4 of this Agreement. FAC and FinCo each shall bear their own expenses.

(c) The purchase price as set forth in this Section 9.4 shall in all circumstances be paid in cash.

Section 9.5 No Lien . FAC and FinCo acknowledge and agree that nothing in this Agreement is intended to or shall constitute a lien on or a grant of a security interest in the Assets described in this ARTICLE IX .

Section 9.6 FAC Use of RES Database . Upon consummation of a transaction effected through a Purchase Right pursuant to this ARTICLE IX , all rights of FAC and any of its Subsidiaries to use the RES Database or any portion thereof shall cease.

Section 9.7 Transfer of Embodiments . In the event of the consummation of a transaction effected through a Purchase Right pursuant to this ARTICLE IX , FinCo and FAC will cooperate in the Transfer of the embodiments of the RES Database in such form and on such media as FinCo may reasonably request within a reasonable time after such transaction is consummated.

Section 9.8 Transferees . Notwithstanding any provision herein to the contrary, FAC and FACL shall not, and FAC shall cause its Subsidiaries not to, Transfer the RES Database or any portion thereof unless the transferee shall execute an agreement agreeing to be bound by the provisions of this ARTICLE IX ; mutatis mutandis , including, without limitation, the obligation to cause any further transferee to be similarly bound.

Section 9.9 Effect of Not Following Procedure . Any sale, Transfer or other disposition of the RES Database, either directly or indirectly, not in accordance with the foregoing procedures of this ARTICLE IX shall be null and void and of no force and effect.

Section 9.10 FinCo Assignment; Change in Control . FinCo’s rights under this ARTICLE IX shall not be assignable, in whole or in part, and shall automatically terminate upon

 

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a Change in Control of FinCo.

Section 9.11 Remedies . Notwithstanding anything in this Agreement to the contrary, the Parties recognize that the performance of the obligations by FAC and its Affiliates under this ARTICLE IX are special, unique and extraordinary in character, and that in the event of the breach by FAC and/or its Affiliates of the terms and conditions of this ARTICLE IX , FinCo shall be entitled, if it so elects, to institute and prosecute proceedings to enforce the specific performance thereof pursuant to Section 14.20 by FAC or its Affiliates or to enjoin FAC and/or its Affiliates from consummating any transaction that would result in the direct or indirect Transfer of the RES Database.

ARTICLE X.

INDEMNIFICATION

Section 10.1 Release of Pre-Distribution Claims .

(a) Except (i) as provided in Section 10.1(c) , (ii) as may be otherwise expressly provided in this Agreement, any Ancillary Agreement or in connection with any Continuing Arrangements and (iii) for any matter for which any Party is entitled to indemnification or contribution pursuant to this ARTICLE X , each Party, for itself and each member of its Group, its Affiliates and all Persons who at any time prior to the Effective Time were directors, officers, agents or employees of any member of its Group (in their respective capacities as such), in each case, together with its heirs, executors, administrators, successors and assigns, does hereby remise, release and forever discharge the other Party and the members of the other Party’s Group, their respective Affiliates and all Persons who at any time prior to the Effective Time were shareholders, directors, officers, agents or employees of any member of such other Party (in their respective capacities as such), in each case, together with its heirs, executors, administrators, successors and assigns, from any and all Liabilities whatsoever, whether at Law or in equity (including any right of contribution), whether arising under any Contract, by operation of Law or otherwise, existing or arising from any acts or events occurring or failing to occur or alleged to have occurred or to have failed to occur or any conditions existing or alleged to have existed on or before the Effective Time, including in connection with the Plan of Separation and all other actions taken to implement the Distribution and any of the other transactions contemplated hereunder and under the Ancillary Agreements.

(b) The Parties represent, warrant and agree that they have been fully advised of the content of Section 1542 of the Civil Code of the State of California, which reads as follows: “A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially effected his settlement with the debtor.” The Parties hereby expressly waive and relinquish all rights and benefits under that section and any Law or legal principle of similar effect in any jurisdiction with respect to the release granted in this Agreement.

(c) Nothing contained in Section 10.1(a) and Section 10.4(a) shall impair or otherwise affect any right of either Party, and as applicable, a member of either Party’s Group, to enforce this Agreement, any Ancillary Agreement or any agreements, arrangements, commitments or understandings contemplated in this Agreement or any Ancillary Agreement. In addition, nothing contained in Section 10.1(a) shall release any person from:

 

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(i) any Liability Assumed, Transferred or allocated to a Party or a member of such Party’s Group pursuant to or contemplated by, or any other Liability of any member of such Group under, this Agreement or any Ancillary Agreement including, with respect to FAC, any FAC Retained Liability and, with respect to FinCo, any FinCo Liability;

(ii) any Liability for the sale, lease, construction or receipt of goods, property or services purchased, obtained or used in the ordinary course of business by a member of one Group from or on behalf of a member of the other Group prior to the Effective Time;

(iii) any Liability for unpaid amounts for products or services or refunds owing on products or services due on a value-received basis for work done by a member of one Group at the request or on behalf of a member of the other Group;

(iv) any Liability provided in or resulting from any other Contract or understanding that is entered into after the Effective Time between one Party (and/or a member of such Party’s Group), on the one hand, and the other Party (and/or a member of such Party’s Group), on the other hand;

(v) any Liability with respect to a Contingent Shared Liability pursuant to ARTICLE VII ;

(vi) any Liability with respect to any Continuing Arrangements;

(vii) any Liability surrounding the exchange or provision of Information pursuant to this Agreement, as set forth in Section 2.5(a) ;

(viii) any Liability resulting from the rights of a minority partner, member or shareholder with respect to any minority interest Contract, as set forth in Section 2.5(b) ; and

(ix) any Liability that the Parties may have with respect to indemnification or contribution pursuant to this Agreement or otherwise for claims brought against the Parties by third Persons, which Liability shall be governed by the provisions of this ARTICLE X and, if applicable, the appropriate provisions of the Ancillary Agreements.

In addition, nothing contained in Section 10.1(a) shall release FAC from indemnifying any director, officer or employee of FinCo who was a director, officer or employee of FAC or any of its Affiliates on or prior to the Distribution Date, as the case may be, to the extent such director, officer or employee is or becomes a named defendant in any Action with respect to which he or she was entitled to such indemnification pursuant to then existing obligations.

(d) Each Party shall not, and shall not permit any member of its Group to make, any claim, demand or offset, or commence any Action asserting any claim or demand, including any claim of contribution or indemnification, against the other Party or any member of the other Party’s Group, or any other Person released pursuant to Section 10.1(a) , with respect to

 

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any Liabilities released pursuant to Section 10.1(a) .

(e) It is the intent of each Party, by virtue of the provisions of this Section 10.1 , to provide for a full and complete release and discharge of all Liabilities existing or arising from all acts and events occurring or failing to occur or alleged to have occurred or to have failed to occur and all conditions existing or alleged to have existed on or before the Effective Time, whether known or unknown, between or among either Party (and/or a member of such Party’s Group), on the one hand, and the other Party (and/or a member of such Party’s Group), on the other hand (including any contractual agreements or arrangements existing or alleged to exist between or among any such members on or before the Effective Time), except as specifically set forth in Section 10.1(a) and Section 10.1(c) . At any time, at the reasonable request of the other Party, a Party shall cause each member of its respective Group and, to the extent practicable each other Person on whose behalf it released Liabilities pursuant to this Section 10.1 , to execute and deliver releases reflecting the provisions hereof.

Section 10.2 Indemnification by FAC .

(a) Except as otherwise specifically set forth in any provision of this Agreement or of any Ancillary Agreement or with respect to any Continuing Arrangement, following the Distribution Date, FAC shall and shall cause the other members of the FAC Group to indemnify, defend and hold harmless the FinCo Indemnitees from and against any and all Indemnifiable Losses of the FinCo Indemnitees, respectively, arising out of, by reason of or otherwise in connection with (i) the FAC Retained Liabilities or alleged FAC Retained Liabilities (as alleged by a third party) or (ii) any breach by FAC of any provision of this Agreement or any Ancillary Agreement unless such Ancillary Agreement expressly provides for separate indemnification therein, in which case any such indemnification claims shall be made thereunder.

(b) FAC shall indemnify and hold harmless FinCo, FATICO, each underwriter with respect to Registrable Securities and each of their respective officers, directors, employees and agents and each Person who controls FinCo, FATICO or such underwriter within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act from and against any and all losses, claims, damages and Liabilities caused by any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement, preliminary prospectus or Prospectus, including any amendment or supplement thereto, or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as such losses, claims, damages or Liabilities relate to any untrue statement or omission or alleged untrue statement or omission based upon information furnished in writing to FAC by FinCo, FATICO or any underwriter expressly for use therein.

Section 10.3 Indemnification by FinCo .

(a) Except as otherwise specifically set forth in any provision of this Agreement or of any Ancillary Agreement or with respect to any Continuing Arrangement, FinCo shall and shall cause the other members of the FinCo Group to indemnify, defend and hold harmless the FAC Indemnitees from and against any and all Indemnifiable Losses of the

 

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FAC Indemnitees, respectively, arising out of, by reason of or otherwise in connection with (i) the FinCo Liabilities or alleged FinCo Liabilities (as alleged by a third party) or (ii) any breach by FinCo of any provision of this Agreement or any Ancillary Agreement unless such Ancillary Agreement expressly provides for separate indemnification therein, in which case any such indemnification claims shall be made thereunder.

(b) FinCo shall and shall cause FATICO to indemnify and hold harmless FAC, its directors, its officers who sign any Registration Statement and each Person, if any, who controls FAC within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act to the same extent as the foregoing indemnity from FAC to FinCo and FATICO (but not in an amount exceeding the net proceeds to FinCo and FATICO from the offering of any Registrable Securities pursuant to such Registration Statement), but only with reference to information relating to FinCo or FATICO furnished in writing by FinCo or FATICO to FAC expressly for use in any Registration Statement, preliminary prospectus, or Prospectus, including any amendment or supplement thereto.

Section 10.4 Procedures for Indemnification .

(a) An Indemnitee shall give the Indemnifying Party notice of any matter that an Indemnitee has determined has given or could give rise to a right of indemnification under this Agreement (other than a Third Party Claim which shall be governed by Section 10.4(b) ), within thirty (30) days of such determination, stating the amount of the Indemnifiable Loss claimed, if known, and method of computation thereof, and containing a reference to the provisions of this Agreement in respect of which such right of indemnification is claimed by such Indemnitee or arises; provided , however , that the failure to provide such written notice shall not release the Indemnifying Party from any of its obligations except and solely to the extent the Indemnifying Party shall have been actually prejudiced as a result of such failure.

