FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
---------- --------------
Commission file number 0-3658
------
|
Incorporated in California 95-1068610
--------------------------------------------- ---------------
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
114 East Fifth Street, Santa Ana, California 92701-4699
---------------------------------------------------- --------------
(Address of principal executive offices) (Zip Code)
(714)558-3211
----------------------------------------------------
(Registrant's telephone number, including area code)
|
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes [X] No [_]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and reports to be filed by Section 12,13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.
Yes [_] No [_]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.
$1 par value - 17,965,313 as of May 12, 1998
Part I: Financial Information
Item 1. Financial Statements
A. Condensed Consolidated Balance Sheets
B. Condensed Consolidated Statements of Income
C. Condensed Consolidated Statements of Cash Flows
D. Notes to Condensed Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Part II: Other Information
Item 4. Submission of Matters to a Vote of Security Holders
Item 6. Exhibits and Reports on Form 8-K Items 1-3, and 5 have been omitted because they are not applicable with respect to the current reporting period.
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 thereunto duly authorized.
/s/ Thomas A. Klemens
---------------------
Thomas A. Klemens
Executive Vice President
Chief Financial Officer
(Principal Financial Officer and Duly
Authorized to Sign on Behalf of
Registrant)
Date: May 14, 1998
|
March 31, 1998 December 31, 1997
-------------- -----------------
Assets
Cash and cash equivalents $ 211,687,000 $ 181,531,000
-------------- --------------
Accounts and accrued income receivable, net 169,159,000 128,017,000
-------------- --------------
Investments:
Deposits with savings and loan
associations and banks 26,428,000 29,029,000
Debt securities 140,933,000 151,503,000
Equity securities 20,481,000 13,904,000
Other long-term investments 36,419,000 35,047,000
-------------- --------------
224,261,000 229,483,000
-------------- --------------
Loans receivable 66,573,000 63,378,000
-------------- --------------
Property and equipment, at cost 390,776,000 323,065,000
Less-accumulated depreciation (161,195,000) (122,688,000)
-------------- --------------
229,581,000 200,377,000
-------------- --------------
Title plants and other indexes 146,975,000 100,626,000
-------------- --------------
Assets acquired in connection with claim
settlements (net of valuation reserves
of $10,199,000 and $11,135,000) 20,228,000 21,119,000
-------------- --------------
Deferred income taxes 16,943,000 31,563,000
-------------- --------------
Goodwill and other intangibles, net 134,142,000 132,361,000
-------------- --------------
Deferred policy acquisition costs 25,171,000 25,016,000
-------------- --------------
Other assets 54,235,000 54,673,000
-------------- --------------
$1,298,955,000 $1,168,144,000
============== ==============
Liabilities and Stockholders' Equity
Demand deposits $ 61,993,000 $ 62,475,000
-------------- --------------
Accounts payable and accrued liabilities 195,344,000 168,133,000
-------------- --------------
Deferred revenue 104,482,000 104,124,000
-------------- --------------
Reserve for known and incurred but not
reported claims 252,927,000 250,826,000
-------------- --------------
Income taxes payable 18,425,000 3,987,000
-------------- --------------
Notes and contracts payable 39,149,000 41,973,000
-------------- --------------
Minority interests in consolidated
subsidiaries 63,286,000 25,214,000
-------------- --------------
Guaranteed Preferred Beneficial Interests
in Company's Junior Subordinated
Deferrable Interest Debentures 100,000,000 100,000,000
-------------- --------------
Stockholders' equity:
Preferred stock, $1 par value
Authorized - 500,000 shares;
Outstanding - none
Common stock, $1 par value
Authorized - 36,000,000 shares;
Outstanding - 17,581,000 and
17,374,000 shares 17,581,000 17,374,000
Additional paid-in capital 52,934,000 43,953,000
Retained earnings 386,968,000 344,645,000
Net unrealized gain on securities 5,866,000 5,440,000
-------------- --------------
463,349,000 411,412,000
-------------- --------------
$1,298,955,000 $1,168,144,000
============== ==============
|
For the Three Months Ended
March 31
------------ ------------
1998 1997
------------ ------------
Revenues
Operating revenues $561,614,000 $376,425,000
Investment and other income 43,435,000 6,452,000
------------ ------------
605,049,000 382,877,000
------------ ------------
Expenses
Salaries and other personnel costs 199,122,000 140,787,000
Premiums retained by agents 140,045,000 122,193,000
Other operating expenses 135,000,000 84,470,000
Provision for title losses and other claims 27,328,000 18,592,000
Depreciation and amortization 13,706,000 6,475,000
Premium taxes 4,154,000 4,161,000
Interest 3,576,000 1,122,000
------------ ------------
522,931,000 377,800,000
------------ ------------
Income before income taxes and minority interests 82,118,000 5,077,000
Income taxes 29,400,000 1,900,000
------------ ------------
Income before minority interests 52,718,000 3,177,000
Minority interests 7,753,000 311,000
------------ ------------
Net income $ 44,965,000 $ 2,866,000
============ ============
Net income per share:
Basic $ 2.57 $ .17
============ ============
Diluted $ 2.49 $ .16
============ ============
Cash dividends per share $ .15 $ .12
============ ============
Weighted average number of shares:
Basic 17,466,000 17,351,000
============ ============
Diluted 18,072,000 17,733,000
============ ============
|
For the Three Months Ended
March 31
---------------------------
1998 1997
------------ ------------
Cash flows from operating activities:
Net income $ 44,965,000 $ 2,866,000
Adjustments to reconcile net income to cash provided by (used for)
operating activities-
Provision for title losses and other claims 27,328,000 18,592,000
Depreciation and amortization 13,706,000 6,475,000
Minority interests in net income 7,753,000 311,000
Investment gain (Note 2) (32,449,000)
Other, net (2,287,000) (1,040,000)
Changes in assets and liabilities excluding effects of
company acquisitions and noncash transactions-
Claims paid, including assets acquired, net of recoveries (24,336,000) (16,953,000)
Net change in income tax accounts 28,829,000 (1,044,000)
(Increase) decrease in accounts and accrued income receivable (25,765,000) 1,753,000
Increase (decrease) in accounts payable and accrued liabilities 15,522,000 (13,874,000)
Decrease in deferred revenue (5,954,000) (1,344,000)
Other, net 5,495,000 (2,556,000)
------------ ------------
Cash provided by (used for) operating activities 52,807,000 (6,814,000)
------------ ------------
Cash flows from investing activities:
Net cash effect of company acquisitions (3,396,000) (10,884,000)
Net decrease in deposits with banks 2,601,000 2,116,000
Net increase in loans receivable (3,195,000) (2,275,000)
Purchases of debt and equity securities (15,625,000) (9,155,000)
Proceeds from sales of debt and equity securities 14,679,000 8,624,000
Proceeds from maturities of debt securities 5,594,000 6,504,000
Net decrease in other investments 1,001,000 369,000
Capital expenditures (21,539,000) (16,448,000)
Proceeds from sale of property and equipment 204,000 548,000
------------ ------------
Cash used for investing activities (19,676,000) (20,601,000)
------------ ------------
Cash flows from financing activities:
Net change in demand deposits (482,000) 3,213,000
Repayment of debt (4,954,000) (6,742,000)
Proceeds from exercise of stock options 1,007,000 (268,000)
Proceeds from issuance of stock to employee savings plan 4,096,000
Cash dividends (2,642,000) (2,088,000)
------------ ------------
Cash used for financing activities (2,975,000) (5,885,000)
------------ ------------
Net increase (decrease) in cash and cash equivalents 30,156,000 (33,300,000)
Cash and cash equivalents - Beginning of year 181,531,000 173,439,000
------------ ------------
- End of first quarter $211,687,000 $140,139,000
============ ============
Supplemental information:
Cash paid during the first quarter for:
Interest $ 1,129,000 $ 1,056,000
Premium taxes $ 4,223,000 $ 6,505,000
Income taxes $ 5,097,000 $ 4,197,000
Noncash investing and financing activities:
Shares issued for stock bonus plan $ 2,623,000 $ 2,185,000
Liabilities incurred in connection with company acquisitions $ 66,078,000 $ 3,011,000
Net unrealized gain (loss) on securities $ 426,000 $ (845,000)
Company acquisitions in exchange for common stock $ 1,462,000
|
The condensed consolidated financial information included in this report has been prepared in conformity with the accounting principles and practices reflected in the consolidated financial statements included in the annual report filed with the Commission for the preceding calendar year. All adjustments are of a normal recurring nature and are, in the opinion of management, necessary to a fair statement of the consolidated results for the interim periods. This report should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended December 31, 1997. Certain 1997 interim amounts have been reclassified to conform with the 1998 presentation.
On January 1, 1998, the Company formed a limited liability corporation (LLC) with Experian Group (Experian). The purpose of the LLC is to combine certain operations of the Company's subsidiary, First American Real Estate Information Services, Inc., with Experian's Real Estate Solutions division (RES). The LLC is 80% owned by the Company and 20% owned by Experian. RES is a supplier of core real estate data, providing, among other things, property valuation information, title and tax information and imaged title documents.
This business combination has been accounted for under the purchase method of accounting, and accordingly, the purchase price was allocated to the assets acquired and liabilities assumed based on the estimated fair values at January 1, 1998. In addition, as a result of the transaction, the Company recognized an investment gain of $32.4 million in the first quarter 1998. The operating results of the LLC are included in the Company's consolidated financial statements commencing January 1, 1998.
On January 1, 1998, the Company adopted Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income." This statement requires the reporting of comprehensive income in addition to net income. Comprehensive income is a more inclusive financial reporting methodology that includes disclosure of certain financial information that historically has not been recognized in the calculation of net income. Currently, the only comprehensive income item that affects the Company is unrealized gains and losses on debt and equity securities.
The Company reported net unrealized gains of $0.4 million and net unrealized losses of $0.8 million for the three month period ended March 31, 1998 and 1997, respectively. Accordingly, comprehensive income for the two respective periods was $45.4 million and $2.0 million.
On March 31, 1998, the Company entered into an agreement to acquire Data Tree Corporation, a California company in the business of providing database management and document imaging systems to county recorders, governmental agencies and the title industry. This transaction is expected to close during the second quarter 1998 and will be accounted for using the purchase method of accounting.
On April 7, 1998, the Company issued and sold $100.0 million of 7.55% debentures, due April 1, 2028. The 30-year bonds were issued at 99.456% of the principal amount. Net proceeds will be used for general corporate purposes, including, without limitation, repayment of certain debt and the financing of the construction of new corporate facilities.
On April 16, 1998, the Company acquired California-based Contour Software, a supplier of mortgage origination software and services to the mortgage loan industry. This acquisition will be reflected in the Company's second quarter 1998 financial statements and will be accounted for using the pooling method of accounting.
Any statements in this document looking forward in time involve risks and uncertainties, including but not limited to the following risks: the effect of interest rate fluctuations; changes in the performance of the real estate markets; the effect of changing economic conditions; the demand for and the acceptance of the Company's products; and contingencies associated with the Year 2000 issue.
RESULTS OF OPERATIONS
Three months ended March 31:
OVERVIEW
Low mortgage interest rates and an improving national real estate economy resulted in relatively strong revenues for the first quarter 1997. However, first quarter 1997 profits were adversely affected by the need for title operations to increase staffing levels in order to service the substantial increase in residential orders which subsequently closed in the second quarter 1997. Furthermore, the Company's information services operations experienced higher overhead in the quarter as they integrated acquisitions and transitioned new accounts to their systems. Favorable real estate conditions continued throughout 1997 and, coupled with market share increases in all of the Company's primary business segments, culminated in the best year overall in the Company's history. Starting in the fourth quarter 1997 and into the first quarter 1998, lower mortgage interest rates and higher consumer confidence lead to record-setting residential resale activity as well as a substantial increase in refinance transactions nationwide. This, coupled with the particularly strong California real estate market, contributed to record-setting revenues, net income and net income per share for the first quarter 1998. Net income and net income per diluted share for the first quarter 1998 (excluding an investment gain of $19.6 million on an after-tax basis) was $25.4 million and $1.40, respectively. See Note 2 to the condensed consolidated financial statements for a description of the investment gain.
OPERATING REVENUES
Set forth below is a summary of operating revenues for each of the Company's segments.
Three Months Ended
March 31
-------------------------------
($000)
1998 % 1997 %
-------- --- -------- ---
Title Insurance:
Direct operations $225,719 40 $147,674 39
Agency operations 176,536 32 152,106 40
-------- --- --------- ---
402,255 72 299,780 79
Real Estate Information 140,360 25 62,047 17
Home Warranty 13,173 2 10,068 3
Trust and Banking 5,826 1 4,530 1
-------- --- -------- ---
Total $561,614 100 $376,425 100
======== === ======== ===
|
Title Insurance. Operating revenues from direct title operations increased 52.8% when compared with the same period of the prior year. This increase was primarily attributable to an increase in the number of title orders closed by the Company's direct operations as well as an increase in the average revenues per order closed. The Company's direct operations closed 260,600 title orders during the current quarter, an increase of 43.6% when compared with 181,500 title orders closed during the same period of the prior year. This increase was primarily due to the factors mentioned above, primarily the strong real estate market in California, a state heavily concentrated with direct operations, as well as an increase in the Company's national market share. The average revenues per order closed were $866 for the current three month period, as compared with $814 for the same period of the prior year. This increase was primarily due to appreciating residential real estate values. Operating revenues from agency operations increased 16.1% when compared with the same period of the prior year. This increase was primarily due to the same factors affecting direct operations mentioned above, offset in part by the inherent delay in reporting by agents.
Real Estate Information. Real estate information operating revenues increased 126.2% when compared with the same period of the prior year. This increase was primarily attributable to the same economic factors affecting title insurance mentioned above, as well as $38.2 million of operating revenues contributed by new acquisitions.
Home Warranty. Home warranty operating revenues increased 30.8% when compared with the same period of the prior year. This increase was primarily attributable to improvements in the residential resale markets in which this business segment operates.
INVESTMENT AND OTHER INCOME
Investment and other income totaled $43.4 million and $6.5 million for the first quarter 1998 and 1997, respectively. The increase of $36.9 was primarily attributable to an investment gain of $32.4 million relating to the joint venture agreement with Experian (see Note 2 to the condensed consolidated financial statements), other investment gains of $3.4 million, and $1.0 million increase in equity in earnings of unconsolidated subsidiaries.
TOTAL OPERATING EXPENSES
Title Insurance. Salaries and other personnel costs were $144.9 million, an increase of 33.2% when compared with the same period of the prior year. This increase was primarily due to costs incurred servicing the record-setting number of orders opened during the period, offset in part by personnel efficiencies. The Company's direct operations opened 397,800 title orders during the current period, an increase of 53.9% when compared with the same period of the prior year.
Agents retained $140.0 million, or 79.3%, and $122.2 million, or 80.3%, of the title premiums generated by agency operations for the first quarter 1998 and 1997, respectively. The percentage of title premiums retained by agents varies from region to region. Accordingly, the geographical mix of revenues from agency operations accounts for the variation in the percentage amount of title premiums retained by agents.
Other operating expenses were $68.0 million, an increase of 28.1% when compared with the same period of the prior year. This increase was primarily attributable to the impact of certain incremental costs associated with processing the record-setting title order volume, as well as marginal price level increases.
The provision for title losses as a percentage of title insurance operating revenues was 3.9% for the current period and 3.8% for the same period of the prior year. This relatively constant loss percentage was due to stable claims experience.
Premium taxes for title insurance were $4.0 million for both the first quarter 1998 and 1997. Expressed as a percentage of title insurance operating revenues, premium taxes were 1.0% for the first quarter 1998 and 1.3% for the first quarter 1997. The decrease in percentage was primarily due to changes in the geographical mix of title insurance operating revenues, as well as changes in the Company's non-insurance title subsidiaries' contribution to revenues.
Real Estate Information. Real estate information personnel and other operating expenses were $105.8 million, an increase of 110.1% when compared with the same period of the prior year. This increase was primarily due to $33.2 million of costs associated with new acquisitions, costs incurred servicing the increased business volume and slightly higher overhead costs attributable to the integration of the new acquisitions.
Home Warranty. Home warranty personnel and other operating expenses were $4.2 million, an increase of 29.6% when compared with the same period of the prior year. This increase was primarily attributable to costs incurred servicing the increased business volume and expansion into other states. The provision for home warranty losses expressed as a percentage of home warranty operating revenues was 51.4% and 58.2% for the first quarter 1998 and 1997, respectively. The decrease in loss ratio was primarily due to a decrease in the average number of claims per contract.
INCOME BEFORE INCOME TAXES AND MINORITY INTERESTS
Set forth below is a summary of income before income taxes and minority interests for each of the Company's segments.
Three Months Ended
March 31
--------------------------------
($000)
1998 % 1997 %
------- --- ------- ---
Title Insurance $30,261 52 $ (57) (1)
Real Estate Information 23,535 40 7,823 76
Home Warranty 3,026 5 1,636 16
Trust and Banking 1,588 3 915 9
------- --- ------- ---
Total before corporate 58,410 100 10,317 100
=== ===
Corporate 23,708 (5,240)
------- -------
Total $82,118 $ 5,077
======= =======
|
In general, the title insurance business is a lower profit margin business when compared to the Company's other segments. The lower profit margins reflect the high cost of producing title evidence whereas the corresponding revenues are subject to regulatory and competitive pricing restraints. Due to this relatively high proportion of fixed costs, title insurance profit margins generally improve as closed order volumes increase. In addition, title insurance profit margins are affected by the composition (residential or commercial) and type (resale, refinancing or new construction) of real estate activity. Profit margins from resale and new construction transactions are generally higher than from refinancing transactions because in many states there are premium discounts on, and cancellation rates are higher for, refinance transactions. Title insurance profit margins are also affected by the percentage of operating revenues generated by agency operations. Profit margins from direct operations are generally higher than from agency operations due primarily to the large portion of the premium that is retained by the agent. Real estate information pretax profits are generally unaffected by the type of real estate activity but increase as the volume of residential real estate loan transactions increase. Included in corporate for the three months ended March 31, 1998 was an investment gain of $32.4 million (See Note 2 to the condensed consolidated financial statements).
INCOME TAXES
The effective income tax rate was 35.8% for the current quarter and 37.4% for the same period of the prior year. The decrease in effective rate was primarily attributable to changes in the ratio of permanent differences to income before income taxes.
MINORITY INTERESTS
Minority interest expense was $7.8 million and $0.3 million for the first quarter 1998 and 1997, respectively. The increase of $7.5 million was primarily attributable to the strong operating results of the Company's recently formed 80% joint venture with Experian, as well as the strong operating results of other less than 100% owned subsidiaries
NET INCOME
Net income for the current quarter was $45.0 million, or $2.49 per diluted share, which included an investment gain of $32.4 million, or $1.09 per diluted share, compared with net income of $2.9 million, or $0.16 per diluted share.
LIQUIDITY AND CAPITAL RESOURCES
Total cash and cash equivalents increased $30.2 million for the three months ended March 31, 1998, and decreased $33.3 million for the same period of the prior year. The increase for the current period was primarily due to cash generated by operating activities, offset in part by capital expenditures and repayment of debt. The decrease for the prior year period was primarily attributable to cash used for operating activities, capital expenditures and repayment of debt.
Notes and contracts payable as a percentage of total capitalization decreased to 5.9% at March 31, 1998, from 7.3% at December 31, 1997. The decrease was primarily attributable to net income for the period and an increase in minority interest in consolidated subsidiaries (primarily due to the joint venture with Experian).
The Company's management has initiated a program to evaluate the Year 2000 issue as it relates to its internal computer systems and third party computer systems with which the Company interacts. The Company is currently in the inventory and assessment phase of the program, with the remaining phases (renovation, testing and implementation) expected to be completed by midyear 1999. The Company has incurred to date nominal costs related to this issue. The majority of the costs are expected to be incurred in the final three phases of the program. These costs, which include internal staff costs as well as consulting and other expenses, will be expensed as incurred. At this time, the Company is unable to reasonably estimate the total costs for the Year 2000 issue.
On April 7, 1998, the Company issued and sold $100.0 million of 7.55% senior debentures, due April 1, 2028. The 30-year bonds were issued at 99.456% of the principal amount. Net proceeds will be used for general corporate purposes, including, without limitation, repayment of certain debt and the financing of the construction of new corporate facilities.
Management believes that all of its anticipated cash requirements for the immediate future will be met from internally generated funds and proceeds from the issuance and sale of its 30-year bonds.
(a) The annual meeting of shareholders (the "Meeting") of The First American Financial Corporation (the "Company") was held on Thursday, April 23, 1998.
(b) The names of the persons who were nominated to serve as directors of the Company for the ensuing year are listed below, together with a tabulation of the results of the voting with respect to each nominee. Each of the persons named was nominated by management of the Company and all such nominees were elected.
Name of Nominee Votes For Votes Withheld --------------- --------- -------------- George L. Argyros 13,117,545 166,772 Gary J. Beban 13,124,129 160,188 J. David Chatham 13,124,134 160,183 William G. Davis 13,123,593 160,724 James L. Doti 13,123,279 161,038 Lewis W. Douglas, Jr. 13,099,469 184,848 Paul B. Fay, Jr. 13,098,509 185,808 Dale F. Frey 13,125,084 159,233 D. P. Kennedy 13,123,346 160,971 Parker S. Kennedy 13,122,961 161,356 Anthony R. Moiso 13,124,408 159,909 R. J. Munzer 13,088,940 195,377 Frank E. O'Bryan 11,696,790 1,587,527 Roslyn B. Payne 13,105,818 178,499 D. Van Skilling 13,124,554 159,763 Virginia M. Ueberroth 13,124,408 159,909 |
(c) At the Meeting, the proposal to amend the Company's 1996 Stock Option Plan (to increase by 1,000,000 the number of Common shares available for grant thereunder) was approved by the holders of a majority of the Company's Common shares represented at the Meeting and entitled to vote.
Votes For Votes Against Votes Withheld Broker Nonvotes --------- ------------- -------------- --------------- 7,342,100 3,343,215 107,741 2,491,261 |
No other matters were voted upon at the Meeting or during the quarter for which this report is filed.
(a) Exhibits
(2) Agreement and Plan of Merger, dated as of March 27, 1998, by and among The First American Financial Corporation, Image Acquisition Corp., Data Tree Corporation and Harish Chopra, incorporated by reference herein from Exhibit 2.1 of Registration Statement on Form S-4 dated May 7, 1998.
(10)(a) Contribution and Joint Venture Agreement By and Among The
First American Financial Corporation and Experian
Information Solutions, Inc., et al., dated November 30,
1997.
(10)(b) Operating Agreement for First American Real Estate
Solutions LLC, a California Limited Liability Company, By
and Among The First American Real Estate Information
Services, Inc. and Experian Information Solutions, Inc., et
al., dated November 30, 1997.
(10)(c) FAREISI Transition Agreement
(10)(d) Data License Agreement
(10)(e) Interim Operating Agreement By and Among The First American
Financial Corporation and Experian Information Solutions,
Inc., et al., dated November 30, 1997.
(10)(f) Experian Transition Agreement
(10)(g) Reseller Services Agreement
(10)(h) Amendment to Reseller Services Agreement For Resales to
Consumers
(10)(i) Trademark License Agreement
(10)(j) Amendment to Section 5.1 of The First American Financial
Corporation 1996 Stock Option Plan, incorporated by
reference herein from definitive Proxy Statement dated
March 23, 1998.
(27) Financial Data Schedule
|
(b) Reports on Form 8-K
During the quarterly period covered by this report, the Company filed reports on Form 8-K dated January 23, 1998 (reporting on the declaration and payment of a "3 for 2" stock split and amendment of the Company's articles of incorporation to increase the authorized number of Common shares in connection therewith), January 27, 1998 (reporting on the formation of a joint venture between the Company and Experian Information Solutions, Inc.), March 18, 1998 (reporting on the Company's having entered into a definitive agreement to acquire Contour Software, Inc.), and March 31, 1998 (reporting on the Company's having entered into a definitive agreement to acquire Data Tree Corporation). Subsequent to such quarterly period, the Company filed a report on Form 8-K dated April 7, 1998 (reporting on the Company's issuance of $100,000,000 aggregate principal amount of 7.55% senior debentures due 2028).
EXHIBIT INDEX
Exhibit No. Description
----------- -----------
(2) Agreement and Plan of Merger, dated as of March 27, 1998, By and
Among The First American Financial Corporation, Image Acquisition
Corp., Data Tree Corporation and Harish Chopra, incorporated by
reference herein from Exhibit 2.1 of Registration Statement on
Form S-4 dated May 7, 1998.
(10)(a) Contribution and Joint Venture Agreement By and Among The First
American Financial Corporation and Experian Information
Solutions, Inc., et al., dated November 30, 1997.
(10)(b) Operating Agreement for First American Real Estate Solutions LLC,
a California Limited Liability Company, By and Among The First
American Real Estate Information Services, Inc. and Experian
Information Solutions, Inc., et al., dated November 30, 1997.
(10)(c) FAREISI Transition Agreement
(10)(d) Data License Agreement
(10)(e) Interim Operating Agreement By and Among The First American
Financial Corporation and Experian Information Solutions, Inc.,
et al., dated November 30, 1997.
(10)(f) Experian Transition Agreement
(10)(g) Reseller Services Agreement
(10)(h) Amendment to Reseller Services Agreement For Resales to Consumers
(10)(i) Trademark License Agreement
(10)(j) Amendment to Section 5.1 of The First American Financial
Corporation 1996 Stock Option Plan, incorporated by reference
herein from definitive Proxy Statement dated March 23, 1998.
(27) Financial Data Schedule
|
Exhibit (10)(a)
CONTRIBUTION AND JOINT VENTURE AGREEMENT
By and Among
THE FIRST AMERICAN FINANCIAL CORPORATION,
FIRST AMERICAN REAL ESTATE INFORMATION SERVICES, INC.,
FIRST AMERICAN APPRAISAL SERVICES, INC.,
FIRST AMERICAN APPRAISAL CONSULTING SERVICES, INC.,
FIRST AMERICAN CREDCO, INC.,
FIRST AMERICAN FIELD SERVICES, INC.,
FIRST AMERICAN FLOOD DATA SERVICES, INC.,
FIRST AMERICAN PROPERTY SERVICES, INC.,
FIRST AMERICAN REAL ESTATE TAX SERVICE, INC.,
PASCO ENTERPRISES, INC.,
PRIME CREDIT REPORTS, INC.,
PROPERTY FINANCIAL SERVICES OF NEW ENGLAND, INC.,
DOCS ACQUISITION CORP.,
STRATEGIC MORTGAGE SERVICES, INC. (TEXAS),
and
EXPERIAN INFORMATION SOLUTIONS, INC.
November 30, 1997
TABLE OF CONTENTS/1/
-----------------
Page
----
ARTICLE I
DEFINITIONS............................................................ 2
1.01. Defined Terms............................................ 2
-------------
1.02. Principles of Construction............................... 8
--------------------------
ARTICLE II
ORGANIZATION OF NEWCO;
CLOSING; SCOPE OF BUSINESS............................................. 8
2.01. Organization............................................. 8
------------
2.02. Capital Contributions; Closing........................... 9
------------------------------
2.03. Certain Obligations Not Transferred...................... 10
-----------------------------------
2.04. Effective Time........................................... 10
--------------
2.05. Instruments of Transfer and Conveyance................... 10
--------------------------------------
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF EXPERIAN............................. 11
3.01. Authorization and Validity of Agreement.................. 11
---------------------------------------
3.02. Existence and Good Standing.............................. 11
---------------------------
3.03. EXPERIAN Financial Statements............................ 12
-----------------------------
3.04. Title to Interests....................................... 12
------------------
3.05. Leases................................................... 12
------
3.06. Real Property............................................ 12
-------------
3.07. Material Contracts....................................... 13
------------------
3.08. Consents and Approvals; No Violations.................... 13
-------------------------------------
3.09. Litigation............................................... 14
----------
3.10. Taxes.................................................... 14
-----
3.11. Conduct of Business...................................... 15
-------------------
3.12. Compliance with Laws; Permits............................ 15
-----------------------------
3.13. Intellectual Properties.................................. 16
-----------------------
3.14. Labor Matters............................................ 17
-------------
3.15. Employee Benefit Plans................................... 17
----------------------
3.16. Environmental Laws and Regulations....................... 17
----------------------------------
3.17. Books and Records........................................ 18
-----------------
3.18. Nature of Investment..................................... 18
--------------------
3.19. Transactions with Affiliates............................. 18
----------------------------
3.20. Broker's or Finder's Fees................................ 18
-------------------------
/1/ This Table of Contents is provided for convenience only, and does not
-
form a part of the attached Contribution and Joint Venture Agreement.
