Exhibit (10)(a)
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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
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TABLE OF CONTENTS/1/
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Page
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ARTICLE I
DEFINITIONS............................................................ 2
1.01. Defined Terms............................................ 2
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1.02. Principles of Construction............................... 8
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ARTICLE II
ORGANIZATION OF NEWCO;
CLOSING; SCOPE OF BUSINESS............................................. 8
2.01. Organization............................................. 8
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2.02. Capital Contributions; Closing........................... 9
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2.03. Certain Obligations Not Transferred...................... 10
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2.04. Effective Time........................................... 10
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2.05. Instruments of Transfer and Conveyance................... 10
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF EXPERIAN............................. 11
3.01. Authorization and Validity of Agreement.................. 11
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3.02. Existence and Good Standing.............................. 11
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3.03. EXPERIAN Financial Statements............................ 12
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3.04. Title to Interests....................................... 12
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3.05. Leases................................................... 12
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3.06. Real Property............................................ 12
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3.07. Material Contracts....................................... 13
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3.08. Consents and Approvals; No Violations.................... 13
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3.09. Litigation............................................... 14
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3.10. Taxes.................................................... 14
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3.11. Conduct of Business...................................... 15
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3.12. Compliance with Laws; Permits............................ 15
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3.13. Intellectual Properties.................................. 16
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3.14. Labor Matters............................................ 17
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3.15. Employee Benefit Plans................................... 17
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3.16. Environmental Laws and Regulations....................... 17
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3.17. Books and Records........................................ 18
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3.18. Nature of Investment..................................... 18
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3.19. Transactions with Affiliates............................. 18
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3.20. Broker's or Finder's Fees................................ 18
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/1/ This Table of Contents is provided for convenience only, and does not
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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
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4.02. Existence and Good Standing.............................. 19
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4.03. FAFCO Financial Statements............................... 20
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4.04. Title to Interests....................................... 20
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4.05. Leases................................................... 20
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4.06. Real Property............................................ 20
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4.07. Material Contracts....................................... 21
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4.08. Consents and Approvals; No Violations.................... 21
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4.09. Litigation............................................... 22
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4.10. Taxes.................................................... 22
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4.11. Conduct of Business...................................... 23
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4.12. Compliance with Laws; Permits............................ 24
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4.13. Intellectual Properties.................................. 24
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4.14. Labor Matters............................................ 25
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4.15. Employee Benefit Plans................................... 25
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4.16. Environmental Laws and Regulations....................... 25
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4.17. Books and Records........................................ 26
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4.18. Nature of Investment..................................... 26
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4.19. Transactions with Affiliates............................. 26
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4.20. Broker's or Finder's Fees................................ 26
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ARTICLE V
COVENANTS.............................................................. 26
5.01. Ordinary Course.......................................... 26
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5.02. NEWCO Business Opportunities............................. 27
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5.03. Best Efforts............................................. 28
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5.04. Consents and Further Assurances.......................... 28
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5.05. Notices of Certain Events................................ 29
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5.06. Access to Information Concerning Business and Records.... 30
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5.07. Exclusive Dealing........................................ 30
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5.08. FAFCO Board Representation............................... 31
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5.09. Guarantees............................................... 31
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5.10. Certain Fees............................................. 31
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5.11. Certain Covenants........................................ 31
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ARTICLE VI
EXPERIAN PUT OPTION; FAFCO CALL OPTION.............. 32
6.01. EXPERIAN Put Option...................................... 32
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6.02. FAFCO Call Option........................................ 33
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6.03. FAFCO Change of Control Put Option....................... 34
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6.04. EXPERIAN Change of Control Call Option................... 35
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6.05. Extraordinary Put Option................................. 35
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6.06. Put/Call Adjustment...................................... 36
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6.07. General Put/Call Provisions.............................. 36
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(ii)
6.08. Dispute Resolution....................................... 37
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ARTICLE VII
CONDITIONS PRECEDENT................................................... 38
7.01. Conditions Precedent to the Obligations of Each of the
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Parties.................................................. 38
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7.02. Conditions Precedent to the Obligations of the FAFCO
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Parties.................................................. 40
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7.03. Conditions Precedent to the Obligations of EXPERIAN...... 41
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ARTICLE VIII
SURVIVAL OF REPRESENTATION; INDEMNIFICATION............................ 43
8.01. Survival of Representations.............................. 43
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8.02. Indemnification.......................................... 43
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8.03. Post-Effective-Time Tax Indemnification.................. 43
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ARTICLE IX
TERMINATION............................................................ 44
9.01. Events of Termination.................................... 44
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9.02. Effect of Termination.................................... 44
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ARTICLE X
MISCELLANEOUS.......................................................... 44
10.01. Fees and Expenses........................................ 44
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10.02. Extension; Waiver........................................ 44
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10.03. Confidentiality.......................................... 44
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10.04. Public Announcements..................................... 45
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10.05. Records Retained by FAFCO, EXPERIAN and NEWCO............ 45
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10.06. Notices.................................................. 45
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10.07. Entire Agreement......................................... 46
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10.08. Binding Effect; Benefit; Assignment...................... 46
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10.09. Amendment and Modification............................... 47
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10.10. Further Actions.......................................... 47
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10.11. Counterparts............................................. 47
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10.12. Applicable Law; Submission to Jurisdiction............... 47
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10.13. Severability............................................. 47
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SCHEDULES
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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
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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
(iv)
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").
W I T N E S S E T H :
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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:
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ARTICLE
I
DEFINITIONS
1.01. Defined Terms. As used in this Agreement, the following terms
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shall have the following meanings (such meanings to be equally applicable to
both the singular and plural forms of the terms defined):
"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
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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 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 Great Universal Stores, Inc.
("GUS") (on a fully diluted basis), other than existing shareholders of GUS
beneficially holding as of the date hereof in the aggregate more than 5% of the
outstanding shares of common stock of GUS, or (b) GUS shall fail to own,
directly or indirectly, at least 51% of the economic and voting interest in the
capital stock of EXPERIAN other than as a result of a public offering of the
capital stock of EXPERIAN; provided, however, that an EXPERIAN Change of Control
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shall not occur as a result of the merger of EXPERIAN into GUS or an Affiliate
of GUS so long as (x) EXPERIAN is the surviving entity or (y) the surviving
entity, in the event that
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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.
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"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.
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"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).
"Prime Rate" means, as of any date of determination, the per annum rate of
interest specified as the Prime Rate in the Wall Street Journal published on
such date, provided that for any date on which the Wall Street Journal is not
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published, "Prime Rate" means the per annum rate of interest specified as the
Prime Rate in the Wall Street Journal last published before such date.
"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).
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"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.