(b) Third Party Claims .

(i) If a claim or demand is made against a FAC Indemnitee or a FinCo Indemnitee (each, an “ Indemnitee ”) by any Person who is not a party to this Agreement (a “ Third Party Claim ”) as to which such Indemnitee is or may be entitled to indemnification pursuant to this Agreement, such Indemnitee shall, in writing and in reasonable detail, and promptly (and in any event within fifteen (15) days) after receipt by such Indemnitee of written notice of a Third Party Claim, provide notice of such Third Party Claim to the Party (and, if applicable, the Managing Party) that is or may be required pursuant to this ARTICLE X or pursuant to any Ancillary Agreement to make such indemnification (the “ Indemnifying Party ”). If either Party shall receive notice or otherwise learn of the assertion of a Third Party Claim that may reasonably be determined to be a Contingent Shared Liability, such Party, as appropriate, shall give the Managing Party (as determined pursuant to ARTICLE VII ) written notice thereof within fifteen (15) days after such Person becomes aware of such Third Party Claim; provided , however , that the failure to provide notice of any such Third Party Claim pursuant to this or the preceding sentence shall not release the Indemnifying Party from any of its obligations except and solely to the extent the Indemnifying Party shall have been actually prejudiced as a result of such failure. Thereafter, the Indemnitee shall deliver to

 

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the Indemnifying Party (and, if applicable, to the Managing Party), promptly (and in any event within five (5) Business Days) after the Indemnitee’s receipt thereof, copies of all notices and documents (including court papers) received by the Indemnitee relating to the Third Party Claim.

(ii) Other than in the case of (A) a Contingent Shared Liability (the defense of which shall be assumed and controlled by the Managing Party as provided for in ARTICLE VII ), (B) indemnification pursuant to the Tax Sharing Agreement or (C) indemnification by a beneficiary Party of a guarantor Party pursuant to Section 2.10(c) (the defense of which shall be assumed and controlled by the beneficiary Party), an Indemnifying Party shall assume and control the defense of any Third Party Claim, at such Indemnifying Party’s own cost and expense and by such Indemnifying Party’s own counsel (which counsel is reasonably acceptable to the applicable Indemnitees), within thirty (30) days of the receipt of such notice from such Indemnitees. In connection with the Indemnifying Party’s defense of a Third Party Claim, such Indemnitee shall have the right to employ separate counsel and to participate in (but not control) the defense, compromise, or settlement thereof, at its own expense and, in any event, shall cooperate with the Indemnifying Party in such defense and make available to the Indemnifying Party, at the Indemnifying Party’s expense, all witnesses, pertinent Information, materials and information in such Indemnitee’s possession or under such Indemnitee’s control relating thereto as are reasonably required by the Indemnifying Party; provided , however , that in the event of a conflict of interest between the Indemnifying Party and the applicable Indemnitee(s), such Indemnitee(s) shall be entitled to retain, at the Indemnifying Party’s Expense, separate counsel as required by the applicable rules of professional conduct with respect to such matter; provided further , that if (x) the Third Party Claim is not a Contingent Shared Liability and (y) the Indemnifying Party has assumed the defense of the Third Party Claim but has specified, and continues to assert, any reservations or exceptions to such defense, then, in any such case, the reasonable fees and expenses of one separate counsel for all Indemnitees shall be borne by the Indemnifying Party.

(iii) Other than in the case of a Contingent Shared Liability, if an Indemnifying Party fails for any reason to assume responsibility for defending a Third Party Claim within the time specified, such Indemnitee may defend such Third Party Claim at the cost and expense of the Indemnifying Party. If the Indemnitee is conducting the defense against any such Third Party Claim, the Indemnifying Party shall cooperate with the Indemnitee in such defense and make available to the Indemnitee, at the Indemnitee’s expense, all witnesses, pertinent Information, and material in such Indemnifying Party’s possession or under such Indemnifying Party’s control relating thereto as are reasonably required by the Indemnitee.

(iv) Unless the Indemnifying Party has failed to assume the defense of the Third Party Claim in accordance with the terms of this Agreement, no Indemnitee may settle or compromise any Third Party Claim that is not a Contingent Shared Liability (with any Contingent Shared Liability handled in accordance with ARTICLE VII ) without the consent of the Indemnifying Party, which consent shall not be unreasonably withheld or delayed.

 

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(v) In the case of a Third Party Claim (except for any Third Party Claim that is a Contingent Shared Liability which, with respect to the subject matter of this Section 10.4(b)(v) , shall be governed by Section 7.4 ), no Indemnifying Party shall consent to entry of any judgment or entry into any settlement of the Third Party Claim without the consent of the Indemnitee if the effect thereof is to permit any injunction, declaratory judgment, other order or other non-monetary relief to be entered, directly or indirectly, against any Indemnitee; it being understood that in the case of a Third Party Claim that is a Contingent Shared Liability, such matters are addressed in ARTICLE VII .

(vi) For the avoidance of doubt, and pursuant to Section 7.7 , the Litigation Management Agreement (and not the provisions of this Section 10.4(b) ) shall govern with respect to all Third Party Claims specifically set forth in the Litigation Management Agreement or covered by the terms thereof.

(c) Absent fraud or willful misconduct by an Indemnifying Party, the indemnification provisions of this ARTICLE X shall be the sole and exclusive remedy of an Indemnitee for any monetary or compensatory damages or losses resulting from any breach of this Agreement and each Indemnitee expressly waives and relinquishes any and all rights, claims or remedies such Person may have against any Indemnifying Party with respect to the foregoing other than under this ARTICLE X .

Section 10.5 Cooperation in Defense and Settlement .

(a) With respect to any Third Party Claim that is not a Contingent Shared Liability and that implicates both Parties in a material fashion due to the allocation of Liabilities, responsibilities for management of defense and related indemnities pursuant to this Agreement or any of the Ancillary Agreements, the Parties agree to use commercially reasonable best efforts to cooperate fully and maintain a joint defense (in a manner that will preserve for both Parties the attorney-client privilege, joint defense or other privilege with respect thereto). The Party that is not responsible for managing the defense of such Third Party Claims shall, upon reasonable request, be consulted with respect to significant matters relating thereto and may, if necessary or helpful, retain counsel to assist in the defense of such claims.

(b) Each of FAC and FinCo agrees that at all times from and after the Effective Time, if an Action is commenced by a third party with respect to which FAC (or any member of the FAC Group), on one hand, and FinCo (or any member of the FinCo Group), on the other hand, is a nominal defendant or such Action is otherwise not a Liability allocated to such named Party under this Agreement or any Ancillary Agreement, then the other Party shall use commercially reasonable best efforts to cause such nominal defendant to be removed from such Action, as soon as reasonably practicable.

Section 10.6 Indemnification Payments . Indemnification required by this ARTICLE X shall be made by periodic payments of the amount thereof in a timely fashion during the course of the investigation or defense, as and when bills are received or an Indemnifiable Loss or Liability incurred.

 

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Section 10.7 Contribution .

(a) If the indemnification provided for herein, including in respect of any Contingent Shared Liability, is unavailable to, or insufficient to hold harmless an Indemnitee under this Agreement or any Ancillary Agreement in respect of any Liabilities referred to herein or therein, then the Indemnifying Party shall contribute to the amount paid or payable by such Indemnitee as a result of such Liabilities in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and the Indemnitee in connection with the actions or omissions that resulted in Liabilities as well as any other relevant equitable considerations. With respect to the foregoing, the relative fault of the Indemnifying Party and Indemnitee shall be determined by reference to, among other things, whether the misstatement or alleged misstatement of a material fact or omission or alleged omission to state a material fact relates to Information supplied by such Indemnifying Party or Indemnified Party, and the parties’ relative intent, knowledge, access to Information and opportunity to correct or prevent such statement or omission.

(b) The Parties agree that it would not be just and equitable if contribution pursuant to this Section 10.7 were determined by a pro rata allocation or by any other method of allocation that does not take account of the equitable considerations referred to in Section 10.7(a) . The amount paid or payable by an Indemnitee as a result of the Liabilities referred to in Section 10.7(a) shall be deemed to include, subject to the limitations set forth above, any legal or other fees or expenses reasonably incurred by such Indemnitee in connection with investigating any claim or defending any Action. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.

Section 10.8 Indemnification Obligations Net of Insurance Proceeds and Other Amounts .

(a) Any Indemnifiable Loss subject to indemnification or contribution pursuant to this ARTICLE X including, for the avoidance of doubt, in respect of any Contingent Shared Liability, will be calculated (i) net of Insurance Proceeds that actually reduce the amount of the Indemnifiable Loss, (ii) net of any proceeds received by the Indemnitee from any third party for indemnification for such Liability that actually reduce the amount of the Indemnifiable Loss (“ Third Party Proceeds ”) and (iii) net of any tax benefits actually realized in accordance with, and subject to, the principles set forth or referred to in the Tax Sharing Agreement, and increased in accordance with, and subject to, the principles set forth in the Tax Sharing Agreement. Accordingly, the amount that any Indemnifying Party is required to pay to any Indemnitee pursuant to this ARTICLE X will be reduced by any Insurance Proceeds or Third Party Proceeds theretofore actually recovered by or on behalf of the Indemnitee in respect of the related Indemnifiable Loss. If an Indemnitee receives a payment required by this Agreement from an Indemnifying Party in respect of any Indemnifiable Loss (an “ Indemnity Payment ”) and subsequently receives Insurance Proceeds or Third Party Proceeds, then the Indemnitee will pay to the Indemnifying Party an amount equal to the excess of the Indemnity Payment received over the amount of the Indemnity Payment that would have been due if the Insurance Proceeds or Third Party Proceeds had been received, realized or recovered before the Indemnity Payment was made.

 

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(b) The Parties acknowledge that the indemnification and contributions hereof do not relieve any insurer who would otherwise be obligated to pay any claim to pay such claim. In furtherance of the foregoing, the Indemnitee shall use commercially reasonable best efforts to seek to collect or recover any third-party Insurance Proceeds and any Third Party Proceeds (other than Insurance Proceeds under an arrangement where future premiums are adjusted to reflect prior claims in excess of prior premiums) to which the Indemnified Party is entitled in connection with any Indemnifiable Loss for which the Indemnified Party seeks contribution or indemnification pursuant to this ARTICLE X ; provided , that the Indemnitee’s inability to collect or recover any such Insurance Proceeds or Third Party Proceeds shall not limit the Indemnifying Party’s obligations hereunder.

Section 10.9 Additional Matters; Survival of Indemnities .