(i)
|
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE FAFCO PARTIES.................... 19
4.01. Authorization and Validity of Agreement.................. 19
---------------------------------------
4.02. Existence and Good Standing.............................. 19
---------------------------
4.03. FAFCO Financial Statements............................... 20
--------------------------
4.04. Title to Interests....................................... 20
------------------
4.05. Leases................................................... 20
------
4.06. Real Property............................................ 20
-------------
4.07. Material Contracts....................................... 21
------------------
4.08. Consents and Approvals; No Violations.................... 21
-------------------------------------
4.09. Litigation............................................... 22
----------
4.10. Taxes.................................................... 22
-----
4.11. Conduct of Business...................................... 23
-------------------
4.12. Compliance with Laws; Permits............................ 24
-----------------------------
4.13. Intellectual Properties.................................. 24
-----------------------
4.14. Labor Matters............................................ 25
-------------
4.15. Employee Benefit Plans................................... 25
----------------------
4.16. Environmental Laws and Regulations....................... 25
----------------------------------
4.17. Books and Records........................................ 26
-----------------
4.18. Nature of Investment..................................... 26
--------------------
4.19. Transactions with Affiliates............................. 26
----------------------------
4.20. Broker's or Finder's Fees................................ 26
-------------------------
ARTICLE V
COVENANTS.............................................................. 26
5.01. Ordinary Course.......................................... 26
---------------
5.02. NEWCO Business Opportunities............................. 27
----------------------------
5.03. Best Efforts............................................. 28
------------
5.04. Consents and Further Assurances.......................... 28
-------------------------------
5.05. Notices of Certain Events................................ 29
-------------------------
5.06. Access to Information Concerning Business and Records.... 30
-----------------------------------------------------
5.07. Exclusive Dealing........................................ 30
-----------------
5.08. FAFCO Board Representation............................... 31
--------------------------
5.09. Guarantees............................................... 31
----------
5.10. Certain Fees............................................. 31
------------
5.11. Certain Covenants........................................ 31
-----------------
ARTICLE VI
EXPERIAN PUT OPTION; FAFCO CALL OPTION.............. 32
6.01. EXPERIAN Put Option...................................... 32
-------------------
6.02. FAFCO Call Option........................................ 33
-----------------
6.03. FAFCO Change of Control Put Option....................... 34
----------------------------------
6.04. EXPERIAN Change of Control Call Option................... 35
--------------------------------------
6.05. Extraordinary Put Option................................. 35
------------------------
6.06. Put/Call Adjustment...................................... 36
-------------------
6.07. General Put/Call Provisions.............................. 36
---------------------------
(ii)
|
6.08. Dispute Resolution....................................... 37
------------------
ARTICLE VII
CONDITIONS PRECEDENT................................................... 38
7.01. Conditions Precedent to the Obligations of Each of the
------------------------------------------------------
Parties.................................................. 38
-------
7.02. Conditions Precedent to the Obligations of the FAFCO
----------------------------------------------------
Parties.................................................. 40
-------
7.03. Conditions Precedent to the Obligations of EXPERIAN...... 41
---------------------------------------------------
ARTICLE VIII
SURVIVAL OF REPRESENTATION; INDEMNIFICATION............................ 43
8.01. Survival of Representations.............................. 43
---------------------------
8.02. Indemnification.......................................... 43
---------------
8.03. Post-Effective-Time Tax Indemnification.................. 43
---------------------------------------
ARTICLE IX
TERMINATION............................................................ 44
9.01. Events of Termination.................................... 44
---------------------
9.02. Effect of Termination.................................... 44
---------------------
ARTICLE X
MISCELLANEOUS.......................................................... 44
10.01. Fees and Expenses........................................ 44
-----------------
10.02. Extension; Waiver........................................ 44
-----------------
10.03. Confidentiality.......................................... 44
---------------
10.04. Public Announcements..................................... 45
--------------------
10.05. Records Retained by FAFCO, EXPERIAN and NEWCO............ 45
---------------------------------------------
10.06. Notices.................................................. 45
-------
10.07. Entire Agreement......................................... 46
----------------
10.08. Binding Effect; Benefit; Assignment...................... 46
-----------------------------------
10.09. Amendment and Modification............................... 47
--------------------------
10.10. Further Actions.......................................... 47
---------------
10.11. Counterparts............................................. 47
------------
10.12. Applicable Law; Submission to Jurisdiction............... 47
------------------------------------------
10.13. Severability............................................. 47
------------
|
SCHEDULE 2.02(a) FAFCO MEMBERS Excluded Assets and Liabilities
SCHEDULE 2.02(b) EXPERIAN Excluded Assets and Liabilities
SCHEDULE 3.03 Material Adverse Effect (EXPERIAN)
SCHEDULE 3.04 Title to Interests (EXPERIAN)
SCHEDULE 3.05 Leases (EXPERIAN)
SCHEDULE 3.06 Real Property (EXPERIAN)
SCHEDULE 3.07(a) Material Contracts (EXPERIAN)
SCHEDULE 3.07(c) Existing or Potential Defaults (EXPERIAN)
(iii)
|
SCHEDULE 3.08 Necessary Consents (EXPERIAN)
SCHEDULE 3.09 Litigation (EXPERIAN)
SCHEDULE 3.10 Tax Matters (EXPERIAN)
SCHEDULE 3.13(b) Copyrights (EXPERIAN)
SCHEDULE 3.13(d) Adverse Claims (EXPERIAN)
SCHEDULE 3.14 Labor (EXPERIAN)
SCHEDULE 3.15 Employee Benefit Plans (EXPERIAN)
SCHEDULE 3.17 Books and Records (EXPERIAN)
SCHEDULE 3.19 Transactions with Affiliates (EXPERIAN)
SCHEDULE 4.03 Material Adverse Effect (FAFCO)
SCHEDULE 4.04 Title to Interests (FAFCO)
SCHEDULE 4.05 Leases (FAFCO)
SCHEDULE 4.06 Real Property (FAFCO)
SCHEDULE 4.07(a) Material Contracts (FAFCO)
SCHEDULE 4.07(c) Existing or Potential Defaults (FAFCO)
SCHEDULE 4.08 Necessary Consents (FAFCO)
SCHEDULE 4.09 Litigation (FAFCO)
SCHEDULE 4.10 Tax Matters (FAFCO)
SCHEDULE 4.13(b) Copyrights (FAFCO)
SCHEDULE 4.13(d) Adverse Claims (FAFCO)
SCHEDULE 4.14 Labor (FAFCO)
SCHEDULE 4.15 Employee Benefit Plans (FAFCO)
SCHEDULE 4.17 Books and Records (FAFCO)
SCHEDULE 4.19 Transactions with Affiliates (FAFCO)
SCHEDULE 5.01 Approved Transactions
EXHIBITS
--------
Exhibit A Form of $3MM Note
Exhibit B Form of Operating Agreement
Exhibit C-1 Form of Experian Transition Agreement
Exhibit C-2 Form of FAFCO Transition Agreement
Exhibit D Form of Data License Agreement
Exhibit E Form of EXPERIAN/CREDCO Agreement
Exhibit F Form of Trademark License Agreement
Exhibit G Form of Interim Operating Agreement
|
CONTRIBUTION AND JOINT VENTURE AGREEMENT, made as of November 30, 1997
(this "Agreement"), by and among THE FIRST AMERICAN FINANCIAL CORPORATION, a
California corporation ("FAFCO"), FIRST AMERICAN REAL ESTATE INFORMATION
SERVICES, INC., a California corporation, ("FAREISI"), FIRST AMERICAN APPRAISAL
SERVICES, INC., a California corporation ("FAREISI Subsidiary 1"), FIRST
AMERICAN APPRAISAL CONSULTING SERVICES, INC., a California corporation ("FAREISI
Subsidiary 2"), FIRST AMERICAN CREDCO, INC., a Washington corporation ("FAREISI
Subsidiary 3"), FIRST AMERICAN FIELD SERVICES, INC., a New Jersey corporation
("FAREISI Subsidiary 4"), FIRST AMERICAN FLOOD DATA SERVICES, INC., a Texas
corporation ("FAREISI Subsidiary 5"), FIRST AMERICAN PROPERTY SERVICES, INC., a
New York corporation ("FAREISI Subsidiary 6"), FIRST AMERICAN REAL ESTATE TAX
SERVICE, INC., a Florida corporation ("FAREISI Subsidiary 7"), PASCO
ENTERPRISES, INC., a Texas corporation ("FAREISI Subsidiary 8"), PRIME CREDIT
REPORTS, INC., a California corporation ("FAREISI Subsidiary 9"), PROPERTY
FINANCIAL SERVICES OF NEW ENGLAND, INC., a Delaware corporation ("FAREISI
Subsidiary 10"), DOCS ACQUISITION CORP., a Nevada corporation ("DOCS"),
STRATEGIC MORTGAGE SERVICES, INC. (TEXAS), a Texas corporation ("SMS"), and
EXPERIAN INFORMATION SOLUTIONS, INC., an Ohio corporation ("EXPERIAN").
WHEREAS, FAFCO, FAREISI, FAREISI Subsidiary 1, FAREISI Subsidiary 2, FAREISI Subsidiary 3, FAREISI Subsidiary 4, FAREISI Subsidiary 5, FAREISI Subsidiary 6, FAREISI Subsidiary 7, FAREISI Subsidiary 8, FAREISI Subsidiary 9, FAREISI Subsidiary 10, DOCS, SMS (FAREISI, the foregoing FAREISI Subsidiaries, DOCS and SMS, collectively, the "FAFCO Members"), and EXPERIAN (each a "Party" and, collectively, the "Parties") desire to combine the FAREISI Business and the RES Business;
WHEREAS, the Parties desire that EXPERIAN and each of the FAFCO Members become the joint owners of a California limited liability company to be formed pursuant to Section 2.01 of this Agreement ("NEWCO") to own and operate the combined FAREISI Business and RES Business;
WHEREAS, to effectuate their intent the Parties deem it advisable for EXPERIAN and each of the FAFCO Members to make a contribution of certain assets and liabilities to NEWCO; and
WHEREAS, in order to set forth certain terms and conditions upon which NEWCO will be owned and operated, the Parties desire to enter into this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual covenants hereinafter set forth, the Parties agree as follows:
ARTICLE
I
DEFINITIONS
"Adjusted Earnings" means, for any period, the profits of NEWCO for such period, assuming an effective tax rate of 40% (which percentage the Parties may from time to time hereafter agree to adjust to reflect material changes in tax rates), as determined in accordance with US GAAP and excluding extraordinary gains and charges, restructuring charges and other unusual or infrequently occurring items.
"Affiliate" shall mean and include, with reference to any Person, any other Person, other than NEWCO, Controlling, Controlled by or under common Control with such Person.
"Agreement" shall mean this Contribution and Joint Venture Agreement, as the same may be amended, modified and/or supplemented from time to time.
"Balance Sheet Date" shall mean September 30, 1997 in the case of FAFCO and November 19, 1997 in the case of EXPERIAN.
"Business" shall mean the FAREISI Business and/or the RES Business, as the context may require.
"Business Day" shall mean any day, excluding Saturday, Sunday or any day which shall be a legal holiday in the State of California.
"Business Record" shall have the meaning set forth in Section 10.05.
"Call Election Notice" has the meaning given thereto in Section 6.02(a) hereof.
"Call Exercise Date" has the meaning given thereto in Section 6.02(a) hereof.
"Call Option" has the meaning given thereto in Section 6.02(a) hereof.
"Call Price" has the meaning given thereto in Section 6.02(b) hereof.
"Capital Account" shall have the meaning given thereto in Section 1.01 of the Operating Agreement.
"Closing" shall mean the closing of the transactions contemplated herein and shall take place at the offices of White & Case, 633 West Fifth Street, Los Angeles, California 90071, at 10:00 A.M. local time on a Business Day occurring not more than ten Business Days after the
satisfaction or waiver of all the conditions to the effectiveness of this Agreement set forth in Article VII or such other place or time as the Parties may agree, not later than November 30, 1997 (the date of the Closing being referred to as the "Closing Date"); it being understood that the Parties anticipate that the Closing will occur on or before November 30, 1997.
"Code" shall have the meaning set forth in Section 3.15.
"Commission" shall mean the U.S. Securities and Exchange Commission.
"Control" shall mean the power to vote more than 50% of the Voting Interests of an Entity or to otherwise control the management and affairs of such Entity (including by way of the power to veto any material act or decision).
"Effective Date" shall mean January 1, 1998.
"Effective Time" shall mean 00:01 (local time) on January 1, 1998.
"Encumbrances" shall mean all liens, encumbrances, restrictions and claims of every kind and character.
"End Date" shall have the meaning set forth in Section 6.01(a).
"Environmental Claims" shall have the meaning set forth in Section 3.16.
"Environmental Laws" shall have the meaning set forth in Section 3.16.
"Entity" shall mean any Person that is not a natural Person.
"ERISA" shall have the meaning set forth in Section 3.15.
"Exchange Act" shall mean the U.S. Securities Exchange Act of 1934, as amended.
"EXPERIAN" shall have the meaning set forth in the introductory paragraph of this Agreement.
EXPERIAN is not the surviving entity, shall have expressly assumed in writing each obligation of EXPERIAN under this Agreement, the Operating Agreement and each other agreement relating to NEWCO to which EXPERIAN is a party.
"EXPERIAN Change of Control Notice" has the meaning given thereto in
Section 6.04 hereof.
"EXPERIAN Interests" shall have the meaning set forth in Section 2.02(b).
"EXPERIAN Plan" and "EXPERIAN Plans" shall have the meaning set forth in
Section 3.15.
"FAFCO" shall have the meaning set forth in the introductory paragraph of this Agreement.
"FAFCO Balance Sheet" shall have the meaning set forth in Section 4.03(a).
"FAFCO Change of Control" means an event as a result of which (a) any
Person or group of Persons (within the meaning of Section 13 or 14 of the
Exchange Act) shall have acquired beneficial ownership (within the meaning of
Rule 13d-3 promulgated by the Commission under the Exchange Act) of 51% or more
of the outstanding shares of common stock of FAFCO (on a fully diluted basis) or
(b) FAFCO shall fail to own, directly or indirectly, at least 51% of the
economic and voting interest in the capital stock of each of the FAFCO Members.
"FAFCO Change of Control Notice" has the meaning given thereto in Section 6.03 hereof.
"FAFCO Financial Statements" shall have the meaning set forth in Section 4.03(a).
"FAFCO Interests" shall have the meaning set forth in Section 2.02(a).
"FAFCO Member" shall have the meaning given thereto in the first WHEREAS clause of this Agreement.
"FAFCO Plan" and "FAFCO Plans" shall have the meaning set forth in Section 4.15.
"FAREISI" shall have the meaning set forth in the introductory paragraph of this Agreement.
"FAREISI Business" shall mean the collective businesses of each of the FAFCO Members.
"FAREISI Material Contract" shall have the meaning set forth in Section 4.07(b).
"FAREISI Permitted Encumbrances" shall have the meaning set forth in
Section 4.04.
"FAREISI Pro-Forma Balance Sheet" shall have the meaning set forth in
Section 4.03(a).
"FAREISI Property" shall have the meaning set forth in Section 4.16.
"Hazardous Materials" shall have the meaning set forth in Section 3.16.
"Implementing Agreements" shall have the meaning set forth in Section 7.01(d).
"Indemnifiable Taxes" shall have the meaning set forth in Section 8.03(a).
"Intellectual Property" means all patents, patent applications, registered and unregistered trademarks and service marks, registered and unregistered copyrights, computer programs, databases, trade secrets and proprietary information.
"Interests" shall mean the FAFCO Interests and/or the EXPERIAN Interests, as the context may require.
"Interim Operating Agreement" shall mean an Interim Operating Agreement by and among FAFCO, each of the FAFCO Members and EXPERIAN in substantially the form of Exhibit G attached hereto.
"License" shall have the meaning set forth in Section 3.12.
"Losses" shall have the meaning set forth in Section 8.02.
"Major Exchange" shall mean any one of the following securities exchanges or quotation systems: New York Stock Exchange, NASDAQ, American Stock Exchange or Pacific Stock Exchange.
"Management Committee" shall have the meaning given thereto in Section 1.01 of the Operating Agreement.
"Manager" shall have the meaning given thereto in Section 1.01 of the Operating Agreement.
"Material Adverse Effect" shall have the meaning set forth in Section 3.02.
"Membership Interest" shall mean, with respect to each of the FAFCO Members and EXPERIAN, its respective interest in NEWCO as determined in accordance with the Operating Agreement.
"NEWCO" shall mean the California limited liability company to be formed pursuant to Article II.
"NEWCO Development Opportunity" shall have the meaning given to the term "Company Development Opportunity" in Section 1.01 of the Operating Agreement.
"NEWCO Business" shall mean the business owned and operated by NEWCO after the Closing which shall include, without limitation, the combined FAREISI Business and the RES Business.
"Notes" shall have the meaning set forth in Section 2.02(a).
"Notice Date" has the meaning given thereto in Section 6.06(c) hereof.
"Operating Agreement" shall mean an Operating Agreement by and among each of the FAFCO Members and EXPERIAN in substantially the form of Exhibit B attached hereto.
"Panel" shall have the meaning set forth in Section 6.08(b).
"Panel Date" shall have the meaning set forth in Section 6.08(b).
"Party" and "Parties" shall have the meaning set forth in the first WHEREAS clause of this Agreement.
"Percentage Interest" shall mean, with respect to EXPERIAN, the percentage set forth in Section 2.02(f) of the Operating Agreement with respect to EXPERIAN, as such percentage may be adjusted from time to time pursuant to the terms of the Operating Agreement.
"Permitted Encumbrances" shall mean the FAREISI Permitted Encumbrances and/or the RES Permitted Encumbrances, as the context may require.
"Person" shall mean and include any individual, partnership, association, joint stock company, joint venture, corporation, trust, limited liability company, unincorporated organization, government, agency or political subdivision thereof.
"Pre-Closing Period" shall have the meaning set forth in Section 3.10(a).
"Put Election Notice" has the meaning given thereto in Section 6.01(a) hereof.
"Put Exercise Date" has the meaning given thereto in Section 6.01(a) hereof.
"Put Option" has the meaning given thereto in Section 6.01(a) hereof.
"Put Price" has the meaning given thereto in Section 6.01(b) hereof.
"Registration Date" shall have the meaning set forth in Section 6.01(a).
"Release" shall have the meaning set forth in Section 3.16.
"RES Business" shall mean the business of EXPERIAN commonly known as Experian Real Estate Solutions (including, without limitation, the businesses commonly known as Experian Title Information Services and Experian Property Data).
"RES Material Contract" shall have the meaning set forth in Section 3.07(b).
"RES Permitted Encumbrances" shall have the meaning set forth in Section 3.04.
"RES Pro-Forma Balance Sheet" shall have the meaning set forth in Section 3.03(a).
"RES Pro-Forma Financials" shall have the meaning set forth in Section 3.03(a).
"RES Property" shall have the meaning set forth in Section 3.16.
"Returns" shall have the meaning set forth in Section 3.10(a).
"Securities Act" shall mean the U.S. Securities Act of 1933, as amended.
"Taxes" shall mean all taxes, assessments, charges, duties, fees, levies or other governmental charges, including, without limitation, all Federal, state, county, local, foreign and other income, franchise, profits, capital gains, capital stock, transfer, sales, use, occupation, property, excise, severance, windfall profits, stamp, license, payroll, withholding and other taxes, assessments, charges, duties, fees, levies or other governmental charges of any kind whatsoever (whether payable directly or by withholding and whether or not requiring the filing of a Return), all estimated taxes, deficiency assessments, additions to tax, penalties and interest and shall include any liability for such amounts as a result either of being a member of a combined, consolidated, unitary or affiliated group or of a contractual obligation to indemnify any person or other entity.
"Transactional Taxes" shall have the meaning set forth in Section 2.01(b)(ii).
"Trigger Date" shall mean November 30, 2002.
"US GAAP" means United States generally accepted accounting principles applied on a consistent basis.
"Voting Interest" shall mean with respect to any Entity, any equity interest of such Entity having general voting power under ordinary circumstances to participate in the election of a majority of the governing body of such Entity (irrespective of whether at the time any other class
or classes of equity interest of such Entity shall have or might have voting power by reason of the happening of any contingency).
"$3MM Note" shall have the meaning set forth in Section 2.02(b).
"$25MM Note" shall have the meaning set forth in Section 7.01(e)(ii).
(a) All references to Articles, Sections, subsections, Schedules and Exhibits are to Articles, Sections, subsections, Schedules and Exhibits in or to this Agreement unless otherwise specified. The words "hereof," "herein" and "hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The term "including" is not limiting and means "including without limitation."
(b) All accounting terms not specifically defined herein shall be construed in accordance with US GAAP.
(c) In the computation of periods of time from a specified date to a later specified date, the word "from" means "from and including"; the words "to" and "until" each mean "to but excluding"; and the word "through" means "to and including."
(d) The Table of Contents hereto and the Article and Section headings herein are for convenience only and shall not affect the construction hereof.
(e) This Agreement and the Implementing Agreements are the result of negotiations among and have been reviewed by counsel to the Parties and are the products of all Parties. Accordingly, they shall not be construed against any Party merely because of such Party's involvement in their preparation.
ARTICLE II
ORGANIZATION OF NEWCO;
CLOSING; SCOPE OF BUSINESS
(a) NEWCO shall be a limited liability company established under the laws of the State of California, (i) having as its registered name such name as from time to time is set forth in NEWCO's Articles of Organization and (ii) having its principal offices located in St. Petersburg, Florida or such location as from time to time is set forth in NEWCO's Articles of Organization.
(b) (i) All out-of-pocket costs of the establishment of NEWCO as a limited liability company as contemplated by Section 2.01(a) (including organizational changes and amendments to organizational documents that may be made on or before the Closing Date) shall be shared eighty percent (80%) by the FAFCO Members and twenty percent (20%) by EXPERIAN.
(ii) Except as otherwise provided in clause (iii) below, each Party shall bear its own (A) costs incurred as a result of the transfer of any Interests to NEWCO, including payments to third parties, if any, to obtain their consent to such transfer (it being understood and agreed that each Party shall determine, in its sole discretion, whether or not to obtain any such consent), (B) attorneys' fees and related costs incurred by it in connection with the preparation, execution and delivery of this Agreement and the Implementing Agreements and the transactions contemplated hereby or thereby, except as may otherwise expressly be provided herein or therein and (C) sales, use, transfer, conveyance, bulk transfer, business and occupation, value added or income taxes, or other taxes, duties, excises or governmental charges imposed by any taxing jurisdiction with respect to the transfer, assignment or conveyance of its Interests or otherwise on account of this agreement or the transactions contemplated hereby including, without limitation, those arising from its corporate reorganizations and intercompany transactions in contemplation of such transactions (the foregoing taxes described in this clause (C) being hereinafter referred to as "Transactional Taxes").
(iii) Notwithstanding anything in this Section 2.01(b) to the contrary, the Parties hereby agree to share as provided in Section 2.01(b)(i) the reasonable legal fees and expenses of White & Case in connection with the establishment of NEWCO as a limited liability company.
(a) At or prior to the Effective Time, FAFCO and FAREISI shall cause each FAFCO Member to transfer to NEWCO, and each FAFCO Member shall transfer to NEWCO, free and clear of all Encumbrances, other than FAREISI Permitted Encumbrances, all of the assets (which assets will include, without limitation, cash in an amount that, when aggregated with the cash, if any, contributed by all other FAFCO Members, will not be less than $15,000,000), properties, rights, services and interests constituting its share of the FAREISI Business (other than such assets, properties, rights, services and interests set forth on Part 1 of Schedule 2.02(a) attached hereto under the name of such FAFCO Member), together with all liabilities and obligations of any nature of such FAFCO Member, whether absolute, accrued, contingent or otherwise, and whether due or to become due, arising out of or relating to such assets, properties, rights, services and interests (other than the liabilities and obligations set forth in Part 2 of Schedule 2.02(a) attached hereto under the name of such FAFCO Member) (all such assets, properties, rights, services, liabilities, obligations and interests being transferred are hereinafter collectively referred to as the "FAFCO Interests"). In consideration for such transfer, NEWCO shall in accordance with Section 2.02 of the Operating Agreement, credit the respective Capital Accounts of the FAFCO Members and issue to the FAFCO Members Membership Interests in NEWCO in an aggregate amount equal to 80% of the Membership Interests to be issued at the Effective Time.
(b) At or prior to the Effective Time, EXPERIAN shall transfer or cause to
be transferred to NEWCO, (i) free and clear of all Encumbrances, other than RES
Permitted Encumbrances, all of the assets (which assets will include, without
limitation, not less than $3,000,000 in cash), properties, rights, services and
interests constituting the RES Business (other than such assets, properties,
rights, services and interests set forth in Part 1 of Schedule 2.02(b) attached
hereto), together with all liabilities and obligations of any nature of
EXPERIAN, whether absolute, accrued, contingent or otherwise, and whether due or
to become due, arising out of or relating to such assets, properties, rights,
services and interests (other than the liabilities and obligations set forth in
Part 2 of Schedule 2.02(b) attached hereto) (all such assets, properties,
rights, services, liabilities, obligations and interests being transferred
hereunder are hereinafter referred to as the "EXPERIAN Interests") and (ii) cash
in the amount of $10,000,000, by wire transfer of immediately available funds to
an account designated by NEWCO. In consideration of such transfer, NEWCO shall
(x) in accordance with Section 2.02 of the Operating Agreement, credit the
Capital Account of EXPERIAN and issue to EXPERIAN a Membership Interest in NEWCO
equal to 20% of the Membership Interests to be issued at the Effective Time and
(y) deliver or cause to be delivered to EXPERIAN a promissory note, dated the
Effective Date, in the principal amount of $3,000,000 in the form attached
hereto as Exhibit A duly executed by NEWCO (the "$3MM Note").
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF EXPERIAN
EXPERIAN hereby represents and warrants to FAFCO, FAREISI and each of the other FAFCO Members and to NEWCO (which shall be an intended beneficiary of such representations and warranties upon its acknowledgement of this Agreement) as follows:
(a) It has full corporate power and authority to execute and deliver this Agreement and each of the Implementing Agreements to which it is a party, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution, delivery and performance by it of this Agreement and the Implementing Agreements to which it is a party and the consummation of the transactions contemplated hereby and thereby, have been duly authorized and approved by its Board of Directors and, if applicable, shareholder(s), and no other corporate or shareholder action is necessary to authorize the execution, delivery and performance by it of this Agreement and the Implementing Agreements to which it is a party and the consummation of the transactions contemplated hereby and thereby. This Agreement and each of the Implementing Agreements to which it is a party have been duly executed and delivered by it and, assuming the due execution of this Agreement and each of the Implementing Agreements by the other parties hereto and thereto, are valid and binding obligations of it, enforceable against it in accordance with their terms, except to the extent that their en forceability may be subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting the enforcement of creditors' rights generally and to general equitable principles.
(b) Each document and instrument (including, but not limited to, the Implementing Agreements) executed by it as contemplated by this Agreement, when executed and delivered by it in accordance with the terms hereof, shall have been duly executed and delivered by it and, assuming due execution and delivery by the other parties thereto, shall be valid and binding upon it and enforceable against it in accordance with its terms, except to the extent that its enforceability may be subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting the enforcement of creditors' rights generally and to general equitable principles.
(a) EXPERIAN has heretofore furnished FAFCO with its pro-forma balance sheet as at November 19, 1997 (such balance sheet being hereinafter referred to as the "RES Pro-Forma Balance Sheet"), and related pro-forma statements of operations and cash flows for the period then ended, together with all explanatory notes thereto, for the RES Business showing the effects of the elimination of EXPERIAN's businesses and operations not included in the EXPERIAN Interests being transferred to NEWCO (such pro-forma statements, together with the RES Pro-Forma Balance Sheet, the "RES Pro-Forma Financials"). The RES Pro- Forma Financials, including the footnotes thereto, are based upon currently available information and upon certain assumptions therein disclosed that EXPERIAN believes in good faith to be reasonable under current circumstances.
(b) Except as set forth on Schedule 3.03 attached hereto, since the Balance Sheet Date, the RES Business has experienced no Material Adverse Effect.
(a) Schedule 3.07(a) attached hereto sets forth a complete list of all RES Material Contracts related to the operation of the RES Business.
(b) Except as set forth in Schedule 3.07(a) attached hereto, in
connection with the ownership or operation of the RES Business, it neither has
nor is bound by (i) any agreement or contract relating to the employment of any
Person with total annual compensation in excess of $300,000, or any bonus,
deferred compensation, pension, profit sharing, stock option, employee stock
purchase, retirement or other employee benefit plan, (ii) any agreement,
indenture or other instrument which contains restrictions with respect to
payment of dividends or any other distribution tion, (iii) any agreement,
contract or commitment relating to capital expenditures in excess of $1,000,000,
(iv) any loan or advance to, or investment in, any Person or agreement, contract
or commitment relating to the making of any such loan, advance or investment,
(v) any guarantee or other contingent liability in respect of any indebtedness
or obligation of any Person (other than the endorsement of negotiable
instruments for collection in the ordinary course of business), (vi) any
management service, consulting or any other similar type contract which is not
cancelable without penalty within 30 days and involves estimated payments in
excess of $50,000 in any twelve-month period, (vii) any agreement, contract or
commitment limiting the ability of the RES Business to engage in any line of
business or to compete with any Person, (viii) any agreement, contract or
commitment not entered into in the ordinary course of business which is not
cancelable without penalty within 30 days or (ix) any agreement, contract or
commitment which is reasonably expected to have a Material Adverse Effect on the
RES Business, taken as a whole (each of the agreements, contracts or commitments
in clauses (i) to (ix) above, a "RES Material Contract").
(c) Except as set forth on Schedule 3.07(c), each contract or agreement set forth on Schedule 3.07(a) (or required to be set forth thereon) is in full force and effect and there exists no default or event of default or event, occurrence, condition or act (including the transfer of the EXPERIAN Interests hereunder) attributable to it or of which it has knowledge which, with the giving of notice, the lapse of time or the happening of any other event or condition, would become a default or event of default thereunder. It has not violated any of the terms or conditions of any contract or agreement set forth on Schedule 3.07(a) (or required to be set forth thereon) in any material respect, and, to its knowledge, all of the covenants to be performed by any other party thereto have been fully performed.
the creation of any Encumbrance upon any of the EXPERIAN Interests under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, license, franchise, permit, agreement, lease, franchise agreement or any other instrument or obligation to which it is a party, or by which the EXPERIAN Interests may be bound, excluding from the foregoing clauses (c) and (d) filings, notices, permits, consents and approvals the absence of which, and violations, breaches, defaults, conflicts and liens which, individually, would not have a Material Adverse Effect on the RES Business, taken as a whole.
(i) Except as set forth on Schedule 3.10, EXPERIAN has not been the subject of an audit or other examination of Taxes by the tax authorities of any nation, state or locality nor has EXPERIAN or the RES Business received any notices from any taxing authority relating to any issue which could affect the Tax liability of the RES Business.
(ii) Except as set forth on Schedule 3.10, as of the Closing Date, EXPERIAN (A) has not entered into an agreement or waiver or been requested to enter into an agreement or waiver extending any statute of limitations relating to the payment or collection of Taxes of the RES Business or (B) is not presently contesting the Tax liability of the RES Business before any court, tribunal or agency.
(iii) Except as set forth on Schedule 3.10, EXPERIAN has not been included in any "consolidated," "unitary" or "combined" Return provided for under the law of the United States, any foreign jurisdiction or any state or locality with respect to Taxes for any taxable period for which the statute of limitations has not expired.
(iv) All Taxes related to the RES Business which EXPERIAN or the RES Business is (or was) required by law to withhold or collect have been duly withheld or collected, and have been timely paid over to the proper authorities to the extent due and payable.
(v) None of the RES Business consists of any United States real property interests within the meaning of Section 897 of the Code and EXPERIAN is not a United States real property holding company within the meaning of Section 897(c)(2) of the Code.
(vi) There are no tax sharing, allocation, indemnification or similar agreements in effect under which the RES Business could be liable for any Taxes or other claims of any party.
(vii) EXPERIAN has not applied for, been granted, or agreed to any accounting method change for which the RES Business will be required to take into account any adjustment under Section 481 of the Code or any similar provision of the Code or the corresponding tax laws of any nation, state or locality.
(viii) The RES Business is not a party to any agreement that would require it to make any payment that would constitute an "excess parachute payment" for purposes of Sections 280G and 4999 of the Code.
(a) Subject to the qualifications set forth on Schedule 3.12(a) attached hereto, it is in compliance with all applicable laws, regulations, orders, judgments and decrees relating to the RES Business except where the failure to so comply would not have a Material Adverse Effect on the RES Business, taken as a whole.
(b) EXPERIAN possesses all franchises, licenses, certificates of authority, permits or other authorizations (each, a "License") necessary for the RES Business, except where the failure
to possess such a License would not have a Material Adverse Effect on the RES Business, taken as a whole. All such Licenses are in full force and effect and it has not received any written notice of any event, inquiry, investigation or proceeding threatening the validity of such Licenses, except where the failure of such Licenses to be in full force and effect or such event, inquiry, investigation or proceeding would not have a Material Adverse Effect on its RES Business, taken as a whole.
(a) The operation of the RES Business as currently conducted requires no rights under patents, registered or unregistered trademarks or registered or unregistered service marks other than rights under patents, trademarks and service marks owned by EXPERIAN (or its predecessors-in-interest), and rights granted for the benefit of the RES Business pursuant to license agreements that are in full force and effect. Within the three-year period immediately preceding the date of this Agreement, the RES Business made use of no rights under any patents, trademarks or service marks other than those owned by EXPERIAN (or its predecessors-in-interest), and rights granted for the benefit of the RES Business under license agreements.
(b) Except as disclosed on Schedule 3.13(b) attached hereto, the operation of the RES Business as currently conducted requires no rights under copyrights, other than rights under copyrights owned by EXPERIAN, and rights granted for the benefit of the RES Business pursuant to license agreements that are in full force and effect. Within the three-year period immediately preceding the date of this Agreement, the RES Business made no use of rights under any copyright, other than those owned by EXPERIAN (or its predecessors-in-interest), and rights granted for the benefit of the RES Business under license agreements.
(c) To the best of its knowledge, the operation, development and maintenance of the RES Business as currently conducted requires no rights under trade secrets or proprietary information (including but not limited to those in computer software and databases and to those disclosed in patent applications) other than rights under trade secrets and proprietary information owned by EXPERIAN, and rights granted for the benefit of the RES Business pursuant to license agreements that are in full force and effect. To the best of its knowledge, within the three-year period immediately preceding the date of this Agreement, the RES Business made use of no rights under any trade secret or proprietary information other than those owned by EXPERIAN (or its predecessors- in-interest), and rights granted for the benefit of the RES Business under license agreements.
(d) Except as set forth on Schedule 3.13(d), no claim adverse to its or the RES Business' interests in the Intellectual Property used in the RES Business or its license agreements with respect thereto has been made in litigation. To the best of its knowledge, no such claim has been threatened or asserted, no reasonable basis exists for any such claim, and no Person has infringed or otherwise violated its or the RES Business' right in any of such Intellectual Property or its license agreements with respect thereto.
on the RES Business. It is not involved in, or threatened with or affected by, any labor dispute, arbitration, law suit or administrative proceeding relating to the RES Business which reasonably could be expected to have a Material Adverse Effect on the RES Business. Except as set forth on Schedule 3.14 attached hereto, it is not a party to any collective labor agreement or similar agreement.