"Subsidiary" shall mean, with respect to any Person, (a) any partnership of
which such Person is a general partner or of which such Person's Subsidiary is a
general partner or (b) any other Entity which, at the time as of which any
determination is being made, is Controlled by such Person; provided, that for
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purposes of this Agreement, Excelis, Inc. and shall not be deemed to be a
Subsidiary of FAREISI.
"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
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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).
1.02. Principles of Construction.
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(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
2.01. Organization.
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(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.
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(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.
2.02. Capital Contributions; Closing.
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(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.
9
(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").
2.03. Certain Obligations Not Transferred. Notwithstanding Sections
-----------------------------------
2.02(a) and 2.02(b) hereof, any obligation of FAFCO, FAREISI, EXPERIAN or any
other FAFCO Member, or their respective Affiliates, to lend money, extend
credit, make advances to, purchase or acquire any securities or other interest
in or make any capital contribution to any other Person, which requires FAFCO,
FAREISI, EXPERIAN or such other FAFCO Member, or such Affiliates, to advance
funds prior to the Effective Time in full or partial satisfaction of such
obligation, shall, to the extent of such requirement to lend money, extend
credit, make advance to, purchase or acquire any securities or other interest in
or make any capital contribution to any other Person prior to the Effective
Time, remain the sole obligation of FAFCO, FAREISI, EXPERIAN or such other FAFCO
Member, or such Affiliates, as the case may be, and shall not be directly or
indirectly assumed by NEWCO.
2.04. Effective Time. The transactions referred to in Sections 2.02(a),
--------------
2.02(b) and 2.03 shall be deemed, as between the Parties, to occur at the
Effective Time.
2.05. Instruments of Transfer and Conveyance. The sale, transfer and
--------------------------------------
conveyance of the Interests shall be effected by delivery on or prior to the
Closing Date by each Party hereto of such deeds, transfers in registrable form,
endorsements, assurances, conveyances, releases, discharges, assignments,
certificates, drafts, checks or other instruments of transfer and conveyance,
duly executed by such Party or such other Person, as the case may be, as any
other Party reasonably deems necessary to vest in NEWCO all right, title and
interest in and to the Interests, free and clear of any Encumbrance of any kind,
except Permitted Encumbrances.
10
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:
3.01. Authorization and Validity of Agreement.
---------------------------------------
(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.
3.02. Existence and Good Standing. It is a corporation duly organized,
---------------------------
validly existing and in good standing under the laws of the jurisdiction of its
organization and has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as now being conducted.
It is duly qualified or licensed to conduct its business, and is in good
standing in each jurisdiction in which the character or location of the property
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification necessary, except where the failure to be so duly
qualified or licensed would not have a material adverse effect on the business,
properties, assets, liabilities, condition (financial or otherwise), results of
operations or prospects (a "Material Adverse Effect") of the RES Business, taken
as a whole.
11
3.03. EXPERIAN Financial Statements.
-----------------------------
(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.
3.04. Title to Interests. It possesses good and marketable title to
------------------
all of the properties and assets (real and personal, tangible or intangible)
comprising the EXPERIAN Interests, free and clear of all Encumbrances, except
for Encumbrances which (i) are set forth on Schedule 3.04, (ii) are for taxes,
assessments or governmental charges not yet due, (iii) were incurred in the
ordinary course of business and which do not in the aggregate materially detract
from the value of the EXPERIAN Interests or materially impair the use thereof in
the operation of the RES Business or (iv) are reflected on the RES Pro-Forma
Financial Statements, as the case may be. Encumbrances of the type described in
clauses (i) through (iv) are sometimes referred to as "RES Permitted
Encumbrances".
3.05. Leases. Except as otherwise set forth in Schedule 3.05, each
------
lease to which it is a party included in the RES Business is in full force and
effect; all rents and additional rents due to date from it on each such lease
have been paid; in each case, it has not received notice that it is in material
default thereunder; and, to its knowledge, there exists no material event,
occurrence, condition or act (including the transactions contemplated by this
Agreement) which, with the giving of notice, the lapse of time or the happening
of any further event or condition, would constitute a material default by it or
any other party under such lease.
3.06. Real Property. Schedule 3.06 attached hereto contains a list of
-------------
all real property owned by it constituting part of the RES Business and includes
the name of the record title holder thereof and a list of all indebtedness
secured by a lien, mortgage or deed of trust thereon. It has good and marketable
title in fee simple to all the real property specified as owned by it in
Schedule 3.06, free and clear of all Encumbrances, except for RES Permitted
Encumbrances or as set forth on Schedule 3.06. All of the buildings, structures
and appurtenances situated on the real property listed on Schedule 3.06 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.
12
3.07. Material Contracts.
------------------
(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.
3.08. Consents and Approvals; No Violations. Assuming the making and/or
-------------------------------------
obtaining, to the reasonable satisfaction of the Parties, of such applications,
registrations, declarations, filings, authorizations, orders, consents and
approvals as are set forth in Schedule 3.08 hereto, the execution and delivery
of this Agreement and the Implementing Agreements by it and the consummation of
the transactions contemplated hereby and thereby (a) will not violate the
provisions of the Articles of Incorporation or By-Laws or similar organizational
documents of it, (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
13
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.
3.09. Litigation. Except as set forth in Schedule 3.09 attached hereto,
----------
there is no action, suit or proceeding at law or in equity by any Person, or any
arbitration or any administrative or other proceeding by or before or, to its
knowledge, any investigation by, any governmental body, instrumentality or
agency, pending or to its knowledge threatened, against it which, if adversely
determined, would have a Material Adverse Effect on the RES Business, taken as a
whole. Except as set forth in Schedule 3.09 attached hereto, it is not subject
to any judgment, order or decree entered in any lawsuit or proceeding which may
have a Material Adverse Effect on the RES Business, taken as a whole. There are
no such suits, actions, claims, proceedings or investigations pending or, to its
knowledge, threatened, seeking to prevent or challenging the transactions
contemplated by this Agreement or the Implementing Agreements.
3.10. Taxes. (a) Tax Returns. It has timely filed or caused to be timely filed
----- -----------
with the appropriate taxing authorities all returns, statements, forms and
reports for Taxes ("Returns") that are required to be filed by, or with respect
to, the RES Business on or prior to the Closing Date. The Returns have
accurately reflected all liability for Taxes of the RES Business for the periods
covered thereby.
(b) Payment of Taxes. Except as set forth on Schedule 3.10, all Taxes and
----------------
Tax liability ities of EXPERIAN (to the extent attributable to the RES Business)
for all taxable years or periods that end on or before the Closing Date and,
with respect to any taxable year or period beginning before and ending after the
Closing Date, the portion of such taxable year or period ending on and including
the Closing Date ("Pre-Closing Period") have been timely paid or accrued and ade
quately disclosed and fully provided for on the books and records of EXPERIAN in
accordance with US GAAP.