(a) The indemnity and contribution agreements contained in this ARTICLE X shall remain operative and in full force and effect, regardless of (i) any investigation made by or on behalf of any Indemnitee; (ii) the knowledge by the Indemnitee of Indemnifiable Losses for which it might be entitled to indemnification or contribution hereunder; and (iii) any termination of this Agreement.

(b) The rights and obligations of each Party and its respective Indemnitees under this ARTICLE X shall survive the sale or other Transfer by any Party or its respective Subsidiaries of any Assets or businesses or the assignment by it of any Liabilities.

(c) Each Party shall, and shall cause the members of its respective Group to, preserve and keep in their possession their Records relating to financial reporting, internal audit, employee benefits, past acquisition or disposition transactions, claims, demands, actions, and email files and backup tapes regarding any of the foregoing as such pertain to any period prior to the Distribution Date, whether in electronic form or otherwise, until the date on which such Records are no longer required to be retained pursuant to such Party’s applicable record retention policy and schedules as in effect immediately prior to the Distribution Date or as modified in good faith thereafter; provided , however , to the extent the Tax Sharing Agreement provides for a longer period of retention of Tax Records, such longer period as provided in the Tax Sharing Agreement shall control.

ARTICLE XI.

CONFIDENTIALITY; ACCESS TO INFORMATION

Section 11.1 Provision of Corporate Records . Other than in circumstances in which indemnification is sought pursuant to ARTICLE X (in which event the provisions of such Article will govern) or for matters related to provision of Tax Records (in which event the provisions of the Tax Sharing Agreement will govern) and without limiting the applicable provisions of ARTICLE VII , and subject to appropriate restrictions for classified, privileged or confidential information:

(a) After the Effective Time, upon the prior written request by FinCo for specific and identified Information that relates to (i) FinCo or the conduct of the FinCo Business

 

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up to the Distribution Date, or (ii) any Ancillary Agreement to which FAC and FinCo are parties, FAC shall provide, as soon as reasonably practicable following the receipt of such request, appropriate copies of such Information (or the originals thereof if FinCo has a reasonable need for such originals) in the possession or control of FAC or any of its Affiliates or Subsidiaries, but only to the extent such items so relate and are not already in the possession or control of FinCo.

(b) After the Distribution Date, upon the prior written request by FAC for specific and identified Information which relates to (i) FAC or the conduct of the FAC Retained Business up to the Distribution Date, or (ii) any Ancillary Agreement to which FinCo and FAC are parties, FinCo shall provide, as soon as reasonably practicable following the receipt of such request, appropriate copies of such Information (or the originals thereof if FAC has a reasonable need for such originals) in the possession or control of FinCo or any of its Subsidiaries, but only to the extent such items so relate and are not already in the possession or control of FAC.

Section 11.2 Access to Information . Other than in circumstances in which indemnification is sought pursuant to ARTICLE X (in which event the provisions of such Article will govern) or for access with respect to tax matters (in which event the provisions of the Tax Sharing Agreement will govern) and without limiting the applicable provisions of ARTICLE VII , from and after the Effective Time, each of FAC and FinCo shall afford to the other and its authorized accountants, counsel and other designated representatives reasonable access during normal business hours, subject to appropriate restrictions for classified, privileged or Confidential Information, to the personnel, properties, and Information of such Party and its Subsidiaries insofar as such access is reasonably required by the other Party and relates to (a) such other Party or the conduct of its business prior to the Effective Time or (b) any Ancillary Agreement to which the Party requesting such access and the Party requested to grant such access are parties. Nothing in this Section 11.2 shall require any Party to violate any agreement with any third party regarding the confidentiality of confidential and proprietary Information relating to that third party or its business; provided , however , that in the event that a Party is required to disclose any such Information, such Party shall use commercially reasonable best efforts to seek to obtain such third party Consent to the disclosure of such Information.

Section 11.3 Witness Services . At all times from and after the Effective Time, each of FAC and FinCo shall use its commercially reasonable best efforts to make available to the others, upon reasonable written request, its and its Subsidiaries’ officers, directors, employees, consultants and agents as witnesses to the extent that (a) such Persons may reasonably be required to testify in connection with the prosecution or defense of any Action in which the requesting Party may from time to time be involved (except for claims, demands or Actions between members of each Group) and (b) there is no conflict in the Action between the Parties. A Party providing a witness to the other Party under this Section 11.3 shall be entitled to receive from the recipient of such services, upon the presentation of invoices therefor, payments for such amounts, relating to disbursements and other out-of-pocket expenses (which shall not include the costs of salaries and benefits of employees who are witnesses or any pro rata portion of overhead or other costs of employing such employees that would have been incurred by such employees’ employer regardless of the employees’ service as witnesses), as may be reasonably incurred and properly paid under applicable Law.

Section 11.4 Reimbursement; Other Matters . Except to the extent otherwise

 

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contemplated by this Agreement (including pursuant to Section 7.3 ) or any Ancillary Agreement a Party providing Information or access to Information to the other Party under this ARTICLE XI shall be entitled to receive from the recipient, upon the presentation of invoices therefor, payments for such amounts, relating to supplies, disbursements and other out-of-pocket expenses, as may be reasonably incurred in providing such Information or access to such Information.

Section 11.5 Confidentiality .

(a) Notwithstanding any termination of this Agreement, for a period of five (5) years from the Effective Time, the Parties shall hold, and shall cause each of their respective Subsidiaries to hold, and shall each cause their respective officers, employees, agents, consultants and advisors to hold, in strict confidence, and not to disclose or release or use, without the prior written consent of the other Party (which may be withheld in such Party’s sole and absolute discretion, except where disclosure is required by applicable Law), any and all Confidential Information (as defined herein) concerning the other Party; provided , that the Parties may disclose, or may permit disclosure of, Confidential Information (i) to their respective auditors, attorneys, financial advisors, bankers and other appropriate consultants and advisors who have a need to know such Information and are informed of their obligation to hold such Information confidential to the same extent as is applicable to the Parties and in respect of whose failure to comply with such obligations, the applicable Party will be responsible, (ii) if the Parties or any of their respective Subsidiaries are required or compelled to disclose any such Confidential Information by judicial or administrative process or by other requirements of Law or stock exchange rule, (iii) as required in connection with any legal or other proceeding by one Party against the other Party, or (iv) as necessary in order to permit a Party to prepare and disclose its financial statements, Tax Returns or other required disclosures. Notwithstanding the foregoing, in the event that any demand or request for disclosure of Confidential Information is made pursuant to clause (ii) above, each Party, as applicable, shall promptly notify the other of the existence of such request or demand and shall provide the other a reasonable opportunity to seek an appropriate protective order or other remedy, which both Parties will cooperate in obtaining. In the event that such appropriate protective order or other remedy is not obtained, the Party whose Confidential Information is required to be disclosed shall or shall cause the other Party to furnish, or cause to be furnished, only that portion of the Confidential Information that is legally required to be disclosed and shall take commercially reasonable steps to ensure that confidential treatment is accorded such Information.

(b) Notwithstanding anything to the contrary set forth herein, (i) the Parties shall be deemed to have satisfied their obligations hereunder with respect to Confidential Information if they exercise the same degree of care (but no less than a reasonable degree of care) as they take to preserve confidentiality for their own similar Information and (ii) confidentiality obligations provided for in any agreement between each Party or its Subsidiaries and their respective employees shall remain in full force and effect.

(c) Notwithstanding anything to the contrary set forth herein, Confidential Information of any Party in the possession of and used by the other Party as of the Effective Time may continue to be used by such Party in possession of the Confidential Information in and only in the operation of the FinCo Business or the FAC Retained Business, as the case may be;

 

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provided , that such use is not competitive in nature, and may be used only so long as the Confidential Information is maintained in confidence and not disclosed in violation of Section 11.5(a) . Such continued right to use may not be transferred (directly or indirectly) to any third party without the prior written consent of the applicable Party, except pursuant to Section 14.9 .

(d) Each Party acknowledges that it and the other members of its respective Group may have in their possession confidential or proprietary Information of third parties that was received under confidentiality or non-disclosure agreements with such third party while part of the FAC Group. Each of the Parties will hold, and will cause the other members of it respective Group and their respective representatives to hold, in strict confidence the confidential and proprietary Information of third parties to which it or any other member of its respective Group has access, in accordance with the terms of any agreements entered into prior to the Effective Time between one or more members of the FAC Group (whether acting through, on behalf of, or in connection with, the separated Businesses) and such third parties.

Section 11.6 Privileged Matters .

(a) Pre-Separation Services . The Parties recognize that legal and other professional services that have been and will be provided prior to the Effective Time have been and will be rendered for the collective benefit of each of the members of the FAC Group and the FinCo Group, and that each of the members of the FAC Group and the FinCo Group should be deemed to be the client with respect to such pre-separation services for the purposes of asserting all privileges that may be asserted under applicable Law.

(b) Post-Separation Services . The Parties recognize that, following the Effective Time, legal and other professional services will be provided that will be rendered solely for the benefit of FAC or FinCo, as the case may be. With respect to such post-separation services, the Parties agree as follows:

(i) FAC shall be entitled, in perpetuity, to control the assertion or waiver of all privileges in connection with privileged Information that relates solely to the FAC Retained Business, whether or not the privileged Information is in the possession of or under the control of FAC or FinCo. FAC shall also be entitled, in perpetuity, to control the assertion or waiver of all privileges in connection with privileged Information that relates solely to the subject matter of any claims constituting FAC Retained Liabilities, now pending or that may be asserted in the future, in any lawsuits or other proceedings initiated against or by FAC, whether or not the privileged Information is in the possession of or under the control of FAC or FinCo; and

(ii) FinCo shall be entitled, in perpetuity, to control the assertion or waiver of all privileges in connection with privileged Information that relates solely to the FinCo Business, whether or not the privileged Information is in the possession of or under the control of FAC or FinCo. FinCo shall also be entitled, in perpetuity, to control the assertion or waiver of all privileges in connection with privileged Information that relates solely to the subject matter of any claims constituting FinCo Liabilities, now pending or that may be asserted in the future, in any lawsuits or other proceedings initiated against or by FinCo, whether or not the privileged Information is in the

 

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possession of or under the control of FAC or FinCo.

(c) The Parties agree that they shall have a shared privilege, with equal right to assert or waive, subject to the restrictions in this Section 11.6 , with respect to all privileges not allocated pursuant to the terms of Section 11.6(b) . All privileges relating to any claims, proceedings, litigation, disputes or other matters that involve both FAC and FinCo in respect of which both Parties retain any responsibility or Liability under this Agreement shall be subject to a shared privilege among them.