(a) Hazardous Materials have not been (i) generated, used, treated
or stored on, or transported to or from, any RES Property by it, or (ii)
Released or disposed of on any RES Property by it, except in the case of clause
(i) or (ii) in compliance with Environmental Law and so as not to give rise to
an Environmental Claim;
(b) The RES Business is in compliance with all applicable Environmental Laws and with the requirements of any permits issued under such laws; and
(c) There are no past, pending or, to its knowledge, threatened Environmental Claims against the RES Business and, to the best of its knowledge after, there are no facts, circumstances, conditions or occurrences that could reasonably be anticipated to form the basis of a claim under or a violation of, or require the expenditure of funds for compliance with, any Environmental Law that individually or in the aggregate could have a Material Adverse Effect on the RES Business, taken as a whole.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE FAFCO PARTIES
Each of FAFCO, FAREISI and each other FAFCO Member hereby represents and warrants, jointly and severally, to EXPERIAN and to NEWCO (which shall be an intended benefi ciary of such representations and warranties upon its acknowledgement of this Agreement) as follows:
(a) It has full corporate power and authority to execute and deliver this Agreement and each of the Implementing Agreements to which it is a party, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution, delivery and performance by it of this Agreement and the Implementing Agreements to which it is a party and the consummation of the transactions contemplated hereby and thereby, have been duly authorized and approved by its Board of Directors and, if applicable, shareholder(s), and no other corporate or shareholder action is necessary to authorize the execu tion, delivery and performance by it of this Agreement and the Implementing Agreements to which it is a party it and the consummation of the transactions contemplated hereby and thereby. This Agreement and each of the Implementing Agreements to which it is a party have been duly executed and delivered by it and, assuming the due execution of this Agreement and of each of the Implementing Agreements by the other parties hereto and thereto, are valid and binding obliga tions of it, enforceable against it in accordance with their terms, except to the extent that their en forceability may be subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting the enforcement of creditors' rights generally and to general equitable principles.
(b) Each document and instrument (including, but not limited to, the Implementing Agreements) executed by it as contemplated by this Agreement, when executed and delivered by it in accordance with the terms hereof shall have been duly executed and delivered by it and, assuming due execution and delivery by the other parties thereto, shall be valid and binding upon it and enforceable against it in accordance with its terms, except to the extent that its enforceability may be subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting the enforcement of creditors' rights generally and to general equitable principles.
(a) FAFCO has heretofore furnished EXPERIAN with its balance sheet as at December 31, 1996 (such balance sheet being hereinafter referred to as the "FAFCO Balance Sheet"), and related statements of operations, stockholders' equity, and cash flows for the period then ended, together with all explanatory notes thereto (such statements, together with the FAFCO Balance Sheet, the "FAFCO Financial Statements"), audited by Price Waterhouse LLP. Such FAFCO Financial Statements, including the footnotes thereto, except as indicated therein, have been prepared in accordance with US GAAP, and fairly present in all material respects the consolidated financial condition and consolidated results of operations of FAFCO and the changes in the consolidated financial position of FAFCO at such dates and for the period(s) covered thereby. Additionally, FAFCO has heretofore furnished EXPERIAN with its pro-forma balance sheet as at September 30, 1996 together with all explanatory notes thereto, for the FAREISI Business showing the effects of the elimination of operations not included in the FAFCO Interests being transferred to NEWCO (such balance sheet being hereinafter referred to as the "FAREISI Pro-Forma Balance Sheet"). The FAREISI Pro-Forma Balance Sheet, including the footnotes thereto, are based upon currently available information and upon certain assumptions therein disclosed that FAFCO believes in good faith to be reasonable under current circumstances.
(b) Except as set forth on Schedule 4.03 attached hereto, since the Balance Sheet Date, the FAREISI Business has experienced no Material Adverse Effect.
appurtenances situated on the real property listed on Schedule 4.06 are in good operating condition and in a state of good maintenance and repair (normal wear and tear excepted) and are adequate and suitable for the purposes for which they are presently being used.
(a) Schedule 4.07(a) attached hereto sets forth a complete list of all FAREISI Material Contracts related to the operation of the FAREISI Business.
(b) Except as set forth in Schedule 4.07(a) attached hereto, in
connection with the ownership or operation of the FAREISI Business, it neither
has nor is bound by (i) any agreement or contract relating to the employment of
any Person with total annual compensation in excess of $300,000, or any bonus,
deferred compensation, pension, profit sharing, stock option, employee stock
purchase, retirement or other employee benefit plan, (ii) any agreement,
indenture or other instrument which contains restrictions with respect to
payment of dividends or any other distribu tion, (iii) any agreement, contract
or commitment relating to capital expenditures in excess of $1,000,000, (iv) any
loan or advance to, or investment in, any Person or agreement, contract or
commitment relating to the making of any such loan, advance or investment, (v)
any guarantee or other contingent liability in respect of any indebtedness or
obligation of any Person (other than the endorsement of negotiable instruments
for collection in the ordinary course of business), (vi) any management service,
consulting or any other similar type contract which is not cancelable without
penalty within 30 days and involves estimated payments in excess of $50,000 in
any twelve-month period, (vii) any agreement, contract or commitment limiting
the ability of the FAREISI Business to engage in any line of business or to
compete with any Person, (viii) any agreement, contract or commitment not
entered into in the ordinary course of business which is not cancelable without
penalty within 30 days or (ix) any agreement, contract or commitment which is
reasonably expected to have a Material Adverse Effect on the FAREISI Business,
taken as a whole (each of the agreements, contracts or commitments in clauses
(i) to (ix) above, a "FAREISI Material Contract").
(c) Except as set forth on Schedule 4.07(c), each contract or agreement set forth on Schedule 4.07(a) (or required to be set forth thereon) is in full force and effect and there exists no default or event of default or event, occurrence, condition or act (including the transfer of the FAFCO Interests hereunder) attributable to it or of which it has knowledge which, with the giving of notice, the lapse of time or the happening of any other event or condition, would become a default or event of default thereunder. It has not violated any of the terms or conditions of any contract or agreement set forth on Schedule 4.07(a) (or required to be set forth thereon) in any material respect, and, to its knowledge, all of the covenants to be performed by any other party thereto have been fully performed.
(b) will not violate any statute, rule, regulation, order or decree of any public body or authority applicable to it or by which its Interests may be bound, (c) will not require any filing with, or permit, consent or approval of, or the giving of any notice to, any governmental or regulatory body, agency or authority, and (d) will not result in a violation or breach by it of, conflict with, constitute (with or without due notice or lapse of time or both) a default by it under, or result in the creation of any Encumbrance upon any of the FAFCO Interests under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, license, franchise, permit, agreement, lease, franchise agreement or any other instrument or obligation to which it is a party, or by which the FAFCO Interests may be bound, excluding from the foregoing clauses (c) and (d) filings, notices, permits, consents and approvals the absence of which, and violations, breaches, defaults, conflicts and liens which, individually, would not have a Material Adverse Effect on the FAREISI Business, taken as a whole.
(i) Except as set forth on Schedule 4.10, none of the FAFCO Members has been the subject of an audit or other examination of Taxes by the tax authorities of any nation, state or locality nor have the FAFCO Members or the FAREISI Business received any notices from any taxing authority relating to any issue which could affect the Tax liability of the FAREISI Business.
(ii) Except as set forth on Schedule 4.10, none of the FAFCO Members has, as of the Closing Date, (A) entered into an agreement or waiver or been requested to enter
into an agreement or waiver extending any statute of limitations relating to the payment or collection of Taxes of the FAREISI Business or (B) is presently contesting the Tax liability of the FAREISI Business before any court, tribunal or agency.
(iii) Except as set forth on Schedule 4.10, none of the FAFCO Members has been included in any "consolidated," "unitary" or "combined" Return provided for under the law of the United States, any foreign jurisdiction or any state or locality with respect to Taxes for any taxable period for which the statute of limitations has not expired.
(iv) All Taxes which FAFCO, the FAFCO Members or the FAREISI Business are (or were) required by law to withhold or collect have been duly withheld or collected, and have been timely paid over to the proper authorities to the extent due and payable.
(v) None of the FAREISI Business consists of any United States real property interests within the meaning of Section 897 of the Code and none of the FAFCO Members is a United States real property holding company within the meaning of Section 897(c)(2) of the Code.
(vi) There are no tax sharing, allocation, indemnification or similar agreements in effect under which the FAREISI Business could be liable for any Taxes or other claims of any party.
(vii) None of the FAFCO Members has applied for, been granted, or agreed to any accounting method change for which the FAREISI Business will be required to take into account any adjustment under Section 481 of the Code or any similar provision of the Code or the corresponding tax laws of any nation, state or locality.
(viii) The FAREISI Business is not a party to any agreement that would require it to make any payment that would constitute an "excess parachute payment" for purposes of Sections 280G and 4999 of the Code.
(a) Subject to the qualifications set forth on Schedule 4.12(a), it is in compliance with all applicable laws, regulations, orders, judgments and decrees relating to the FAREISI Business
except where the failure to so comply would not have a Material Adverse Effect on the FAREISI Business, taken as a whole.
(b) The FAFCO Members possess all Licenses necessary for the FAREISI Business, except where the failure to possess such a License would not have a Material Adverse Effect on the FAREISI Business, taken as a whole. All such Licenses are in full force and effect and it has not received any written notice of any event, inquiry, investigation or proceeding threatening the validity of such Licenses, except where the failure of such Licenses to be in full force and effect or such event, inquiry, investigation or proceeding would not have a Material Adverse Effect on the FAREISI Business, taken as a whole.
(a) The operation of the FAREISI Business as currently conducted requires no rights under patents, registered or unregistered trademarks or registered or unregistered service marks other than rights under patents, trademarks and service marks owned by the FAFCO Members, and rights granted for the benefit of the FAREISI Business pursuant to license agreements that are in full force and effect. Within the three-year period immediately preceding the date of this Agreement, the FAREISI Business made use of no rights under any patents, trademarks or service marks other than those owned by the FAFCO Members, and rights granted for the benefit of the FAREISI Business under license agreements.
(b) Except as disclosed on Schedule 4.13(b) attached hereto, the operation of the FAREISI Business as currently conducted requires no rights under copyrights other than rights under copyrights owned by the FAFCO Members, and rights granted for the benefit of the FAREISI Business pursuant to license agreements that are in full force and effect. Within the three-year period immediately preceding the date of this Agreement, the FAREISI Business made no use of rights under any copyright other than those owned by the FAFCO Members, and rights granted for the benefit of the FAREISI Business under license agreements.
(c) To the best of its knowledge, the operation, development and maintenance of the FAREISI Business as currently conducted requires no rights under trade secrets or proprietary information (including but not limited to those in computer software and databases and to those disclosed in patent applications) other than rights under trade secrets and proprietary information owned by the FAFCO Members, and rights granted for the benefit of the FAREISI Business pursuant to license agreements that are in full force and effect. To the best of its knowledge, within the three-year period immediately preceding the date of this Agreement, the FAREISI Business made use of no rights under any trade secret or proprietary information other than those owned by the FAFCO Members, and rights granted for the benefit of the FAREISI Business under license agreements.
(d) Except as set forth on Schedule 4.13(d), no claim adverse to the FAFCO Members' or the FAREISI Business' interests in the Intellectual Property used in the FAREISI Business or the FAFCO Members' license agreements with respect thereto has been made in litigation. To the best of its knowledge, no such claim has been threatened or asserted, no reasonable basis exists for any such claim, and no Person has infringed or otherwise violated the FAFCO Members' or
the FAREISI Business' rights in any of such Intellectual Property or the FAFCO Members' license agreements with respect thereto.
(b) The FAREISI Business is in compliance with all applicable Environmental Laws and with the requirements of any permits issued under such laws.
(c) There are no past, pending or, to its knowledge, threatened Environmental Claims against the FAREISI Business and, to the best of its knowledge, there are no facts, circumstances, conditions or occurrences that could reasonably be anticipated to form the basis of a claim under or a violation of, or require the expenditure of funds for compliance with, any Environmental Law that individually or in the aggregate could have a Material Adverse Effect on the FAREISI Business, taken as a whole.
For purposes of this Agreement, the term "FAREISI Property" means any real property and improvements owned, leased, or operated by any of the FAFCO MEMBERS in the FAREISI Business.
ARTICLE V
COVENANTS
provided in the immediately preceding sentence, it will not, and it will not
permit any of its Subsidiaries to, without the consent of each of the other
Parties (which consent shall not unreasonably be withheld), (a) enter into any
material transactions, other than those in the ordinary course of its Business
as theretofore conducted and those set forth on Schedule 5.01 attached hereto,
(b) create or otherwise become liable with respect to money borrowed or purchase
money indebted ness, or voluntarily incur any other material liability or
obligation (direct or contingent), except liabilities in the ordinary course of
the operation of its Business, (c) increase the rate of compensation payable or
to become payable to any employee employed in its Business, who would receive,
after giving effect to such increase, aggregate compensation at an annual rate
exceeding $300,000, or make any material increase in any bonus, insurance,
profit sharing or other employee benefit plan, grant any general wage or salary
increase, except as required by amendments to plans applicable to its employees
generally and which are applicable to employees of its Business only as a
consequence thereof, (d) make any capital expenditures in excess of $500,000
individually or $1,000,000 in the aggregate, (e) terminate or waive any right of
substantial value to its Business, (f) make any material change in accounting
methods except as required by law or applicable generally accepted accounting
principles, (g) settle, compromise or admit liability in any material action,
suit or proceeding at law or equity or any material arbitration or any material
administrative or other proceeding before any administrative or governmental
body in respect of its Business or (h) agree to do any of the foregoing, whether
or not in writing.
If any business opportunity which, if the Operating Agreement were in effect, would constitute a NEWCO Development Opportunity, arises prior to the Effective Date, the Party to whom such business opportunity is presented promptly shall notify the other Parties in writing of such business opportunity and shall confer with the other Parties regarding whether or not such business opportunity should be contributed to NEWCO on the Effective Date. If, however, a business opportunity arises prior to the Effective Date which would not constitute a NEWCO Development Opportunity, the Party to whom such business opportunity is presented may, at its option, notify the other Parties in writing of such business opportunity and, if such notice is delivered, shall confer with the other Parties regarding whether or not such business opportunity should be contributed to NEWCO on the Effective Date.
In either event, if the Parties agree that such business opportunity should be contributed to NEWCO, then such business opportunity shall be contributed to NEWCO on the Effective Date and the Parties shall adjust the principal amount of the promissory notes to be payable by NEWCO to FAFCO or EXPERIAN, as the case may be, as follows: (i) if such business opportunity is contributed to NEWCO on the Effective Date by FAFCO or any FAFCO Member, then the principal amount of the $25MM Note shall be increased by an amount equal to the fair market value of any capital contributions and development costs made or incurred by FAFCO or any of its Affiliates with respect to such opportunity prior to the Effective Date and (ii) if such business opportunity is contributed to NEWCO on the Effective Date by EXPERIAN, then the principal
amount of the $3MM Note shall be increased by an amount equal to the fair market value of capital contributions and other development costs made or incurred by EXPERIAN or any of its Affiliates with respect to such opportunity prior to the Effective Date. If the Parties cannot agree within 20 days after the delivery of such notice on whether or not the business opportunity should be contributed, then, notwithstanding anything to the contrary contained in any Implementing Agreement, the Party possessing such business opportunity shall be free to pursue such business opportunity in such manner as such Party determines and neither NEWCO nor the other Parties shall have any right, claim or interest in or to any revenues resulting therefrom.
(a) Subject to the proviso to Section 5.03, the Parties agree that they will use their best efforts to obtain the written consent of any other necessary party to the assignment of any contract, lease, commitment, sales order, purchase order or undertaking constituting a part of any Interest to be transferred hereunder and, to the extent that any such contract, lease, commitment, sales order, purchase order or undertaking requiring such consent is transferred or assigned pursuant to the terms of this Agreement without such consent, the Parties will cooperate with each other and with NEWCO in any lawful arrangement designed to provide each Party and NEWCO the benefits under any such Interest. Notwithstanding Section 5.03 and any other provision of this Section 5.04(a) to the contrary, (i) none of FAFCO, FAREISI or any other FAFCO Member shall be required to seek the consent to the transfer of the FAFCO Interests of any party to a contract with FAFCO, FAREISI or any other FAFCO Member pursuant to which a consent is required, provided that, in lieu of seeking and obtaining any such required consent, FAFCO agrees to indemnify and hold NEWCO harmless from all Losses suffered or paid, directly or indirectly, through application of NEWCO's assets or otherwise, as a result of or arising out of the failure
of FAFCO, FAREISI or any other FAFCO Member to seek or obtain any such required consent and (ii) FAFCO may request that EXPERIAN not seek the consent to the transfer of the EXPERIAN Interests of any party to a contract with EXPERIAN pursuant to which a consent is required, and, so long as FAFCO agrees to indemnify and hold EXPERIAN harmless from all Losses suffered or paid, directly or indirectly, through application of EXPERIAN's assets or otherwise, as a result of or arising out of the failure of EXPERIAN to seek or obtain any such required consent in accordance with the FAFCO request, EXPERIAN will not seek the consent of such party to the transfer of the EXPERIAN Interests unless it determines, in its sole and absolute discretion, that obtaining such consent is in the best interests of its businesses other than the RES Business.
(b) Subject to the proviso to Section 5.03, on or after the Closing Date and without further consideration, each Party shall, from time to time, execute and deliver such further instruments of conveyance, assignment and transfer and shall take, or cause to be taken, such other action as NEWCO or any other Party may reasonably request for the more effective conveyance, assignment and transfer to NEWCO of any of the Interests, and each Party shall lend its assistance to NEWCO or any other Party in the collection and reduction to possession of the Interests, in the exercise of rights with respect thereto and otherwise in the effectuation of the intentions and purposes of this Agreement.
(a) any notice or other communication from any Person alleging that the consent of such Person is or may be required in connection with the transactions contemplated by this Agreement or the Implementing Agreements;
(b) any notice or other communication from any governmental entity in connection with the transactions contemplated by this Agreement or the Implementing Agreements;
(c) any actions, suits, claims (or to its knowledge, investigations) or proceedings commenced or, to its knowledge threatened against, relating to or involving or otherwise affecting the consummation of the transactions contemplated by this Agreement or the Implementing Agreements; and
to the sum of the Membership Interests held by the FAFCO Members, and EXPERIAN guaranteeing that portion of NEWCO's obligations equal to its Membership Interest.
(a) so long as any FAFCO Member is a Member of NEWCO, a fee to FAFCO in respect of management services provided by FAFCO from time to time by NEWCO in an amount equal to 0.80% of NEWCO's gross revenues, as determined in accordance with US GAAP, which fee shall be paid in arrears for each calendar quarter within 30 days of the conclusion of the previous quarter; and
(b) FAREISI Subsidiary 7 hereby covenants and agrees that, upon the request of EXPERIAN at any time prior to the Effective Date, it shall transfer and convey to NEWCO on the Effective Date or promptly thereafter, all of the assets (or any portion thereof so requested) owned by it and listed under its name on Part 1(H) of Schedule 2.02(a) attached hereto, free and clear of all Encumbrances, except for FAREISI Permitted Encumbrances and, in connection therewith, it shall deliver to NEWCO such endorsements, assurances, conveyances, releases, discharges, assignments, certificates or other instruments of transfer and conveyance, duly executed by FAREISI Subsidiary 7 or such other Person, as the case may be, as NEWCO and/or EXPERIAN reasonably deems necessary to vest in NEWCO all right, title and interest in and to such assets, free and clear of any Encumbrance of any kind, except FAREISI Permitted Encumbrances.
ARTICLE VI
EXPERIAN PUT OPTION; FAFCO CALL OPTION
that EXPERIAN may, not earlier than 30 days prior to the End Date, request that FAFCO specify in writing the consideration that FAFCO will use to pay the Put Price and, unless FAFCO notifies EXPERIAN of its election within 10 days after its receipt of EXPERIAN's request, FAFCO shall be deemed to have elected to pay the Put Price in cash).
(b) On the Call Exercise Date (i) EXPERIAN shall deliver to FAFCO the certificates, if any, properly endorsed, representing 100% of the Membership Interest of EXPERIAN, together with such other duly executed instruments of transfer reasonably requested by FAFCO to give effect to the purchase and sale of EXPERIAN's Membership Interest pursuant to this Section 6.02, (ii) FAFCO shall deliver to EXPERIAN, in immediately available funds, the applicable Call Price in cash, (iii) EXPERIAN shall be released from, or otherwise indemnified to its reasonable satisfaction against, any liabilities in respect of guarantees provided by EXPERIAN in accordance with Section 5.09 and (iv) any and all indebtedness of NEWCO to EXPERIAN shall be paid to
shall have the right to purchase from EXPERIAN 100% of the Membership Interest then owned by EXPERIAN by delivering to EXPERIAN and NEWCO written notice thereof specifying (i) FAFCO's election to purchase from EXPERIAN 100% of its Membership Interest pursuant to this Section 6.04 and (ii) the cash price at which such Membership Interest is to be purchased (which price shall be determined, as of the close of business on the business day immediately preceding the date on which such EXPERIAN Change of Control occurred, in accordance with the formula set forth in the last sentence of Section 6.02(b) above and without regard to the proviso thereto). In the event FAFCO elects to purchase from EXPERIAN its Membership Interest pursuant to this Section 6.04, EXPERIAN shall deliver the certificates, if any, representing such Membership Interest, in proper form for transfer (together with such other duly executed instruments of transfer reasonably requested by FAFCO to give effect to the purchase and sale of EXPERIAN's Membership Interest pursuant to this Section 6.03), to FAFCO against receipt of the purchase price therefor in immediately available funds no later than five (5) days after such election is made.
(a) Notwithstanding anything to the contrary contained in this Article
VI, in the event that on the third anniversary of the Closing Date the value of
the Membership Interest then owned by EXPERIAN (such value determined, as at
such date, in accordance with the formula set forth in the last sentence of
Section 6.01(b) above) is less than $80,000,000 solely as a result of damages,
costs, payments, losses, interest, fines and penalties suffered or paid by NEWCO
as a result of or arising out of the matters set forth in Items 2, 3 and 4 on
Schedule 4.09 hereto, EXPERIAN shall have the right, at any one time during the
forty-five (45) day period thereafter, so long as FAFCO has not exercised the
Call Option pursuant to Section 6.04, to sell to FAFCO 100% of the Membership
Interest then owned by EXPERIAN by delivering to FAFCO a written notice
specifying (i) EXPERIAN's election to sell to FAFCO 100% of its Membership
Interest pursuant to this Section 6.05(a) and (ii) the date, not earlier than 45
days and not later than 60 days after the date of such notice, on which the sale
hereunder shall be exercised. Upon the date specified by EXPERIAN in accordance
with clause (ii) of the preceding sentence, (w) FAFCO shall deliver to EXPERIAN
the cash purchase price in the amount of $80,000,000 in immediately available
funds, (x) EXPERIAN shall deliver to FAFCO the certificates, if any,
representing 100% of the Membership Interest then owned by EXPERIAN, in proper
form for transfer, together with such other duly executed instruments of
transfer reasonably requested by FAFCO to give effect to the purchase and sale
of EXPERIAN's Membership Interest pursuant to this Section 6.05(a), (y) EXPERIAN
shall be released from, or otherwise indemnified to its reasonable satisfaction
against, any liabilities in respect of guarantees provided by EXPERIAN in
accordance with Section 5.09 and (z) any and all indebtedness of NEWCO to
EXPERIAN shall be paid to NEWCO in immediately available funds.
(b) Notwithstanding anything to the contrary contained in this Article VI, in the event that at any time on of after the Trigger Date the value of the Membership Interest then owned by EXPERIAN (such value determined, as at such date, in accordance with the formula set forth in the last sentence of Section 6.01(b) above) is less than $80,000,000 solely as a result of damages, costs, payments, losses, interest, fines and penalties suffered or paid by NEWCO as a result of or arising out of the matters (or any of them) set forth in Items 2, 3 and 4 on Schedule 4.09
hereto, EXPERIAN shall have the right, at any one time (and only once), so long
as FAFCO has not exercised the Call Option pursuant to Section 6.02 or 6.04, to
sell to FAFCO 100% of the Membership Interest then owned by EXPERIAN by
delivering to FAFCO a written notice specifying (i) EXPERIAN's election to sell
to FAFCO 100% of its Membership Interest pursuant to this Section 6.05(b) and
(ii) the date, not earlier than 45 days and not later than 60 days after the
date of such notice, on which the sale hereunder shall be exercised. Upon the
date specified by EXPERIAN in accordance with clause (ii) of the preceding
sentence, (w) FAFCO shall deliver to EXPERIAN the cash purchase price in the
amount of $80,000,000 in immediately available funds, (x) EXPERIAN shall deliver
to FAFCO the certificates, if any, representing 100% of the Membership Interest
then owned by EXPERIAN, in proper form for transfer, together with such other
duly executed instruments of transfer reasonably requested by FAFCO to give
effect to the purchase and sale of EXPERIAN's Membership Interest pursuant to
this Section 6.05(b), (y) EXPERIAN shall be released from, or otherwise
indemnified to its reasonable satisfaction against, any liabilities in respect
of guarantees provided by EXPERIAN in accordance with Section 5.09 and (z) any
and all indebtedness of NEWCO to EXPERIAN shall be paid to NEWCO in immediately
available funds.
(a) In the event NEWCO is subject to any voluntary or involuntary bankruptcy proceeding at any time after the Trigger Date (unless, in the case of any involuntary proceeding, such proceeding is dismissed within 60 days), the Put Option and the Call Option, respectively, shall terminate.
(b) The place of payment of the Put Price or the Call Price, as the case may be, shall be the principal offices of NEWCO or at such other location as shall be agreed upon in writing by EXPERIAN and FAFCO no later than 3 Business Days prior to the time of payment.
(c) For purposes of this Article VI, a "Notice Date" shall be the date on which any notice hereunder specifying the Put Exercise Date or the Call Exercise Date, as the case may be, is given or deemed given in accordance with the provisions of Section 10.06.
(a) In the event of any dispute arising out of or relating to this Article VI (including, without limitation, any dispute involving (i) the determination of the Put Price, the Call Price or any other amount (including, without limitation, the Adjusted Earnings upon which the Put Price, the Call Price or any such other amount is based) to be paid in connection with the purchase of Experian's Membership Interest pursuant to any provision of this Article VI or (ii) appropriate amendments, modifications or supplements to the provisions of this Article VI in accordance with Section 6.06), FAFCO or EXPERIAN, as the case may be, shall provide written notice to the other party of the dispute, which notice shall specify the notifying party's position. Each of FAFCO and EXPERIAN agree to attempt in good faith to resolve any such dispute within 30 days following the receipt of the written notice thereof.
(b) If the dispute cannot be resolved within the 30 day period described in Section 6.08(a) above, either FAFCO or EXPERIAN may, by delivering written notice to the other, submit any such dispute to the following resolution procedure. A panel (the "Panel") shall be created to resolve the dispute and shall be composed of three members who shall be appointed as follows: (i) one Panel member shall be appointed by each of FAFCO and EXPERIAN as designated by written notice to the other within 15 days after receipt of the notice submitting the disputes to the resolution procedure and (ii) the third, who shall serve as chairperson, shall be appointed by the two Panel members so appointed pursuant to preceding clause (i) within 10 days after the second appointment pursuant to such clause (i). If a Person, or Persons, entitled to appoint a Panel member fails to appoint such Panel member within the time period permitted therefor, such Panel member shall at the written request of either Party be appointed by the American Arbitration Association. The date on which all Panel members shall have been selected is hereinafter referred to as the "Panel Date". The place of the dispute resolution proceedings and all other matters to be determined by the Panel will be determined by the majority vote of the Panel. Except as provided in Section 6.08(c) below, each of FAFCO and EXPERIAN shall bear their respective costs and expenses (including attorneys' fees) in connection with the dispute resolution proceedings and shall be responsible for one-half of the fees, costs and expenses of the Panel.
(c) The Panel shall render a written decision with reasons therefor within 30 days of the Panel Date. The Panel may award fees, costs and expenses (including attorneys' fees and Panel costs) to the prevailing Party and may award interest on any amount determined to be owing. Any determination by the Panel shall be final and binding upon the Parties and may be enforced by any court of competent jurisdiction in the same manner as a judgment in such court.
(d) Notwithstanding anything to the contrary contained in this Section 6.08, each of FAFCO and EXPERIAN hereby covenant and agree that, in the event of a dispute involving the determination of the Put Price, the Call Price or any other amount to be paid in connection with the purchase of Experian's Membership Interest pursuant to any provision of this Article VI, (i) each such Party shall, within the time limit prescribed in Section 6.08(b)(i) above, appoint a representative from its independent certified public accountants as its Panel member and (ii) the third Panel member shall, within the time limit prescribed in Section 6.08(b)(ii) above, be appointed by the two Panel members appointed by the Parties pursuant to clause (i) of this Section 6.08(d) from a firm of independent certified public accountants of nationally recognized standing. If a Person, or Persons, entitled to appoint a Panel member pursuant to this Section 6.08(d) fails
to appoint such Panel member within the time period permitted therefor, such Panel member shall at the written request of either Party be appointed by the American Arbitration Association.
ARTICLE VII
CONDITIONS PRECEDENT
(i) NEWCO shall have been duly established under the laws of the State of California and, in connection therewith, the Articles of Organization of NEWCO and any amendments thereto shall have been filed with the Secretary of State of the State of California; and
(ii) On or prior to the Closing Date, the Management Committee of NEWCO shall be appointed in accordance with the terms of the Operating Agreement.
(i) the Operating Agreement in substantially the form of Exhibit B;
(ii) the Experian Transition Agreement in substantially the form of Exhibit C-1;
(iii) the FAFCO Transition Agreement in substantially the form of Exhibit C-2;
(iv) the Data License Agreement in substantially the form of Exhibit D;
(v) the EXPERIAN/CREDCO Agreement in substantially the form of Exhibit E;
(vi) the Trademark License Agreement in substantially the form of Exhibit F; and
(vii) the Interim Operating Agreement in substantially the form of Exhibit G.
in form and substance to FAFCO and its counsel, and FAFCO shall have received copies of all such documents and other evidences as it or its counsel may reasonably request in order to establish the consummation of such transactions and the taking of all proceedings in connection therewith.
of FAFCO, FAREISI and each of the other FAFCO Members are in good standing or subsisting in such jurisdiction and listing all charter or similar organizational documents of FAFCO, FAREISI and each of the other FAFCO Members on file and (iii) a certificate as to the tax status of each of FAFCO, FAREISI and each of the other FAFCO Members from the appropriate official in its respective jurisdiction of organization.
ARTICLE VII
SURVIVAL OF REPRESENTATION; INDEMNIFICATION
(a) The EXPERIAN Parties and the FAFCO Parties agree to indemnify and hold NEWCO and each other Party harmless from all claims, expenses, obligations, damages, costs,
payments, liabilities, losses, interest, fines and penalties, including, without limitation, costs and expenses of litigation (including costs of investigation), reasonable attorney's fees and reasonable consultants' fees, but excluding any special or consequential or indirect damages (collectively, "Losses") suffered or paid, directly or indirectly, through application of NEWCO's or the other indemnified party's assets or otherwise, as a result of or arising out of the failure of any representation and warranty contained in this Agreement made by the FAFCO Parties or the EXPERIAN Parties, as the case may be, to be true and correct in all material respects as of the date of this Agreement and as of the Closing Date; it being understood that NEWCO's right to indemnification under this Section 8.02 shall terminate at such time as FAFCO's and EXPERIAN's rights under this Section 8.02 shall terminate.
(b) Each Party's and NEWCO's right to indemnification pursuant to this
Section 8.02 shall not be limited in amount, except that each Party shall only
have liability in respect of any Losses in excess of $1,000,000 in the
aggregate.
(a) All Taxes relating or attributable to the RES Business and the FAREISI Business (other than Transactional Taxes) ("Indemnifiable Taxes") for all periods from or after the Effective Time shall be for the account of NEWCO.
(b) The Parties agree that they shall take all necessary action to cause NEWCO to indemnify and hold the Parties harmless from all Indemnifiable Taxes relating or attributable to the RES Business and the FAREISI Business for all periods from or after the Effective Time, through application of NEWCO's assets or otherwise.
(c) Upon signing the acknowledgment required by Section 10.08(b) hereof, and as partial consideration for receiving the benefits of this Agreement, NEWCO shall become bound by the obligations of Section 5.10 and this Section 8.03 as if a party hereto.
ARTICLE IX
TERMINATION
ARTICLE X
MISCELLANEOUS
NEWCO copies deleting such information but shall not destroy the original Business Records except in accordance with normal record retention policies (or otherwise take action to make such original Business Records unavailable to NEWCO). Any Business Records which any Party requires in connection with pending or threatened litigation, or which are otherwise subject to hold orders as provided in said Party's record retention and protection policies, may be retained by said Party and copies thereof delivered to NEWCO.
(a) if to EXPERIAN, to it at:
Experian Information Solutions, Inc.