(c) Other Tax Matters.
-----------------
(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.
14
(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.
3.11. Conduct of Business. Since the Balance Sheet Date, except as
-------------------
contemplated or expressly required or permitted by this Agreement or as set
forth on Schedule 3.11 attached hereto, (i) the RES Business has been conducted
only in the ordinary course; (ii) the RES Business has not incurred any material
liabilities (direct, contingent or otherwise) or engaged in any material
transaction or entered into any material agreement outside the ordinary course
of business; (iii) it has not increased the compensation of any officer or
granted any general salary or benefits increase to the employees of the RES
Business other than in the ordinary course of business; and (iv) it has not
taken any action which, if taken subsequent to the execution of this Agreement
and on or prior to the Closing Date, would constitute a breach of its agreements
set forth in Section 5.01.
3.12. Compliance with Laws; Permits.
-----------------------------
(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
15
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.
3.13. Intellectual Properties.
-----------------------
(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.
3.14. Labor Matters. No work stoppage involving the RES Business is pending
-------------
or, to its knowledge, threatened which reasonably could be expected to have a
Material Adverse Effect
16
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.
3.15. Employee Benefit Plans. Each "employee benefit plan" (as defined in
----------------------
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) maintained or contributed to by it and/or any organization which
together with it would be treated as a "single employer" within the meaning of
Section 414(b) or (c) of the Internal Revenue Code of 1986, as amended (the
"Code"), or to which it or any such organization has an obligation to contribute
(each, an "EXPERIAN Plan" and collectively, the "EXPERIAN Plans") is listed on
Schedule 3.15 attached hereto. Except as set forth in such Schedule 3.15, or to
the extent that any breach of the representations set forth in this sentence
would not have a Material Adverse Effect on the RES Business, taken as a whole:
(a) each EXPERIAN Plan is in compliance with applicable law and has been
administered and operated in accordance with its terms; (b) each EXPERIAN Plan
which is intended to be "qualified" (within the meaning of Section 401(a) of the
Code) has received a favorable determination letter from the Internal Revenue
Service and, to its knowledge, no event has occurred and no condition exists
which could reasonably be expected to result in the revocation of any such
determination letter; (c) no EXPERIAN Plan is covered by Title IV of ERISA or
subject to Section 412 of the Code or Section 302 of ERISA; (d) to its
knowledge, no "disqualified person" or "party in interest" (as defined in
Section 4975(e)(2) of the Code and Section 3(14) of ERISA, respectively) has
engaged in any transaction in connection with an EXPERIAN Plan that could
reasonably be expected to result in the imposition of a penalty pursuant to
Section 502(i) of ERISA or a tax pursuant to Section 4975(a) of the Code; and
(e) no liability, claim, action or litigation, has been made, commenced or, to
its knowledge, threatened with respect to any EXPERIAN Plan (other than routine
claims for benefits payable submitted in the ordinary course and appeals of such
claims).
3.16. Environmental Laws and Regulations. Except as set forth on Schedule
----------------------------------
3.16:
(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.
17
For purposes of this Agreement, the following terms shall have the
following meanings: (A) "RES Property" means any real property and improvements
owned, leased, or operated by EXPERIAN in connection with the RES Business; (B)
"Hazardous Materials" means (i) any petroleum or petroleum products, radioactive
materials or friable asbestos; (ii) any chemicals, materials or substances
defined as "hazardous substances," under the Comprehensive Environmental
Response Compensation and Liability Act of 1980, as amended, 42 U.S.C. (S) 9601
et seq. ("CERCLA"); (C) "Environmental Law" means any federal, state or local
- -- ----
statute, law, rule, regulation, ordinance or code in effect and in each case as
amended as of the Closing Date, relating to the environment or Hazardous
Materials, including without limitation CERCLA, the Resource Conservation and
Recovery Act, as amended, 42 U.S.C. (S) 6901 et seq.; the Federal Water
-- ----
Pollution Control Act, as amended, 33 U.S.C. (S) 1251 et seq.; the Toxic
-- ----
Substances Control Act, 15 U.S.C. (S) 2601 et seq.; the Clean Air Act, 42 U.S.C.
-- ----
(S) 7401 et seq.; the Safe Drinking Water Act, 42 U.S.C. (S) 3808 et seq.; and
-- ---- -- ----
(D) "Environmental Claims" means regulatory or judicial actions, suits, claims,
notices of noncompliance or violation, or proceedings arising under
Environmental Law (for purposes of this subclause (D), "Claims") including (i)
Claims by governmental or regulatory authorities for enforcement, cleanup,
removal, response, remedial actions or damages pursuant to applicable
Environmental Law and (ii) Claims by any third party seeking damages,
contribution, indemnification, cost recovery, compensation or injunctive relief
resulting from Hazardous Materials or arising from injury the environment; and
(E) "Release" means disposing, discharging, injecting, spilling, leaking,
leaching, dumping, emitting, escaping, emptying, seeping, placing and the like,
into or upon any land or water or air, or otherwise entering into the
environment.
3.17. Books and Records. Except as set forth on Schedule 3.17 attached
-----------------
hereto, the RES Business has no records, systems, controls, data or information
recorded, stored, maintained, operated or otherwise wholly or partly dependent
upon or held by any means (including any electronic, mechanical or photographic
process, whether computerized or not) which (including all means of access
thereto and therefrom) are not under the exclusive ownership and direct control
of the RES Business.
3.18. Nature of Investment. EXPERIAN is acquiring its Membership Interest
--------------------
in NEWCO for its own account, for investment only and not with a view to, or
sale in connection with, a distribution thereof within the meaning of the
Securities Act.
3.19. Transactions with Affiliates. Schedule 3.19 attached hereto
----------------------------
identifies all contracts, commitments and agreements in effect as of the date
hereof by and between the RES Business on the one hand and EXPERIAN or any of
its Affiliates (other than the RES Business) on the other.
3.20. Broker's or Finder's Fees. No agent, broker, Person or firm acting on
-------------------------
behalf of it is, or will be, entitled to any commission or broker's or finder's
fees from any of the Parties hereto, or from any Affiliate of any of the Parties
hereto, in connection with any of the transac tions contemplated hereby.
18
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:
4.01. Authorization and Validity of Agreement.
---------------------------------------
(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.
4.02. Existence and Good Standing. It is a corporation duly organized,
---------------------------
validly existing and in good standing under the laws of the jurisdiction of its
organization and has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as now being conducted.
It is duly qualified or licensed to conduct its business, and is in good
standing in each jurisdiction in which the character or location of the property
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification necessary, except where the failure to be so duly
qualified or licensed would not have a Material Adverse Effect on the FAREISI
Business, taken as a whole.