(d) Except as provided in Section 11.6(e) or Section 11.6(f) below, neither Party may waive any privilege that could be asserted under any applicable Law, and in which the other Party has a shared privilege, without the consent of the other Party, which consent shall not be unreasonably withheld or delayed or as. Consent shall be in writing, or shall be deemed to be granted unless written objection is made within twenty (20) days after notice upon the other Party requesting such consent.

(e) In the event of any litigation or dispute between or among the Parties or any members of their respective Groups, either Party may waive a privilege in which the other Party or member of such Group has a shared privilege, without obtaining the consent of the other Party; provided , that such waiver of a shared privilege shall be effective only as to the use of Information with respect to the litigation or dispute between the Parties and/or the members of their respective Groups, and shall not operate as a waiver of the shared privilege with respect to third parties.

(f) If a dispute arises between the Parties or their respective Subsidiaries regarding whether a privilege should be waived to protect or advance the interest of a Party, each Party agrees that it shall negotiate in good faith, shall endeavor to minimize any prejudice to the rights of the other Party, and shall not unreasonably withhold consent to any request for waiver by the other Party. Each Party specifically agrees that it will not withhold consent to waiver for any purpose except to protect its own legitimate interests.

(g) Upon receipt by a Party or by any Subsidiary thereof of any subpoena, discovery or other request that arguably calls for the production or disclosure of Information subject to a shared privilege or as to which the other Party has the sole right hereunder to assert a privilege, or if a Party obtains knowledge that any of its or any of its Subsidiaries’ current or former directors, officers, agents or employees have received any subpoena, discovery or other requests that arguably calls for the production or disclosure of such privileged Information, such Party shall promptly notify the other Party of the existence of the request and shall provide the other Party a reasonable opportunity to review the Information and to assert any rights it or they may have under this Section 11.6 or otherwise to prevent the production or disclosure of such privileged Information.

(h) The transfer of all Information pursuant to this Agreement is made in reliance on the agreement of FAC and FinCo as set forth in Section 11.5 and this Section 11.6 , to maintain the confidentiality of privileged Information and to assert and maintain all applicable privileges. The access to Information being granted pursuant to Section 7.3 , Section 10.5 , Section 11.1 and Section 11.2 hereof, the agreement to provide witnesses and individuals

 

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pursuant to Section 7.3 , Section 10.5 , and Section 11.3 hereof, the furnishing of notices and documents and other cooperative efforts contemplated by Section 7.3 and Section 10.5 hereof, and the transfer of privileged Information between the Parties and their respective Subsidiaries pursuant to this Agreement shall not be deemed a waiver of any privilege that has been or may be asserted under this Agreement or otherwise.

(i) Notwithstanding any provision to the contrary in this Section 11.6 , the Audit Management Party (as defined in the Tax Sharing Agreement) shall have the authority to disclose or not disclose, in its sole discretion, any and all privileged Information to (i) any Taxing Authority (as defined in the Tax Sharing Agreement) conducting a Tax Contest or (ii) to third parties in connection with the defense of a Tax Contest, including, expert witnesses, accountants and other advisors, potential witnesses and other parties whose assistance is deemed, in the sole discretion of the Audit Management Party, to be necessary or beneficial to representing the interests of the Parties hereunder.

Section 11.7 Ownership of Information . Any Information owned by one Party or any of its Subsidiaries that is provided to a requesting Party pursuant to this ARTICLE XI shall be deemed to remain the property of the providing Party. Unless specifically set forth herein, nothing contained in this Agreement shall be construed as granting or conferring rights of license or any other rights in any such Information.

Section 11.8 Other Agreements . The rights and obligations granted under this ARTICLE XI are subject to any specific limitations, qualifications or additional provisions on the sharing, exchange or confidential treatment of Information set forth in any Ancillary Agreement.

ARTICLE XII.

DISPUTE RESOLUTION

Section 12.1 Negotiation Period .

(a) In the event of a controversy, dispute or claim arising out of, in connection with or in relation to the interpretation, performance, nonperformance, validity or breach of this Agreement or otherwise arising out of, or in any way related to this Agreement or the transactions contemplated hereby, including any claim based on contract, tort, statute or constitution (but excluding any controversy, dispute or claim arising out of any Contract relating to the use or lease of real property if any third party is a necessary party to such controversy, dispute or claim) (collectively, “ Agreement Disputes ”), the general counsels and chief financial officers of each Party and such other executive officers as each Party invites shall negotiate for a reasonable period of time to settle such Agreement Dispute; provided , that such reasonable period shall not, unless otherwise agreed by the Parties in writing, exceed thirty (30) days from the time of receipt by a Party of written notice of such Agreement Dispute (“ Dispute Notice ”). If the general counsels, chief financial officers and such other invited executive officers are unable to resolve the Agreement Dispute within such time frame, the general counsels, chief financial officers and chief executive officers of each Party shall negotiate for an additional period not to exceed fifteen (15) days; provided , however , that in the event of any arbitration in accordance

 

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with Section 12.2 hereof, the Parties shall not assert the defenses of statute of limitations and laches arising during the period beginning after the date of receipt of the Dispute Notice, and any contractual time period or deadline, under this Agreement or any Ancillary Agreement to which such Agreement Dispute relates, occurring after the Dispute Notice is received shall not be deemed to have passed until such Agreement Dispute has been resolved.

(b) Notwithstanding the foregoing, in the event an Agreement Dispute arises from a matter governed by the Litigation Management Agreement, the general counsels of each Party shall first negotiate on their own for a period of time not to exceed thirty (30) days from the time of receipt by a Party of a Dispute Notice. If the general counsels are unable resolve such Agreement Dispute within the thirty (30) day time frame, then negotiations will commence pursuant to the process set forth in Section 12.1(a) .

Section 12.2 Arbitration . Subject to Section 12.8 , if the Agreement Dispute has not been resolved for any reason after the negotiation period, such Agreement Dispute shall be determined, at the request of any Party, by arbitration conducted in Orange County, California, before one arbitrator. The arbitration shall be administered by JAMS pursuant to its Comprehensive Arbitration Rules and Procedures, except as modified herein (the “ Rules ”). Each Party shall submit a list of three (3) proposed arbitrators to the other Party and the Parties shall negotiate to appoint a mutually agreed upon arbitrator within thirty (30) days. If an arbitrator is not timely appointed by the Parties under this Section 12.2 , the arbitrator shall be appointed by JAMS in accordance with the listing, ranking and striking method in the Rules, and in any such procedure, each Party shall be given a limited number of strikes, excluding strikes for cause. Any controversy concerning whether an Agreement Dispute is an arbitrable Agreement Dispute, whether arbitration has been waived, whether an assignee of this Agreement is bound to arbitrate, or as to the interpretation of enforceability of this ARTICLE XII shall be determined by the arbitrator. In resolving any Agreement Dispute, the Parties intend that the arbitrator shall apply the substantive Laws of the State of California, without regard to any choice of law principles thereof that would mandate the application of the laws of another jurisdiction. The Parties intend that the provisions to arbitrate set forth herein be valid, enforceable and irrevocable, and any award rendered by the arbitrator shall be final and binding on the Parties. The Parties agree to comply and cause the members of their applicable Group, to comply with any award made in any such arbitration proceedings and agree to enforcement of or entry of judgment upon such award in any court of competent jurisdiction, including any federal or state court in California. The arbitrator shall be entitled, if appropriate, to award any remedy in such proceedings, including monetary damages in accordance with Section 12.3 , specific performance and all other forms of legal and equitable relief; provided , however , the arbitrator shall not be entitled to award punitive, exemplary, treble or any other form of non-compensatory damages unless in connection with indemnification for a Third Party Claim (and in such a case, only to the extent awarded in such Third Party Claim). Notwithstanding the foregoing, nothing in this Section 12.2 shall be deemed to preclude a Party from seeking provisional remedies in aid of arbitration from a court of appropriate jurisdiction.

Section 12.3 Arbitration with Respect to Monetary Damages . Subject to Section 12.8 , in the event the Agreement Dispute involves (a) valuation of a Liability under (i) this Agreement, (ii) any Ancillary Agreement or (iii) any other agreement entered into by the Parties pursuant to this Agreement or any Ancillary Agreement, (b) an amount in controversy in an Agreement

 

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Dispute or (c) an amount of damages following a determination of Liability, the arbitration shall proceed in the following manner: Each Party shall submit to the arbitrator and exchange with each other, on a schedule to be determined by the arbitrator, a proposed valuation, amount or damages, as the case may be, together with a statement, including all supporting documents or other evidence upon which it relies, setting forth such Party’s explanation as to why its proposal is reasonable and appropriate. The arbitrator, within fifteen (15) days of receiving such proposals and supporting documents, shall choose between the proposals and shall be limited to awarding only one of the proposals submitted.

Section 12.4 Arbitration Period . Any arbitration proceeding shall be concluded in a maximum of six (6) months from the commencement of the arbitration. The parties involved in the proceeding may agree in writing to extend the arbitration period if necessary to appropriately resolve the Agreement Dispute.

Section 12.5 Treatment of Negotiations and Arbitration . Without limiting the provisions of the Rules, unless otherwise agreed in writing by or among the Parties or permitted by this Agreement, the Parties shall keep, and shall cause the members of their applicable Group to keep, confidential all matters relating to any negotiation, conference, arbitration, discussion or arbitration award pursuant to this ARTICLE XII and all such matters shall be treated as compromise and settlement negotiations for purposes of Rule 408 of the Federal Rules of Evidence and comparable state rules; provided , that such matters may be disclosed (a) to the extent reasonably necessary in any proceeding brought to enforce the award or for entry of a judgment upon the award and (b) to the extent otherwise required by Law or stock exchange rule. Nothing said or disclosed, nor any document produced, in the course of any negotiations, conferences and discussions that is not otherwise independently discoverable, shall be offered or received as evidence or used for impeachment or for any other purpose in any current or future arbitration. Nothing contained herein is intended to or shall be construed to prevent a Party from applying to any court of competent jurisdiction for interim measures or other provisional relief in connection with the subject matter of any Agreement Disputes. Without prejudice to such provisional remedies as may be available under the jurisdiction of a court, the arbitral tribunal shall have full authority to grant provisional remedies and to direct the Parties to request that any court modify or vacate any temporary or preliminary relief issued by such court, and to award damages for the failure of any Party to respect the arbitral tribunal’s orders to that effect.

Section 12.6 Continuity of Service and Performance . Unless otherwise agreed in writing, the Parties will continue to provide service and honor all other commitments under this Agreement and each Ancillary Agreement during the course of dispute resolution pursuant to the provisions of this ARTICLE XII with respect to all matters not subject to such dispute resolution.