505 City Parkway West
Orange, California 92868
Telephone: (714) 385-8296 Telecopier: (714) 938-2513 Attention: General Counsel |
(b) if to FAFCO, FAREISI or any other FAFCO Member, to it at:
The First American Financial Corporation
114 East Fifth Street
Santa Ana, California 92702
Telephone: (714) 558-3211
Telecopier: (714) 647-2242
Attention: Parker S. Kennedy
with a copy to:
White & Case
633 West Fifth Street, 19th Floor
Los Angeles, California 90071
Telephone: (213) 620-7700 Telecopier: (213) 687-0758 Attention: Neil W. Rust |
or to such other Person or address as any Party shall specify by notice in writing to each of the other Parties. Except for a notice of a change of address, which shall be effective only upon receipt thereof, all such notices, requests, demands, waivers and communications properly addressed shall be effective: (i) if sent by U.S. mail, three Business Days after deposit in the U.S. mail, postage prepaid; (ii) if sent by FedEx or other overnight delivery service, two Business Days
after delivery to such service; (iii) if sent by personal courier, upon receipt; and (iv) if sent by facsimile, upon receipt.
(a) This Agreement shall inure to the benefit of and be binding upon the Parties hereto and their respective successors and permitted assigns, but neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the Parties hereto without the prior written consent of each other Party. Nothing in this Agreement, expressed or implied, is intended to confer on any Person other than the Parties hereto or their respective successors and permitted assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement.
(a) This Agreement and the legal relations between the Parties hereto shall be governed by and construed in accordance with the laws of the State of California, without regard to the conflict of laws rules thereof.
(b) Each of the Parties agrees that any legal action or proceeding with respect to this Agreement may be brought in the Courts of the State of California or the United States District Court for the Central District of California and, by execution and delivery of this Agreement, each Party hereby irrevocably submits itself in respect of its property, generally and unconditionally to the non-exclusive jurisdiction of the aforesaid courts in any legal action or proceeding arising out of this Agreement. Each of the Parties hereby irrevocably waives any objection which it may now or hereafter have to the laying of venue of any of the aforesaid actions or proceedings arising out of or in connection with this Agreement brought in the courts referred to in the preceding sentence. Each Party consents to process being served in any such action or proceeding by the mailing of a copy thereof to the address for notices to it set forth in Section 10.06 and agrees that such service upon receipt shall constitute good and sufficient service of process or notice thereof. Nothing in this paragraph shall affect or eliminate any right to serve process in any other matter permitted by law.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed in their respective corporate names by their respective officers, each of whom is duly and validly authorized and empowered, all as of the day and year first above written.
THE FIRST AMERICAN FINANCIAL
CORPORATION
By /s/ Parker S. Kennedy ------------------------------------ Name: Parker S. Kennedy Title: |
FIRST AMERICAN REAL ESTATE
INFORMATION SERVICES, INC.
By /s/ John Long ------------------------------------ Name: John Long Title: |
FIRST AMERICAN APPRAISAL SERVICES,
INC.
By /s/ Anand Nallathambi ------------------------------------ Name: Anand Nallathambi Title: |
FIRST AMERICAN APPRAISAL CONSULTING
SERVICES, INC.
By /s/ Anand Nallathambi ------------------------------------ Name: Anand Nallathambi Title: |
FIRST AMERICAN CREDCO, INC.
By /s/ Donald A. Robert ------------------------------------ Name: Donald A. Robert Title: President |
FIRST AMERICAN FIELD SERVICES, INC.
By /s/ Shari Nott ------------------------------------ Name: Shari Nott Title: Vice President |
FIRST AMERICAN FLOOD DATA
SERVICES, INC.
By /s/ Robert Douglas ------------------------------------ Name: Robert Douglas Title: Senior Vice President |
FIRST AMERICAN PROPERTY SERVICES,
INC.
By /s/ John Long ------------------------------------ Name: John Long Title: |
FIRST AMERICAN REAL ESTATE TAX
SERVICE, INC.
By /s/ David C. Yavorsky ------------------------------------ Name: David C. Yavorsky Title: President |
PASCO ENTERPRISES, INC.
By /s/ John Long ------------------------------------ Name: John Long Title: |
PRIME CREDIT REPORTS, INC.
By /s/ Donald A. Robert ------------------------------------ Name: Donald A. Robert Title: Senior Vice President |
PROPERTY FINANCIAL SERVICES OF NEW
ENGLAND, INC.
By /s/ Anand Nallathambi ------------------------------------ Name: Anand Nallathambi Title: |
DOCS ACQUISITION CORP.
By /s/ John Long ------------------------------------ Name: John Long Title: |
STRATEGIC MORTGAGE SERVICES,
INC. (TEXAS)
By /s/ Mark B. Rogers ------------------------------------ Name: Mark B. Rogers Title: President |
EXPERIAN INFORMATION SOLUTIONS, INC.
By /s/ D.V. Skilling ------------------------------------ Name: D. Van Skilling Title: |
ACKNOWLEDGED AND AGREED TO:
FIRST AMERICAN REAL ESTATE SOLUTIONS LLC
By /s/ Parker S. Kennedy ------------------------------------- Name: Parker S. Kennedy Title: |
Exhibit (10)(b)
OPERATING AGREEMENT
FOR
FIRST AMERICAN REAL ESTATE SOLUTIONS LLC,
A CALIFORNIA LIMITED LIABILITY COMPANY
By and Among
FIRST AMERICAN REAL ESTATE INFORMATION SERVICES, INC.,
FIRST AMERICAN APPRAISAL CONSULTING SERVICES, INC.,
FIRST AMERICAN APPRAISAL SERVICES, INC.,
FIRST AMERICAN CREDCO, INC.,
FIRST AMERICAN FIELD SERVICES, INC.,
FIRST AMERICAN FLOOD DATA SERVICES, INC.,
FIRST AMERICAN PROPERTY SERVICES, INC.,
FIRST AMERICAN REAL ESTATE TAX SERVICE, INC.,
PASCO ENTERPRISES, INC.,
PRIME CREDIT REPORTS, INC.,
PROPERTY FINANCIAL SERVICES OF NEW ENGLAND, INC.,
DOCS ACQUISITION CORP.,
STRATEGIC MORTGAGE SERVICES, INC. (TEXAS)
and
EXPERIAN INFORMATION SOLUTIONS, INC.
Dated as of November 30, 1997
TABLE OF CONTENTS/1/
--------------------
Page
----
ARTICLE I
DEFINED TERMS; CONSTRUCTION ...................... 2
1.01. Defined Terms .................................................. 2
------------
1.02. Construction ................................................... 6
------------
ARTICLE II
ORGANIZATIONAL MATTERS ......................... 7
2.01. Formation of the Company....................................... 7
------------------------
2.02. Capital Contributions; Membership Interests.................... 7
-------------------------------------------
2.03. Name of the Company............................................ 8
-------------------
2.04. Effectiveness; Term............................................ 9
-------------------
2.05. Principal Office and Registered Agent.......................... 9
-------------------------------------
2.06. Addresses of the Members and the Managers...................... 9
-----------------------------------------
2.07. Purpose and Business of the Company............................ 9
-----------------------------------
ARTICLE III
THE MEMBERS................................ 9
3.01. Limited Liability.............................................. 9
-----------------
3.02. Admission of Additional Members................................ 9
-------------------------------
3.03. Termination of Membership Interest............................. 9
----------------------------------
3.04. Absence of Management Powers................................... 9
----------------------------
3.05. Unanimous Consent of Members................................... 10
----------------------------
ARTICLE IV
MANAGEMENT COMMITTEE; MAJOR DECISIONS................... 10
4.01. Management By Management Committee............................. 10
----------------------------------
4.02. Management Committee Representation; Officers.................. 10
---------------------------------------------
4.03. Major Decisions................................................ 11
---------------
4.04. Acquisition Approval; Additional Capital....................... 13
----------------------------------------
4.05. Voluntary Loans................................................ 14
---------------
ARTICLE V
ALLOCATIONS OF NET PROFITS AND NET LOSSES; DISTRIBUTIONS.......... 15
5.01. Allocations of Net Profit and Net Loss......................... 15
--------------------------------------
5.02. Special Allocations............................................ 15
-------------------
5.03. Code Section 704(c) Allocations................................ 17
-------------------------------
---------------------------
/1/ This Table of Contents is provided for convenience only, and does not
form a part of the attached Operating Agreement.
(i)
|
5.04. Allocations of Net Profits and Losses and Distributions
-------------------------------------------------------
in Respect of a Transferred Interest........................... 17
------------------------------------
5.05. Distributions by the Company................................... 18
----------------------------
5.06. Form of Distribution........................................... 18
--------------------
5.07. Restriction on Distributions................................... 19
----------------------------
5.08. Return of Distributions........................................ 19
-----------------------
ARTICLE VI
MEMBERSHIP INTEREST TRANSFER RESTRICTIONS................. 19
6.01. Transfer Restrictions.......................................... 19
---------------------
6.02. Further Restrictions on Transfer of Interests.................. 20
---------------------------------------------
6.03. Void Transfer.................................................. 20
-------------
6.04. Permitted Transfers............................................ 20
-------------------
6.05. Third-Party Offers............................................. 21
------------------
ARTICLE VII
BUSINESS OPPORTUNITIES........................... 22
7.01. Business Opportunities......................................... 22
----------------------
ARTICLE VIII
CONSEQUENCES OF DISSOLUTION EVENTS;
TERMINATION OF MEMBERSHIP INTEREST..................... 23
8.01. Dissolution Event.............................................. 23
-----------------
8.02. Withdrawal..................................................... 23
----------
8.03. Purchase Price................................................. 23
--------------
8.04. Notice of Intent to Purchase................................... 23
----------------------------
8.05. Purchase Pro Rata.............................................. 23
-----------------
8.06. Winding Up the Company......................................... 24
----------------------
8.07. Final Statement................................................ 24
---------------
ARTICLE IX
BOOKS AND RECORDS; TAX RETURNS; ACCESS BY MEMBERS.............. 24
9.01. Company Books and Records...................................... 24
--------------------------
9.02. Tax Returns.................................................... 24
-----------
ARTICLE X
MISCELLANEOUS............................... 26
10.01. Specific Performance........................................... 26
--------------------
10.02. Amendments and Modifications................................... 26
----------------------------
10.03. Notices........................................................ 26
-------
10.04. Attorneys' Fees................................................ 27
---------------
10.05. Further Assurances............................................. 27
------------------
10.06. Counterparts................................................... 27
------------
10.07. Governing Law.................................................. 27
-------------
10.08. Successors..................................................... 27
----------
10.09. Severability................................................... 28
------------
(ii)
|
10.10. Entire Agreement................................................ 28
----------------
10.11. Confidentiality................................................. 28
---------------
|
SCHEDULES
Schedule 1 Officers Schedule 2 Approved Transactions Schedule 3 Existing Borrowing Facilities |
OPERATING AGREEMENT
FOR
FIRST AMERICAN REAL ESTATE SOLUTIONS LLC,
A CALIFORNIA LIMITED LIABILITY COMPANY
OPERATING AGREEMENT FOR FIRST AMERICAN REAL ESTATE SOLUTIONS LLC, a California limited liability company (the "Company"), dated as of November 30, 1997, by and among FIRST AMERICAN REAL ESTATE INFORMATION SERVICES, INC., a California corporation ("FAREISI"), FIRST AMERICAN APPRAISAL CONSULTING SERVICES, INC., a California corporation ("FAREISI Subsidiary 1"), FIRST AMERICAN APPRAISAL SERVICES, INC., a California corporation ("FAREISI Subsidiary 2"), FIRST AMERICAN CREDCO, INC., a Washington corporation ("FAREISI Subsidiary 3"), FIRST AMERICAN FIELD SERVICES, INC., a New Jersey corporation ("FAREISI Subsidiary 4"), FIRST AMERICAN FLOOD DATA SERVICES, INC., a Texas corporation ("FAREISI Subsidiary 5"), FIRST AMERICAN PROPERTY SERVICES, INC., a New York corporation ("FAREISI Subsidiary 6"), FIRST AMERICAN REAL ESTATE TAX SERVICE, INC., a Florida corporation ("FAREISI Subsidiary 7"), PASCO ENTERPRISES, INC., a Texas corporation ("FAREISI Subsidiary 8"), PRIME CREDIT REPORTS, INC., a California corporation ("FAREISI Subsidiary 9"), PROPERTY FINANCIAL SERVICES OF NEW ENGLAND, INC., a Delaware corporation ("FAREISI Subsidiary 10"), DOCS ACQUISITION CORP., a Nevada corporation ("DOCS"), STRATEGIC MORTGAGE SERVICES, INC. (TEXAS), a Texas corporation ("SMS") and EXPERIAN INFORMATION SOLUTIONS, INC., an Ohio corporation ("EXPERIAN").
WHEREAS, pursuant to that certain Contribution and Joint Venture Agreement, dated as of November 30, 1997 (the "JV Agreement"), by and among The First American Financial Corporation, a California corporation ("FAFCO"), FAREISI, FAREISI Subsidiary 1, FAREISI Subsidiary 2, FAREISI Subsidiary 3, FAREISI Subsidiary 4, FAREISI Subsidiary 5, FAREISI Subsidiary 6, FAREISI Subsidiary 7, FAREISI Subsidiary 8, FAREISI Subsidiary 9, FAREISI Subsidiary 10, DOCS, SMS, (FAREISI, the foregoing FAREISI Subsidiaries, DOCS and SMS, collectively, the "FAFCO Members") and EXPERIAN, the parties thereto have agreed that the FAFCO Members and EXPERIAN shall become the joint owners of the Company which is being formed hereunder to own and operate the combined FAREISI Business and RES Business (each such term used herein as defined in the JV Agreement);
WHEREAS, in furtherance of the transactions contemplated in the JV Agreement, the Company, the FAFCO Members and EXPERIAN desire to define in this Agreement certain of their rights, duties and obligations with respect to the ownership, operation and management of the Company;
NOW, THEREFORE, in order to carry out their intent as expressed above, and in consideration of the mutual covenants and agreements hereinafter contained, the parties hereto hereby covenant and agree as follows:
ARTICLE I
DEFINED TERMS; CONSTRUCTION
"Adjusted Capital Account Deficit" shall mean, with respect to any Member, the deficit balance, if any, in such Member's Capital Account as of the end of the applicable Fiscal Year after (i) crediting thereto any amounts which such Member is, or is deemed to be, obligated to restore pursuant to Treasury Regulations (S) 1.704-2(g)(1) and (S) 1.704-2(i)(5) and (ii) debiting such Capital Account by the amount of the items described in Treasury Regulations (S) 1.704-1(b)(2)(ii)(d)(4), (5) and (6). The foregoing definition of Adjusted Capital Account Deficit is intended to comply with the provisions of Treasury Regulation (S) 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
"Affiliate" has the meaning given thereto in Section 1.01 of the JV Agreement.
"Agreement" means this Operating Agreement, as the same may be amended, modified and/or supplemented from time to time.
"Articles" means the Articles of Organization for the Company originally filed with the California Secretary of State and as amended from time to time.
"Bankruptcy" means, with respect to any Person, the occurrence of one or more of the following events: (i) such Person commences a voluntary case concerning itself under Title 11 of the United States Code entitled "Bankruptcy," as now or hereafter in effect, or any successor thereto (the "Bankruptcy Code"); (ii) an involuntary case is commenced against such Person and the petition is not controverted within 10 days, or is not dismissed within 60 days, after commencement of the case; (iii) a custodian (as defined in the Bankruptcy Code) is appointed for, or takes charge of, all or substantially all of the property of, such Person; (iv) such Person commences any other proceeding under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction whether now or hereafter in effect; (v) there is commenced against such Person any such proceeding which remains undismissed for a period of 60 days; (vi) such Person is adjudicated insolvent or bankrupt or any order of relief or other order approving any such case or proceeding is entered; (vi) such Person suffers the appointment of a custodian or the like for it or any substantial part of its property to continue undischarged or unstayed for a period of 60 days; (vii) such Person makes a general assignment for the benefit of creditors; or (viii) any corporate or partnership action is taken by such Person for the purpose of effecting any of the foregoing.
"Business Day" shall mean any day, excluding Saturday, Sunday or any day which shall be a legal holiday in the State of California.
"By-Laws" means the By-Laws as initially adopted by the Management Committee and as the same may be amended from time to time.
"Capital Account" means with respect to any Member the capital account which the Company establishes and maintains for such Member pursuant to Section 2.02(b).
"Capital Contribution" means, with respect to any Member, the total amount of cash and the fair market value of property contributed (net of liabilities secured by such contributed property that the Company is considered to assume or take subject to under Section 752 of the Code) to the Company by such Member.
"Code" means the Internal Revenue Code of 1986, as amended from time to time, the provisions of any succeeding law.
"Company" has the meaning given thereto in the introductory paragraph of this Agreement.
"Company Development Opportunity" means any business opportunity related to real estate lending specifically involving the acquisition, development, construction, operation or management of merged credit reporting, appraisal services, flood compliance, real estate tax reporting, tax certification, tax outsourcing, mortgage assignments, tax valuation, real property field services and real estate transaction document preparation.
"Company Minimum Gain" has the meaning given to the term "partnership minimum gain" in the Regulations Sections 1.704-2(b)(2) and 1.704-2(d).
"Corporations Code" means the California Corporations Code, as amended from time to time, and the provisions of succeeding law.
"Dissolution Event" means, with respect to any Member, the withdrawal from this Agreement, the Bankruptcy, the dissolution or the termination of such Member.
"Distributable Cash" means the amount of cash which the Management Committee deems available for distribution to the Members, taking into account all debts, liabilities, and obligations of the Company then due, and working capital and other amounts which the Management Committee deems necessary for the Company's business or to place into reserves for customary and usual claims with respect to such business.
"Effective Time" has the meaning given thereto in Section 1.01 of the JV Agreement.
"EXPERIAN" has the meaning given thereto in the first WHEREAS clause of this Agreement.
"Experian Managers" has the meaning given thereto in Section 4.02(a) hereof.
"FAFCO" has the meaning given thereto in the first WHEREAS clause of this Agreement.
"FAFCO Managers" has the meaning given thereto in Section 4.02(a) hereof.
"FAFCO Members" has the meaning given thereto in the first WHEREAS clause of this Agreement.
"Fiscal Year" means the Company's fiscal year, which shall be the calendar year.
"Former Member" has the meaning given thereto in Section 8.01 hereof.
"Former Member's Interest" has the meaning given thereto in Section 8.01 hereof.
"GAAP" means generally accepted accounting principles in the United States of America applied on a consistent basis and reasonable under the circumstances.
"JV Agreement" has the meaning given thereto in the first WHEREAS clause of this Agreement.
"Major Decision" has the meaning given thereto in Section 4.03 hereof.
"Manager" has the meaning given thereto in Section 4.01 hereof.
"Management Committee" means the Management Committee of the Company.
"Member" means each Person who is an initial signatory to this Agreement or has been admitted to the Company as a Member in accordance with the Articles or this Agreement and has not become the subject of a Dissolution Event or ceased to be a Member in accordance with Article VIII or for any other reason.
"Member Minimum Gain" shall mean an amount, determined in accordance with Regulations Section 1.704-2(i)(3) with respect to any Member Nonrecourse Debt, equal to the Company Minimum Gain that would result if such Member Nonrecourse Debt were treated as a Nonrecourse Liability.
"Member Nonrecourse Debt" has the meaning given to the term "partner nonrecourse debt" in Regulations Section 1.704-2(b)(4).
"Member Nonrecourse Deductions" has the meaning given to the term "partner nonrecourse deductions" in Regulations Section 1.704-2(i).
"Membership Interest" means a Member's entire interest in the Company, including, without limitation, the right to receive distributions of the Company's assets and allocations of
income, gain, loss, deduction, credit and similar items from the Company pursuant to this Agreement and the Act, the right to vote on or participate in the management, and the right to receive information concerning the business and affairs, of the Company.
"Net Profits" and "Net Losses" mean, for any Fiscal Year, the net income or net loss, respectively, of the Company for such Fiscal Year.
"Nonrecourse Deduction" has the meaning given to such term in Regulations
Section 1.704-2(b)(1).
"Nonrecourse Liability" has the meaning set forth in Regulations Section 1.752-1(a)(2).
"Offer" has the meaning given thereto in Section 6.04(c) hereof.
"Offered Interest" has the meaning given thereto in Section 6.04(c) hereof.
"Offering Price" has the meaning given thereto in Section 6.04(c) hereof.
"Offer Notice" has the meaning given thereto in Section 6.04(c) hereof.
"Offer Rejection" has the meaning given thereto in Section 6.04(d) hereof.
"Offer Terms" has the meaning given thereto in Section 6.04(c) hereof.
"Percentage Interest" means, with respect to a Member, the percentage set forth in Section 2.02(f) with respect to such Member, as such percentage may be adjusted from time to time pursuant to the terms of this Agreement.
"Permitted Transfer" has the meaning given thereto in Section 6.04(a) hereof.
"Permitted Transferee" has the meaning given thereto in Section 6.04(a) hereof.
"Person" means and includes any individual, partnership, association, joint stock company, joint venture, corporation, trust, limited liability company, unincorporated organization or other enterprise or any government or political subdivision or any agency, department or instrumentality thereof.
"Proposed Transferee" has the meaning given thereto in Section 6.04(c) hereof.
"Regulations" shall, unless the context clearly indicates otherwise, mean the regulations in force as final or temporary that have been issued by the U.S. Department of Treasury pursuant to its authority under the Code, and any successor regulations.
"Remaining Members" has the meaning given thereto in Section 8.01 hereof.
"Requested Amount" has the meaning given thereto in Section 4.04(b) hereof.
"RES Data" has the meaning given thereto in the Data License Agreement in the form of Exhibit D to the JV Agreement.
"Secretary" means the Secretary of the Company appointed by the Management Committee.
"Tax Matters Member" has the meaning given thereto in Section 9.02(b) hereof.
"Third-Party Offer" has the meaning given thereto in Section 6.05 hereof.
"Third-Party Terms" has the meaning given thereto in Section 6.05 hereof.
"Trademark License Agreement" means the Trademark License Agreement in substantially the form of Exhibit G to the JV Agreement.
"Transfer" means any sale, transfer, assignment, donation, pledge, hypothecation, encumbrance or other disposition in any manner whatsoever, voluntarily or involuntarily, including, without limitation, any attachment, assignment for the benefit of creditors or transfer by operation of law or otherwise.
"Transfer Notice" has the meaning given thereto in Section 6.04(e) hereof.
"Voluntary Loans" has the meaning given thereto in Section 4.05(a) hereof.
"$3MM Note" has the meaning given thereto in Section 1.01 of the JV Agreement.
"$25MM Note" has the meaning given thereto in Section 1.01 of the JV Agreement.
(a) To the fullest extent permissible, each of the FAFCO Members, EXPERIAN and the Company hereby waives such provisions of the California Corporations Code as are inconsistent with the terms hereof.
(b) The words "hereof", "herein" and "hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Article, Section, subsection and Schedule references are to this Agreement unless otherwise specified.
(c) All accounting terms not specifically defined herein shall be construed in accordance with GAAP.
(d) The meanings given to terms used herein shall be equally applicable to both the singular and plural forms of such terms.
(e) The Table of Contents hereto and the Article and Section headings herein are for convenience only and shall not affect the construction hereof.
(f) This Agreement is the result of negotiations among and have been reviewed by counsel to the Members and is the product of all the Members. Accordingly, this Agreement shall not be construed against any Member merely because of such Member's involvement in its preparation.
ARTICLE II
ORGANIZATIONAL MATTERS
(b) The Company shall establish and maintain a separate Capital Account for each Member in accordance with Regulations Section 1.704-1(b)(2)(iv). Each Member shall receive a credit to its Capital Account in the amount of (i) the amount of any Capital Contribution made in cash, (ii) the fair market value (net of liabilities that the Company is considered to assume, or take subject to, under Section 752 of the Code) of any Capital Contribution made in property other than cash, and (iii) allocations to such Member of Net Profits. Each Member's Capital Account shall be debited with (i) the amount of any cash and the fair market value of property distributed to such Member (net of liabilities that such Member is considered to assume or take subject to Section 752 of the Code), all as may be determined in accordance with this Agreement, and (ii) allocations of Net Losses. If a Member transfers all or a part of
its Membership Interest in accordance with this Agreement, such Member's Capital
Account attributable to the transferred Membership Interest shall carry over to
the new owner of such Membership Interest pursuant to Regulations Section 1.704-
1(b)(2)(iv)(l). If any property other than cash is distributed to a Member, the
Capital Accounts of the Members shall be adjusted as if the property had instead
been sold by the Company for a price equal to its fair market value and the
proceeds distributed. Upon liquidation and winding-up of the Company, any
unsold Company property shall be valued to determine the gain or loss which
would result if such property were sold at its fair market value at the time of
such liquidation. The Capital Accounts of the Members shall be adjusted to
reflect how any such gain or loss would have been allocated under Article V if
such property had been sold at the assigned values.
(d) Except as provided herein, no Member shall be entitled to receive any interest or other earnings on its Capital Contributions.
(e) Except upon the dissolution of the Company or as may be specifically provided in this Agreement, no Member shall have the right to demand or receive the return of all or any part of its Capital Account or its capital contributions to the Company.
(f) The Percentage Interests of the Members at the Effective Time shall be ___% with respect to FAREISI Subsidiary 1, ___% with respect to FAREISI Subsidiary 2, ___% with respect to FAREISI Subsidiary 3, ___% with respect to FAREISI Subsidiary 4, ___% with respect to FAREISI Subsidiary 5, ___% with respect to FAREISI Subsidiary 6, FAREISI Subsidiary 7, ___% with respect to FAREISI Subsidiary 8, ___% with respect to FAREISI Subsidiary 9, ___% with respect to FAREISI Subsidiary 10, ___% with respect to DOCS, ___% with respect to SMS and 20% with respect to EXPERIAN. Immediately following any additional Capital Contributions, the Percentage Interests shall be adjusted by the Management Committee to reflect the new relative proportions of the Capital Accounts of the Members.
ARTICLE III
THE MEMBERS
(a) a decision to dissolve the Company or voluntarily terminate this Agreement or voluntarily commence a case concerning itself under the Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar law now or hereafter in effect;
(b) a decision to continue the business of the Company after the occurrence of a Dissolution Event;
(c) any amendment of the Articles, By-Laws or, in accordance with
Section 10.02, this Agreement; and
(d) a decision to compromise the obligation of a Member to make a Capital Contribution or return money or property paid or distributed in violation of the Act.
ARTICLE IV
MANAGEMENT COMMITTEE; MAJOR DECISIONS
(a) So long as EXPERIAN shall own at least a 10% Membership Interest in the Company, the number of Managers of the Company shall be ten, and the FAFCO Members shall designate eight Managers (the "FAFCO Managers") and EXPERIAN shall designate two Managers of the Company (the "Experian Managers"). The FAFCO Members shall be entitled to remove or replace any FAFCO Manager in their sole discretion upon written notice to EXPERIAN and the Company. EXPERIAN shall be entitled to remove or replace any Experian Manager in its sole discretion upon written notice to FAFCO and the Company. Each Manager of the Company so designated shall hold office, subject to the applicable provisions of the Articles and By-Laws of the Company, until the next annual meeting of the Members and until their respective successors shall be duly elected or appointed and qualified. Each member of the Management Committee shall have one vote, and the vote of the majority of the members of the Management Committee participating in a meeting of the Management Committee (subject to the quorum requirements set forth in the By-Laws) shall constitute the act of the Management Committee, unless otherwise expressly set forth herein.
(b) The Members acknowledge that the Managers are appointed to represent and serve the interests of the Members who appointed such Managers. The Members agree that no such Manager shall have any liability (including, without limitation, for any claim of breach of fiduciary duty) to the Company or to any Member as a result of taking any action as a Manager, or as an officer or director of a Member, which action the Manager reasonably believes to be in the best interests of the Member he or she represents.
(c) At the Effective Time, each individual listed on Schedule 1 hereto shall become an officer of the Company holding the office(s) of the Company set forth opposite his or her name on Schedule 1 hereto and shall, subject to the applicable provisions of the Articles and By-Laws of the Company, hold such office(s) until his or her successor shall be duly elected or appointed and qualified. Without limiting the foregoing, John Long shall be elected the President and Chief Executive Officer of the Company until his successor shall be duly elected or appointed and qualified.
(a) any acquisition by the Company of any business of another Person, or of any property, securities, rights or other assets in one or a series of related transactions
if (i) the consideration for such acquisition exceeds, in the aggregate, US $5,000,000 or (ii) the Company is required to make a cash down-payment in excess of $1,250,000 in connection with such acquisition (regardless of the aggregate consideration involved in such acquisition).
(b) any sale, transfer or other disposition of assets of the Company, other than in the ordinary course of business, with a fair market value at the time of such sale, transfer or disposition exceeding, in the aggregate, US $5,000,000.
(c) the adoption, filing or amendment of any designation of rights, preferences and privileges with respect to any equity security of the Company;
(d) the issuance, redemption or repurchase by the Company of any Membership Interest or any other equity security of the Company to any Person;
(e) other than borrowings made, or permitted to be made, under the Company's borrowing facilities listed on Schedule 3 hereto (together with any extensions or refinancings thereof which do not increase the aggregate principal amount of borrowings permitted to be made thereunder) and Voluntary Loans, the borrowing of any sums of money;
(f) the creation of any liens or encumbrances on any of the Company's assets, other than the creation of liens and encumbrances (i) securing borrowings permitted under paragraph (e) above; (ii) liens for taxes not yet due, or liens for taxes being contested in good faith and by appropriate proceedings for which adequate reserves have been established; (iii) liens in respect of property or assets of the Company imposed by law, which were incurred in the ordinary course of business, including without limitation, carriers', warehousemen's and mechanics' liens and other similar liens arising in the ordinary course of business and (x) which do not in the aggregate materially detract from the value of such property or assets or materially impair the use thereof in the operation of the business of the Company or (y) which are being contested in good faith by appropriate proceedings and for which adequate reserves have been established, which proceedings have the effect of preventing the forfeiture or sale of the property or assets subject to any such lien; (iv) pledges or deposits in connection with worker's compensation, unemployment insurance and other social security legislation; or (v) constituting purchase money security interests;
(g) except as provided in paragraphs (a) and (b) of this Section 4.03, any loan or other use of the Company's assets with a fair market value in excess of $1,250,000 to, or the Company making an investment in, any Person not a Member or an Affiliate of a Member; provided, however, the Company may loan or permit the use of the Company's assets if the fair market value thereof does not singularly or in the aggregate exceed $1,250,000;
(h) any change in the character of the business of the Company or the undertaking of any new ventures or transactions or the engaging in any type of business not incidental and directly related to the Company's present business;
(i) the sale or other disposition of all or substantially all of the assets and property of the Company;
(j) the merger or consolidation of the Company with or into any other limited liability company or any corporation or other entity;
(k) except as contemplated by Sections 4.04 and 4.05, any transaction, whether or not evidenced by a written agreement, between the Company, on the one hand, and FAFCO or its Affiliates, on the other hand, involving estimated consideration in excess of $25,000 over any twelve-month period;
(l) any determination by the Company to require that each of FAFCO and EXPERIAN provide a guaranty to a third party in accordance with the provisions of Section 5.09 of the JV Agreement; provided that if the Experian Managers fail to consent to a request for such guaranties, then the FAFCO Members and their Affiliates (including, without limitation, FAFCO) shall nevertheless have the right, but not the obligation, to provide any such guaranties upon such terms and conditions as they (or any of them) shall determine in their (or its) sole and absolute discretion; or
(m) any sale or other transfer by the Company of RES Data to an entity in a market served by EXPERIAN.
(a) Upon the approval of any acquisition described in clause (a) of
Section 4.03 in accordance with the provisions of Section 4.03, any action
thereafter necessary or desirable in respect of such acquisition and any
additional terms of such acquisition (including, without limitation, the source
and the nature of the capital needed, if any), may be approved by the
affirmative vote of a majority of the Managers (whether or not such majority
includes the Experian Managers). Without limiting the generality of the
foregoing, if, in connection with any such approved acquisition, the Management
Committee shall determine that additional capital is required by the Company,
the Management Committee may request that each of the Members contribute such
additional capital in proportion to the Percentage Interests then held by each
of them. Subject to clause (b) below, the Company shall accept from each of the
FAFCO Members and EXPERIAN a contribution only in the full amount of its share
of the additional capital requested. The contribution shall be in such form,
cash or otherwise, as the Management Committee shall determine.
(b) Upon receipt by EXPERIAN of any request from the Management Committee for an additional capital contribution pursuant to clause (a) above, EXPERIAN shall have the option to contribute or decline to contribute such additional capital by delivering a written notice to the Company and each of the FAFCO Members specifying its election not more than
30 days after its receipt of such request for additional capital (it being understood and agreed that if such written notice is not delivered within the 30 day period provided, EXPERIAN shall be deemed to have elected not to contribute such additional capital). In the event that EXPERIAN elects not to contribute its proportionate share of additional capital as requested (the "Requested Amount"), the FAFCO Members (or any of them) shall have the right, but not the obligation, to contribute to the Company for their (or its) own account as an additional capital contribution the Requested Amount. EXPERIAN shall not be considered in breach of this Agreement as a result of its election not to contribute the Requested Amount.