19
4.03. FAFCO Financial Statements.
--------------------------
(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.
4.04. Title to Interests. The FAFCO Members possess good and marketable
------------------
title to all of the properties and assets (real and personal, tangible or
intangible) comprising the FAFCO Interests, free and clear of all Encumbrances,
except for Encumbrances which (i) are set forth on Schedule 4.04 attached
hereto, (ii) are for current taxes, assessments or governmental charges not yet
due, (iii) were incurred in the ordinary course of business and which do not in
the aggregate materially detract from the value of the FAFCO Interests or
materially impair the use thereof in the operation of the FAREISI Business or
(iv) are reflected on the FAREISI Pro-Forma Balance Sheet, as the case may be.
Encumbrances of the type described in clauses (i) through (iv) are sometimes
referred to as "FAREISI Permitted Encumbrances.
4.05. Leases. Except as otherwise set forth in Schedule 4.05 attached
------
hereto, each lease to which it is a party that is included in the FAREISI
Business is in full force and effect; all rents and additional rents due to date
from it on each such lease have been paid; in each case, it has not received
notice that it is in material default thereunder; and, to its knowledge, there
exists no material event, occurrence, condition or act (including the
transactions contemplated by this Agreement) which, with the giving of notice,
the lapse of time or the happening of any further event or condition, would
constitute a material default by it or any other party under such lease.
4.06. Real Property. Schedule 4.06 attached hereto contains a list of all
-------------
real property owned by it constituting part of the FAREISI Business and includes
the name of the record title holder thereof and a list of all indebtedness
secured by a lien, mortgage or deed of trust thereon. Each FAFCO Member has good
and marketable title in fee simple to all the real property specified as owned
by it in Schedule 4.06, free and clear of all Encumbrances, except for FAREISI
Permitted Encumbrances or as set forth on Schedule 4.06. All of the buildings,
structures and
20
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.
4.07. Material Contracts.
------------------
(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.
4.08. Consents and Approvals; No Violations. Assuming the making and/or
-------------------------------------
obtaining, to the reasonable satisfaction of the Parties, of such applications,
registrations, declarations, filings, authorizations, orders, consents and
approvals as are set forth in Schedule 4.08 hereto, the execution and delivery
of this Agreement and the Implementing Agreements by it and the consummation of
the transactions contemplated hereby and thereby (a) will not violate the
provisions of the Articles of Incorporation or By-Laws or similar organizational
documents of it,
21
(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.
4.09. Litigation. Except as set forth in Schedule 4.09 attached hereto,
----------
there is no action, suit or proceeding at law or in equity by any Person, or any
arbitration or any administrative or other proceeding by or before or, to its
knowledge, any investigation by, any governmental body, instrumentality or
agency, pending or to its knowledge threatened, against it which, if adversely
determined, would have a Material Adverse Effect on the FAREISI Business, taken
as a whole. Except as set forth in Schedule 4.09 attached hereto, it is not
subject to any judgment, order or decree entered in any lawsuit or proceeding
which may have a Material Adverse Effect on the FAREISI Business, taken as a
whole. There are no such suits, actions, claims, proceedings or in
vestigations pending or, to its knowledge, threatened, seeking to prevent or
challenging the transactions contemplated by this Agreement or the Implementing
Agreements.
4.10. Taxes. (a) Tax Returns. It has timely filed or caused to be timely filed
----- -----------
with the appropriate taxing authorities all Returns that are required to be
filed by, or with respect to, the FAREISI Business on or prior to the Closing
Date. The Returns have accurately reflected all lia bility for Taxes of the
FAREISI Business for the periods covered thereby.
(b) Payment of Taxes. All Taxes and Tax liabilities of FAFCO and the FAFCO
----------------
Members (to the extent attributable to the FAREISI Business) for all taxable
years or periods that end on or before the Closing Date and with respect to the
Pre-Closing Period have been timely paid or accrued and adequately disclosed and
fully provided for on the books and records of the FAREISI Business in
accordance with US GAAP.
(c) Other Tax Matters.
-----------------
(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
22
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.
4.11. Conduct of Business. Since the Balance Sheet Date, except as
-------------------
contemplated or expressly required or permitted by this Agreement or as set
forth on Schedule 4.11 attached hereto, (i) the FAREISI Business has been
conducted only in the ordinary course; (ii) the FAREISI Business has not
incurred any material liabilities (direct, contingent or otherwise) or engaged
in any material transaction or entered into any material agreement outside the
ordinary course of business; (iii) it has not increased the compensation of any
officer or granted any general salary or benefits increase to the employees of
the FAREISI Business other than in the ordinary course of business; and (iv) it
has not taken any action which, if taken subsequent to the execution of this
Agreement and on or prior to the Closing Date, would constitute a breach of its
agreements set forth in Section 5.01.
4.12. Compliance with Laws; Permits.
-----------------------------
(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
23
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.
4.13. Intellectual Properties.
-----------------------
(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
24
the FAREISI Business' rights in any of such Intellectual Property or the FAFCO
Members' license agreements with respect thereto.
4.14. Labor Matters. No work stoppage involving the FAREISI Business is
-------------
pending or, to its knowledge, threatened which reasonably could be expected to
have a Material Adverse Effect on the FAREISI Business. It is not involved in,
or threatened with or affected by, any labor dispute, arbitration, law suit or
administrative proceeding relating to the FAREISI Business which reasonably
could be expected to have a Material Adverse Effect on the FAREISI Business.
Except as set forth on Schedule 4.14 attached hereto, it is not a party to any
collective labor agreement or similar agreement.
4.15. Employee Benefit Plans. Each "employee benefit plan" (as defined in
----------------------
Section 3(3) of ERISA) maintained or contributed to by it and/or any
organization which together with it would be treated as a "single employer"
within the meaning of Section 414(b) or (c) of the Code or to which it or any
such organization has an obligation to contribute (each, a "FAFCO Plan" and
collectively, the "FAFCO Plans") is listed on Schedule 4.15 attached hereto.
Except as set forth in such Schedule 4.15, or to the extent that any breach of
the representations set forth in this sentence would not have a Material Adverse
Effect on the FAREISI Business, taken as a whole: (a) each FAFCO Plan is in
compliance with applicable law and has been administered and operated in
accordance with its terms; (b) each FAFCO Plan which is intended to be
"qualified" (within the meaning of Section 401(a) of the Code) has received a
favorable determination letter from the Internal Revenue Service and, to its
knowledge, no event has occurred and no condition exists which could reasonably
be expected to result in the revocation of any such determination letter; (c) no
FAFCO Plan is covered by Title IV of ERISA or subject to Section 412 of the Code
or Section 302 of ERISA; (d) to its knowledge, no "disqualified person" or
"party in interest" (as defined in Section 4975(e)(2) of the Code and Section
3(14) of ERISA, respectively) has engaged in any transaction in connection with
a FAFCO Plan that could reasonably be expected to result in the imposition of a
penalty pursuant to Section 502(i) of ERISA or a tax pursuant to Section 4975(a)
of the Code; and (e) no liability, claim, action or litigation, has been made,
commenced or, to its knowledge, threatened with respect to any FAFCO Plan (other
than routine claims for benefits payable submitted in the ordinary course and
appeals of such claims).