Section 12.7 Consolidation . The arbitrator may consolidate an arbitration under this Agreement with any arbitration arising under or relating to the Ancillary Agreements or any other agreement between the parties entered into pursuant hereto, as the case may be, if the subject of the Agreement Disputes thereunder arise out of or relate essentially to the same set of facts or transactions. Such consolidated arbitration shall be determined by the arbitrator appointed for the arbitration proceeding that was commenced first in time.

Section 12.8 Exception to Arbitration . Notwithstanding anything in this ARTICLE XII

 

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to the contrary, in the event that the matters described on Schedule 12.8 (Exceptions to Arbitration) have been fully and finally completed, including the exhaustion of all appeals, if the Agreement Dispute has not been resolved for any reason after the negotiation period, such Agreement Dispute may be subject to litigation in accordance with Section 14.19 and Section 14.21 .

ARTICLE XIII.

INSURANCE

Section 13.1 Policies and Rights Included Within Assets . The FinCo Assets shall include (a) any and all rights of an insured Party under each of the FinCo Shared Policies, subject to the terms of such FinCo Shared Policies and any limitations or obligations of FinCo contemplated by this ARTICLE XIII , specifically including rights of indemnity and the right to be defended by or at the expense of the insurer, with respect to all actual or alleged wrongful acts, occurrences, events, claims, suits, actions, proceedings, injuries, losses, Liabilities, damages and expenses that occurred or are alleged by any Party to have occurred, in whole or in part, prior to the Distribution Date in connection with the conduct of the FinCo Business, regardless of whether any suit, claim, action or proceeding is brought before or after the Distribution Date or, to the extent any claim is made against FinCo or any of its Subsidiaries, the conduct of the FAC Retained Business, and that actual or alleged wrongful acts, occurrences, events, claims, suits, actions, proceedings, injuries, losses, Liabilities, damages and expenses may arise out of an insured or insurable occurrence or wrongful act under one or more of such FinCo Shared Policies; provided , however , that nothing in this clause shall be deemed to constitute (or to reflect) an assignment of such FinCo Shared Policies to FinCo, and (b) the FinCo Policies.

Section 13.2 [Reserved]

Section 13.3 [Reserved]

Section 13.4 Administration; Other Matters .

(a) Administration . Unless otherwise provided in writing between the Parties, from and after the Effective Time, FAC shall be responsible for (i) Insurance Administration of the Shared Policies and (ii) Claims Administration under such Shared Policies with respect to Contingent Shared Liabilities, FAC Retained Liabilities and FinCo Liabilities; provided , that FinCo shall be responsible for all such Insurance Administration and Claims Administration when the relevant aspects of such Shared Policies relate exclusively to the FinCo Business or a member of the FinCo Group; provided further , that the retention of such responsibilities by FAC is in no way intended to limit, inhibit or preclude any right to insurance coverage for any Insured Claim of a named insured under such Policies as contemplated by the terms of this Agreement and; provided further , that FAC’s retention of the administrative responsibilities for the Shared Policies shall not relieve FinCo of the primary responsibility for reporting such Insured Claim accurately, completely and in a timely manner or of FinCo’s authority to settle any such Insured Claim within any period or amount permitted or required by the relevant Policy. FAC may discharge its administrative responsibilities under this Section 13.4 by contracting for the provision of services by independent parties. Each Party shall pay

 

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any costs relating to defending its respective Insured Claims under Shared Policies to the extent such costs, including defense, out-of-pocket expenses, and direct and indirect costs of employees or agents of FAC related to Claims Administration and Insurance Administration, are not covered under such Policies. Each Party shall be responsible for obtaining or reviewing the appropriateness of releases upon settlement of its respective Insured Claims under Shared Policies.

(b) Allocation of Insurance Proceeds . Unless otherwise provided in writing between the Parties, Insurance Proceeds received with respect to suits, occurrences, claims, costs and expenses covered under the Shared Policies shall be paid to FAC with respect to FAC Retained Liabilities and to FinCo with respect to FinCo Liabilities. In the event that the aggregate limits on any Shared Policies are exhausted by the payment of Insured Claims by the Parties, the Parties agree to allocate the Insurance Proceeds received thereunder based upon their respective percentage of the total insured claim or claims that were covered under such Shared Policy (their “ Allocable Portion of Insurance Proceeds ”), and any Party that has received Insurance Proceeds in excess of such Party’s Allocable Portion of Insurance Proceeds shall pay to the other Party the appropriate amount so that each Party will have received its Allocable Portion of Insurance Proceeds. Each of the Parties agrees to use commercially reasonable best efforts to maximize available coverage under those Shared Policies applicable to it for the benefit of both Parties, and to take all commercially reasonable steps to recover from all other responsible parties (except the Parties) in respect of an Insured Claim to the extent coverage limits under a Shared Policy have been exceeded or would be exceeded as a result of such Insured Claim.

(c) Allocation of Aggregate Deductibles . In the event that both Parties have insured claims under any Shared Policy for which an aggregate deductible is payable, the Parties agree that the aggregate amount of the total deductible paid shall be borne by the Parties in the same proportion that the Insurance Proceeds received by each such Party bears to the total Insurance Proceeds received under the applicable Shared Policy (their “ Allocable Share of the Deductible ”), and if either Party has paid more than its Allocable Share of the Deductible such Party shall be entitled to receive from the other Party an appropriate amount such that each Party will only have to bear its Allocable Share of the Deductible.

Section 13.5 Agreement for Waiver of Conflict and Shared Defense . In the event that Insured Claims of both Parties exist relating to the same occurrence, the Parties shall jointly defend and waive any conflict of interest necessary to the conduct of the joint defense. Nothing in this ARTICLE XIII shall be construed to limit or otherwise alter in any way the obligations of the Parties to this Agreement, including those created by this Agreement, by operation of Law or otherwise.

Section 13.6 Cooperation . The Parties agree to use their commercially reasonable best efforts to cooperate with respect to the various insurance matters contemplated by this Agreement.

Section 13.7 Certain Matters Relating to FAC’s Organizational Documents . For a period of six (6) years from the Distribution Date, FAC’s Articles of Incorporation, as amended, and Bylaws, as amended, shall contain provisions no less favorable with respect to

 

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indemnification than are set forth in FAC’s Articles of Incorporation and Bylaws immediately after the Effective Time, which provisions shall not be amended, repealed or otherwise modified for a period of six (6) years from the Distribution Date in any manner that would affect adversely the rights thereunder of individuals who, at or prior to the Effective Time, were directors, officers, employees, fiduciaries or agents of any member of the FAC Group or the FinCo Group, unless such modification shall be (a) pursuant to the reincorporation of FAC as a Delaware corporation or (b) required by Law (and then only to the minimum extent required by Law).

ARTICLE XIV.

MISCELLANEOUS

Section 14.1 Complete Agreement; Construction . This Agreement, including the Exhibits and Schedules hereto, and the Ancillary Agreements and any side agreement the Parties may enter into regarding insurance, shall constitute the entire agreement between the Parties with respect to the subject matter hereof and shall supersede all previous negotiations, commitments, course of dealings and writings with respect to such subject matter. In the event of any inconsistency between this Agreement and any Schedule hereto, the Schedule shall prevail. In the event and to the extent that there shall be a conflict between the provisions of this Agreement and the provisions of any Ancillary Agreement or Continuing Arrangement, such Ancillary Agreement or Continuing Arrangement shall control; provided , that with respect to any Conveyancing and Assumption Instrument, this Agreement shall control unless specifically stated otherwise in such Conveyancing and Assumption Instrument. Except as expressly set forth in this Agreement or any Ancillary Agreement: (a) all matters relating to Taxes and Tax Returns of the Parties and their respective Subsidiaries shall be governed exclusively by the Tax Sharing Agreement; and (b) for the avoidance of doubt, in the event of any conflict between this Agreement or any Ancillary Agreement, on the one hand, and the Tax Sharing Agreement, on the other hand, with respect to such matters, the terms and conditions of the Tax Sharing Agreement shall govern; provided , however , that the Parties’ rights and obligations with respect to the Purchase Right set forth in ARTICLE IX shall be governed solely by ARTICLE IX and not by the Tax Sharing Agreement.

Section 14.2 Ancillary Agreements . This Agreement is not intended to address, and should not be interpreted to address, the matters specifically and expressly covered by the Ancillary Agreements.

Section 14.3 Counterparts . This Agreement may be executed in counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more such counterparts have been signed by each Party and delivered to the other Party.

Section 14.4 Survival of Agreements . Except as otherwise contemplated by this Agreement or any Ancillary Agreement, all covenants and agreements of the Parties contained in this Agreement and each Ancillary Agreement shall survive the Effective Time and remain in full force and effect in accordance with their applicable terms.

Section 14.5 Expenses . Except as otherwise provided (a) in this Agreement (including with respect to Specified Shared Expenses, responsibility for which is allocated pursuant to

 

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Section 5.4 ), or (b) in any Ancillary Agreement, the Parties agree that all other expenses shall (i) to the extent incurred and payable prior to the Distribution Date, be paid by FAC and (ii) to the extent any such Expenses arise and are payable by any Party following the Distribution Date, be paid by such Party. Notwithstanding the foregoing, each Party shall be responsible for (and reimburse the other Party to the extent such Party has paid such costs and expenses on behalf of the responsible Party), its own internal fees, costs and expenses (e.g., salaries of personnel working in its respective Business) incurred in connection with the Plan of Separation.

Section 14.6 Notices . All notices, requests, claims, demands and other communications under this Agreement and, to the extent applicable and unless otherwise provided therein, under each of the Ancillary Agreements, shall be in English, shall be in writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by overnight courier service, by facsimile with receipt confirmed (followed by delivery of an original via overnight courier service) or by registered or certified mail (postage prepaid, return receipt requested) to the respective Parties at the following addresses (or at such other address for a Party as shall be specified in a notice given in accordance with this Section 14.6 ):

To FAC:

4 First American Way

Santa Ana, CA 92707

Attn: General Counsel

Facsimile: (714) 250-6917

To FinCo:

1 First American Way

Santa Ana, CA 92707

Attn: General Counsel

Facsimile: (714) 250-3325

Section 14.7 Waivers and Consents . The failure of either Party to require strict performance by the other Party of any provision in this Agreement will not waive or diminish that Party’s right to demand strict performance thereafter of that or any other provision hereof. Any consent required or permitted to be given by either Party to the other Party under this Agreement shall be in writing and signed by the Party giving such consent.

Section 14.8 Amendments . Subject to the terms of Section 14.11 hereof, this Agreement may not be modified or amended except by an agreement in writing signed by a duly authorized representative of each of the Parties.