(c) If any of the Members makes an additional contribution as provided in this Section 4.04, then each such Member shall receive a credit to its respective Capital Account in the amount of any additional capital which it has contributed to the Company. Immediately following such Capital Contributions, the Percentage Interests of the Members shall be adjusted by the Management Committee to reflect the new relative proportions of the Capital Accounts of the Members. Such adjustment shall be made by: first, adjusting the Capital Accounts of all of the Members to reflect the fair market value of the Company's assets and shall include any unrealized income, gain, loss or deduction in Company assets immediately prior to the additional Capital Contributions; second, determining relative proportions of the Capital Accounts, taking into account the new Capital Contributions; and third, adjusting the Percentage Interests to reflect the relative portions of the Capital Accounts as so adjusted.
(d) In the event that the Experian Managers fail to consent pursuant to
Section 4.03 hereof to any acquisition described in clause (a) of such Section
4.03 that is proposed by the FAFCO Members or the FAFCO Managers, the FAFCO
Members and their Affiliates (including, without limitation, FAFCO) shall be
free to pursue such proposed acquisition and neither the Company nor EXPERIAN
nor its Affiliates shall have any right, claim or interest in or to any revenues
resulting therefrom. In the event that the FAFCO Managers fail to consent
pursuant to Section 4.03 hereof to any acquisition described in clause (a) of
such Section 4.03 that is proposed by EXPERIAN or the Experian Managers,
EXPERIAN and its Affiliates shall be free to pursue such proposed acquisition
and neither the Company nor the FAFCO Members shall have any right, claim or
interest in or to any revenues resulting therefrom. In the event that the
Company fails to diligently pursue any acquisition described in clause (a) of
Section 4.03 that is approved by the Management Committee in accordance with the
terms of such Section 4.03, then the party that proposed such acquisition to the
Company shall be free to pursue such acquisition (so long as the Company's
failure to diligently pursue such acquisition is not attributable to such
party's actions) and neither the Company nor any other Member nor any of such
Member's Affiliates shall have any right, claim or interest in or to any
revenues resulting therefrom.
(a) If, at any time or times hereafter, the Management Committee shall determine that additional financing is required by the Company to conduct its business and operations according to its ordinary and usual course of business or in connection with any acquisition described in clause (a) of Section 4.03 and approved in accordance with the provisions of Section 4.03, the Management Committee may request that each of the FAFCO Members and
(b) Notwithstanding any other provision of this Agreement, for the three year period from and after the Effective Time until the third anniversary thereof, the FAFCO Members (or any of them) may at any time and from time to time, without the consent of EXPERIAN or the Experian Managers, borrow money from or lend money to the Company. Such borrowings and loans shall bear interest at the Prime Rate and shall be disregarded for purposes of the declaration and payment of distributions by the Management Committee of the Company pursuant to Section 5.05. In the event that borrowings by any FAFCO Member from the Company exceed loans made by such FAFCO Member to the Company (in each case taking into account accrued but unpaid interest) at the time any distribution is declared, the amount of the distribution to such FAFCO Member shall be reduced by the amount of such excess.
ARTICLE V.
ALLOCATIONS OF NET PROFITS AND NET LOSSES; DISTRIBUTIONS
Notwithstanding the previous sentence, losses allocated to a Member shall not exceed the maximum amount of losses that can be allocated without causing a Member to have an Adjusted Capital Account Deficit at the end of any Fiscal Year. In the event that any Member would have an Adjusted Capital Account Deficit as a consequence of an allocation of losses in proportion to Percentage Interests, the amount of losses that would be allocated to such Member but for such allocation shall be allocated to the other Members to the extent that such allocations would not cause such other Members to have an Adjusted Capital Account Deficit and allocated among such other Members in proportion to their Percentage Interests. Any allocation of items of loss pursuant to this Section 5.01(a) shall be taken into account in computing subsequent allocations pursuant to this Article V, and prior to any allocation of items in such Section so that the net amount of any items allocated to each Member pursuant to this Article V shall, to the maximum extent practicable, be equal to the net amount that would have been allocated to each Member pursuant to this Article V if no reallocation of losses had occurred under this Section 5.01(a).
occurred, provided that an allocation pursuant to this Section 5.02(c) shall be made if and only to the extent that such Member would have an Adjusted Capital Account Deficit after all other allocations provided for in this Article V have been tentatively made as if this Section 5.02(c) were not in this Agreement. The foregoing provision is intended to comply with Regulations Section 1.704- 1(b)(2)(ii)(d) and shall be interpreted and applied in a manner consistent with such Regulations.
pursuant to this Section 5.03 are solely for purposes of federal, state and local taxes. As such, they shall not affect or in any way be taken into account in computing a Member's Capital Account or share of profits, losses, or other items of distributions pursuant to any provision of this Agreement.
(b) All distributions hereunder shall be made in the following order of priority:
(i) To the Members in proportion to their unreturned Capital Contributions until each Member has received cumulative distributions from the Effective Date through the date of such distribution equal to its Capital Contributions; and
(ii) To the Members in proportion to their Percentage Interests.
All such distributions shall be made only to the Persons who, according to the books and records of the Company, are the holders of record of the Membership Interests in respect of which such distributions are made on the actual date of distribution.
(a) Except for distributions to the Members in accordance with Section 5.05(a)(i), no distribution shall be made if, after giving effect to the distribution:
(i) The Company would not be able to pay its debts as they become due in the usual course of business; or
(ii) The Company's total assets would be less than the sum of its total liabilities plus, unless this Agreement provides otherwise, the amount that would be needed, if the Company were to be dissolved at the time of the distribution, to satisfy the preferential rights of other Members, if any, upon dissolution that are superior to the rights of the Member receiving the distribution.
(b) The Management Committee may base a determination that a distribution is not prohibited on any of the following:
(i) Financial statements prepared in accordance with GAAP;
(ii) A fair valuation; or
(iii) Any other method that is reasonable in the circumstances.
ARTICLE VI
MEMBERSHIP INTEREST TRANSFER RESTRICTIONS
(a) Notwithstanding anything to the contrary contained in this Article
VI, any Member may effect a Transfer upon the terms and conditions of this
Section 6.04 set forth below (each a "Permitted Transfer" and each transferee
thereof, a "Permitted Transferee").
(b) The Membership Interest of any Member may be transferred to any other Member, subject to compliance with Section 6.02, and without the prior written consent of the other Members or the Management Committee.
(c) If any Member desires to sell all or any part of its Membership Interest (other than pursuant to Section 6.04(b)) and (i) is not otherwise prohibited from doing so under this Section 6.04 and (ii) identifies a proposed Transferee that is willing to purchase all or part of such Membership Interest for cash (a "Proposed Transferee"), such Member shall first offer to sell the Offered Interest to the other Members (the "Offer") by giving the other Members written notice thereof (an "Offer Notice") specifying (A) the identity of the Proposed Transferee, (B) the Membership Interest offered (the "Offered Interest"), (C) the price at which the Proposed Transferee is willing to purchase the Offered Interest (the "Offering Price") and (D) any other terms of the Offer (the "Offer Terms"). Following its receipt of an Offer Notice, each Member shall have a ten (10) day period during which it may elect to accept the Offer and acquire all or a portion of the Offered Interest at the Offering Price and upon the Offer Terms. The failure of any Member to deliver a written election notice within
the applicable period shall constitute an election on the part of that Member not to purchase any of the Offered Interest. Each Member so electing to acquire shall be entitled to purchase a portion of the Offered Interest in the same proportion that the Percentage Interest of such Member bears to the aggregate of the Percentage Interests of all of the Members electing to so purchase the Offered Interest. In the event any Member elects to purchase none or less than all of its pro rata share of the Offered Interest, then each other Member can elect to purchase any such remaining portion of the Offered Interest in the same proportion that the Percentage Interest of such Member bears to the aggregate of the Percentage Interests of all of the Members electing to so purchase the remaining portion of the Offered Interest.
(d) In the event the other Members elect not to purchase or obtain all of the Offered Interest (an "Offer Rejection"), the transferring Member shall be free, subject to compliance with the tag-along provisions of Section 6.04(e) below, if applicable, to sell the Offered Interest to the Permitted Transferee at the Offering Price and upon the Offer Terms. If such sale is not consummated at the Offering Price and upon the Offer Terms within sixty (60) days from the date of the Offer Rejection, then the provisions of Section 6.04(c) shall once again apply.
(e) In the event that any FAFCO Member proposes to effect a Permitted Transfer of all or any part of its Membership Interest pursuant to Section 6.04(d) above, such transferring FAFCO Member shall promptly give written notice (such notice, a "Transfer Notice") thereof to EXPERIAN setting forth the name of, and the portion of its Membership Interest to be purchased by, the Permitted Transferee, the purchase price of the Membership Interest to be sold, any other significant terms of such sale and the date such proposed sale will be consummated. EXPERIAN shall have the right, exercisable upon irrevocable written notice to the transferring FAFCO Member within ten (10) days after receipt of a Transfer Notice, to participate in such sale on the same terms and conditions as set forth in the Transfer Notice and to sell all or any portion of its Membership Interest. EXPERIAN shall effect its participation in the sale by delivering on the date scheduled for such sale to the transferring FAFCO Member for delivery to the Permitted Transferee one or more certificates, if any, representing the Membership Interest which EXPERIAN desires to sell in accordance with this Section 6.04(e) and/or any other duly executed instruments of transfer necessary to effect the transfer of its Membership Interest. Such certificate or certificates and/or instruments of transfer delivered by EXPERIAN to the transferring FAFCO Member shall be delivered on such date to such Permitted Transferee in consummation of the sale of EXPERIAN's Membership Interest pursuant to the terms and conditions specified in the Transfer Notice, and the transferring FAFCO Member shall concurrently therewith remit to EXPERIAN that portion of the sale proceeds or other consideration to which EXPERIAN is entitled by reason of its participation in such sale. A transferring FAFCO Member's sale of all or any portion of its Membership Interest shall be effected on the terms and conditions set forth in the applicable Transfer Notice. In no event shall a transferring FAFCO Member receive special consideration in such sale. The exercise or non-exercise of the rights of EXPERIAN hereunder to participate in one or more sales of a Membership Interest made by a FAFCO Member shall not adversely affect its right to participate in subsequent sales of any Membership Interest subject to this Section 6.04.
ARTICLE VII
BUSINESS OPPORTUNITIES
(a) If the Company becomes aware of any Company Development Opportunity, the Management Committee will give due consideration to the desirability of pursuing such Company Development Opportunity. Except as provided in Section 7.01(c), if the Company does not promptly pursue such Company Development Opportunity, each of the Members and their respective Affiliates shall be free to pursue such Company Development Opportunity and the Company shall not have any right, claim or interest in or to any revenues or assets resulting therefrom.
(b) Should any Member or any of its Affiliates discover, develop or be offered a Company Development Opportunity, such Person will first offer such Company Development Opportunity to the Company. Except as provided in Section 7.01(c), if the Management Committee does not promptly pursue such Company Development Opportunity, then the Person discovering, developing or being offered such Company Development Opportunity and its Affiliates shall be free to pursue such Company Development Opportunity and neither the Company nor any other Member shall have any right, claim or interest in or to any revenues or assets resulting therefrom.
(c) Notwithstanding anything in Sections 7.01(a) and 7.01(b) to the contrary, no FAFCO Member nor any of its Affiliates shall be free to pursue any Company Development Opportunity offered to but not promptly pursued by the Company if (i) such Company Development Opportunity was offered to the Company by a FAFCO Member or any of its
Affiliates and (ii) the Experian Managers voted to pursue such Company Development Opportunity. Notwithstanding anything in Sections 7.01(a) and 7.01(b) to the contrary, neither EXPERIAN nor any of its Affiliates shall be free to pursue any Company Development Opportunity offered to but not promptly pursued by the Company if (i) such Company Development Opportunity was offered to the Company by EXPERIAN or any of its Affiliates and (ii) the FAFCO Managers voted to pursue such Company Development Opportunity.
(d) Notwithstanding anything in Sections 7.01(a), 7.01(b) or 7.01(c) to the contrary, to the extent any provision of this Agreement regarding Company Development Opportunities conflicts with the Data Services Agreement referenced in Section 7.01(d) of the JV Agreement, the provisions of the Data Services Agreement shall control.
ARTICLE VII
CONSEQUENCES OF DISSOLUTION EVENTS;
TERMINATION OF MEMBERSHIP INTEREST
be entitled to purchase a portion of the Former Member's Interest in the same proportion that the Percentage Interest of the Remaining Member bears to the aggregate of the Percentage Interests of all of the Remaining Members electing to purchase the Former Member's Interest.
(a) First, in payment of the debts and liabilities of the Company and the expenses of liquidation;
(b) Then, to the establishment of such reserves as may be deemed reasonably necessary by the Management Committee for any contingent or unforeseen liabilities or obligations of the Company; and
(c) Then, after making all allocations required by Section 5.01, to Members, in proportion to the positive balance in the Members' respective Capital Accounts after satisfaction of each Member's obligation to the Company.
ARTICLE IX
BOOKS AND RECORDS; TAX RETURNS; ACCESS BY MEMBERS
federal, state, local or international taxing authority, technical advice conferences and appellate hearings, as soon as possible after receiving notice of the scheduling of such proceedings. The Tax Matters Member will schedule such proceedings only after consulting the other Members with a view to accommodating the reasonable convenience of both the Tax Matters Member and the other Members. The Tax Matters Member shall not take any action of any nature whatsoever including, without limitation, agreeing to extend the period of limitations for assessments, filing a petition or complaint in any court, filing a request for an administrative adjustment of Company items after any return has been filed, or entering into any settlement agreement with the Internal Revenue Service, the U.S. Treasury or any other federal, state, local or international taxing authority with respect to Company items of income, gain, loss or deduction, in any such case without first consulting each other Member. The Tax Matters Member may request extensions to file any tax return or statement without consulting with, but shall so inform, the Management Committee. The provisions of this Agreement regarding the Company's tax returns shall survive the termination of the Company and the transfer of any Member's Membership Interest and shall remain in effect for the period of time necessary to resolve any and all matters regarding the federal, state, local and international income taxation of the Company and items of Company income, gain, loss and deduction.
ARTICLE X
MISCELLANEOUS
If to the Company:
First American Real Estate Solutions LLC
150 Second Avenue, Suite 1600
St. Petersburg, Florida 33701
Attn: Mr. John Long
Telephone: (800) 449-8732
Telecopy: (813) 895-3619
If to the FAFCO Members:
c/o The First American Financial Corporation
114 East Fifth Street (P.O. Box 267)
Santa Ana, California 92702
Attn: Mr. Parker Kennedy
Telephone: (714) 558-3211
Telecopy: (714) 647-2242
With a copy to:
White & Case
633 West Fifth Street, 19th Floor
Los Angeles, CA 90071
Attn: Neil W. Rust
Telephone: (213) 620-7700
Telecopy: (213) 687-0758
If to EXPERIAN:
Experian Information Solutions, Inc.
505 City Parkway West
Orange, California 92868
Attn: General Counsel
Telephone: (714) 385-8296
Telecopy: (714) 938-2513
or to such other Person or address as any party shall specify by notice in writing to each of the other parties hereto. Except for a notice of a change of address, which shall be effective only upon receipt thereof, all such notices, requests, demands, waivers and communications properly addressed shall be effective: (i) if sent by U.S. mail, three Business Days after deposit in the U.S. mail, postage prepaid; (ii) if sent by FedEx or other overnight delivery
service, two Business Days after delivery to such service; (iii) if sent by personal courier, upon receipt; and (iv) if sent by facsimile, upon receipt.
party or make any unauthorized use thereof. Each party shall treat all such information with the same degree of care against disclosure or unauthorized use which it affords to its own confidential information. The obligation of confidentiality and non-use shall not apply to any information which (a) is or becomes generally available to the public through no fault of the receiving party, (b) is independently developed by the receiving party or (c) is received in good faith from a third party who is lawfully in possession of such information and has the lawful right to disclose or use it.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as of the date first written above.
FIRST AMERICAN REAL ESTATE INFORMATION
SERVICES, INC.
By /s/ John Long ------------------------------------ Name: John Long Title: |
FIRST AMERICAN APPRAISAL SERVICES,
INC.
By /s/ Anand Nallathambi ------------------------------------ Name: Anand Nallathambi Title: |
FIRST AMERICAN APPRAISAL CONSULTING
SERVICES, INC.
By /s/ Anand Nallathambi ------------------------------------ Name: Anand Nallathambi Title: |
FIRST AMERICAN CREDCO, INC.
By /s/ Donald A. Robert ------------------------------------ Name: Donald A. Robert Title: President |
FIRST AMERICAN FIELD SERVICES, INC.
By /s/ Shari Nott ------------------------------------ Name: Shari Nott Title: Vice President |
FIRST AMERICAN FLOOD DATA
SERVICES, INC.
By /s/ Robert Douglas ------------------------------------ Name: Robert Douglas Title: Senior Vice President |
FIRST AMERICAN PROPERTY SERVICES,
INC.
By /s/ John Long ------------------------------------ Name: John Long Title: |
FIRST AMERICAN REAL ESTATE TAX
SERVICE, INC.
By /s/ David C. Yavorsky ------------------------------------ Name: David C. Yavorsky Title: President |
PASCO ENTERPRISES, INC.
By /s/ John Long ------------------------------------ Name: John Long Title: |
PRIME CREDIT REPORTS, INC.
By /s/ Donald A. Robert ------------------------------------ Name: Donald A. Robert Title: Senior Vice President |
PROPERTY FINANCIAL SERVICES OF NEW
ENGLAND, INC.
By /s/ Anand Nallathambi ------------------------------------ Name: Anand Nallathambi Title: |
DOCS ACQUISITION CORP.
By /s/ John Long ------------------------------------ Name: John Long Title: |
STRATEGIC MORTGAGE SERVICES,
INC. (TEXAS)
By /s/ Mark B. Rogers ------------------------------------ Name: Mark B. Rogers Title: President |
EXPERIAN INFORMATION SOLUTIONS, INC.
By /s/ D. V. Skilling ----------------------------------- Name: D. Van Skilling Title: |
Officers of First American Real Estate Solutions LLC
John W. Long -- President and Chief Executive Officer John Lamson -- Chief Financial Officer and Treasurer Parker Kennedy -- Senior Vice President Craig J. Zinda -- Secretary |
Schedule 2 to
Operating Agreement
-------------------
|
Approved Transactions
1. Experian is in the process of selling the real property located at 1700/1800 N.W. 66th Avenue, Plantation, Florida.
2. Experian has amended an Agreement with COMPS Infosystems, Inc. to provide for the sale of its C&I Data Extract Business in Florida and Georgia.
Existing Borrowing Facilities
1. Intercompany indebtedness in the amount of $33,500,000 owing by FAREISI to its sister company, First American Title Insurance Company ("FATICO"), resulting in an accounts payable balance in the aforesaid amount owing to FATICO.
EXHIBIT (10)(c)
FAREISI TRANSITION AGREEMENT
This FAREISI TRANSITION AGREEMENT (this "Agreement") is made as of the 30th day of November, 1997 by and among First American Real Estate Solutions LLC, a California limited liability company ("NEWCO"), First American Real Estate Information Services, Inc., a California corporation ("FAREISI"), for itself and each of the FAFCO Members (as such term is defined in the Joint Venture Agreement described below), and The First American Financial Corporation, a California corporation ("FAFCO").
RECITALS
A. NEWCO was formed on or before November 30, 1997 as a limited liability
company with FAREISI, certain affiliates of FAREISI, and EXPERIAN INFORMATION
SOLUTIONS, INC. ("EXPERIAN"), as members. The FAFCO Members contributed the
assets, liabilities and going business of their respective Real Estate
Information Service businesses (collectively, the "FAREISI Business") to NEWCO
in return for issuance of an eighty percent (80%) membership interest in NEWCO.
EXPERIAN contributed the assets, liabilities and going business of its Real
Estate Solutions business (the "RES Business") and Ten Million Dollars
($10,000,000) cash to NEWCO in return for issuance of a twenty percent (20%)
membership interest in NEWCO. These contributions and membership interests are
the subject of a Contribution and Joint Venture Agreement dated as of November
30, 1997 (the "Joint Venture Agreement") and an Operating Agreement dated as of
November 30, 1997 (the "Operating Agreement").
B. The parties have agreed to enter into this Agreement to provide for certain matters relating to the operation of the FAREISI Business by NEWCO following the Closing Date, subject to the terms and conditions set forth herein.
NOW, THEREFORE, in consideration for the forgoing and for other good and valuable consideration, and intending to be legally bound hereby, the parties hereby agree as follows:
TERMS AND CONDITIONS
ARTICLE I
1.1 Definitions: The Joint Venture Agreement and the Operating Agreement define certain terms. Such terms shall, to the extent not inconsistent with the definitions contained in this Agreement have the meanings set forth in those agreements, where used herein and identified with initial capital letters.
1.2 Other Definitions, Meanings and Interpretations: For purposes of this Agreement, the term "parties" means (except where the context otherwise requires) NEWCO, FAREISI and FAFCO; the term "person" includes any natural person, firm, association, partnership, corporation, limited liability company, governmental agency or other entity other than the parties; and the words "hereof," "herein," "hereby" and other words of similar import refer to this Agreement as a whole. The headings of the Articles and Sections of this Agreement have been included herein for convenience of reference only and shall not be deemed to affect the meaning of the operative provisions of this Agreement. The meanings given to defined terms (whether defined herein or in the Joint Venture and Operating Agreements) shall apply equally to both the singular and plural forms of such terms.
1.3 Relationship with the Joint Venture and Operating Agreements: This Agreement is intended to support and supplement the Joint Venture and Operating Agreements. Wherever possible, this Agreement and the Joint Venture and Operating Agreements shall be construed as being consistent. Where particular matters are addressed expressly in this Agreement, the terms and conditions of this Agreement, and not those of the Joint Venture or Operating Agreement, shall govern. Otherwise, the terms and conditions of the Joint Venture and Operating Agreements shall govern.
2.1 Transition of Hired Employees: Except as otherwise specifically provided in Section 2.2, all employees of the FAREISI Business shall, at the Effective Time, automatically become employees of NEWCO as of the Effective Time. All employees of the FAREISI Business automatically hired by NEWCO as of the Effective Time shall be referred to herein as the "Hired Employees." Except as otherwise specifically provided in this Agreement, no FAFCO Member shall have any obligation with respect to the Hired Employees after the Effective Time.
2.2 Inactive Employees: Notwithstanding anything in this Agreement, the Joint Venture Agreement or the Operating Agreement to the contrary, FAREISI shall cause each FAFCO Member (subject to such FAFCO Member's policies and procedures) to retain all of its employees engaged in the FAREISI Business who are on leave of absence status (whether paid or unpaid) as of the Effective Time (together with all liabilities related to such retained employees), until such time as such FAFCO Member has determined, in good faith and consistent with past practices, that any such person may return to active status. Upon making such determination, the FAFCO Member shall promptly notify NEWCO and such employee shall thereafter, upon reporting to work, automatically become an employee of NEWCO and shall be treated as a Hired Employee for the purposes of this Agreement (and all liabilities related to such employee shall then be automatically assumed by NEWCO).
2.3 Insurance Plans: FAFCO acknowledges and agrees that NEWCO does not intend to establish its own medical, vision, dental, life, accidental death and dismemberment,
and long-term disability plans (collectively, "Insurance Plans") for the Hired Employees. Accordingly, from and after the Effective Time, for so long as NEWCO desires, FAFCO shall ensure that the Hired Employees and, to the extent NEWCO so desires, any other employees hired from time to time by NEWCO after the Effective Time (collectively, the "NEWCO Employees") are eligible to participate in FAFCO's Insurance Plans upon terms and conditions substantially similar to those offered to employees of FAFCO and its subsidiaries. NEWCO agrees to reimburse FAFCO for FAFCO's direct costs, if any, incurred in making the Insurance Plans available to the NEWCO Employees.
2.4 Accrued Vacation: Each FAFCO Member will transfer to NEWCO the liability for accrued vacation pay of the Hired Employees as of the Effective Time. NEWCO will credit to each Hired Employee the accrued vacation such Hired Employee accrued with FAREISI prior to the Effective Time.
2.5 401(k) Plans: FAFCO acknowledges and agrees the NEWCO does not intend to establish its own 401(k) plan for the NEWCO Employees. Accordingly, from and after the Effective Time, for so long as NEWCO desires, FAFCO shall ensure that the NEWCO Employees are eligible to participate in FAFCO's 401(k) plan upon substantially terms and conditions substantially similar to those offered to employees of FAFCO and its subsidiaries. NEWCO agrees to reimburse FAFCO for FAFCO's direct costs, if any, incurred in making the 401(k) plan available to the NEWCO Employees.
3.1 Disbursement Accounts:
(a) During the period from the Closing Date through the Effective Time (the "Interim Operating Period"), FAREISI shall cause each FAFCO Member to (i) retain control over any disbursement account presently under the control of a FAFCO Member and (ii) continue to issue checks on behalf of the FAREISI Business in the ordinary course of business. FAREISI shall cause each FAFCO Member to separately account for amounts distributed by such FAFCO Member on behalf of the FAREISI Business.
(b) In the event that NEWCO does not have a disbursement system or disbursement bank account in place by the Effective Time, FAREISI shall cause each FAFCO Member to assist NEWCO in processing NEWCO payments subsequent to the Effective Time, as follows:
Prior to the Effective Time, those FAFCO Members which need to do so will open a new disbursement bank account ("NEWCO's FAREISI Disbursement Bank Account") to process post-Effective Time payments relating to the FAREISI Business. Each FAFCO Member will continue to process such
accounts payable after the Effective Time and shall be entitled to be reimbursed for its direct costs incurred in connection therewith. The checks for these payments will be written from NEWCO's FAREISI Disbursement Bank Account. This bank account will not be run as a controlled disbursement account. No FAFCO Member will fund this account. The FAFCO Members will issue checks from NEWCO's FAREISI Disbursement Bank Account only to the extent that funding has been provided to this account by NEWCO in advance. There will be no interest credited to this account. All bank costs, expenses, fees and earnings credits relating to the opening and operation of NEWCO's FAREISI Disbursement Bank Account will be the responsibility of NEWCO and will be charged directly to such account.
(c) Within ninety (90) days after the Effective Date (the last day of such ninety (90) day period to be known as the "Bank Account Cut-off Date"), NEWCO will have completed all necessary actions to transfer the ownership of NEWCO's FAREISI Disbursement Bank Account to NEWCO. Regardless of whether the transfer of ownership of FAREISI's NEWCO Disbursement Bank Account to NEWCO has been completed by the Bank Account Cut-off Date, FAREISI shall cause the FAFCO Members to cease issuing checks from this account as of the end of the Bank Account Cut-Off Date.
3.3 Payroll Accounts:
(a) During the Interim Period, FAREISI shall cause each FAFCO Member to retain its payroll bank accounts in existence on the date hereof. FAREISI shall cause the FAFCO Members to (with respect to the FAREISI Business) issue paychecks and make direct payroll deposits from this account for the period from the Closing Date through the end of the last payroll period ending prior to
the Effective Time. All payroll liabilities of the FAREISI Business for Hired Employees accrued after such time will be transferred to NEWCO at the Effective Time.
(b) In the event that NEWCO does not have a payroll system or payroll bank account in place by the Effective Time, FAREISI shall cause each FAFCO Member to assist NEWCO in processing NEWCO's payroll related to the FAREISI Business subsequent to the Effective Time, as follows:
Prior to the Effective Time, those FAFCO Members which need to do so will open a new payroll bank account ("NEWCO's FAREISI Payroll Bank Account") to process NEWCO payroll relating to the FAREISI Business. Each FAFCO Member shall continue to process such payroll after the Effective Time and shall be entitled to be reimbursed for its direct costs incurred in connection therewith. These payments will be issued from NEWCO's FAREISI Payroll Bank Account. This bank account will not be run as a controlled disbursement account. No FAFCO Member will fund this account. NEWCO must deposit funds into the account for payroll taxes paid and net payroll one day before each pay day. There will be no interest credited to this account. All bank costs, expenses, fees and earnings credits relating to the opening and operation of NEWCO's FAREISI Payroll Bank Account will be the responsibility of NEWCO and will be charged directly to such account.
(c) By the Bank Account Cut-off Date, NEWCO will have completed all necessary actions to transfer the ownership of NEWCO's FAREISI Payroll Bank Account to NEWCO. Regardless of whether the transfer of ownership of NEWCO's FAREISI Payroll Bank Account to NEWCO has been completed by the Bank Account Cut-off Date, FAREISI will cause the FAFCO Members to cease issuing checks and making payments from this account as of the end of the Bank Account Cut-Off Date.
3.4 Escrow and Petty Cash Accounts: FAREISI shall cause the FAFCO Members to assist NEWCO in working with FAREISI's banks to cause the escrow and petty cash bank accounts applicable to the FAREISI Business in existence on the date hereof to transfer to NEWCO as of the Effective Time. Funds in these accounts as of the Effective Time will be the property of NEWCO. FAREISI shall cause the FAFCO Members to operate and fund these accounts in the ordinary course of business until the Effective Date.
3.5 Tax and Wage Information: Each Hired Employee will receive one W-2 and one 1099 from each FAFCO Member by which such employee was employed for calendar year 1997.
4.1 Bonuses: FAREISI shall cause the account balances of such accounts as are kept by each FAFCO Member for the purpose of awarding bonuses and/or commissions to such FAFCO Members' employees under any applicable bonus or commission plans, if any, as funded through the Effective Time with respect to the Hired Employees to be transferred to NEWCO at the Effective Time. FAREISI shall cause each FAFCO Member to determine, in good faith and generally consistent with past practice, the actual payout amounts for the Hired Employees under such plans, if any, for that portion of fiscal year 1997/1998 up to the Effective Time in accordance with that FAFCO Members' normal practices and processes and thereafter deliver such payout information to NEWCO. NEWCO shall distribute such bonuses/commissions, as instructed by the FAFCO Member, to the appropriate recipients at such times as NEWCO shall determine (but in no event prior to January 1, 1998). Within five (5) business days following any payment of such bonuses/commissions, FAREISI shall cause the FAFCO Member to reimburse NEWCO for the total costs related to such bonuses/commissions to the extent they relate to the period through November 30, 1997.
4.2 Surety Bonds: As promptly as possible after the Effective time, NEWCO shall take any and all action necessary to have each surety bond relating to the FAREISI Business which was provided by any FAFCO Member to be replaced by a surety bond obtained by NEWCO. If, after the Effective Time, any FAFCO Member is required to pay any amounts under any surety bond for actions or inactions on the part of NEWCO or any of its affiliates, then NEWCO shall reimburse such FAFCO Member for all amounts paid by such FAFCO Member under such surety bond within five (5) business days of receipt from the FAFCO Member of a request for the payment of such amounts.
5.1 Certain Existing Purchase Agreements: Prior to the Effective Date, the FAREISI Business received goods and services pursuant to purchase agreements entered into by the FAFCO Members on behalf of all of their business units (the "Existing Purchase Agreements"). The Joint Venture and Operating Agreements do not contemplate that NEWCO will be able to continue to obtain goods and services after the Effective Time pursuant to the Existing Purchase Agreements. Therefore, NEWCO shall use its reasonable best efforts to obtain new contracts from such vendors or other, lenders on a stand-alone basis as promptly as possible after the Effective Time. In the meantime, however, in order to provide NEWCO with an opportunity to solicit new bids and negotiate new contracts for the goods and services provided under the Existing Purchase Agreements, FAREISI shall cause the FAFCO Members to, if and only to the extent expressly permitted by the terms of the Existing Purchase Agreements, allow NEWCO to purchase goods and services pursuant to the Existing Purchase Agreements for, except as provided below, a period not to exceed one hundred eighty (180)
days after the Effective Date (the "Transition Period"). During the Transition Period, NEWCO shall pay all vendors providing goods or services to it under the Existing Purchase Agreements pursuant to separate purchase orders. Upon expiration of the Transition Period, NEWCO's right to purchase goods and services pursuant to the Existing Purchase Agreements shall terminate and FAREISI shall have no other obligations to NEWCO with respect to such agreements.