4.16. Environmental Laws and Regulations. (a) Hazardous Materials have
----------------------------------
not been (i) generated, used, treated or stored on, or transported to or from,
any FAREISI Property by it, or (ii) Released or disposed of on any FAREISI
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 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.
25
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.
4.17. Books and Records. Except as set forth on Schedule 4.17 attached
-----------------
hereto, the FAREISI Business has no records, systems, controls, data or
information recorded, stored, maintained, operated or otherwise wholly or partly
dependent upon or held by any means (including any electronic, mechanical or
photographic process, whether computerized or not) which (including all means of
access thereto and therefrom) are not under the exclusive ownership and direct
control of the FAREISI Business.
4.18. Nature of Investment. Each of the FAFCO Members represents for itself
--------------------
that it is acquiring its Membership Interest in NEWCO for its own account, for
investment only and not with a view to, or sale in connection with, a
distribution thereof within the meaning of the Securities Act.
4.19. Transactions with Affiliates. Schedule 4.19 attached hereto
----------------------------
identifies all contracts, commitments and agreements in effect as of the date
hereof relating to the FAREISI Business by and between any FAFCO Member on the
one hand and FAFCO or any of its Affiliates (other than the other FAFCO Members)
on the other.
4.20. Broker's or Finder's Fees. No agent, broker, Person or firm acting on
-------------------------
behalf of it is, or will be, entitled to any commission or broker's or finder's
fees from any of the Parties hereto, or from any Affiliate of any of the Parties
hereto, in connection with any of the transactions contemplated hereby.
ARTICLE V
COVENANTS
5.01. Ordinary Course. Each of FAFCO and EXPERIAN hereby covenants and
---------------
agrees that, except as set forth on Schedule 5.01 attached hereto or as
otherwise permitted, required or specifically contemplated by this Agreement and
the Interim Operating Agreement or as otherwise consented to or approved by each
of the other Parties, during the period commencing on the date hereof and ending
on the Effective Date, it will operate or cause to be operated its Business
substantially as presently operated and only in the ordinary course (which shall
include the ordinary course payment of accounts payable and billing and
collection of accounts receivable consistent with the current operations of its
Business), and consistent with such operation, will use its reasonable best
efforts to maintain present business organizations and relationships with
persons having business dealings with its Business and to retain the services of
its key operating employees engaged in operating its Business (it being
understood and agreed that operation of the Businesses during the period
commencing on the date hereof and ending on the Effective Date in accordance
with the terms of the Interim Operating Agreement shall be in compliance with
the terms of this Section 5.01). Each of FAFCO and EXPERIAN hereby further
covenants and agrees that from the date hereof to the Effective Date, in
connection with the operation of its Business, except as
26
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.
5.02. NEWCO Business Opportunities. Each of the Parties expressly
----------------------------
acknowledges that, as a result of the development of the RES Business and the
FAREISI Business, respectively, certain business opportunities may arise after
the execution of this Agreement but prior to the Effective Date that would be
within the scope of NEWCO's business (as described in the Operating Agreement).
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
27
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.
5.03. Best Efforts. Except to the extent specifically provided in Section
------------
5.04, each Party shall, and shall cause its respective Subsidiaries and
Affiliates to, cooperate and use its respective reasonable best efforts to take,
or cause to be taken, all appropriate action and to make, or cause to be made,
all filings necessary, proper or advisable under applicable laws and regulations
to consummate and make effective the transactions contemplated by this
Agreement, including, without limitation, its respective reasonable best efforts
to obtain, prior to the Closing, all Licenses, consents, approvals,
authorizations, qualifications and orders of governmental authorities and,
subject to the last sentence of Section 5.04(a), parties to contracts with or
affecting, in the case of EXPERIAN, the RES Business, and in the case of FAFCO,
FAREISI and the other FAFCO Members, the FAREISI Business, as are necessary for
consummation of the transactions contemplated by this Agreement and to fulfill
the conditions to the Closing; provided, that, except as otherwise specifically
--------
required by this Agreement, no loan agreement or contract for borrowed money
shall be repaid except as currently required by its terms, in whole or in part,
and no contract shall be amended to increase the amount payable thereunder or
otherwise to be more burdensome to the RES Business or the FAREISI Business in
order to obtain any such consent, approval or authorization without first
obtaining the written approval of the other Parties and no Party shall be
required to make any cash payment, provide any guaranty or relinquish any
property or contractual rights to obtain any such consent, approval or
authorization except for filing fees and fees and expenses of attorneys,
accountants and other professional advisors and payments in accordance with the
terms of contracts in existence as of the date hereof.
5.04. Consents and Further Assurances.
-------------------------------
(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
28
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.
5.05. Notices of Certain Events. Each Party hereto shall promptly notify
-------------------------
the other Parties of:
(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
(d) such Party's obtaining knowledge of the occurrence, or failure
to occur, of any event which occurrence or failure to occur will be likely
to cause (i) any representation or warranty contained in this Agreement
(including, without limitation, the representations contained in Sections
3.03(b) and 4.03(b)), or in the Implementing Agreements to be untrue and
inaccurate in any material respect, or (ii) any material failure of any
Party to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it under this Agreement or the Implementing
Agreements; provided, that no such notification shall affect the
--------
representations, warranties or obligations of the Parties or the conditions
to the obligations of the Parties hereunder or thereunder.
29
5.06. Access to Information Concerning Business and Records. During the
-----------------------------------------------------
period commencing on the date hereof and ending on the Closing Date, each Party
shall, upon reasonable notice, afford to the other and the other's counsel,
accountants and other authorized representatives, full access during normal
business hours to the employees, properties, books and records of itself and its
Subsidiaries relating to the RES Business or the FAREISI Business, respectively,
in order that they may have the opportunity to make such reasonable
investigations as they shall desire of the affairs of each such business. Each
Party agrees to cause its officers and employees to furnish such additional
financial and operating data and other information and respond to such inquiries
concerning the RES Business or the FAREISI Business, respectively, as any other
Party shall from time to time reasonably request. Any such investigation or
review, however, shall not affect the representations and warranties made by the
Parties in this Agreement or any Implementing Agreement or any remedy for breach
of any such representations and warranties.