Section 14.9 Assignment . Except as otherwise provided for in this Agreement, this Agreement shall not be assignable, in whole or in part, directly or indirectly, by either Party, without the prior written consent of the other Party, and any attempt to assign any rights or obligations arising under this Agreement without such consent shall be void; provided , that a Party may assign this Agreement in connection with a merger transaction in which such Party is not the surviving entity or in connection with the sale by such Party of all or substantially all of its Assets; provided , further , that the surviving entity of such merger or the transferee of such

 

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Assets shall agree in writing, in form reasonably satisfactory to the other Party, to be bound by the terms of this Agreement as if named as a “Party” hereto.

Section 14.10 Successors and Assigns . The provisions of this Agreement and the obligations and rights hereunder shall be binding upon, inure to the benefit of and be enforceable by (and against) the Parties and their respective successors and permitted transferees and assigns.

Section 14.11 Certain Termination and Amendment Rights . This Agreement (including ARTICLE X hereof) may be terminated and the Distribution may be amended, modified or abandoned at any time prior to the Distribution Date by and in the sole discretion of FAC without the approval of FinCo or the shareholders of FAC. In the event of such termination, neither Party shall have any liability of any kind to the other Party or any other Person. After the Distribution Date, this Agreement may not be terminated or amended except by an agreement in writing signed by FAC and FinCo.

Notwithstanding the foregoing, ARTICLE X shall not be terminated or amended after the Effective Time in a manner adverse to the third party beneficiaries thereof without the Consent of any such Person.

Section 14.12 Payment Terms .

(a) Except as expressly provided to the contrary in this Agreement or in any Ancillary Agreement, any amount to be paid or reimbursed by a Party (and/or a member of such Party’s Group), on the one hand, to the other Party (and/or a member of such Party’s Group), on the other hand, under this Agreement shall be paid or reimbursed hereunder within thirty (30) days after presentation of an invoice or a written demand therefor setting forth, or accompanied by, reasonable documentation or other reasonable explanation supporting such amount.

(b) Except as expressly provided to the contrary in this Agreement (including with respect to certain default payments described in Section 7.6 ) or in any Ancillary Agreement, any amount not paid when due pursuant to this Agreement (and any amount billed or otherwise invoiced or demanded and properly payable that is not paid within thirty (30) days of such bill, invoice or other demand) shall bear interest at a rate per annum equal to the Prime Rate plus four percent (4%) (or the maximum legal rate, whichever is lower), calculated for the actual number of days elapsed, accrued from the date on which such payment was due up to the date of the actual receipt of payment.

Section 14.13 No Circumvention . The Parties agree not to directly or indirectly take any actions, act in concert with any Person who takes an action, or cause or allow any member of any such Party’s Group to take any actions (including the failure to take a reasonable action) such that the resulting effect is to materially undermine the effectiveness of any of the provisions of this Agreement or any Ancillary Agreement (including adversely affecting the rights or ability of a Party to successfully pursue indemnification, contribution or payment pursuant to ARTICLE VII and ARTICLE X ).

Section 14.14 Subsidiaries . Each of the Parties shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth herein to be performed by any Subsidiary of such Party or by any entity that becomes a Subsidiary of such

 

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Party on and after the Distribution Date.

Section 14.15 Third Party Beneficiaries . Except (a) as provided in ARTICLE X relating to Indemnitees and for the release under Section 10.1 of any Person provided therein, (b) as provided in Section 13.7 relating to the directors, officers, employees, fiduciaries or agents provided therein and (c) as specifically provided in any Ancillary Agreement, this Agreement is solely for the benefit of the Parties and should not be deemed to confer upon third parties any remedy, claim, liability, reimbursement, claim of action or other right in excess of those existing without reference to this Agreement.

Section 14.16 Title and Headings . Titles and headings to sections herein are inserted for the convenience of reference only and are not intended to be a part of or to affect the meaning or interpretation of this Agreement.

Section 14.17 Exhibits and Schedules . The Exhibits and Schedules hereto shall be construed with and as an integral part of this Agreement to the same extent as if the same had been set forth verbatim herein.

Section 14.18 Governing Law . This Agreement shall be governed by and construed in accordance with the internal Laws of the State of California, without regard to the conflict of laws principles thereof.

Section 14.19 Consent to Jurisdiction . Subject to the provisions of ARTICLE X hereof, each of the Parties irrevocably submits to the exclusive jurisdiction of (a) the state courts of California, or (b) the United States District Court for the Central District of California (the “ California Courts ”), for the purposes of any suit, action or other proceeding to compel arbitration or for provisional relief in aid of arbitration in accordance with ARTICLE XII or to prevent irreparable harm, and to the non-exclusive jurisdiction of the California Courts for the enforcement of any award issued thereunder. Each of the Parties further agrees that service of any process, summons, notice or document by U.S. registered mail to such Party’s respective address set forth above shall be effective service of process for any action, suit or proceeding in the California Courts with respect to any matters to which it has submitted to jurisdiction in this Section 14.19 . Each of the Parties irrevocably and unconditionally waives any objection to the laying of venue of any action, suit or proceeding arising out of this Agreement or the transactions contemplated hereby in the California Courts, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum.

Section 14.20 Specific Performance . The Parties agree that irreparable damage would occur in the event that the provisions of this Agreement were not performed in accordance with their specific terms. Accordingly, it is hereby agreed that the Parties shall be entitled to an injunction or injunctions to enforce specifically the terms and provisions hereof in any court of the United States or any state having jurisdiction, this being in addition to any other remedy to which they are entitled at law or in equity.

Section 14.21 Waiver of Jury Trial . EACH PARTY HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO

 

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A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY HEREBY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 14.21 .

Section 14.22 Severability . In the event any one or more of the provisions contained in this Agreement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and therein shall not in any way be affected or impaired thereby. The Parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions, the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

Section 14.23 Force Majeure. No Party (or any Person acting on its behalf) shall have any liability or responsibility for failure to fulfill any obligation (other than a payment obligation) under this Agreement or, unless otherwise expressly provided therein, any Ancillary Agreement, so long as and to the extent to which the fulfillment of such obligation is prevented, frustrated, hindered or delayed as a consequence of circumstances of Force Majeure. A Party claiming the benefit of this provision shall, as soon as reasonably practicable after the occurrence of any such event: (a) notify the other Party of the nature and extent of any such Force Majeure condition and (b) use due diligence to remove any such causes and resume performance under this Agreement as soon as feasible.

Section 14.24 Interpretation . The Parties have participated jointly in the negotiation and drafting of this Agreement. This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the Party drafting or causing any instrument to be drafted.

Section 14.25 No Duplication; No Double Recovery . Nothing in this Agreement is intended to confer to or impose upon any Party a duplicative right, entitlement, obligation or recovery with respect to any matter arising out of the same facts and circumstances (including with respect to the rights, entitlements, obligations and recoveries that may arise out of one or more of the following Sections: Section 3.4 ; Section 7.3 ; Section 8.2 ; Section 10.3 ; and Section 10.4 ).

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed as of the day and year first above written.

 

THE FIRST AMERICAN CORPORATION
By:  

/s/    Anand Nallathambi

Name:   Anand Nallathambi
Title:   Executive Vice President
FIRST AMERICAN FINANCIAL CORPORATION
By:  

/s/    Dennis J. Gilmore

Name:   Dennis J. Gilmore
Title:   Chief Executive Officer

Acknowledged and Agreed with Respect to Article IX:

 

FIRST AMERICAN CORELOGIC, INC.
By:  

/s/    Stergios Theologides

Name:   Stergios Theologides
Title:   Senior Vice President

 

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Exhibit 10.2

TAX SHARING AGREEMENT

by and between

THE FIRST AMERICAN CORPORATION

and

FIRST AMERICAN FINANCIAL CORPORATION

Dated as of June 1, 2010

 

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TAX SHARING AGREEMENT

This TAX SHARING AGREEMENT (this “ Agreement ”), dated as of June 1, 2010, by and among The First American Corporation, a California corporation (“ Parent ”) and First American Financial Corporation, a Delaware corporation (“ Spinco ”). Each of Parent and Spinco is sometimes referred to herein as a “ Party ” and collectively, as the “ Parties .”

W I T N E S S E T H

WHEREAS, the Parties have entered into a Separation and Distribution Agreement, dated as of June 1, 2010 (the “ Separation Agreement ”), providing for the separation of the Parent Group from the Spinco Group (the “ Separation ”);

WHEREAS, pursuant to the terms of the Separation Agreement, Parent and its subsidiaries will consummate a series of internal restructuring steps (the “ Internal Restructuring Steps ”) and will distribute all of the outstanding shares of Spinco (pro rata) to the record holders of Parent’s common stock (the “ Spin-Off ”);

WHEREAS, for U.S. federal income tax purposes, it is intended that the Contribution and Distribution (as defined herein) shall qualify as a tax-free transaction under Sections 355(a) and 368(a)(1)(D) of the Code;

WHEREAS, at the close of business on the Distribution Date, the taxable year of Spinco shall close for U.S. federal income tax purposes; and

WHEREAS, the Parties wish to provide for the payment of Income Taxes and Other Taxes and entitlement to Refunds thereof, allocate responsibility and provide for cooperation in connection with the filing of returns in respect of Income Taxes and Other Taxes, and provide for certain other matters relating to Income Taxes and Other Taxes.

NOW, THEREFORE, in consideration of the premises and the representations, covenants and agreements herein contained and intending to be legally bound hereby, the Parties agree as follows:

1. Definitions . Capitalized terms used but not defined herein shall have the respective meanings assigned to them in the Separation Agreement. For purposes of this Agreement, the following terms shall have the meanings set forth below:

Acting Party ” shall have the meaning set forth in Section 4(f)(iii).

Actually Realized ” or “ Actually Realizes ” shall mean, for purposes of determining the timing of the incurrence of any Tax Liability or the realization of a Refund (or any related Tax cost or benefit), whether by receipt or as a credit or other offset to Taxes payable, by a Person in respect of any payment, transaction, occurrence or event, the time at which the amount of Income Taxes or Other Taxes paid (or Refund received) by such Person is increased above (or reduced below) the amount of Income Taxes or Other Taxes that such

 

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Person would have been required to pay (or Refund that such Person would have received) but for such payment, transaction, occurrence or event.