6.1 Excelis Agreement: During the Interim Operating Period, FAFCO, FAREISI and NEWCO shall, subject to the terms of the Operating Agreement as incorporated into the Interim Operating Agreement, use their best efforts to document the relationship that Excelis, Inc. will have with NEWCO from and after the Effective Time.
6.2 Dallas Property: During the Interim Operating Period, FAREISI and NEWCO shall, subject to the terms of the Operating Agreement as incorporated into the Interim Operating Agreement, use their best efforts to document the relationship that FAREISI will have with NEWCO from and after the Effective Time in respect of that certain real property owned by FAREISI and located at 8435 Stemmons Freeway, Dallas, Texas (the "Dallas Property"), which relationship shall require FAREISI (i) to sublease to NEWCO that space currently utilized in connection with the FAREISI Business and (ii) to make available to NEWCO certain tenant improvements at the Dallas Property, which tenant improvements shall be paid for on a monthly basis over a ten-year period.
7.1 Post-Effective Date Support Arrangements: Each of FAREISI and NEWCO anticipate that occasional requests for services regarding tax, payroll, treasury and other matters (including requests to answer specific questions related thereto) may be made by the other party after the Effective Date. Subject to the terms of the Operating Agreement, such services shall be provided without charge unless the party receiving such request determines, in its sole discretion, that satisfaction of such request would involve the expenditure of a significant amount of time and/or resources, in which case, such party shall provide to the requesting party an estimate of the costs anticipated to be incurred in satisfying the request, which costs shall include (a) the pro rata portion of the salary and bonus of the employees actually providing the services requested pursuant hereto, (b) reasonable out-of-pocket expenses (evidenced by appropriate documentation) and (c) a payroll expense charge in an amount equal to 23% of the amount of salary billed and 11% of bonus billed, pursuant to clause (a) above. Upon receipt of such estimate, the requesting party shall have two (2) business days in which to notify the other party whether such party should undertake to
provide the requested services. If such services are provided, the party providing the services shall deliver to the requesting party an invoice on a monthly basis containing a description of the services performed and the aggregate costs actually incurred in performing such services (which amount may exceed the estimate provided to the requesting party, provided that in such case, the party providing the services shall provide reasonable detail to the requesting party as to the nature of such excess). The invoice shall be paid by the requesting party within thirty (30) days of receipt thereof. Notwithstanding the foregoing, FAREISI and NEWCO may from time to time require personnel and other data from the other party related to or required in connection with their maintenance of human resources databases, which information shall be provided to the requesting party without charge. The parties obligation to provide support services pursuant to this Section 6.1 is in addition to any other specific support services commitments agreed to by the parties pursuant to any other agreements, including the Joint Venture and Operating Agreements, and nothing in this Section 6.1 is intended or shall be construed to obligate any party to pay or reimburse any amounts with respect to such other commitments.
8.1 Cooperation: The parties will cooperate in good faith to carry out the purposes of this Agreement. Without limiting the generality of the foregoing, each party will assist the other party and furnish the other party with such information and documentation as the other party may reasonably request.
8.2 Enforcement Against the FAFCO Members: FAREISI shall cause each FAFCO Member to comply with its obligations under this Agreement.
8.3 Indemnity:
(a) NEWCO agrees to defend, indemnify and hold harmless each FAFCO Member and its subsidiaries and affiliates (including, without limitation, their respective officers, directors, employees, shareholders and agents) (the "FAFCO Parties") against any and all liabilities, damages, losses, claims, costs and expenses (including, without limitation, costs of collection and reasonable attorneys' fees) (collectively, "Damages") arising out of or resulting from any demand, claim, lawsuit or other cause of action brought by a third party as a result of or in connection with the post-closing services rendered by employees of any FAFCO Party pursuant to this Agreement, provided that no FAFCO Party shall be entitled to indemnification in respect of its or his own gross negligence or wilful misconduct.
(b) FAREISI hereby agrees to defend, indemnify and hold harmless NEWCO and its subsidiaries and affiliates (including, without limitation, their respective
officers, directors, employees, shareholders and agents) (the "NEWCO Parties") against any and all Damages arising out of or resulting from any demand, claim, lawsuit or other cause of action brought by a third party as a result of or in connection with the postclosing services rendered by employees of any NEWCO Party pursuant to this Agreement, provided that no NEWCO Party shall be entitled to indemnification in respect of its or his own gross negligence or wilful misconduct.
8.4 No Liability:
(a) In providing services hereunder, no FAFCO Party shall be liable to any NEWCO Party for any error or omission except to the extent that any such error or omission results from the willful failure of a FAFCO Party's employee to perform the services required hereunder or from the gross negligence or willful misconduct of any such FAFCO Party employee. In no event shall any FAFCO Party be liable to any NEWCO Party or any third party for any special or consequential damages, including, without limitation, lost profits or injury to the goodwill of any NEWCO Party, in connection with the performance, misfeasance or nonfeasance hereunder of any FAFCO Party. Neither FAREISI nor any FAFCO Party makes any representation or warranty under this Agreement as to the accuracy or completeness of any information provided to NEWCO pursuant to the terms of this Agreement; provided; however, that nothing in this Agreement is intended to limit or otherwise affect the representations and warranties made under the Joint Venture and Operating Agreements or in any certificate or other document delivered pursuant thereto.
(b) In providing services hereunder, no NEWCO Party shall be liable to any FAFCO Party for any error or omission except to the extent than any such error or omission results from the willful failure of a NEWCO Party's employee to perform the services required hereunder or from the gross negligence or willful misconduct of any such FAFCO Party employee. In no event shall any NEWCO Party be liable to any FAFCO Party or any third party for any special or consequential damages, including, without limitation, lost profits or injury to the goodwill of any FAFCO Party, in connection with the performance, misfeasance or nonfeasance hereunder of any NEWCO Party. Neither NEWCO nor any Newco Party makes any representation or warranty under this Agreement as to the accuracy or completeness of any information provided to any FAFCO Party pursuant to the terms of this Agreement; provided; however, that nothing in this Agreement is intended to limit or otherwise affect the representations and warranties made under the Joint Venture and Operating Agreements or in any certificate or other document delivered pursuant thereto.
8.5 Confidentiality: The parties acknowledge that information concerning the business or operations of any of the other parties received as a result of the operation of this
Agreement constitutes confidential information subject to the terms and conditions of the Joint Venture and Operating Agreements.
8.6 Severability: If any provision of this Agreement shall finally be determined to be unlawful, then such provision shall be deemed to be severed from this Agreement and every other provision of this Agreement shall remain in full force and effect.
8.7 Notices: Any notice or other communication required or permitted to be given under this Agreement shall be given in the manner provided in the Joint Venture Agreement.
8.8 Assignment: This Agreement shall be binding upon and inure to the benefit of the successors of each of the parties, but shall not be assigned by any party without the prior written consent of the other parties.
8.9 No Third Parties: This Agreement is not intended to, and shall not, create any rights in or confer any benefits upon any person other than the parties hereto.
8.10 Governing Law: This Agreement will be governed by and construed in accordance with the internal substantive laws of the State of California, except where the substantive laws of another jurisdiction mandatorily apply.
8.11 Counterparts: More than one counterpart of this Agreement may be executed by the parties hereto, and each fully executed counterpart shall be deemed an original without production of the others.
8.12 Complete Agreement: This Agreement, together with the EXPERIAN Transition, Joint Venture and Operating Agreements, sets forth the entire understanding of the parties with respect to the subject matter hereof and supersedes all prior letters of intent, agreements, covenants, arrangements, communications, representations, or warranties, whether oral or written, by any officer, employee, or representative or either party relating thereto.
IN WITNESS WHEREOF, the parties have each caused this Agreement to be executed by their respective duly authorized officers as of the date first above written.
FIRST AMERICAN REAL ESTATE
SOLUTIONS LLC
By: /s/ Parker S. Kennedy
----------------------------
Title:
-------------------------
|
FIRST AMERICAN REAL ESTATE
INFORMATION SERVICES, INC.
By: /s/ John Long
----------------------------
Title:
-------------------------
|
THE FIRST AMERICAN FINANCIAL
CORPORATION
By: /s/ Parker S. Kennedy
----------------------------
Title:
-------------------------
|
Exhibit (10)(d)
First American Real Estate Solutions, LLC 150 Second Avenue, Suite 1600, St. Petersburg, Florida 33701
November 30, 1997
Mr. John Peace
Chief Executive
CCN Experian
Talbot House
Talbot Street
Nottingham NG1 5HF
United Kingdom
Mr. D. Van Skilling
Chairman and Chief Executive Officer
Experian
505 City Parkway West
Orange, California 92868
Dear John and Van:
This letter constitutes the data license agreement between First American Real Estate Solutions, LLC ("Newco") and Experian Information Solutions, Inc. ("Experian").
An integral part of the creation of Newco has been the ongoing obligation of Newco to provide to Experian the data currently held by the Real Estate Solutions ("RES") division of Experian. We refer to this data as the RES Data.
Because it is difficult to cover all issues we may face in the future in a document prepared today, we collectively developed a set of guiding principles to cover the present and future issues. These principles cover (1) Access and Royalties and (2) Limitations on Use of RES data. Each guiding principle is set forth in bold print followed by an expansion of its meaning, where needed. Following that are provisions relative to use restrictions, payments, disputes, limitation of liability and disclaimer of warranties.
EXPERIAN WILL HAVE FULL AND FREE ACCESS TO THE RES DATA FOR USE IN ITS CURRENT MARKETS AND/OR PRODUCTS. FOR ALL NEW MARKETS OR PRODUCTS, EXPERIAN WILL PAY A ROYALTY.
Mr. John Peace
Mr. D. Van Skilling
November 30, 1997
Newco hereby grants to Experian and its affiliate credit reporting agencies a nonexclusive, nontransferable right and license to use the RES Data at cost, except in the cases where a royalty applies (as set forth below), so long as Experian is a member of Newco and for ten years thereafter. Experian will pay Newco the incremental costs ("Costs") incurred by Newco in the course of reproduction and/or delivery of the RES Data. Reimbursement of these Costs is intended to result in neither profit nor loss to Newco.
Subject to the terms of this letter, the use of the data would include the sale, application, compilation, storage, copying, employment, exploitation, management, manipulation, packaging, sorting or other utilization of the RES Data. Any party who receives the RES Data from Experian may not resell such data except in the case of an affiliate credit bureau or other authorized Experian reseller. In providing the information, Newco reserves its rights in the RES Data, in the software programs which compile and manipulate this data and in any copyrights, proprietary information or trademarks which relate to the data or software.
The RES Data will be provided to Experian at cost and for no royalty, for use by Experian in its current markets and/or products as of the date hereof.
As detailed below, Newco may charge Experian a fair and reasonable royalty for all other markets or products.
Where Newco is required to provide to Experian for no royalty the RES Data, the
use by Experian of the programs and systems which compile and sort the data and
put it into a usable form must also be provided to Experian at no royalty.
Experian shall not have royalty-free access to new programs which apply rules-
based technology, such as artificial intelligence, to the data.
Notwithstanding, access to Value Point and future enhancements thereof shall be
provided at no royalty.
As the RES Data is improved or enhanced, Experian's no royalty access shall continue so long as the data bases continue to be generically similar to the RES Data Base or any portion thereof.
For instance, the addition to the property data base of data elements not currently taken from the tax assessor records would be generically similar, while geographically expanded title plant data would not be.
Experian's rights to the various elements of the RES Data will continue so long as a particular element is made available to regular commercial buyers of such data. Newco will have the right to discontinue any element of the RES Data after first offering to transfer the data and the updating function to Experian. Experian shall pay Newco for the cost of such transfer.
Mr. John Peace
Mr. D. Van Skilling
November 30, 1997
The RES Data may be delivered in a variety of forms and media including, but not limited to, magnetic tape, CPU-to-CPU access, gateway access to an on-line service and CD Rom, so long as such form or media is regularly available to Newco's commercial clients.
ANY SALE BY NEWCO OF RES DATA TO A COMPETITOR OF EXPERIAN IS SUBJECT TO THE SUPER-MAJORITY RIGHTS OF EXPERIAN. EXCEPT FOR EXPERIAN'S CURRENT MARKETS AND/OR PRODUCTS, IF EXPERIAN USES OR SELLS THE RES DATABASE IN A MARKET SERVED BY NEWCO, EXPERIAN WILL PAY A ROYALTY.
Newco may not sell RES Data to competitors of Experian that are credit repositories or other providers of raw credit data (such as Equi-Fax and Transunion) or other direct marketing companies (such as Axiom or Metromail) without Experian's approval. Experian will not sell RES Data to competitors of Newco such as DataQuick or Datascan without paying a royalty. For instance, Experian may not sell RES Data to the real estate industry without paying a royalty, for instance sale to Bank of America of a product using RES Data without paying a royalty where the product was to be used by Bank of America in making a second mortgage loan. In no event will Experian be required to pay a royalty for the sale of any credit report.
The "super-majority rights" referred to in the principle above are defined in the operating agreement for Newco. As Experian and Newco enter new markets and develop new products, we will continue to be guided by the above principles.
Experian's use of the RES Data shall be subject to any third party limitations imposed upon Newco's use of such data. Experian and its affiliates shall be solely responsible for the security, distribution, and use of RES Data delivered to Experian or its affiliates. Experian shall apply to the RES Data the same compliance with laws restrictions, security, and confidentiality measures that Experian applies to its own data.
Newco will bill Experian for any royalties or Costs due under this agreement. Experian and Newco will, upon request of the other party, cooperate in determining the amount of royalties due.
Mr. John Peace
Mr. D. Van Skilling
November 30, 1997
In the unlikely event of a dispute under this agreement, each party will have available to it at its unilateral request the dispute resolution procedures established in Section 6.05 of the joint venture agreement. Whether we arbitrate or resort to litigation, the prevailing party will be entitled to collect attorney fees from the other party.
Neither party shall have any obligation or liability to the other hereunder for any special, incidental, consequential or punitive damages incurred by the other party in connection with the performance of this agreement. Experian will indemnify, defend and hold harmless Newco, its employees, agents and representatives from and against any losses, claims, suits, costs and/or expenses, including attorney fees, arising out of any claim by any third party arising out of Experian's use of the RES Data. Newco will indemnify, defend and hold harmless Experian, its employees, agents and representatives from and against any losses, claims, suits, costs and/or expenses, including attorney fees, arising out of any claim by any third party that Experian does not have the right to use the RES Data.
Newco warrants to Experian that Newco has the right to license to Experian the RES Data.
NEWCO PROVIDES NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, CURRENTNESS, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF THE RES DATA FURNISHED BY IT OR THE MEDIA ON OR THROUGH WHICH SUCH RES DATA IS PROVIDED.
We look forward to a long and prosperous joint venture.
FIRST AMERICAN REAL ESTATE SOLUTIONS, LLC
By: /s/ Parker S. Kennedy
--------------------------------------
Parker S. Kennedy
Senior Vice President
|
Mr. John Peace
Mr. D. Van Skilling
November 30, 1997
AGREED AN ACCEPTED:
EXPERIAN INFORMATION SOLUTIONS, INC.
INTERIM OPERATING AGREEMENT
By and Among
THE FIRST AMERICAN FINANCIAL CORPORATION,
FIRST AMERICAN REAL ESTATE INFORMATION SERVICES, INC.,
and
EXPERIAN INFORMATION SOLUTIONS, INC.
Dated as of November 30, 1997
TABLE OF CONTENTS/1/
Page
ARTICLE I
DEFINITIONS................................ 2
1.01. Defined Terms........................................................ 2
1.02. Principles of Construction........................................... 3
ARTICLE II
TERM; INCORPORATION OF OPERATING AGREEMENT.................. 4
2.01. Term................................................................. 4
2.02. Incorporation of Operating Agreement By Reference.................... 4
2.03. Exceptions........................................................... 4
2.04. Controlling Document................................................. 4
ARTICLE III
MISCELLANEOUS............................... 5
3.01. Specific Performance................................................. 5
3.02. Amendments and Modifications......................................... 5
3.03. Notices.............................................................. 5
3.04. Attorneys' Fees...................................................... 6
3.05. Further Assurances................................................... 6
3.06. Counterparts......................................................... 6
3.07. Governing Law........................................................ 6
3.08. Successors........................................................... 6
3.09. Severability......................................................... 6
3.10. Entire Agreement..................................................... 7
3.11. Confidentiality...................................................... 7
---------------
|
/1/ This Table of Contents is provided for convenience only, and does not form a part of the attached Interim Operating Agreement.
INTERIM OPERATION AGREEMENT, made as of November 30, 1997 (this "Agreement"), by and among THE FIRST AMERICAN FINANCIAL CORPORATION, a California corporation ("FAFCO"), FIRST AMERICAN REAL ESTATE INFORMATION SERVICES, INC., a California corporation, ("FAREISI"), and EXPERIAN INFORMATION SOLUTIONS, INC., an Ohio corporation ("EXPERIAN") (each a "Party" and, collectively, the "Parties").
WHEREAS, FAFCO, FAREISI, First American Appraisal Consulting Services, Inc., a California corporation ("FAREISI Subsidiary 1"), First American Appraisal Services, Inc., a California corporation ("FAREISI Subsidiary 2"), First American Credco, Inc., a Washington corporation ("FAREISI Subsidiary 3"), First American Field Services, Inc., a New Jersey corporation ("FAREISI Subsidiary 4"), First American Flood Data Services, Inc., a Texas corporation ("FAREISI Subsidiary 5"), First American Property Services, Inc., a New York corporation ("FAREISI Subsidiary 6"), First American Real Estate Tax Service, Inc., a Florida corporation ("FAREISI Subsidiary 7"), Pasco Enterprises, Inc., a Texas corporation ("FAREISI Subsidiary 8"), Prime Credit Reports, Inc., a California corporation ("FAREISI Subsidiary 9"), Property Financial Services Of New England, Inc., a Delaware corporation ("FAREISI Subsidiary 10"), Docs Acquisition Corp., a Nevada corporation ("DOCS"), Strategic Mortgage Services, Inc. (Texas), a Texas corporation ("SMS") (FAREISI, FAREISI Subsidiary 1, FAREISI Subsidiary 2, FAREISI Subsidiary 3, FAREISI Subsidiary 4, FAREISI Subsidiary 5, FAREISI Subsidiary 6, FAREISI Subsidiary 7, FAREISI Subsidiary 8, FAREISI Subsidiary 9, FAREISI Subsidiary 10, DOCS and SMS, collectively, the "FAFCO Members") and EXPERIAN have entered into that certain Contribution and Joint Venture Agreement, of even date herewith (as the same may be amended, modified and supplemented from time to time, the "JV Agreement"; capitalized terms used in this Agreement and not otherwise defined herein shall, unless the context otherwise requires, have the meaning given thereto in the JV Agreement), in order to combine the FAREISI Business and the RES Business;
WHEREAS, in connection with the JV Agreement, the FAFCO Members and EXPERIAN have entered into that certain Operating Agreement For First American Real Estate Solutions LLC, of even date herewith (as the same may be amended, modified and supplemented from time to time, the "Operating Agreement"), pursuant to which each of the FAFCO Members and EXPERIAN have established First American Real Estate Solutions LLC, a California limited liability company ("Newco");
WHEREAS, Section 2.02 of the JV Agreement and Section 2.02(a) of the Operating Agreement contemplate that at 00:01 (Pacific Standard Time) on January 1, 1998 (the "Effective Time") (i) the FAFCO Members will contribute the FAREISI Business to Newco and (ii) EXPERIAN will contribute the RES Business to Newco; and
WHEREAS, the Parties intend for Newco to commence operations from and after the date of this Agreement as if the contributions described in the preceding paragraph had occurred on the date of this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual covenants hereinafter set forth, the Parties agree as follows:
ARTICLE I
DEFINITIONS
"Agreement" shall mean this Interim Operating Agreement, as the same may be amended, modified and/or supplemented from time to time.
"Commencement Time" shall mean 00:01 (Pacific Standard Time) on December 1, 1997.
"Effective Time" shall have the meaning set forth in the third WHEREAS clause of this Agreement.
"EXPERIAN" shall have the meaning set forth in the introductory paragraph of this Agreement.
"FAFCO" shall have the meaning set forth in the introductory paragraph of this Agreement.
"FAFCO Member" shall have the meaning given thereto in the first WHEREAS clause of this Agreement.
"FAREISI" shall have the meaning set forth in the introductory paragraph of this Agreement.
"FAREISI Business" shall mean the collective businesses of each of the FAFCO Members.
"Implementing Agreements" shall have the meaning set forth in Section 7.01(d) of the JV Agreement.
"Interim Period" shall have the meaning set forth in Section 2.03 hereof.
"JV Agreement" shall have the meaning set forth in the first WHEREAS clause of this Agreement.
"Newco" shall have the meaning set forth in the second WHEREAS clause of this Agreement.
"Operating Agreement" shall have the meaning set forth in the second WHEREAS clause of this Agreement.
"Party" and "Parties" shall have the meaning set forth in the introductory paragraph of this Agreement.
"Person" shall mean and include any individual, partnership, association, joint stock company, joint venture, corporation, trust, limited liability company, unincorporated organization, government, agency or political subdivision thereof.
"Prime Rate" shall have the meaning set forth in the JV Agreement.
"RES Business" shall mean the business of EXPERIAN commonly known as Experian Real Estate Solutions (including, without limitation, the businesses commonly known as Experian Title Information Services and Experian Property Data).
"US GAAP" means United States generally accepted accounting principles applied on a consistent basis.
(a) All references to Articles, Sections and subsections are to Articles, Sections and subsections in this Agreement unless otherwise specified. The words "hereof," "herein" and "hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The term "including" is not limiting and means "including without limitation."
(b) All accounting terms not specifically defined herein shall be construed in accordance with US GAAP.
(c) In the computation of periods of time from a specified date to a later specified date, the word "from" means "from and including"; the words "to" and "until" each mean "to but excluding"; and the word "through" means "to and including."
(d) The Table of Contents hereto and the Article and Section headings herein are for convenience only and shall not affect the construction hereof.
(e) This Agreement and the Implementing Agreements are the result of negotiations among and have been reviewed by counsel to the Parties and are the products of all Parties. Accordingly, they shall not be construed against any Party merely because of such Party's involvement in their preparation.
ARTICLE II
TERM; INCORPORATION OF OPERATING AGREEMENT
ARTICLE III
MISCELLANEOUS
If to Newco:
First American Real Estate Solutions LLC
150 Second Avenue, Suite 1600
St. Petersburg, Florida 33701
Attn: Mr. John Long
Telephone:
Telecopy:
If to the FAFCO Members:
c/o The First American Financial Corporation
114 East Fifth Street (P.O. Box 267)
Santa Ana, California 92702
Attn: Mr. Parker Kennedy
Telephone: (714) 558-3211
Telecopy: (714) 647-2242
With a copy to:
White & Case
633 West Fifth Street, 19th Floor
Los Angeles, CA 90071
Attn: Neil W. Rust
Telephone: (213) 620-7700
Telecopy: (213) 687-0758
If to EXPERIAN:
Experian Information Solutions, Inc.
505 City Parkway West
Orange, California 92868
Attn: General Counsel
Telephone: (714) 385-8296
Telecopy: (714) 938-2513
or to such other Person or address as any party shall specify by notice in writing to each of the other parties hereto. Except for a notice of a change of address, which shall be effective only upon receipt thereof, all such notices, requests, demands, waivers and communications properly addressed shall be effective: (i) if sent by U.S. mail, three Business Days after deposit in the U.S. mail, postage prepaid; (ii) if sent by FedEx or other overnight delivery service, two Business Days after delivery to such service; (iii) if sent by personal courier, upon receipt; and (iv) if sent by facsimile, upon receipt.
pressed or implied, is intended to confer on any Person other than the parties hereto or their respective successors and permitted assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed in their respective corporate names by their respective officers, each of whom is duly and validly authorized and empowered, all as of the day and year first above written.
THE FIRST AMERICAN FINANCIAL
CORPORATION
By /s/ Parker S. Kennedy ---------------------------- Name: Parker S. Kennedy Title: |
FIRST AMERICAN REAL ESTATE
INFORMATION SERVICES, INC.
By /s/ John Long -------------------------------- Name: John Long Title: |
EXPERIAN INFORMATION SOLUTIONS, INC.
By /s/ D.V. Skilling -------------------------------- Name: D. Van Skilling Title: |
EXHIBIT (10)(f)
EXPERIAN TRANSITION AGREEMENT
This TRANSITION AGREEMENT ("Transition Agreement") is made as of the 30th day of November, 1997 by and among First American Real Estate Solutions LLC, a California limited liability company ("NEWCO"), and EXPERIAN Information Solutions, Inc., an Ohio corporation ("EXPERIAN").
RECITALS
A. NEWCO was formed on or before November 30, 1997 as a limited liability company with First American Real Estate Information Services, Inc. ("FAREISI") and certain of its affiliates, and EXPERIAN, as members. EXPERIAN contributed the assets, liabilities and going business of its Real Estate Solutions business (the "RES Business") and Ten Million Dollars ($10,000,000) cash to NEWCO in return for issuance of a twenty percent (20%) membership interest in NEWCO to EXPERIAN. FAREISI and its affiliates contributed the assets, liabilities and going business of their respective Real Estate Information Service businesses (collectively, the "FAREISI Business") to NEWCO in return for issuance of an eighty percent (80%) membership interest in NEWCO. These contributions and membership interests are the subject of a Contribution and Joint Venture Agreement dated as of November 30, 1997 (the "Joint Venture Agreement") and an Operating Agreement dated as of November 30, 1997 (the "Operating Agreement").
B. The parties have agreed to enter into this Transition Agreement to provide for certain matters relating to the operation of the RES Business by NEWCO following the Closing Date, subject to the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and of other good and valuable consideration, and intending to be legally bound hereby, the parties hereby agree as follows:
TERMS AND CONDITIONS
1.1 Definitions: The Joint Venture Agreement and the Operating Agreement define certain terms. Such terms shall, to the extent not inconsistent with the definitions
contained in this Transition Agreement have the meanings set forth in those agreements, where used herein and identified with initial capital letters.
1.2 Other Definitions, Meanings and Interpretations: For purposes of this Transition Agreement, the term "parties" means (except where the context otherwise requires) NEWCO and EXPERIAN; the term "person" includes any natural person, firm, association, partnership, corporation, limited liability company, governmental agency or other entity other than the parties; and the words "hereof," "herein," "hereby" and other words of similar import refer to this Transition Agreement as a whole. The headings of the Articles and Sections of this Transition Agreement have been included herein for convenience of reference only and shall not be deemed to affect the meaning of the operative provisions of this Transition Agreement. The meanings given to defined terms (whether defined herein or in the Joint Venture and Operating Agreements) shall apply equally to both the singular and plural forms of such terms.
1.3 Relationship with the Joint Venture and Operating Agreements: This Transition Agreement is intended to amplify and supplement the Joint Venture and Operating Agreements. Wherever possible, this Transition Agreement and the Joint Venture and Operating Agreements shall be construed as being consistent. Where particular matters are addressed expressly in this Transition Agreement, the terms and conditions of this Transition Agreement, and not those of the Joint Venture or Operating Agreement, shall govern. Otherwise, the terms and conditions of the Joint Venture and Operating Agreements shall govern.
2.1 Transition of Hired Employees: Except as otherwise specifically provided in Section 2.2, all employees of the RES Business shall, at the Effective Time, automatically become employees of NEWCO as of the Effective Time. All employees of the RES Business automatically hired by NEWCO as of the Effective Time shall be referred to herein as the "Hired Employees." Except as otherwise specifically provided in this Agreement, EXPERIAN shall have no obligations with respect to the Hired Employees after the Effective Time.
2.2 Inactive Employees: Notwithstanding anything in this Transition Agreement, the Joint Venture Agreement or the Operating Agreement to the contrary, EXPERIAN shall (subject to EXPERIAN's policies and procedures) retain all employees of the RES Business who are on leave of absence status (whether paid or unpaid) as of the Effective Time (together with all liabilities related to such retained employees), until such time as EXPERIAN has determined, in good faith and consistent with past practices, that any such person may return to active status. Upon making such determination, EXPERIAN shall promptly notify NEWCO and such employee shall thereafter, upon
reporting to work, automatically become an employee of NEWCO and shall be treated as a Hired Employee for the purposes of this Transition Agreement (and all liabilities thereafter related to such employee shall then be automatically assumed by NEWCO).
2.3 Flexible Spending Accounts: All amounts contributed by Hired Employees for calendar year 1997 into their respective flexible spending accounts maintained under EXPERIAN's Flexible Spending Account Plan (the "EXPERIAN Flexible Spending Accounts") shall be retained as assets of EXPERIAN's Flexible Spending Account Plan. All proper claims for costs incurred prior to the Effective Time submitted by Hired Employees after the Effective Time with respect to their EXPERIAN Flexible Spending Accounts shall be made to, and processed and paid by, EXPERIAN.
2.4 Insurance Plans:
(a) On or before the Effective Time, NEWCO will have set up its own long- medical, vision, dental, life, accidental death and dismemberment, and term disability plans for the Hired Employees (the "NEWCO Plans"), the terms of which plans will be substantially the same as those offered under the insurance plans offered by EXPERIAN (the "EXPERIAN Plans"). As of the Effective Time, EXPERIAN will cease coverage of the Hired Employees under the EXPERIAN Plans and it shall be NEWCO's sole responsibility to cover the Hired Employees under the NEWCO Plans at its expense.
(b) NEWCO hereby acknowledges that neither EXPERIAN nor any of its subsidiaries or affiliates will be at any time with respect to any NEWCO Plan (i) a "fiduciary" (as defined in ERISA) with respect to any NEWCO Plan or (ii) a guarantor of performance of NEWCO with respect to any NEWCO Plan or any administrator, health maintenance organization or other entity providing services to any NEWCO Plan.
2.5 Accrued Vacation: EXPERIAN will transfer to NEWCO the liability for accrued vacation pay of the Hired Employees as of the Effective Time. NEWCO will credit to each Hired Employee the accrued vacation such Hired Employee accrued with EXPERIAN prior to the Effective Time.
2.6 401(k) Plans: As of the Effective Time, the Hired Employees will no longer be entitled to participate in EXPERIAN's 401(k) plan. NEWCO will use its best efforts to cause the Hired Employees to be eligible for a 401(k) plan within ninety (90) days following the Effective Time.
3.1 Disbursement Accounts:
(a) During the period from the Closing Date through the Effective Time (the "Interim Operating Period"), EXPERIAN shall (i) retain the controlled disbursement account maintained by EXPERIAN at First Chicago/National Bank of Detroit and (ii) continue to issue checks on behalf of the RES Business in the ordinary course of business. EXPERIAN will separately account for amounts distributed on behalf of the RES Business.
(b) It is anticipated that NEWCO will not have a disbursement system or disbursement bank account in place by the Effective Time. EXPERIAN will assist NEWCO in processing NEWCO payments subsequent to the Effective Time, as follows:
Prior to the Effective Time, EXPERIAN will open a new disbursement bank account ("EXPERIAN's NEWCO Disbursement Bank Account") to process post-Effective Time payments relating to the RES Business transferred to NEWCO. EXPERIAN will continue to process such accounts payable after the Effective Time, for a fee to be agreed by the parties prior to the Effective Time. The checks for these payments will be written from EXPERIAN's NEWCO Disbursement Bank Account. This bank account will not be run as a controlled disbursement account, and EXPERIAN will not fund this account. EXPERIAN will issue checks from EXPERIAN's NEWCO Disbursement Bank Account only to the extent that funding has been provided to this account by NEWCO in advance. There will be no interest credited to this account. All bank costs and expenses, and earnings credits, relating to the opening and operation of EXPERIAN's NEWCO Disbursement Bank Account will be the responsibility of NEWCO and will be charged directly to the account.
(c) Within ninety (90) days after the Effective Date (the last day of such ninety (90) day period to be known as the "Bank Account Cut-off Date"), NEWCO will have completed all necessary actions to transfer the ownership of EXPERIAN's NEWCO Disbursement Bank Account to NEWCO. Regardless of whether the transfer of ownership of EXPERIAN's NEWCO Disbursement Bank Account to NEWCO has been completed by the Bank Account Cut-off Date, EXPERIAN will cease issuing checks from this account as of the end of the Bank Account Cut-Off Date.
3.3 Payroll Accounts:
(a) During the Interim Period, EXPERIAN shall retain the payroll bank account maintained by EXPERIAN with Bank of America as of the Closing Date. EXPERIAN will (with respect to the RES Business) issue paychecks and make direct payroll deposits from this account for the period from the Closing Date through the end of last payroll period ending prior to the Effective Time. All payroll liabilities of the RES Business for Hired Employees accrued after such time will be transferred to NEWCO at the Effective Time.