5.07. Exclusive Dealing. Until the Effective Date, neither FAFCO nor
-----------------
EXPERIAN shall, directly or indirectly, take (and neither FAFCO nor EXPERIAN
shall authorize or permit its or its Subsidiaries' officers, directors,
employees, representatives, investment bankers, attorneys, accountants or other
agents, to so take) any action to encourage, solicit, initiate or, subject to
the fiduciary duties of its respective Board of Directors under applicable law
as advised by counsel, participate in any way in discussions or negotiations
with, or furnish any information to, any Person (other than the Parties hereto
or their respective officers, directors, representatives, agents, affiliates or
associates) in connection with any possible or proposed (a) merger or other
business combination, sale or other disposition of assets constituting the RES
Business or the FAREISI Business, as the case may be, (b) sale of shares of
capital stock if, as a result of such sale of shares of capital stock, an
EXPERIAN Change of Control or a FAFCO Change of Control would occur or (c)
similar transactions involving (i) in the case of EXPERIAN, the EXPERIAN
Interests or the RES Business and (ii) in the case of FAFCO, FAREISI or the
other FAFCO Members, the FAFCO Interests or the FAREISI Business; provided, that
--------
nothing contained in this Section 5.07 shall restrict or prohibit any disclosure
by any Party that is required on the advice of counsel in any document to be
filed with the Commission after the date of this Agreement or any disclosure
that, in the opinion of the Chief Executive Officer of such Party on advice of
counsel, is otherwise required under applicable law. Each of FAFCO and EXPERIAN
will promptly communicate to the other Parties the terms of any proposal or
inquiry that it may receive in respect of any such transaction, or of any such
information requested from it or of any such negotiations or discussions being
sought to be initiated with it.
5.08. FAFCO Board Representation. So long as EXPERIAN shall own at least a
--------------------------
10% Membership Interest in NEWCO, FAFCO will recommend one nominee of EXPERIAN
to the FAFCO Board of Directors nominating committee as a candidate for election
to the Board of Directors of FAFCO.
5.09. Guarantees. If, in accordance with Section 4.03(l) of the Operating
----------
Agreement, NEWCO requests that FAFCO and EXPERIAN provide a guaranty to a third
party in order to secure NEWCO's obligations to such third party, FAFCO and
EXPERIAN shall provide such guaranty on a several basis, with FAFCO guaranteeing
that portion of NEWCO's obligations equal
30
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.
5.10. Certain Fees. NEWCO, by its execution of the acknowledgment on the
------------
signature page hereto, agrees to pay the following fees:
(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) so long as EXPERIAN is a Member of NEWCO, a fee to EXPERIAN in
respect of management services provided by EXPERIAN from time to time by NEWCO
in an amount equal to 0.20% of NEWCO's gross revenues, as determined in
accordance with US GAAP, less the amount of any royalty payments payable by
----
NEWCO pursuant to Section 3 of the Trademark License Agreement, which fee, if
any, shall be paid in arrears for each calendar quarter within 30 days of the
conclusion of the previous quarter.
5.11. Certain Covenants. (a) FAREISI Subsidiary 8 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 real property (or any portion thereof so requested) owned
by it and listed under its name on Part 1(I) 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 deeds
in recordable form, endorsements, assurances, conveyances, releases, discharges,
assignments, certificates or other instruments of transfer and conveyance, duly
executed by FAREISI Subsidiary 8 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 real property, free and clear of any
Encumbrance of any kind, except FAREISI Permitted Encumbrances.
(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.
31
ARTICLE VI
EXPERIAN PUT OPTION; FAFCO CALL OPTION
6.01. EXPERIAN Put Option.
-------------------
(a) EXPERIAN shall have the right, at any one time (and only once)
following the Trigger Date, so long as FAFCO has not exercised the Call Option
pursuant to Section 6.02 and so long as the value of the Membership Interest
then owned by EXPERIAN is greater than $80,000,000 and less than $160,000,000
(such value determined, as at such date, in accordance with the formula set
forth in the last sentence of Section 6.01(b) below), to sell to FAFCO (the "Put
Option") 100% of the Membership Interest then owned by EXPERIAN by delivering to
FAFCO a written notice specifying its election to exercise the Put Option
hereunder (the "Put Election Notice"). At any time thereafter as FAFCO shall
elect, FAFCO shall deliver to EXPERIAN a written notice specifying (i) the date,
not later than 30 days after the date of such notice to EXPERIAN, on which the
Put Option shall be exercised (the "Put Exercise Date"), (ii) the aggregate Put
Price determined in accordance with Section 6.01(b) below, and (iii) FAFCO's
election, in its sole and unfettered discretion, to pay the Put Price (w) in
cash, (x) by delivering to EXPERIAN its unsecured promissory note in an
aggregate principal amount equal to the Put Price, which promissory note shall
have a three year maturity, shall bear interest at the Prime Rate, shall be
payable in equal quarterly installments of principal, together with accrued
interest thereon, shall be subject to acceleration upon default and shall
otherwise be in a form reasonably acceptable to EXPERIAN, (y) by delivering to
EXPERIAN unrestricted registered shares of FAFCO common stock then listed on a
Major Exchange and having a value (determined by reference to the closing price
of the FAFCO common stock on the New York Stock Exchange (or, if not listed
thereon, on such other securities exchange or quotation system upon which such
common stock is listed or quoted) for the Business Day immediately preceding the
Put Exercise Date) on the Put Exercise Date equal to the Put Price, provided
--------
that if the Put Exercise Date occurs at any time within the 120-day period
following the date of the Put Election Notice, then FAFCO may deliver to
EXPERIAN unregistered shares of FAFCO common stock having a value as aforesaid
together with an undertaking (1) to cause the registration of such FAFCO common
stock under the Securities Act and the listing of such stock on a Major Exchange
within the 90-day period following the Put Exercise Date and (2) to deliver to
EXPERIAN on the date the registration and listing of such FAFCO common stock is
effective (the "Registration Date"), in the event that the Put Price exceeds the
value of such registered FAFCO common stock (determined by reference to the
closing price of the FAFCO common stock on the New York Stock Exchange (or, if
not listed thereon, on such other securities exchange or quotation system upon
which such common stock is listed or quoted) for the Business Day immediately
preceding the Registration Date) on the Registration Date, its unsecured
promissory note in a principal amount equal to such excess, which promissory
note shall have the same terms as set forth in clause (x) above and shall
otherwise be in a form reasonably acceptable to EXPERIAN, or (z) any combination
of cash and FAFCO common stock in accordance with the foregoing; provided, that
--------
in no event shall FAFCO specify a Put Exercise Date occurring later than two
years after the date of delivery of the Put Election Notice; provided, further,
-------- -------
that in the event that FAFCO fails to deliver such written notice, the Put
Exercise Date shall occur on the date (the "End Date") which is two years after
the date of delivery of the Put Election Notice (it being understood and agreed
32
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 Put 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 6.01, (ii) FAFCO
shall deliver to EXPERIAN, in immediately available funds or as otherwise
permitted in paragraph (a) above, the applicable Put Price, (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 NEWCO in immediately available funds. For purposes of
this Section 6.01(b), the "Put Price" shall be an amount equal to (A)(1) the
Percentage Interest of EXPERIAN subject to the Put Option multiplied by (2) the
---------- --
product of (I) the average annualized Adjusted Earnings for the eight fiscal
quarters immediately preceding the Notice Date for which financial information
has been reported multiplied by (II) 12.5; plus (B) any distributions on the
---------- -- ----
Membership Interest of EXPERIAN which have been declared or have accrued but
have not been paid as of the Put Exercise Date; provided that, in the event that
--------
the Put Price as determined in accordance with the foregoing formula is less
than $80,000,000, is understood and agreed that the Put Price shall be
$80,000,000.