Additional Restructuring Tax Liabilities ” shall mean, with respect to any Taxing Jurisdiction, the sum of (a) any increase in Restructuring Tax Liabilities (or reduction in a Refund as a result of an increase in such liabilities) Actually Realized attributable to any Determination, (b) any interest on any amounts set forth in clause (a) calculated pursuant to such Taxing Jurisdiction’s laws regarding interest on Tax liabilities actually paid to such Taxing Jurisdiction for the period from the date such additional Tax Liability was recognized until full payment with respect thereto is made pursuant to Section 3 hereof (or in the case of a reduction in a Refund, the amount of interest that would have been received on the foregone portion of the Refund but for the increase in a Tax Liability due to an adjustment in any item of income or loss resulting from any Taxable Internal Restructuring Step), and (c) any penalties or additions of Tax actually paid to such Taxing Jurisdiction with respect to amounts set forth in clause (a).

Additional Spinco Consolidated Tax Liability ” shall mean any increase in Spinco Consolidated Tax Liability (or reduction in Refund as a result of an increase in such liabilities) Actually Realized attributable to a Determination, provided that for the tax year ended December 31, 2009, the Additional Spinco Consolidated Tax Liability shall be equal to 100% of such Tax Liabilities (rather than 75% as set forth in the definition of SpinCo Consolidated Tax Liability). For purposes of any such increase with respect to a Combined Return, the determination of the Tax Liability (or reduction in Refund) Actually Realized that is attributable to Spinco Items that become due as a result of a Determination shall be calculated on a “with and without basis,” by calculating the amount of the excess (if any) of (i) the Tax Liability (or the amount of Refund) Actually Realized as a result of a Determination, over (ii) the Tax Liability (or the amount of Refund) Actually Realized as a result of a Determination if the Determination were recalculated excluding the Spinco Items. Additional Spinco Consolidated Tax Liability shall include (x) any interest on any amounts set forth in the preceding sentence calculated pursuant to such Taxing Jurisdiction’s laws regarding interest on Tax liabilities actually paid to such Taxing Jurisdiction for the period from the date such additional Tax Liability was recognized until full payment with respect thereto is made pursuant to Section 3 hereof (or in the case of a reduction in a Refund, the amount of interest that would have been received on the foregone portion of the Refund but for the increase in a Tax Liability due to an adjustment giving rise to additional tax liability under the preceding sentence), and (y) any penalties or additions of Tax actually paid to such Taxing Jurisdiction with respect to the amounts set forth in the preceding sentence.

Aggregate Spin-Off Tax Liabilities ” shall mean the sum of the Spin-Off Tax Liabilities with respect to each Taxing Jurisdiction.

Aggregate Restructuring Tax Liabilities ” shall mean the sum of the Additional Restructuring Tax Liabilities with respect to each Taxing Jurisdiction.

Appraised Value ” shall mean the appraised value of an asset as determined by Globalview Advisors (or other firm as mutually agreed upon by the Parties) promptly following the date hereof.

 

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Breaching Party ” shall have the meaning set forth in Section 8(c).

Business Day ” shall mean any day other than a Saturday, a Sunday, or day on which banking institutions located in the State of New York are authorized or obligated by law or executive order to close.

Carryback ” shall mean the carryback of a Tax Attribute (including, without limitation, a net operating loss, a net capital loss or a tax credit) by a member of the Spinco Group from a Post-Distribution Taxable Period to a Pre-Distribution Taxable Period during which the member of the Spinco Group was included in a Combined Return filed for such Pre-Distribution Taxable Period.

Carryback Income Tax Benefit ” shall mean, with respect to the effect of any Carryback on the Income Tax Liability of Parent or the Parent Group for any Taxable Period, the excess of (a) the hypothetical Income Tax Liability of Parent or the Parent Group for such taxable period, calculated as if such Carryback had not been utilized but with all other facts unchanged over (b) the actual Income Tax Liability of the Parent or the members of Parent Group for such taxable period, calculated taking into account such Carryback (and treating any Refund as a negative Income Tax Liability for purposes of such calculation).

Cash Acquisition Merger ” shall mean a merger of a newly-formed Subsidiary of Parent or Spinco (as applicable) with a corporation, limited liability company, limited partnership, general partnership or joint venture (in each case, not previously owned directly or indirectly by such Parent or Spinco, as applicable) pursuant to which Parent or Spinco (as applicable) acquires such corporation, limited liability company, limited partnership, general partnership or joint venture solely for cash and no Equity Securities of Parent (or any Subsidiary of Parent) or Spinco (or any Subsidiary of Spinco) are issued, sold, redeemed or acquired, directly or indirectly.

Code ” shall mean the Internal Revenue Code of 1986, as amended.

Combined Return ” shall mean a consolidated, combined or unitary Income Tax Return or Other Tax Return that includes, by election or otherwise, one or more members of the Parent Group together with one or more members of the Spinco Group.

Compensatory Equity Interests ” shall have the meaning set forth in Section 11(a).

Contribution ” shall mean those certain capital contributions to SpinCo by Parent and those certain capital contributions to Parent by Spinco made in connection with the Separation and Distribution.

Controlling Party ” shall have the meaning set forth in Section 6(d).

CoreLogic Purchase Agreement ” shall mean that Purchase Agreement dated March 29, 2010 by and among C&S Holdings, L.P., TA IX, L.P., TA/Atlantic and Pacific IV L.P., TA Strategic Partners Fund B L.P., TA Investors II, L.P., The First American Corporation, First American Real Information Services, Inc. and First American CoreLogic Holdings Inc.

 

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Determination ” shall mean a settlement, Final Determination, judgment, assessment, proposed adjustment or other determination.

Distribution ” shall mean the distribution by Parent of all the common stock of Spinco pro rata to holders of Parent Common Stock.

Distribution Date ” shall mean the date on which the Distribution of Spinco is completed.

Distribution-Related Proceeding ” shall mean any Proceeding in which the IRS, another Tax Authority or any other Party asserts a position that could reasonably be expected to adversely affect the Tax Free Status of any of the Distribution-Related Transactions or that could reasonably be expected to give rise to Additional Restructuring Tax Liabilities.

Distribution-Related Transactions ” shall mean the Contribution together with the Tax-Free Internal Restructuring Steps and the Distribution.

Employing Party ” shall have the meaning set forth in Section 11(a) hereof.

Equity Securities ” shall mean any stock or other securities treated as equity for U.S. federal income tax purposes, options, warrants, rights, convertible debt, or any other instrument or security that affords any Person the right, whether conditional or otherwise, to acquire stock or to be paid an amount determined by reference to the value of stock.

Fifty-Percent or Greater Interest ” shall have the meaning ascribed to such term for purposes of Sections 355(d) and (e) of the Code.

Final Determination ” shall mean the final resolution of liability for any Tax, which resolution may be for a specific issue or adjustment or for a taxable period, (a) by IRS Form 870 or 870-AD (or any successor forms thereto), on the date of acceptance by or on behalf of the taxpayer, or by a comparable form under the laws of any other Taxing Jurisdiction, except that a Form 870 or 870-AD or comparable form shall not constitute a Final Determination to the extent that it reserves (whether by its terms or by operation of law) the right of the taxpayer to file a claim for Refund or the right of the Tax Authority to assert a further deficiency in respect of such issue or adjustment or for such taxable period (as the case may be); (b) by a decision, judgment, decree, or other order by a court of competent jurisdiction, which has become final and unappealable; (c) by a closing agreement or accepted offer in compromise under Sections 7121 or 7122 of the Code, or a comparable agreement under the laws of any other Taxing Jurisdiction; (d) by any allowance of a Refund or credit in respect of an overpayment of Tax, but only after the expiration of all periods during which such Refund may be recovered (including by way of offset) by the Taxing Jurisdiction imposing such Tax; or (e) by any other final disposition, including by reason of the expiration of the applicable statute of limitations or by mutual agreement of the Parties.

Group ” shall mean the Parent Group or the Spinco Group, as applicable.

Income Taxes ” (a) shall mean (i) any federal, state, local or foreign tax, including estimated taxes, charge, fee, impost, levy or other assessment that is based upon,

 

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measured by, or calculated with respect to (A) net income or profits (including, but not limited to, any capital gains, gross receipts, or minimum tax, and any tax on items of tax preference, but not including sales, use, value added, goods and services, real property gains, real or personal property, transfer or similar taxes), (B) multiple bases (including, but not limited to, corporate franchise, doing business or occupation taxes), if one or more of the bases upon which such tax may be based, by which it may be measured, or with respect to which it may be calculated is described in clause (a)(i)(A) of this definition, or (C) any net worth, franchise or similar tax, in each case together with (ii) any interest and any penalties, fines, additions to tax or additional amounts imposed by any Tax Authority with respect thereto and (b) shall include any transferee or successor liability in respect of an amount described in clause (a) of this definition.

Income Tax Return ” shall mean any return, report, filing, statement, questionnaire, declaration or other document required to be filed with a Tax Authority in respect of Income Taxes.

Indemnified Party ” shall mean any Person seeking indemnification pursuant to the provisions of this Agreement.

Indemnifying Party ” shall mean any Party from which any Indemnified Party is seeking indemnification pursuant to the provisions of this Agreement.

Injured Party ” shall have the meaning set forth in Section 8(c) hereof.

Internal Restructuring Steps ” shall mean the steps set forth in the step plan attached hereto as Schedule A, other than Slides 22 (The Controlled 2 Contribution) and 24(a) (The Controlled 2 Distribution).

IRS ” shall mean the Internal Revenue Service.

IRS Ruling ” shall mean any private letter ruling issued by the IRS in connection with any of the Distribution-Related Transactions or Taxable Internal Restructuring Steps.

IRS Ruling Documents ” shall mean the request for a private letter ruling submitted by Parent to the IRS on January 21, 2010, together with the appendices and exhibits thereto, and any supplemental filings or other materials subsequently submitted to the IRS in connection with the Distribution-Related Transactions.

Liable Party ” shall have the meaning set forth in Section 6(d).

Losses ” shall mean any and all losses, liabilities, claims, damages, obligations, payments, costs and expenses, matured or unmatured, absolute or contingent, accrued or unaccrued, liquidated or unliquidated, known or unknown (including, without limitation, the costs and expenses of any and all actions, threatened actions, demands, assessments, judgments, settlements and compromises relating thereto and attorneys’ fees and any and all expenses whatsoever reasonably incurred in investigating, preparing or defending against any such Actions or threatened Actions).

Notified Party ” shall have the meaning set forth in Section 4(f)(iii).

 

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Other Party ” shall have the meaning set forth in Section 2(f).

Other Tax Returns ” shall mean any return, report, filing, statement, questionnaire, declaration or other document required to be filed with a Tax Authority in respect of Other Taxes.