(b) It is anticipated that NEWCO will not have a payroll system or payroll bank account in place by the Effective Time. In such event, EXPERIAN will assist NEWCO in processing NEWCO's payroll related to the RES Business subsequent to the Effective Time, as follows:
Prior to the Effective Time, EXPERIAN will open a new payroll bank account ("EXPERIAN's NEWCO Payroll Bank Account") to process NEWCO payroll relating to the RES Business. EXPERIAN will continue to process such payroll after the Effective Time for a fee to be agreed by the parties prior to the Effective Time. These payments will be issued from EXPERIAN's NEWCO Payroll Bank Account. This bank account will not be run as a controlled disbursement account, and EXPERIAN will not fund this account. NEWCO must deposit funds into the account for payroll taxes paid and net payroll one day before each pay day. There will be no interest credited to this account. All bank costs and expenses, and earnings credits, relating to the opening and operation of EXPERIAN's NEWCO Payroll Bank Account will be the responsibility of NEWCO and will be charged directly to the account.
(c) By the Bank Account Cut-off Date, NEWCO will have completed all necessary actions to transfer the ownership of EXPERIAN's NEWCO Payroll Bank Account to NEWCO. Regardless of whether the transfer of ownership of EXPERIAN's NEWCO Payroll Bank Account to NEWCO has been completed by the Bank Account Cut-off Date, EXPERIAN will cease issuing checks and making payments from this account as of the end of the Bank Account Cut-Off Date.
3.4 Petty Cash Accounts: EXPERIAN and NEWCO agree to work with EXPERIAN's banks to cause the escrow and petty cash bank accounts applicable to the RES Business to transfer to NEWCO as of the Effective Time. These accounts are Wells Fargo accounts No. 4159777689, No. 4159777697 and No. 4091219493; US West account No. 5447041194; and Texas Commerce Bank account No. 1816247. Funds in these accounts as of the Effective Time will be the property of NEWCO. EXPERIAN will operate and fund these accounts in the ordinary course of business until the Effective Date.
3.5 Tax and Wage Information: Each Hired Employee will receive one W-2 and one 1099 from EXPERIAN for calendar year 1997.
4.1 Bonuses/Commissions: EXPERIAN's Employee Incentive Plan, Executive Incentive Plan and Sales Compensation Plan accrual account balances through the Effective Time with respect to the Hired Employees shall be transferred to NEWCO at the Effective Time. EXPERIAN shall determine, in good faith and generally consistent with past practice, the actual payout amounts for the Hired Employees under such plans for that portion of fiscal year 1997/1998 up to the Effective Time in accordance with EXPERIAN's normal practices and processes and thereafter deliver such payout information to NEWCO. NEWCO shall distribute such bonuses/commissions, as instructed by EXPERIAN, to the appropriate recipients at such times as NEWCO shall determine (but in no event prior to January 1, 1998). Within five (5) business days following any payment of such bonuses/commissions, EXPERIAN shall reimburse NEWCO for the total costs related to such bonuses/commissions to the extent they relate to the period through November 30, 1997.
4.2 Surety Bonds: As promptly as possible after the Effective Time, NEWCO shall take any and all action necessary to have each surety bond relating to the RES Business which was provided by EXPERIAN to be replaced by a surety bond obtained by NEWCO. If, after the Effective Time, EXPERIAN is required to pay any amounts under any surety bond for actions or inactions on the part of NEWCO or any of its affiliates, then NEWCO shall reimburse EXPERIAN for all amounts paid by EXPERIAN under such surety bond within five (5) business days of receipt from EXPERIAN of a request for the payment of such amounts.
5.1 Certain Existing Purchase Agreements: Prior to the Effective Date, the RES Business received goods and services pursuant to purchase agreements entered into by EXPERIAN on behalf of all of its business units (the "Existing Purchase Agreements"). The Joint Venture and Operating Agreements do not contemplate that NEWCO will be able to continue to obtain goods and services after the Effective Time pursuant to the Existing Purchase Agreements. Therefore, NEWCO shall use its reasonable best efforts to obtain new contracts from such vendors or other vendors on a stand-alone basis as promptly as possible after the Effective Time. In the meantime, however, in order to provide NEWCO with an opportunity to solicit new bids and negotiate new contracts for the goods and services provided under the Existing Purchase Agreements, EXPERIAN shall, if and only to the extent expressly permitted by the terms of the Existing Purchase Agreements, allow NEWCO to purchase goods and services pursuant to the Existing Purchase Agreements for, except as provided below, a period not
to exceed one hundred eighty (180) days after the Effective Date (the "Transition Period"). During the Transition Period, NEWCO shall pay all vendors providing goods or services to it under the Existing Purchase Agreements pursuant to separate purchase orders. Upon expiration of the Transition Period, NEWCO's right to purchase goods and services pursuant to the Existing Purchase Agreements shall terminate and EXPERIAN shall have no further obligations to NEWCO with respect to such agreements. Notwithstanding the foregoing, the Existing Purchase Agreements identified below will be subject to the following specific arrangements:
(a) EXPERIAN shall instruct American Express promptly after the Effective Time that all American Express Corporate Cards (travel and procurement) issued to employees of the RES Business who will become Hired Employees shall be transferred to NEWCO effective as of the Effective Date, and that EXPERIAN shall thereafter have no liability of any kind related to or arising from such credit cards.
(b) The Transition Period with respect to EXPERIAN's Existing Purchase Agreement with AT&T (AT&T Contract Tariff Order dated August 22, 1997) shall expire on the first anniversary of the Effective Date. After the Effective Date and prior to the expiration of the relevant Transition Period, EXPERIAN shall provide NEWCO with an invoice on a monthly basis for AT&T services actually used by NEWCO during such month, plus EXPERIAN's incremental costs, if any, associated with providing the AT&T's services to NEWCO. NEWCO shall reimburse EXPERIAN within thirty (30) days of each such invoice therefor.
6.1 EXPERIAN Support: Prior to the Effective Date, the RES Business purchased software development, engineering and administrative support services from EXPERIAN. As of the Effective Time, EXPERIAN's obligations to provide such services to the RES Business pursuant to these arrangements shall automatically terminate. NEWCO may, however, upon written notice to EXPERIAN within five (5) business days of the Effective Date, request to have the existing arrangements with the RES Business converted into purchase orders with NEWCO. EXPERIAN shall issue such purchase orders provided EXPERIAN and NEWCO agree upon the terms and conditions of such purchase orders.
6.2 Plantation, Florida Lease: EXPERIAN is in the process of selling real property located at 1700/1800 N.W. 66th Avenue, Plantation, Florida (two buildings) (the "Property") to a third party ("Buyer"). The Property will be excluded from the assets of the RES Business being transferred to NEWCO pursuant to the terms of the JV
Agreement. EXPERIAN will be leasing back the portion of the Property located at 1800 N.W. 66th St. (approx. 57,566 square feet) (the "1800 Building") from the Buyer. Pursuant to the term sheet executed by EXPERIAN and the Buyer, the lease on the 1800 Building will be for a two year period commencing on the date of the sale, with the Buyer having the ability to terminate the lease on six months notice after the first year. The lease rate is $7.00 per square foot per annum, triple net. EXPERIAN also will be leasing back the portion of the Property located at 1700 N.W. 66th St. (approx. 41,250 square feet) (the "1700 Building") from the Buyer for a ten (10) week period commencing on the date of the sale, with an option to extend for an additional thirty (30) day period, to be exercised at any time not later than thirty (30) days prior to the expiration of the initial term. The lease rate on the 1700 Building also will be $7.00 per square foot per annum, triple net. EXPERIAN anticipates that the closing of the sale of the Property will take place prior to the Effective Date. As part of the transfer of the EXPERIAN Interests to NEWCO, EXPERIAN's rights as tenant under both of the above-referenced leases will be assigned to NEWCO, and EXPERIAN will be released from all liabilities and obligations under the leases. If the sale of the Property has not closed prior to the Effective Date, EXPERIAN will execute leases with NEWCO substantially on the terms provided for above, which leases will also include the right of EXPERIAN to assign the leases to any buyer of the Property.
7.1 Post-Effective Date Support Arrangements: Each of EXPERIAN and NEWCO anticipate that occasional requests for services regarding tax, payroll, treasury and other matters (including requests to answer specific questions related thereto) may be made by the other party after the Effective Date. Such services shall be provided without charge unless the party receiving such request determines, in its sole discretion, that satisfaction of such request would involve the expenditure of a significant amount of time and/or resources, in which case, such party shall provide to the requesting party an estimate of the costs anticipated to be incurred in satisfying the request, which costs shall include (a) the pro rata portion of the salary and bonus of the employees actually providing the services requested pursuant hereto, (b) reasonable out-of-pocket expenses (evidenced by appropriate documentation) and (c) a payroll expense charge in an amount equal to 23% of the amount of salary billed and 11% of bonus billed, pursuant to clause (a) above. Upon receipt of such estimate, the requesting party shall have two (2) business days in which to notify the other party whether such party should undertake to provide the requested services. If such services are provided, the party providing the services shall deliver to the requesting party an invoice on a monthly basis containing a description of the services performed and the aggregate costs actually incurred in performing such services (which amount may exceed the estimate provided to the
requesting party, provided that in such case, the party providing services shall provide reasonable detail to the requesting party as to the nature of such excess). The invoice shall be paid by the requesting party within thirty (30) days of receipt thereof. Notwithstanding the foregoing, EXPERIAN and NEWCO may from time to time require personnel and other data from the other party related to or required in connection with their maintenance of human resources databases, which information shall be provided to the requesting party without charge. The parties obligation to provide support services pursuant to this Section 7.1 is in addition to any other specific support services commitments agreed to by the parties pursuant to any other agreements, including the Joint Venture and Operating Agreements, and nothing in this Section 7.1 is intended or shall be construed to obligate any party to pay or reimburse any amounts with respect to such other commitments.
8.1 Cooperation: The parties will cooperate in good faith to carry out the purposes of this Transition Agreement. Without limiting the generality of the foregoing, each party will assist the other party and furnish the other party with such information and documentation as the other party may reasonably request.
8.2 Indemnity:
(a) NEWCO agrees to defend, indemnify and hold harmless EXPERIAN and its subsidiaries and affiliates (including, without limitation, their respective officers, directors, employees, shareholders and agents) (collectively, "EXPERIAN Parties") against any and all liabilities, damages, losses, claims, costs and expenses (including, without limitation, costs of collection and reasonable attorneys' fees) (collectively, "Damages") arising out of or resulting from any demand, claim, lawsuit or other cause of action brought by a third party as a result of or in connection with the post-closing services rendered by employees of any EXPERIAN Party pursuant to this Transition Agreement, provided that no EXPERIAN Party shall be entitled to indemnification in respect of its or his gross negligence or willful misconduct.
(b) EXPERIAN hereby agrees to defend, indemnify and hold harmless NEWCO and its subsidiaries and affiliates (including, without limitation, their respective officers, directors, employees, shareholders and agents) (collectively, "NEWCO Parties") against any and all Damages arising out of or resulting from any demand, claim, lawsuit or other cause of action
brought by a third party as a result of or in connection with the post-closing services rendered by employees of any NEWCO Party pursuant to this Transition Agreement, provided that no NEWCO Party shall be entitled to indemnification in respect of its or his gross negligence or willful misconduct.
8.3 No Liability:
8.4 Confidentiality: The parties acknowledge that information concerning the business or operations of any of the other parties received as a result of the operation of this Transition Agreement constitutes confidential information subject to the terms and conditions of the Joint Venture and Operating Agreements.
8.5 Severability: If any provision of this Transition Agreement shall finally be determined to be unlawful, then such provision shall be deemed to be severed from this Transition Agreement and every other provision of this Transition Agreement shall remain in full force and effect.
8.6 Notices: Any notice or other communication required or permitted to be given under this Transition Agreement shall be given in the manner provided in the Joint Venture and Operating Agreements.
8.7 Assignment: This Transition Agreement shall be binding upon and inure to the benefit of the successors of each of the parties, but shall not be assignable by any party without the prior written consent of the other parties.
8.8 No Third Parties: This Transition Agreement is not intended to, and shall not, create any rights in or confer any benefits upon any person other than the parties hereto.
8.9 Governing Law: This Transition Agreement will be governed by and construed in accordance with the internal substantive laws of the State of California, except where the substantive laws of another jurisdiction mandatorily apply.
8.10 Counterparts: More than one counterpart of this Transition Agreement may be executed by the parties hereto, and each fully executed counterpart shall be deemed an original without production of the others.
8.11 Complete Agreement: This Transition Agreement, together with the FAREISI Transition, Joint Venture and Operating Agreements, sets forth the entire understanding of the parties with respect to the subject matter hereof and supersedes all prior letters of intent, agreements, covenants, arrangements, communications, representations, or warranties, whether oral or written, by any officer, employee, or representative or either party relating thereto.
IN WITNESS WHEREOF, the parties have each caused this Transition Agreement to be executed by their respective duly authorized officers as of the date first above written.
FIRST AMERICAN REAL ESTATE SOLUTIONS LLC
By: /s/ Parker S. Kennedy
---------------------
Title:
---------------------
|
EXPERIAN INFORMATION SOLUTIONS, INC.
By: /s/ T.A. Gasparini
---------------------
Title:
---------------------
|
Exhibit (10)(g)
RESELLER SERVICES AGREEMENT
This Reseller Services Agreement (this "Agreement") is entered into effective as of November __, 1997, by and between First American CREDCO, a Washington corporation, having a principal address as set forth at the end of this Agreement ("FAC"), and Experian Information Solutions, Inc., an Ohio corporation acting through its Information Solutions Division ("Experian").
Experian and FAC agree as follows:
Article 1 Term
1.1 Term. Subject to Section 7.2 of this Agreement, this Agreement will continue in force, without any fixed date of termination ("Term").
Article 2 Credit Reporting Services
2.1 Generally. During the Term, FAC may request that Experian provide FAC with the services listed on the attached pricing schedule (hereinafter referred to, together with the information therein, as the "Services") to the extent offered from time to time by Experian and permitted by this Agreement. The Services may consist of consumer identifying information and/or consumer credit information on individual consumers ("Consumers"). Experian hereby grants FAC a nonexclusive, nontransferable limited license to resell the Services consistent with the terms and conditions of this Agreement.
2.2 Method of Performance. FAC will request the Services from Experian by electronic means. Each such request will contain sufficient identifying information concerning the Consumer about whom the information is requested to enable Experian to perform the Services, and will identify in the manner specified by Experian, the fact that the request is being made by FAC.
2.3 Status As Consumer Reporting Agency. For purposes of this Agreement, the parties agree that FAC certifies that it is a "consumer reporting agency" as such term is defined in the federal Fair Credit Reporting Act.
Article 3 Fees
3.1 Generally. With respect to each response from Experian (including each "no record" response) to a request for Services made by FAC, FAC will pay Experian the fees set forth in the attached pricing schedule. Experian and FAC agree to renegotiate the fees on an annual basis (except as agreed on a particular pricing schedule) during the Term based on the calendar year. FAC's payment to Experian is due not later than thirty (30) days after FAC's receipt of Experian's invoice. If FAC does not pay invoiced amounts within this time period, it may, at Experian's option, also pay interest on the unpaid amount at the rate of one and one-half percent (1.5%) per month or the maximum rate allowed by law, whichever is less. FAC's obligation to pay invoiced amounts is absolute and unconditional and not subject to any offset, defense or counterclaim.
3.2 Taxes. The prices and rates for the Services do not include applicable federal, state or local taxes. FAC will be solely responsible for all federal, state, and local taxes levied or assessed in connection with Experian's performance of Services, other than income taxes assessed with respect to Experian's net income. Experian may separately reflect on its invoices to FAC the amount of any taxes paid by Experian on FAC's behalf, and FAC shall pay Experian for such amounts.
Article 4 Use of Experian Information
4.1 Compliance with Law. FAC certifies and warrants that it will comply with all federal, state and local statutes, regulations, and rules applicable to it, including, without limitation, the federal Fair Credit Reporting Act, 15 U.S.C. (S)1681 et seq., as amended ("FCRA"). FAC further warrants that it will require by written contract that its customers comply with the same obligations of compliance with laws.
4.2 Use of Information. FAC agrees to comply with all of the following:
4.2.1 FAC hereby certifies that it will request the Services and the information therein from Experian and resell such to its customers solely for said customers' use in connection with credit granting, collections, employment, insurance underwriting, or governmental licensing transactions between the customer and the Consumer about whom the credit information relates, and will not request, use or resell any such Services or information for any other purpose, regardless of whether permitted by law. FAC will, in reselling the Services, faithfully transmit the information accurately and in its entirety (except to the extent as may be otherwise required by this Agreement or agreed to by Experian in writing for approved merged reports.) FAC certifies that it will provide Experian, at the time it requests the Services or information, the name of the ultimate end user of the credit information and each FCRA permissible purpose for which such information is furnished.
4.2.2 FAC agrees not to resell or otherwise transfer the Services in whole or in part to bail bond companies, investigative companies (i.e., private investigators), attorneys (other than attorneys whose sole and exclusive practice is collections), news agencies or journalists, businesses which operate out of a residence (except as permitted by Experian policies and procedures), credit clinics, credit repair organizations, credit counseling services (except as otherwise set forth in this Agreement), to any company or individual who is known to have been involved in credit fraud or other unethical business practices or to other types of organizations identified by Experian to FAC in writing. Notwithstanding the foregoing, Experian may permit on a case-by-case basis the resale of consumer identifying information to certain of the foregoing in a manner consistent with Experian policy and procedure on the sale of identifying information.
4.2.3 FAC hereby warrants that it will not, either directly or
indirectly, itself or through any agent or third party: (a) request, compile,
store, maintain or use the Services (including any of the information therein)
to build its own database (other than for file comparison purposes as approved
by Experian from time to time); (b) copy or otherwise reproduce the Services
(including any of the information therein) except to the minimal extent
necessary to provide standard consumer assistance or file comparison activities;
(c) resell or transfer the Services (including any of the information) to more
than one person or entity or to any person or entity who is not solely an end
user of the Services (including any of the information therein); (d) resell,
transmit or otherwise make available to any person the Services (including any
of the information therein) on or through the Internet or other generally
accessible network or delivery method without Experian's prior written consent;
or (e) resell or otherwise provide the Services (including any of the
information therein) pursuant to 15 U.S.C. (S)1681u (FCRA Section 625); or (f)
merge the Services (or any of the information therein) with any information from
a consumer reporting agency
other than for the creation of a merged report to be used solely for mortgage reporting, tenant screening, or consumer disclosure pursuant to Section 4.2.5. FAC will disclose to Experian the purpose for which the Services will be used. Based on such disclosure, the pricing set forth in the attached Exhibit A shall apply. FAC shall be solely responsible for assuring the delivery or transmission of information to its customers in a manner that is secure and in compliance with this Agreement.
4.2.4 FAC agrees to verify that each customer who is provided Services is the end user and does not intend to resell or otherwise provide or transfer the Services in whole or in part to any other person or entity. Notwithstanding the foregoing, Exhibit B hereto lists those agents of FAC that are permitted to resell the Services one additional time. The parties must mutually agree in writing to the addition of agents to Exhibit B.
4.2.5 Experian hereby grants to FAC a nonexclusive, nontransferable, limited license to resell directly to the Consumer(s) pursuant to the terms and conditions of the Amendment to Reseller Services Agreement For Resales to Consumers which is attached hereto and made a part hereof. FAC may provide a disclosure copy to a subject Consumer who has been denied a benefit and requested disclosure; provided, however, that FAC will provide only a copy of the information that was provided by FAC to its customer, and will not attempt to access Experian's systems to obtain additional information or copies of the previously provided services. FAC will refer all Customers who have questions or disputes about information in the Services or in Experian's consumer credit files to the telephone number and/or address for Experian's National Consumer Assistance Center (as such are provided to FAC from time to time by Experian, and not to Experian's telephone number for complimentary credit reports). In no event will FAC attempt to, or hold itself out to the consumer or to the public as being able to, handle disputes on behalf of Experian or to reinvestigate information in Experian's files. In no event will FAC attempt to have information on a Consumer's credit or identifying information changed or altered in any way other than by forwarding the customer to Experian's National Consumer Assistance Center.
4.2.6 FAC agrees to sign a "Experian Reseller Employment Report Addendum" before reselling credit information for employment purposes, and FAC agrees to complete and sign the "End User Investigation Requirements - Tenant Screening" before reselling information for tenant screening. FAC certifies that reports on its employees will only be requested by its designated representative approved by Experian, and that its employees will not request Services relating to themselves, their families or friends, or request consumer report information on other persons other than as permitted by the FCRA and Experian policies.
4.2.7 FAC will not act or provide at any time or in any way, and will not hold itself out as providing credit clinic, credit repair, credit counseling or similar services.
4.3 Experian Policies and Procedures. In addition to the requirements set forth in Section 4.2, FAC agrees to the following:
4.3.1 FAC agrees to comply with Experian's policies and procedures as announced by Experian from time to time, including those attached to this Agreement entitled "Experian Permissible Purpose Guidelines for Resellers" and "Experian Permissible Purpose Type Codes." FAC also agrees to conduct a thorough investigation of its customers and potential customers to confirm that each has a "permissible purpose" for receiving the Services, and otherwise complies with applicable laws and Experian policies. FAC's investigation will include at a minimum all of the actions listed on the "End User Investigation Requirements" form, a copy of which is attached hereto, before giving a customer access to the Services. FAC agrees to provide to Experian at Experian's request all materials and information relating to its investigations of its customers.
4.3.2 FAC acknowledges and agrees that Experian may itself, or may require that FAC, block display of account numbers or other information to FAC and FAC's customers, and FAC agrees to not provide such information to its customers.
4.3.3 Experian may from time to time notify FAC of additional, updated or new requirements compliance with which will be a condition of Experian's continued provision of Services to FAC. FAC agrees to comply with such requirements as to which it has received notice from Experian and such shall be incorporated into this Agreement by this reference.
4.3.4 FAC understands and agrees that Experian may require evidence, including a certification, that FAC understands and will comply with applicable laws and Experian policies and procedures.
4.3.5 FAC agrees to obtain at its expense such training and education concerning applicable legal requirements and Experian policies and procedures as Experian may reasonably request. Training made available to FAC by Experian is provided as a service to FAC, and does not replace or waive FAC's compliance obligations under the law or this Agreement. Such training does not constitute, or substitute for, legal advice, and FAC should consult with its own legal counsel.
4.3.6 FAC will institute and maintain strict procedures for assuring that its employees do not furnish the Services (or information therein) except in compliance with the requirements of the FCRA and this Agreement. FAC will provide training and training materials to its customers to the extent necessary to assure compliance with the FCRA and this Agreement. FAC will provide Experian the opportunity to review and approve or disapprove all such materials prior to their use. FAC will enter into written agreements executed by each of FAC's customers requiring compliance by such customers with the terms and conditions of this Agreement. FAC will monitor its customers on an ongoing basis to assure the continued compliance with the requirements of this Agreement by the customer and by FAC and will immediately discontinue the Services to any customer who is not in compliance.
4.3.7 FAC will not mislead consumers or the public, or demean directly or indirectly Experian Inc., its successors or assigns, the Services, other services provided by Experian, the consumer reporting industry, direct marketing industry or other industries in which Experian, its successors and assigns do business. FAC will provide Experian the opportunity to review and approve or disapprove prior to their use or dissemination any and all advertising, marketing, sales and promotional materials, pamphlets, brochures and similar disclosures that relate directly or indirectly to Experian Inc., its successors or assigns, the Services, other services provided by Experian, the consumer reporting industry, direct marketing industry or other industries in which Experian, its successors and assigns do business, or that mention Experian by name.
Article 5 Intellectual Property
5.1 No License. Experian does not transfer, and FAC does not obtain, any patent rights, copyright interest or other right, claim or interest in the computer programs, systems, forms, formats, schedules, manuals or other proprietary items utilized or provided by Experian.
5.2 Restrictions on Use of Proprietary Designations. Neither party will use, or permit their respective employees, agents and subcontractors to use, the trademarks, service marks, logos, names, or any other proprietary designations of the other party, or the other party's affiliates, whether registered or unregistered, without such other party's prior written consent.
5.3 Ownership of Data. FAC acknowledges that Experian has expended substantial time, effort, and funds to collect, arrange and compile Experian's consumer information database and to create and deliver the Services (including the information therein). The Services, the information contained therein, and the data in Experian's consumer information databases are and will continue to be the exclusive property of
Experian. Nothing contained in this Agreement shall be deemed to convey to FAC, or to any other party, any right, title, or interest, including any patent, copyright, or other proprietary right, in or to the data in Experian's consumer information database(s), any database(s) itself or (except to the extent of the limited license granted in Section 2.1 of this Agreement) to the Services and the information therein.
5.4 Confidential Treatment. FAC hereby acknowledges that the Services it receives from Experian under this Agreement include personal information about individual Consumers and, as such, require confidential treatment. In addition, FAC acknowledges that it may receive other proprietary and confidential information of Experian including but not limited to technical, developmental, operating, computer system, software, performance, cost, know-how and process information. FAC warrants to Experian that (a) except as otherwise permitted by this Agreement, it will maintain the information obtained through Experian in strict confidence and will not disclose such information other than to its employees who have a need to know and (b) will use the information only for purposes of this Agreement. Upon termination of this Agreement or at the request of Experian, FAC will promptly return to Experian all Experian confidential information and any copies thereof provided to it. FAC warrants that it will require by written contract that customers receiving such information from FAC comply with the same obligations of nondisclosure.
Article 6 Indemnification and Limitations
6.1 Disclaimer of Warranty. Because the Services involve conveying information
provided to Experian by other sources, Experian cannot and will not, for the fee
charged for the Services, be an insurer or guarantor of the accuracy or
reliability of the Services, data contained in its database, or in the Services.
EXPERIAN DOES NOT GUARANTEE OR WARRANT THE ACCURACY, TIMELINESS, COMPLETENESS,
CURRENTNESS, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF THE
SERVICES, INFORMATION IN THE SERVICES OR THE MEDIA ON OR THROUGH WHICH THE
SERVICES ARE PROVIDED AND SHALL NOT BE LIABLE TO RESELLER OR TO ANY OF THE
RESELLER'S CUSTOMERS FOR ANY LOSS OR INJURY ARISING OUT OF OR CAUSED IN WHOLE OR
IN PART BY EXPERIAN'S ACTS OR OMISSIONS, WHETHER NEGLIGENT OR OTHERWISE, IN
PROCURING, COMPILING, COLLECTING, INTERPRETING, REPORTING, COMMUNICATING OR
DELIVERING THE SERVICES OR INFORMATION THEREIN.
6.2 Indemnification. FAC will indemnify, defend, and hold Experian harmless from and against any and all liabilities, damages, losses, claims, costs and expenses, including reasonable attorneys fees, which may be asserted against or incurred by Experian, arising out of or resulting from the use, disclosure, sale or transfer of the Services (or information therein) by FAC or its customers, or FAC's breach of this Agreement. FAC covenants not to sue or maintain any cause of action, claim, demand, cross-claim, third party action or other form of litigation or arbitration against Experian, its officer's directors, employees, contractors, agents, affiliated bureaus or subscribers arising out of or relating in any way to the Services (or information therein) being blocked by Experian or not being accurate, timely, complete or current.
6.3 Limitation of Liability. FAC acknowledges that Experian maintains a database, updated on a periodic basis, from which FAC obtains and resells Services, and that Experian does not undertake a separate investigation for each inquiry or request for Services made by FAC. FAC also acknowledges that the prices Experian charges FAC for the Services are based upon Experian's expectation that the risk of any loss or injury that may be incurred by use of the Services will be borne by FAC and not Experian. FAC therefore agrees that it is responsible for determining that the Services are in accordance with Experian's obligations under this Agreement. If FAC reasonably determines that the Services do not meet Experian's obligations under this Agreement, FAC shall so notify Experian in writing within ten (10) days after receipt of the Services in question. FAC's failure to so notify Experian shall mean that FAC accepts the Services as is, and Experian will have no liability whatsoever for the Services. If FAC so notifies Experian within ten (10) days after receipt of the Services, then, unless Experian disputes FAC's claim, Experian will, at its option, either reperform the Services in question or issue FAC a credit for the amount
FAC paid to Experian for the nonconforming Services. This reperformance or credit constitutes FAC's sole remedy and Experian's maximum liability for any breach of this Agreement by Experian. If, notwithstanding the above, liability is imposed on Experian, then FAC agrees that Experian's total liability for any or all of FAC's losses or injuries from Experian's acts or omissions under this Agreement, regardless of the nature of the legal or equitable right claimed to have been violated, shall be the lesser of the amount paid by FAC to Experian under this Agreement during the six month period preceding the alleged breach by Experian of this Agreement or Ten Thousand Dollars ($10,000). FAC covenants that it will not sue Experian for any amount greater than permitted by this Agreement and will not seek punitive damages. IN NO EVENT SHALL EXPERIAN BE LIABLE TO RESELLER OR TO ANY CUSTOMER OR THIRD PARTY FOR ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL OR SPECIAL DAMAGES (INCLUDING BUT NOT LIMITED TO DAMAGES TO BUSINESS REPUTATION, LOST BUSINESS OR LOST PROFITS), WHETHER FORESEEABLE OR NOT AND HOWEVER CAUSED, EVEN IF EXPERIAN IS ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
Article 7 Amendments and Termination
7.1 Amendments. This Agreement may be amended only by a written instrument signed by both parties.
7.2 Termination. Notwithstanding any other term in this Agreement, (a) either party may terminate this Agreement by providing ninety (90) days advance written notice to the other; and (b) Experian may unilaterally terminate this Agreement immediately, or take any lesser action Experian believes is appropriate, including but not limited to blocking FAC's access to the Services and/or charging FAC a fee for auditing FAC to ensure compliance, if Experian believes in its sole judgment, that FAC has failed to comply with any of its obligations hereunder, including any obligation under Article 4 of this Agreement.
7.3 Effect of Termination. Upon expiration or termination of this Agreement, the license granted herein will automatically terminate, FAC will cease reselling the Services (and the information therein) and return any Services in its possession to Experian. No termination or expiration will relieve either party of any liability for monetary sums owing to the other. The provisions of Articles 3, 4, 5, 6 and 8 and Sections 7.3 shall survive the expiration or termination of this Agreement.
Article 8 Miscellaneous
8.1 Status. The parties will perform their obligations hereunder as independent contractors. Nothing contained in this Agreement shall be deemed to create any association, partnership, joint venture, or relationship of principal and agent or master and servant between the parties. The parties acknowledge that any and all rights not expressly granted pursuant to this Agreement are reserved to the respective party and that neither party will have any right, power or authority to obligate the other to any contract, term or condition.
8.2 Excusable Delays. Neither party will be liable to the other for any delay or failure in its performance of any of the acts required by this Agreement (other than for payment obligations hereunder) if and to the extent that such delay or failure arises beyond the reasonable control of such party, including, without limitation, acts of God or public enemies, labor disputes, equipment malfunctions, computer downtime, material or component shortages, supplier failures, embargoes, earthquakes, rationing, acts of local, state or national governments or public agencies, utility or communication failures or delays, fire, flood, epidemics, riots and strikes.
8.3 Governing Law, Venue and Attorney's Fees. This Agreement will be governed by and construed in accordance with the internal substantive laws of the State of California, which are intended to supersede any choice of laws rules which might require the application of the laws of another jurisdiction. Both parties hereby consent to the jurisdiction of the courts of California, whether federal, state or local, with respect to actions brought to enforce or interpret this Agreement. Venue for all actions shall be in Orange County, California. The prevailing party in any arbitration, or permitted legal or equitable action, shall be entitled to an award of its reasonable attorneys' fees and costs.
8.4 Severability. This Agreement shall be deemed to be severable and, if any provision of this Agreement shall be finally determined to be void, illegal or unenforceable, then it is the parties' desire and intention that such provision be deemed automatically adjusted to the minimum extent necessary to conform to applicable requirements of validity, legality and enforceability and, as so adjusted, be deemed a provision of this Agreement as if it were originally included herein; provided, however, if such provision cannot be adjusted without substantially and materially altering the rights and duties hereunder and fundamentally depriving one party of the benefit of the bargain (taken as a whole) contemplated by this Agreement, then the parties will seek to reform this Agreement through the procedure outlined in Section 8.7 (Dispute Resolution) hereof so as to restore, as nearly as possible, the parties' respective rights, duties, and bargain. In any case, the remaining provisions of this Agreement shall remain in effect.