6.02. FAFCO Call Option.
-----------------
(a) FAFCO shall have the right, at any one time (and only once) following
the Trigger Date, so long as EXPERIAN has not exercised the Put Option pursuant
to Section 6.01, to purchase from EXPERIAN (the "Call Option") 100% of the
Membership Interest then owned by EXPERIAN by delivering to EXPERIAN a written
notice specifying its election to exercise the Call Option hereunder (the "Call
Election Notice"). At any time thereafter as EXPERIAN shall elect, EXPERIAN
shall deliver to FAFCO a written notice specifying (i) the date, not later than
30 days after the date of such notice to FAFCO, on which the Call Option shall
be exercised (the "Call Exercise Date") and (ii) the Call Price; provided, that
--------
in no event shall EXPERIAN specify a Call Exercise Date occurring later than two
years after the date of delivery of the Call Election Notice; provided, further,
-------- -------
that in the event that EXPERIAN fails to deliver such written notice, the Call
Exercise Date shall occur on the date which is two years after the date of
delivery of the Call Election Notice.
(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
33
NEWCO in immediately available funds. For purposes of this Section 6.02(b) the
"Call Price" shall be an amount equal to (A) (1) the Percentage Interest of
EXPERIAN subject to the Call Option multiplied by (2) the product of (I) the
---------- --
average annualized Adjusted Earnings for the eight fiscal quarters immediately
preceding the Notice Date multiplied by (II) 12.5; plus (B) any distributions on
---------- -- ----
the Membership Interest of EXPERIAN which have been declared or have accrued but
have not been paid as of the Call Exercise Date; provided that, in the event
--------
that the Call Price as determined in accordance with the foregoing formula is
less than $80,000,000, is understood and agreed that the Call Price shall be
$80,000,000.
(c) Notwithstanding anything to the contrary contained in this Section
6.02, in the event that the Experian Managers (as such term is defined in the
Operating Agreement) fail to consent to any proposed acquisition described in
clause (a) of such Section 4.03 of the Operating Agreement, FAFCO shall have the
right, for the 90-day period immediately following the date upon which such
consent was withheld, to exercise the Call Option with respect to all (but not
less than all) of the Membership Interest then owned by EXPERIAN in accordance
with the provisions of Section 6.02(a) and (b) above, without regard to the two-
year period provided for therein; provided that if such Call Option is exercised
--------
at any time prior to the completion of eight fiscal quarters by NEWCO, the
applicable Call Price shall be determined utilizing the average annualized
Adjusted Earnings for that number of fiscal quarters completed prior to the
Notice Date; provided, further, that the applicable Call Price shall be paid in
-------- -------
cash in immediately available funds.
6.03. FAFCO Change of Control Put Option. Promptly (and in any event within
----------------------------------
five (5) days) following the occurrence of a FAFCO Change of Control, FAFCO
shall give written notice thereof (a "FAFCO Change of Control Notice") to
EXPERIAN and NEWCO. From the occurrence of any such FAFCO Change of Control
through the thirty (30) day period following EXPERIAN's receipt of a FAFCO
Change of Control Notice, EXPERIAN shall have the right to sell to FAFCO 100% of
the Membership Interest then owned by EXPERIAN by delivering to FAFCO and NEWCO
written notice thereof specifying (i) EXPERIAN's election to sell to FAFCO 100%
of its Membership Interest pursuant to this Section 6.03 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 FAFCO Change of Control occurred, in accordance
with the formula set forth in the last sentence of Section 6.01(b) above and
without regard to the proviso thereto). In the event EXPERIAN elects to sell
its Membership Interest pursuant to this Section 6.03, 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.
6.04. EXPERIAN Change of Control Call Option. Promptly (and in any event
--------------------------------------
within five (5) days) following the occurrence of an EXPERIAN Change of Control,
EXPERIAN shall give written notice thereof (an "EXPERIAN Change of Control
Notice") to FAFCO and NEWCO. From the occurrence of any such EXPERIAN Change of
Control through the thirty (30) day period following FAFCO's receipt of an
EXPERIAN Change of Control Notice, FAFCO
34
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.
6.05. Extraordinary Put Options.
-------------------------
(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
35
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.
6.06. Put/Call Adjustment Upon a Major Acquisition. In the event that NEWCO
--------------------------------------------
consummates any acquisition of any business of another Person, or of any
property, securities, rights or other assets in one or a series of related
transactions for consideration (including, without limitation, the reasonably
estimated present value of deferred purchase compensation) exceeding, in the
aggregate, US $50,000,000, each of the Parties hereto agrees to negotiate in
good faith to amend, modify or supplement the provisions of this Article VI
(which may include adjusting the Put Price, the Call Price, the Trigger Date,
the Put Option ceiling set forth in Section 6.01(c) and the Call Option floor
set forth in Section 6.02(c)), taking into account any such acquisition and the
accounting treatment thereof, in order to give effect to the Put Option and the
Call Option and each of the parties respective rights relating thereto on
economic terms comparable to those set forth herein.
6.07. General Put/Call Provisions.
---------------------------
(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.
6.08. Dispute Resolution.
------------------
36
(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
37
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
7.01. Conditions Precedent to the Obligations of Each of the Parties. The
--------------------------------------------------------------
obligation of each of the Parties to consummate the transactions contemplated
hereby is subject to the satisfaction or waiver by such Party on or before the
Closing, of the following conditions precedent:
(a) Formation of NEWCO.
------------------
(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.