Other Taxes ” shall mean any federal, state, local or foreign taxes, including estimated taxes, charges, fees, imposts, levies or other assessments of any nature whatsoever, and without limiting the generality of the foregoing, shall include superfund, sales, use, ad valorem, value added, good and services, occupancy, transfer, real property transfer, intangible, recording, registration, documentary, stamp or similar Taxes, withholding, payroll, employment, excise, occupation, premium or property taxes (in each case, together with any related interest, penalties and additions to tax, or additional amounts imposed by any Tax Authority thereon); provided, however, that Other Taxes shall not include any Income Taxes.

Parent Businesses ” shall mean each trade or business actively conducted (within the meaning of Section 355(b) of the Code) by Parent or any member of the Parent Group immediately after the Distribution of Spinco, as set forth in the IRS Ruling Documents and the Tax Opinion Documents.

Parent Consolidated Group ” shall mean the affiliated group of corporations (within the meaning of Section 1504(a) of the Code without regard to the exclusions in Section 1504(b)(1) through (8)) of which Parent is the common parent (and any predecessor or successor to such affiliated group).

Parent Group ” shall mean (a) Parent and each Person that is a direct or indirect Subsidiary of Parent (including any Subsidiary of Parent that is disregarded for U.S. federal Income Tax purposes (or for purposes of any state, local, or foreign tax law)) immediately after the Distributions after giving effect to the Distribution-Related Transactions, (b) any corporation (or other Person) that shall have merged or liquidated into Parent or any such Subsidiary and (c) any predecessor or successor to any Person otherwise described in this definition.

Parent Income Tax Benefit ” shall mean, with respect to the effect of any Parent Item on the Income Tax Liability of Spinco or the Spinco Group for any Taxable Period (including Taxes for which Spinco is liable under this Agreement), the excess of (a) the hypothetical Income Tax Liability of Spinco or the Spinco Group for such taxable period, calculated as if such item had not been utilized but with all other facts unchanged over (b) the actual Income Tax Liability of Spinco or the members of the Spinco Group for such taxable period, calculated taking into account such item (and treating any Refund as a negative Income Tax Liability for purposes of such calculation).

Parent Items ” shall mean any item of income, gain, loss, deduction or credit attributable to the members of the Parent Group or the assets, liabilities, and businesses of the Parent Group.

Parent Restructuring Tax Liability ” shall mean fifty percent (50%) of any Restructuring Tax Liabilities.

 

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Parent Separate Return ” shall mean any Separate Return required to be filed by Parent or any member of the Parent Group.

Party ” or “ Parties ” shall have the meaning set forth in the recitals to this Agreement.

Payment Due Date ” shall have the meaning set forth in Section 3(d).

Permitted Transaction ” shall mean any transaction that satisfies the requirements of Section 4(c).

Person ” shall mean any individual, partnership, joint venture, limited liability company, corporation, association, joint stock company, trust, unincorporated organization or similar entity or a governmental authority or any department or agency or other unit thereof.

Post-Distribution Taxable Period ” shall mean, with respect to Spinco and its Subsidiaries, a taxable period that begins after the Distribution Date.

Pre-Distribution Taxable Period ” shall mean, with respect to Spinco and its Subsidiaries, a taxable period that ends on or before the Distribution Date.

Preparing Party ” shall have the meaning set forth in Section 2(f).

Proceeding ” shall mean any audit or other examination, or judicial or administrative proceeding relating to liability for, or Refunds or adjustments with respect to, Taxes.

Refund ” shall mean any refund of Taxes, including any reduction in Tax Liabilities by means of a credit, offset or otherwise.

Relying Party ” shall have the meaning set forth in Section 8(d) hereof.

Representative ” shall mean with respect to a Person, such Person’s officers, directors, employees and other authorized agents.

Requesting Party ” shall have the meaning set forth in Section 4(c)(ii).

Responsible Party ” shall have the meaning set forth in Section 3(d).

Restriction Period ” shall mean the period beginning on the Distribution Date and ending on the twenty five (25) month anniversary thereof.

Restructuring Tax Liabilities ” shall mean the sum of (i) any Taxes reflected on a Tax Return as filed of Parent or any entity that is or was a direct or indirect Subsidiary of Parent prior to the Distribution resulting from any Taxable Internal Restructuring Step, (ii) any Taxes resulting from any deferred intercompany gain or excess loss account created as a result of any Internal Restructuring Step and triggered as a result of the Distribution, as set forth in Section 2(e) and (iii) any Other Taxes reflected on any Tax Return as filed resulting from the

 

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Distribution-Related Transactions. The Parties have agreed that, for purposes of reporting any Taxable Internal Restructuring Step in any Tax Return, the Parties shall use the valuations set forth in Schedule B, and determine the tax basis in accordance with the provisions set forth in Schedule B-1, for those certain assets involved in such Taxable Internal Restructuring Steps. For the sake of clarity, Restructuring Tax Liabilities shall not include (i) any additional Taxes arising from a potential revaluation of property for property Tax purposes that has a recurring impact on the Tax obligation of the Parties for future Tax years or other similar Taxes, (ii) any Taxes resulting from the subsequent disposition of any assets held by either Party immediately after the Spin-Off (including, but not limited to, a disposition of by Spinco and First American Title Insurance Company of the stock of Parent held by them as of the Distribution Date), (iii) any Taxes resulting from the merger of The First American Corporation with and into CoreLogic, Inc., as set forth in Slide 25 (The Merger) of the step plan attached hereto as Schedule A and (iv) any Tax imposed on interest arising from the issuance (if any) of a promissory note by Parent to First American Title Insurance Company, or by First American Title Insurance Company to Parent, pursuant to the terms of the Purchase Agreement between Parent and First American Title Insurance Company, dated June 1, 2010.

Separate Return ” shall mean (a) in the case of any Tax Return required to be filed by any member of the Spinco Group (including any consolidated, combined or unitary return), any such Tax Return that does not include any member of the Parent Group and (b) in the case of any Tax Return required to be filed by any member of the Parent Group (including any consolidated, combined or unitary return), any such Tax Return that does not include any member of the Spinco Group.

Separation Agreement ” shall have the meaning set forth in the recitals of this Agreement.

Spinco Business ” shall mean each trade or business actively conducted (within the meaning of Section 355(b) of the Code) by Spinco or any member of the Spinco Group immediately after the Distribution of Spinco, as set forth in the IRS Ruling Documents and the Tax Opinion Documents.

Spinco Consolidated Group ” shall mean the affiliated group of corporations (within the meaning of Section 1504(a) of the Code without regard to exclusions in Section 1504(b)(1) through (8)) of which Spinco is the common parent, determined immediately after the Spin-Off (and any predecessor or successor to such affiliated group other than the Parent Consolidated Group).

Spinco Consolidated Tax Liability ” shall mean (a) with respect to any period other than the period ended December 31, 2009, any Tax Liability (or reduction in Refund) Actually Realized reflected on a Combined Return as filed that is attributable to Spinco Items and (b) with respect to the period ended December 31, 2009, seventy-five percent (75%) of any Tax Liability (or one-hundred (100%) of any reduction in Refund) Actually Realized reflected on a Combined Return as filed that is attributable to Spinco Items; provided, however, that Spinco Consolidated Tax Liability shall not include any Restructuring Tax Liabilities, Additional Restructuring Tax Liabilities or Spin-Off Tax Liabilities. For purposes of clauses (a) and (b) hereof, the determination of the Tax Liability (or reduction in Refund) Actually Realized that is

 

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attributable to Spinco Items for a given Tax Return shall be calculated on a “with and without basis,” by calculating the amount of the excess (if any) of (i) the Tax Liability (or Refund amount) Actually Realized as shown on such Tax Return as filed, over (ii) the Tax Liability (or Refund amount) Actually Realized that would have been shown on such Tax Return if such Tax Return was prepared by excluding the Spinco Items.

Spinco Group ” shall mean, for any taxable period, (a) Spinco and each Person that is a direct or indirect Subsidiary of Spinco (including any Subsidiary of Spinco that is disregarded for U.S. federal Income Tax purposes (or for purposes of any State, local, or foreign tax law)) immediately after the Spin-Off after giving effect to the Distribution-Related Transactions, (b) any corporation (or other Person) that has merged or liquidated into Spinco or any such Subsidiary and (c) any predecessor or successor to any Person otherwise described in this definition.

Spinco Income Tax Benefit ” shall mean, with respect to the effect of any Spinco Item on the Income Tax Liability of Parent or the Parent Group for any Taxable Period (including Taxes for which Parent is liable under this Agreement), the excess of (a) the hypothetical Income Tax Liability of Parent or the Parent Group for such taxable period, calculated as if such item had not been utilized but with all other facts unchanged over (b) the actual Income Tax Liability of the Parent or the members of Parent Group for such taxable period, calculated taking into account such item (and treating any Refund as a negative Income Tax Liability for purposes of such calculation).

Spinco Items ” shall mean any item of income, gain, loss, deduction or credit attributable to the members of the Spinco Group or the assets, liabilities, and businesses of the Spinco Group.

Spinco Restructuring Tax Liability ” shall mean fifty percent (50%) of any Restructuring Tax Liabilities.

Spinco Separate Return ” shall mean any Separate Return required to be filed by Spinco or any member of the Spinco Group, including, without limitation, (a) any consolidated federal Income Tax Returns of the Spinco Consolidated Group required to be filed with respect to a Post-Distribution Taxable Period and (b) any consolidated federal Income Tax Returns for any group of which any member of the Spinco Group was the common parent.

Spin-Off Tax Liabilities ” shall mean, with respect to any Taxing Jurisdiction, the sum of (a) any increase in a Tax Liability (or reduction in a Refund) Actually Realized as a result of any corporate-level gain or income recognized with respect to the failure of any of the Distribution-Related Transactions to qualify for Tax-Free Status under the Income Tax laws of such Taxing Jurisdiction pursuant to any Determination, (b) any interest on any amounts set forth in clause (a) calculated pursuant to such Taxing Jurisdiction’s laws regarding interest on Tax liabilities actually paid to such Taxing Jurisdiction for the period from the date such additional Tax Liability was recognized until full payment with respect thereto is made pursuant to Section 3 hereof (or in the case of a reduction in a Refund, the amount of interest that would have been received on the foregone portion of the Refund but for the failure of any of the Distribution-Related Transactions to qualify for Tax-Free Status), and (c) any penalties or additions of Tax

 

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actually paid to such Taxing Jurisdiction with respect to amounts set forth in clause (a). For the sake of clarity, Spin-Off Tax Liabilities shall not include any Tax imposed on interest arising from the issuance (if any) of a promissory note by Parent to Spinco, or by Spinco to Parent, pursuant to the terms of the Contribution and Transfer Agreement between Parent and Spinco, dated June 1, 2010.

Supplying Party ” shall have the meaning set forth in Section 8(d) hereof.

Tax Attribute ” shall mean a consolidated, combined or unitar