8.5 Successors and Assigns. This Agreement will be binding upon and inure to
the benefit of the parties hereto and to their respective heirs,
representatives, successors, and permitted assignees. This Agreement may not be
assigned, transferred, shared or divided in whole, or in part, by FAC without
Experian's prior written consent. The dissolution, merger, consolidation,
reorganization, sale or other transfer of assets, properties, or controlling
interest of FAC constitutes an assignment of this Agreement for purposes of this
Section 8.5.
8.6 Audit Rights. Experian will have the right to audit FAC and FAC's customers to assure compliance with the terms of this Agreement. FAC will provide full cooperation, and will be responsible for assuring full cooperation by its employees and customers, in connection with such audits. FAC will provide Experian or obtain for Experian access to such properties, records and personnel as Experian may reasonably require for such purpose.
8.7 Dispute Resolution. With the exception of any action taken under Articles 4 and 5 of this Agreement, the parties will resolve any dispute arising out of or relating to this Agreement in a binding arbitration conducted under the auspices of the American Arbitration Association in Orange County, California. Notwithstanding the foregoing, FAC agrees that its failure to comply with the provisions of Articles 4 and 5 will cause irreparable harm to Experian that cannot be adequately compensated in damages and that Experian may seek equitable relief and pursue other remedies to prevent such noncompliance.
8.8 Waiver. Either party may at any time waive compliance by the other with any covenant or condition contained in this Agreement, but only by written instrument signed by the party waiving such compliance. No waiver of any provision of this Agreement shall be deemed to be, or shall constitute, a waiver of any other provision hereof, nor shall such waiver constitute a waiver in any other instance.
8.9 Retention of Rights. Nothing in this Agreement is intended to or shall limit or restrict Experian's ability to market and sell its services, the geographic areas in which or the customers to whom Experian may market or sell its services.
8.10 Publicity. Except as specifically permitted by Experian in writing, under no circumstances will FAC disclose to any third party, directly or indirectly, the terms and conditions of this Agreement.
8.11 No Third Parties. Nothing in this Agreement, whether express or implied, is intended to confer upon any person other than the parties hereto and their respective heirs, representatives, successors and permitted assigns, any rights or remedies under or by reason of this Agreement, nor is anything in this Agreement intended to relieve or discharge the liability of any party hereto.
8.12 Notice. All notices required or permitted to be provided to a party under this Agreement must be in writing and sent to the address for the party set forth on the last page of this Agreement, unless such address has been changed by prior written notice to the other party to the Agreement.
8.13 Subject Headings. The subject headings or captions of the articles and sections of this Agreement are included solely for purposes of convenience and reference and will not be deemed to explain, modify, limit, amplify or aid in the meaning, construction or interpretation of any of the provisions of this Agreement.
8.14 Contract in Entirety. This Agreement (including the exhibits, amendments and addenda hereto which are incorporated herein by this reference) sets forth the entire understanding of the parties hereto with respect to the subject matter hereof and supersedes all prior and contemporaneous letters of intent, agreements, covenants, negotiations, arrangements, communications, representations, understandings or warranties, whether oral or written, by any officer, employee, or representative of either party relating thereto. There are no other understandings, statements, promises or inducements, oral or otherwise, contrary to the terms of this Agreement.
[Signatures follow]
IN WITNESS WHEREOF, each of FAC and Experian has caused this Reseller Services Agreement to be executed by its duly authorized representative as of the date first above written.
First American CREDCO Experian Information Solutions, Inc., By and
"FAC" Through Its Information Solutions Division
By: /s/ Parker S. Kennedy By: D.V. Skilling
------------------------------------- ----------------------------------------
(Signature) (Signature)
Name: Parker S. Kennedy Name: D. Van Skilling
----------------------------------- -------------------------------------
(Print or Type Name of Signer) (Print or Type Name of Signer)
Title: Title:
------------------------------------ -------------------------------------
(Print or Type) (Print or Type)
Address: Address: Experian National Resource Center
------------------------------------ 425 Martingale Road, Suite 600
-------------------------------------------- Schaumburg, Illinois 60173
-------------------------------------------- Telephone: (800) 831-5614
-------------------------------------------- Facsimile: (847) 240-9149
|
EXHIBIT A
TO
RESELLER SERVICES AGREEMENT
Pricing
-------
* Risk Scores $ .09 per score
* Address Update $ .72 per unit
* Social Search $ .72 per unit
* Direct to Consumer Report $1.90
* Direct to Consumer FACS+ $ .10 (mandatory use)
* All other FACS+ $ .05
* Quest - Rates quoted 5/15/96 (No Charge if "late")
- Credit Reports
Annual Volume Per Report Rate
First 5,000,000 Reports $ .99
Next 1,500,000 Reports $ .94
Next 1,500,000 Reports $ .89
Next 1,500,000 Reports $ .84
Over 9,500,000 Reports $1.50
|
* Three (3) year term for this pricing schedule beginning 07/97.
* Close coordination to ensure prompt payment of receivables.
* CREDCO provides management focal point for security issues.
* CREDCO will provide two (2) years of historical Residential Mortgage Credit
Report employment data plus new RMCR employment data developed during the
term of the agreement. A mutually agreed upon format, and media will be
worked out.
* Experian will receive 10 metropolitan area file comparisons per year from
CREDCO's CBAS system.
* CREDCO will pay the Experian surcharge for Colorado reports of $1.39.
* A zip table review of Experian utilization in major U.S. markets will be
collaborated upon.
* CREDCO acknowledges receipt of a $52,000 credit for SMS billing in May and
June of 1997.
* CREDCO acknowledges payment by Experian of all penalties due for system
outages.
The following agreements are effective until October 31, 1998. The parties will meet on or about July 1, 1998 to negotiate in good faith with respect to the continuation of such provisions:
* There will be no vendor penalties to Experian for system downtime.
* Experian shall be the default vendor in the automotive single file
environment.
* The parties agree to allow for "Direct to Consumer" price negotiations in
certain competitive situations.
* The charge for all credit reports over 8,000,000 reports in annual volume will
be $0.84.
EXHIBIT B
TO
RESELLER SERVICES AGREEMENT
The following agents of FAC are permitted to resell the Services one additional time:
Reynolds & Reynolds
CreditCheck, Inc.
Comp-U-Card
American Bankers Insurance
Exhibit (10)(h)
This Amendment To Reseller Services Agreement For Resales To Consumers (the "Amendment") is entered into effective as of November __, 1997, by and between the undersigned FAC and the Information Solutions Division of Experian Information Solutions, Inc.
A. WHEREAS, the parties have entered into a Reseller Services Agreement (the "Agreement"), which prohibits FAC from selling Experian Services (and the information contained therein) to consumers; and
B. WHEREAS, the parties wish to amend the Agreement as set forth herein.
NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, and intending to be legally bound, Experian and FAC hereby agree as follows:
1. License. Section 4.2.5 of the Agreement is hereby amended such that FAC is permitted and granted a nonexclusive, nontransferable, limited license to resell, on the terms and conditions set forth in this Amendment, Services obtained by FAC from Experian under the Agreement directly to the Consumer(s) about whom the information in the Services relate (each such Consumer, the "Inquiring Consumer").
2. Method of Delivery. FAC may only provide the Services (i) by hand delivery to an Inquiring Consumer who is requesting his or her consumer credit information in person at FAC's place of business or (ii) by United States mail service or nationally recognized overnight delivery service to the then most current address in the Experian Services for such Inquiring Consumer (or most reliable address otherwise available from Experian or one of the other two national consumer reporting agencies for the Inquiring Consumer). FAC is specifically prohibited from providing the Services (a) to a person other than the Inquiring Consumer; (b) other than to the address for the Inquiring Consumer obtained as provided in this Amendment; or (c) by facsimile transmission, Internet transmission or other method not expressly permitted in this Agreement or previously approved in writing by Experian. FAC agrees to maintain trained personnel at each of its places of business authorized to resell directly to Consumers, and to have one or more toll free telephone numbers and lines dedicated to supporting resales to Consumers as may be necessary to assure prompt and proficient service levels. FAC's personnel must at a minimum meet the training requirements established by Experian.
3. Authorization of Consumer. FAC agrees that it shall only request Services for resale directly to an Inquiring Consumer after FAC has obtained from the Inquiring Consumer written instructions, signed by the Inquiring Consumer, authorizing FAC to request and receive from Experian that Consumer's credit information for resale to the Inquiring Consumer. FAC agrees to maintain originally executed copies of such written instructions for a minimum of two (2) years.
4. Verification of Consumer Identity. FAC agrees to verify the identity of the Inquiring Consumer prior to reselling or otherwise providing the Services to such Inquiring Consumer. FAC agrees that it will follow at a minimum those procedures for verifying identification set forth in Experian's policies and procedures, as such are amended from time to time (or as is previously approved in writing by Experian), including but not limited to purchasing the Experian FACS+ Service with each inquiry.
5. Fees. For each response from Experian to a request for Services to be resold by FAC to an Inquiring Consumer, FAC will pay to Experian the fees set forth on the pricing schedule attached to the Agreement or to this Amendment, as applicable. Each FAC who engages in transactions with Consumers other than or in addition to face-to-face transactions agrees to purchase from, and to pay Experian for, at least Two Thousand Five Hundred Dollars ($2,500.00) per month for Services to be resold to Consumers. Payments to Experian hereunder shall be made pursuant to the terms of Article 3 of the Agreement.
6. Restriction on Use. FAC will fully and accurately convey the Services (and the information therein) to the Inquiring Consumer, and will do so as quickly as reasonably possible, but in no event later than three (3) business days after receipt of the Services from Experian. FAC will maintain, display and furnish the Services (and the information therein) separate and distinct from all information and services not provided by Experian unless FAC has obtained Experian's prior written approval. FAC will not copy any of the Services (or the information therein) provided to FAC by Experian for resale to an Inquiring Consumer and, once the Services are provided to the Inquiring Consumer, FAC will not retain the Services (or information therein) in any manner or form except to the extent necessary to, and for the sole purpose of, demonstrating compliance with legal requirements. FAC agrees and certifies that it will not reuse or use in whole or in part for any other purpose, the Services provided to it for resale to an Inquiring Consumer.
7. Referral of Consumer Disputes and Questions. FAC will fully comply with the provisions of Section 4.2.5 of the Agreement related to referral of Consumer disputes and questions.
8. Disclosures to Consumers. FAC will implement adequate safeguards and measures to assure Consumers' privacy with respect to the Services and to inform Consumers of their rights under the FCRA and companion state and local laws and regulations. FAC will provide notice(s) to Consumers to the extent and in the manner required by Experian, for example to comply with state and federal deceptive trade practices acts or similar laws and regulations. Specifically, FAC will provide a notice to each Inquiring Consumer, simultaneously with providing the Services to the Inquiring Consumer, that sets forth in prominent, bold-faced type the following:
8.1 The FCRA allows the Consumer to obtain a copy of his or her credit report from any consumer credit reporting agency for a reasonable charge;
8.2 If the Consumer has been rejected for credit in the past thirty
(30) days as a result of his or her consumer credit report, the Consumer is
entitled to receive a disclosure of the nature and substance of all information
in his or her file directly from the consumer credit reporting agency free of
charge;
8.3 The FCRA permits Consumers to dispute inaccurate information in their credit file. Accurate information cannot be changed;
8.4 Experian's policy is to make available to Consumers one complimentary copy of the consumer credit report per year upon request of the Consumer;
8.5 The Consumer does not have to purchase the Services or other information or services from FAC to dispute inaccurate information in the Consumer's Experian file or to receive a copy of the Consumer's Experian consumer credit report;
8.6 Experian's National Consumer Assistance Center provides proprietary consumer disclosure in the form of a "consumer friendly" report that is different from the report provided by FAC as part of the Services. The proprietary "consumer friendly" report must be obtained by the Inquiring Consumer directly from Experian.
8.7 Consumer's residing in the States of Massachusetts, Maryland and Vermont may receive a free copy of their consumer credit report once per year and residents of the State of Georgia may receive two copies per year.
9. Form of Advertising. In addition to the requirements on advertising set forth in Section 4.3.7 of the Agreement, FAC will not use scare tactics or play upon the fears of Consumers, whether in its advertising materials or otherwise, in an effort to directly or indirectly sell the Services or other goods or services offered by FAC.
10. Advertising Approval. Notwithstanding the requirements in Section 4.3.7 of the Agreement, FAC will actually submit to Experian for Experian's prior written approval, written copies of all of FAC's
advertising, promotional, and marketing materials, pamphlets, brochures and similar disclosures, and any changes thereto, related to Experian Inc., its successors or assigns, the Services, other services provided by Experian, the consumer reporting industry, direct marketing industry or other industries in which Experian, its successors and assigns do business, or that mention Experian by name. Experian may approve or disapprove of any submission, in whole or in part, in its sole and absolute discretion. If Experian disapproves of a submission, FAC will not continue to resubmit the submission without changes designed to address the causes of Experian's disapproval. FAC will not disseminate, communicate or otherwise disclose any advertising, promotional, and marketing materials, pamphlets, brochures and similar disclosures until it has obtained Experian's prior written approval. FAC agrees to comply with any additional advertising policies or related guidelines requested of it by Experian.
11. Information Suppression. Experian will have the right to block or otherwise prevent the display or disclosure of information, including but not limited to Experian account numbers, subcodes and social security numbers, and to otherwise change the format of Services provided to FAC for resale to Consumers.
12. Policies and Procedures. FAC agrees to comply with all Experian policies and procedures as announced by Experian from time to time related to the sale of Services directly to Consumers, even if such policies and procedures are in addition to legal requirements and/or Experian policies and procedures applicable to the sale of Services to other persons.
13. Training and Certification. FAC may only resell Services to Inquiring Consumers if FAC meets the applicable requirements of the Agreement, including all training and certification requirements. FAC understands that Experian may require training and certification of FAC in addition to that required of FAC under the Agreement and agrees to obtain all such training and certifications prior to reselling or otherwise providing Services to Consumers. FAC agrees that Experian may change such training and certification at any time, and FAC agrees to obtain such additional training and certification as soon as reasonably possible after request by Experian.
14. Amendment Termination. Notwithstanding any other term in this
Amendment, (a) either party may terminate this Amendment by providing thirty
(30) days advance written notice to the other; and (b) Experian may unilaterally
terminate this Amendment immediately, or take any lesser action Experian
believes is appropriate, including but not limited to blocking FAC's access to
the Services and/or charging FAC a fee for auditing FAC to ensure compliance, if
Experian believes in its sole judgment that FAC has failed to comply with any of
its obligations hereunder or under the Agreement. In the event of such
termination, FAC will cease selling or otherwise providing Services to
Consumers. Failure to cease such activities shall be a breach of the Agreement
permitting Experian to terminate the Agreement in whole or in part pursuant to
Section 7.2 thereof. In addition, this Amendment will automatically terminate
without additional action upon termination of the Agreement.
15. Miscellaneous. All terms and conditions of the Agreement not specifically addressed in this Amendment shall remain unchanged and in full force and effect. In the event of any express conflict or inconsistency between the provisions of this Amendment and the provisions of the Agreement, the provisions of this Amendment will govern and control; provided, however, that the provisions of this Amendment will be so construed to give effect to the applicable provisions of the Agreement to the fullest extent possible. All terms not defined herein beginning with an initial capital letter will have the meaning set forth in the Agreement (or an Appendix thereto).
16. Entire Agreement. This Amendment sets forth the entire understanding of the parties with respect to the subject matter hereof and supersedes all prior agreements (except the Agreement to the extent indicated in Section 15 above), letters, covenants, arrangements, communications, representations, whether oral or written, by any representative of either party.
[Signatures follow]
IN WITNESS WHEREOF, each of FAC and Experian has caused this Amendment to be executed by its respective duly authorized officer as of the date first written above.
First American CREDCO Experian Information Solutions, Inc.
By and Through Its
Information Solutions Division
By: /s/ Parker S. Kennedy By: /s/ D.V. Skilling
--------------------- ----------------------
Signature Signature
Name: Parker S. Kennedy Name: D. Van Skilling
-------------------- ---------------------
Print or Type Print or Type
Title: Title:
------------------- --------------------
Print of Type Print or Type
|
EXHIBIT (10)(i)
TRADEMARK LICENSE AGREEMENT
This TRADEMARK LICENSE AGREEMENT ("Agreement") is made this ___ day of November, 1997 by and between Experian Information Solutions, Inc., an Ohio corporation ("Licensor"), and First American Real Estate Solutions, LLC, a California limited liability company ("Licensee").
RECITALS
WHEREAS, Licensor and The First American Financial Corporation ("FAFCO"), First American Real Estate Information Services, Inc. ("FAREISI") and various subsidiaries and affiliates of FAREISI (FAREISI and its subsidiaries and affiliates are collectively referred to as the "FAFCO Members") are parties to a Contribution and Joint Venture Agreement dated as of November ___, 1997 (the "JV Agreement") whereby Licensor and the FAFCO Members will jointly contribute assets to, and jointly own, Licensee; and
WHEREAS, Licensor has been engaged in developing and marketing a broad range of information products and services, and is the owner of the "Experian" name and the "Experian" trademark and service mark and logo associated therewith (such Experian mark and logo and the use of the Experian mark as a prefix in a secondary mark with another component used by Experian or its related and affiliated entities shall hereinafter be collectively referred to as the "Trademark") that identifies its various businesses, products and services including those of the RES Business (as defined in the JV Agreement) and symbolizes the goodwill and reputation of the business connected therewith throughout the world; and
WHEREAS, Licensee recognizes the worldwide marketing value of Licensor's goodwill and reputation as symbolized by the Trademark and is desirous of using the Trademark in the RES Business that is being contributed to Licensee pursuant to the JV Agreement and benefiting from its goodwill and reputation in connection with Licensee's business; and
WHEREAS, Licensee acknowledges that the reputation and goodwill as symbolized by the Experian name and Trademark are of great value to Licensor and that Licensor will suffer great and irreparable damage if Licensee engages in any activity or course of conduct which threatens to diminish or negatively impact Licensor's goodwill or reputation; and
WHEREAS, the execution and delivery of this Agreement is a condition to the Closing of the transactions contemplated by the JV Agreement; and
WHEREAS, Licensor has imposed certain terms and conditions as to the use of the Trademark which Licensee has accepted in order to protect Licensor's rights; and
WHEREAS, the Parties wish to provide formal evidence of their agreement.
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which are hereby acknowledged, it is mutually agreed as follows:
1. Definitions. Terms defined in the JV Agreement and not otherwise defined herein are used herein as such terms are defined in the JV Agreement.
"Products and/or Services" shall mean the products and services sold or provided by Licensee in the conduct of the RES Business following the Closing that are (i) the products and services sold or provided by Licensor through its RES Business prior to the Closing, (ii) the products and services of Licensor substantially developed by Licensor through its RES Business as of the Closing, and (iii) with Licensor's prior written approval, products or services that are substantially similar to the products and services sold or provided and/or substantially developed for sale by Licensor prior to the Closing.
2. Grant of License. Subject to the terms and conditions hereinafter set forth, Licensor hereby grants to Licensee the right to use the Trademark in association with selling the Products and/or Services. Licensee shall during the term of this Agreement, identify itself by stating its organized or trade name on all the Products and/or Services and related promotions, advertising and public announcements.
3. Royalty. So long as Licensee shall have the right to use the Trademark as provided for herein (whether or not Licensee actually uses the Trademark), Licensee shall pay to Licensor .2% of Licensee's gross revenues, as computed under US GAAP. Such royalty payments shall be made each calendar quarter, within thirty (30) days of the conclusion of the previous quarter.
4. Term. This Agreement shall continue in full force and effect so long as Licensor or an affiliate of Licensor maintains an ownership interest in Licensee, unless sooner terminated as provided below.
5. Limitations. Notwithstanding anything in this Agreement, expressed or implied, to the contrary:
(a) Except as provided in Section 2, Licensee may not use the Trademark as part of any corporate, business or trading name.
(b) Licensee may not use the Trademark other than in connection with the Products and/or Services and as allowed under Section 2 hereof. With respect to any other products or services, Licensee shall use its own name and marks.
(c) Licensee may not change, modify or alter the Trademark in any manner in connection with Licensee's use of the Trademark as provided for herein.
(d) Licensee may not assign its rights or obligations under this Agreement to any other person or entity without the express prior written approval of Licensor, which Licensor may withhold in its sole and absolute discretion.
(e) Any and all use of the Trademark by Licensee shall inure to the benefit of Licensor and Licensee acknowledges that Licensor owns all right, title and interest to the Trademark and, except as set forth in this Agreement, reserves all rights thereto, specifically including, without limitation, all rights to license or authorize use of the Trademark.
(f) Following the Closing, Licensee shall be permitted to utilize in the conduct of the RES Business all inventories, existing as of the Closing, of marketing materials related to the RES Business, including brochures, product and service descriptions, catalogs and similar material, manuals, instruction materials, packaging and other printed material with or without modifying the same, provided that Licensee uses reasonable efforts to advise the users and/or recipients that the new source of such Products and/or Services is Licensee and not Licensor.
6. Quality Control. In order to assure the quality and nature of the Products and/or Services bearing the Trademark and protect the reputation of Licensor:
(a) Licensor acknowledges that the quality standards, specifications, and related policies, procedures and processes for products and/or services bearing the Trademark as of the Closing (the "Standards") are deemed acceptable to Licensor and, for so long as Licensee continues to use the Trademark, Licensee agrees to continue to maintain the quality of the Products and/or Services bearing the Trademark consistent with Licensor's Standards in effect prior to the Closing.
(b) For so long as Licensee continues to use the Trademark, and upon request of Licensor, but not more than once each calendar quarter during the term of this Agreement, Licensee shall make available for Licensor's review copies of all material complaints, claims, suggestions and regulatory or judicial inquiries, requests, recommendations, actions or orders ("Comments") as to the Products and/or Services bearing the Trademark as embodied in any medium of tangible expression from third parties received by Licensee, and all correspondence from or to such third party concerning any Comments received during the preceding quarter.
(c) For so long as Licensee continues to use the Trademark, Licensor shall have the right to enter Licensee's premises, upon reasonable prior notice during regular business hours, and have the right to inspect and examine the Products and/or Services bearing the Trademark and to review all records of Licensee
relating to the quality of the Products and/or Services bearing the Trademark. Licensor shall be able to exercise such right, as a minimum, every four months and in any case where an event may arise that, in its reasonable good faith judgment, requires such on-site review. Licensor shall conduct such activities in a manner not to interfere with Licensee's business operations.
(d) In the event that any Products and/or Services bearing the Trademark are found by Licensor or its designee not to meet the Standards, Licensor shall so notify Licensee in writing. Licensor shall specify to Licensee in reasonable detail the respects in which the Standards are not being met and, unless Licensee, within sixty (60) days of its receipt of such notice, takes corrective measures which reasonably rectify the deficiency, Licensee's right to use the Trademark shall immediately terminate upon notice to that effect from Licensor and this Agreement shall thereupon terminate.
7. Intellectual Property Control. (i) For so long as Licensee continues to use the Trademark, Licensee undertakes to use reasonable efforts to cooperate with Licensor, at Licensor's expense, in protecting the Trademark. In furtherance of such purposes Licensee shall:
(a) Use the Trademark only in accordance with the terms of this Agreement;
(b) Affix appropriate trademark and service mark notations (e.g., "TM" or "(R)") and wording and otherwise make proper use of the Trademark by using it as a proprietary trademark and/or service mark, and indicating that the Trademark is owned by Licensor and used by Licensee with Licensor's permission on all promotional and advertising materials and Products and/or Services;
(c) Not use any name, mark, device, symbol, insignia, designation, labeling or packaging in connection with the Trademark, other than such of the foregoing as Licensee may from time to time use in the ordinary course of Licensee's conduct of the RES Business, without the prior written approval of Licensor, and not apply to register the Trademark in any manner anywhere in the world, with or without a secondary component;
(d) Comply with all applicable laws and regulations with respect to the production, distribution and sale of the Products and/or Services; and
(e) Execute such documents and take such reasonable actions as may be required by Licensor in connection with the protection of the Trademark and the registrations thereof, including, without limitation, cooperate with Licensor in executing and filing Registered User Agreements as necessary or desirable, and in applying to register and renew registrations of the Trademark in such classes and countries as Licensor may wish to do so in its sole discretion.
(ii) For so long as Licensee continues to use the Trademark, each of Licensee and Licensor shall promptly provide the other written notice in the event either party becomes aware of any actual or threatened use of the Trademark by any third party. In such event, Licensor shall have the first right at its own expense, to take such action, including the initiation of legal proceedings, to prevent and terminate such use. If within ninety (90) days, Licensor elects not to pursue any action, Licensee shall then have the right, at its own expense, to take such action, including the initiation of legal proceedings, to prevent and terminate such use. The party conducting such action shall control its conduct and the other party shall cooperate in any such proceeding, such cooperation to include, without limitation, the joining of the other party as a party to the action when either party is required to do so by law in order to bring the action. Any recovery in any such action or proceeding shall first be paid to reimburse the parties for their respective out-of-pocket expenses associated with such action or proceeding (such amounts to be paid on a pro rata basis in the event any recovery is less than the total of the parties' out-of-pocket expenses) and any remaining recovery shall be paid to Licensor.
(iii) Licensor shall, at its own expense, file all applications, affidavits and other documents necessary to maintain the effective registration of the Trademark in the United States Patent and Trademark Office and in each other country in which the Trademark is registered on the date of the Closing, but Licensor and/or Licensee shall not apply to register any marks that include the Trademark in connection with the RES Business.
8. Termination. Notwithstanding anything to the contrary, this Agreement shall automatically terminate without notice immediately upon Licensor or any affiliate of Licensor no longer having an ownership interest in Licensee, or upon notice by Licensor to Licensee upon the occurrence of any of the following events:
(a) Breach by Licensee of the Royalty payment provision contained in
Section 3 of this Agreement, which breach is not cured within ten (10)
days after Licensee's receipt of written notice setting forth the
particular breach.
(b) Breach by Licensee of any other term or condition of this Agreement, which breach is not cured within sixty (60) days after Licensee's receipt of written notice setting forth the particular breach. It is expressly understood that breach of the Standards shall be governed by the provisions of Section 6(d).
(c) Any assignment of Licensee's assets or business for the benefit of creditors, or appointment of a trustee or receiver, or like official to administer or conduct the business of Licensee or adjudication in any legal proceeding that Licensee is either insolvent or otherwise unable to meet its financial obligations as they become due or is a voluntary or involuntary bankrupt.
(d) Licensee or all or substantially all of its operations or assets are sold or assigned, or are confiscated, nationalized or expropriated or in any other manner controlled, either
directly or indirectly, by any government, national, state or municipal, or any agency thereof.
(e) Licensee engages in any course of conduct or activities which generate materially negative publicity asserting that Licensee's business practices do not conform to applicable law or standard industry practices and the Trademark or Experian name, mark and/or logo is referenced in a negative manner in two or more print or television or radio media over the course of any week or is the subject of significant use on the Internet over the course of any week and which negative publicity is not responded to by Licensee in a reasonable period after Licensee receives notice of such from Licensor with Licensee's press releases and written responses directly to the media outlets creating such publicity, and if appropriate, to the customer, consumer or government agency that is the subject of such publicity and/or with published advertisements of Licensee. Such press releases, responses and/or advertisements of Licensee shall (i) announce that corrective action is being undertaken, if in Licensee's reasonable judgment that is necessary or desirable to maintain legal and industry standards, and (ii) clarify, among other things, that Licensee is a separate legal entity that has acquired the RES Business which was formerly Licensor's and which RES Business is no longer operated by Licensor.
9. Rights Upon Termination. The parties expressly agree that upon termination or expiration of this Agreement, Licensee's right to make any use whatsoever of the Trademark shall immediately and permanently cease. Licensee shall thereafter immediately and permanently discontinue any and all further use of the Trademark and take any further steps, at Licensor's expense, reasonably required to effectuate and confirm the exclusive rights of Licensor in and to the Trademark throughout the world. To that end, Licensee shall immediately execute any and all appropriate documents and shall also assist Licensor in terminating any agreements and registrations by which any other party has used the Trademarks. Specifically, without limitation of the foregoing, Licensee shall cooperate fully and assist Licensor, at Licensor's expense, in protecting the Trademark and the registrations thereof throughout the world.
10. Failure to Enforce Agreement. Any failure by Licensor to enforce at any time or for any period of time any term or condition of this Agreement shall not be deemed a waiver of such term or condition or of any other term or condition or of any subsequent breach of any term or condition.
11. Notice. All notices and communications required or permitted to be given under this Agreement will be deemed to have been duly given at the time of receipt if delivered by hand or communicated by electronic transmission or, if mailed, three (3) days after deposit in the U. S. mail as registered or certified, postage prepaid and addressed to the other party at their respective addresses set forth below, unless a different person or address shall have been designated by notice:
To Licensee: First American Real Estate Solutions LLC 150 Second Avenue, Suite 1600 St. Petersburg, Florida 33701 Telefax: (813) 895-3619 Attention: President
To Licensor: Experian Information Solutions, Inc. 505 City Parkway West, 10th Floor Orange, California 92868 Telefax: (714) 938-2513 Attention: General Counsel
12. Successors. This Agreement shall be binding on the successors to the parties hereto subject to the provisions of Paragraph 5(c).
13. Entire Agreement. This Agreement, which may not be amended or modified, except in writing executed by both parties, is the entire Agreement between the parties with respect to its subject matter hereof and supersedes all prior agreements, covenants, arrangements, communications, representations or warranties between the parties with respect to the subject matter hereof, whether written or oral.
14. Survival of Obligations. Other provisions hereof notwithstanding, any obligation of a party incurred under this Agreement prior to the termination or expiration hereof will survive such termination or expiration.
15. Headings. The headings and titles to the paragraphs of this Agreement are inserted for convenience only and will not be deemed a part hereof or affect the construction or interpretation of any provision hereof.
16. Controlling Law. This Agreement shall be construed, interpreted and enforced according to the laws of the State of California.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized representatives as of the day and year first above written.
Licensor:
Experian Information Solutions, Inc.
By: /s/ D. V. Skilling
--------------------------------
Name: D. Van. Skilling
--------------------------------
Title:
--------------------------------
|
Licensee:
First American Real Estate Solutions LLC
By: /s/ Parker S. Kennedy
---------------------------------
Name: Parker S. Kennedy
---------------------------------
Title:
---------------------------------
|
| ARTICLE 7 |
| PERIOD TYPE | 3 MOS |
| FISCAL YEAR END | DEC 31 1998 |
| PERIOD START | JAN 01 1998 |
| PERIOD END | MAR 31 1998 |
| DEBT HELD FOR SALE | 140,933,000 |
| DEBT CARRYING VALUE | 0 |
| DEBT MARKET VALUE | 0 |
| EQUITIES | 20,481,000 |
| MORTGAGE | 0 |
| REAL ESTATE | 0 |
| TOTAL INVEST | 224,261,000 |
| CASH | 211,687,000 |
| RECOVER REINSURE | 0 |
| DEFERRED ACQUISITION | 25,171,000 |
| TOTAL ASSETS | 1,298,955,000 |
| POLICY LOSSES | 252,927,000 |
| UNEARNED PREMIUMS | 0 |
| POLICY OTHER | 0 |
| POLICY HOLDER FUNDS | 0 |
| NOTES PAYABLE | 39,149,000 |
| PREFERRED MANDATORY | 0 |
| PREFERRED | 0 |
| COMMON | 17,581,000 |
| OTHER SE | 445,768,000 |
| TOTAL LIABILITY AND EQUITY | 1,298,955,000 |
| PREMIUMS | 561,614,000 |
| INVESTMENT INCOME | 7,608,000 |
| INVESTMENT GAINS | 35,827,000 |
| OTHER INCOME | 0 |
| BENEFITS | 27,328,000 |
| UNDERWRITING AMORTIZATION | 0 |
| UNDERWRITING OTHER | 0 |
| INCOME PRETAX | 74,365,000 |
| INCOME TAX | 29,400,000 |
| INCOME CONTINUING | 44,965,000 |
| DISCONTINUED | 0 |
| EXTRAORDINARY | 0 |
| CHANGES | 0 |
| NET INCOME | 44,965,000 |
| EPS PRIMARY | 2.57 |
| EPS DILUTED | 2.49 |
| RESERVE OPEN | 0 |
| PROVISION CURRENT | 0 |
| PROVISION PRIOR | 0 |
| PAYMENTS CURRENT | 0 |
| PAYMENTS PRIOR | 0 |
| RESERVE CLOSE | 0 |
| CUMULATIVE DEFICIENCY | 0 |