(b) No Injunction. No preliminary or permanent injunction or other
-------------
order shall have been issued by any court or by any governmental or
regulatory agency, body or authority which prohibits the consummation of
the transactions contemplated by this Agreement or the Implementing
Agreements or has the effect of making the transactions contemplated by
this Agreement or the Implementing Agreements illegal and which is in
effect at the Closing Date (each Party agreeing to use its reasonable best
efforts to have any such injunction or order lifted).
(c) Statutes. No statute, rule, regulation, executive order, decree
--------
or order of any kind shall have been enacted, entered, promulgated or
enforced by any court or governmental authority which prohibits the
consummation of the transactions contemplated by this Agreement or the
Implementing Agreements or has the effect of making the transactions
contemplated by this Agreement or the Implementing Agreements illegal.
(d) Implementing Agreements; Assignments. On or before the Closing
------------------------------------
Date, the following agreements (all such agreements, the "Implementing
Agreements") shall have been duly executed and delivered by each of the
respective parties thereto:
(i) the Operating Agreement in substantially the form of
Exhibit B;
(ii) the Experian Transition Agreement in substantially the
form of Exhibit C-1;
38
(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.
(e) Assumption of FAFCO Notes. NEWCO shall have duly executed and
-------------------------
delivered to FAFCO an assumption agreement, in form and substance
reasonably satisfactory to FAFCO and EXPERIAN, pursuant to which NEWCO
shall assume all liabilities of FAREISI under (i) that certain promissory
note, dated November 19, 1997, made by FAREISI and payable to FAFCO in the
principal amount of $10,000,000 and (ii) that certain promissory note,
dated November 30, 1997, made by FAREISI and payable to FAFCO in the
principal amount of $25,000,000 (the "$25MM Note"), and FAFCO shall have
duly executed and delivered to NEWCO an acknowledgement, in form and
substance reasonably satisfactory to NEWCO and EXPERIAN, pursuant to which
FAFCO shall acknowledge that all rights of FAFCO to amounts payable by
NEWCO under such $25,000,000 promissory note shall be subject and
subordinate to the prior payment in full of all amounts payable by NEWCO to
EXPERIAN under the $3MM Note.
(f) Chase Waiver. The Chase Manhattan Bank ("Chase") shall have
------------
delivered to FAFCO its written waiver of the covenant(s) contained in its
agreement(s) with FAFCO that limit or prohibit FAFCO from consummating the
transactions contemplated by this Agreement and the Implementing
Agreements.
7.02. Conditions Precedent to the Obligations of the FAFCO Parties. The
------------------------------------------------------------
obligation of each of FAFCO, FAREISI and the other FAFCO Members to consummate
the transactions contemplated hereby and in the Implementing Agreements is
additionally subject to the satisfaction or waiver on or before the Closing Date
of the following conditions precedent (other than the condition precedent
specified in clause (h) below which shall be satisfied at or prior to the
Effective Time):
(a) Accuracy of Representations and Warranties. All representations
------------------------------------------
and warranties of EXPERIAN contained herein and in each of the Implementing
Agreements shall be true and correct in all material respects as of the
date hereof and at and as of the Closing Date, with the same force and
effect as though made on and as of the Closing Date.
39
(b) Performance by EXPERIAN. EXPERIAN shall have performed in all
-----------------------
material respects all obligations and agreements, and complied in all
material respects with all covenants and conditions, contained in this
Agreement and the Implementing Agreements to be performed or complied with
by it prior to the Closing Date.
(c) Consents and Approvals. All consents, approvals and other action
----------------------
by, all notices to and all filings with all Persons, including all courts
and administrative and governmental bodies that are required to have been
obtained, taken or made to consummate the transactions contemplated by this
Agreement and the Implementing Agreements (including those disclosed in
Schedule 3.08 attached hereto) shall have been obtained, undertaken or
made, except for such consents, approvals, notices and filings, the failure
to obtain which would not have a Material Adverse Effect on NEWCO after
giving effect to the transactions contemplated hereby and by the
Implementing Agreements.
(d) No Material Adverse Effect. Prior to the Closing, no event shall
--------------------------
have occurred or failed to occur, which occurrence, or failure to occur, as
the case may be, has had or is reasonably likely to have a Material Adverse
Effect on the EXPERIAN Interests or the RES Business, taken as a whole,
whether as a result of any legislative or regulatory change, revocation of
any license or rights to do business, fire, explosion, accident, casualty,
labor trouble, flood, drought, riot, storm, condemnation or act of God or
other public force or otherwise.
(e) Good Standing and Other Certificates. EXPERIAN shall have
------------------------------------
delivered to FAFCO (i) copies of EXPERIAN's charter or similar
organizational documents, including all amendments thereto, in each case
certified by the appropriate official of their respective jurisdiction of
organization, (ii) a certificate from the appropriate official of their
respective jurisdictions of organization to the effect that EXPERIAN is in
good standing or subsisting in such jurisdiction and listing all charter or
similar organizational documents of EXPERIAN on file and (iii) a
certificate as to the tax status of EXPERIAN from the appropriate official
in its respective jurisdiction of organization.
(f) Officer's Certificate. EXPERIAN shall have delivered to FAFCO a
---------------------
certificate of the President or any Vice President of EXPERIAN, dated the
Closing Date certifying that the conditions specified in Sections 7.01(b),
7.02(a), 7.02(b) and 7.02(d) have been satisfied.
(g) Cash Transfer. At or before the Effective Time, EXPERIAN shall
-------------
have delivered US $10,000,000 to NEWCO by wire transfer of immediately
available funds to an account designated by NEWCO.
(h) Due Diligence Completed. On or prior to the Closing Date, FAFCO
-----------------------
shall have completed its due diligence review of the RES Business and shall
be satisfied, it its sole and unfettered discretion, with all aspects
thereof.
(i) Proceedings. All proceedings to be taken in connection with the
-----------
transactions contemplated by this Agreement and all documents incident
thereto shall be satisfactory
40
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.
7.03. Conditions Precedent to the Obligations of EXPERIAN. The obligation
---------------------------------------------------
of EXPERIAN to consummate the transactions contemplated hereby and in the
Implementing Agreements is additionally subject to the satisfaction, at or
before the Closing, of the following conditions precedent:
(a) Accuracy of Representations and Warranties. All representations
------------------------------------------
and warranties of FAFCO, FAREISI and each of the other FAFCO Members
contained herein, and in each of the Implementing Agreements, shall be true
and correct in all material respects as of the date hereof and on and as of
the Closing Date, with the same force and effect as though made on and as
of the Closing Date.
(b) Performance by the FAFCO Parties. Each of FAFCO, FAREISI and
--------------------------------
each of the other FAFCO Members shall have performed in all material
respects all obligations and agreements, and complied in all material
respects with all covenants and conditions, contained in this Agreement and
the Implementing Agreements to be performed or complied with by it prior to
the Closing Date.
(c) Consents and Approvals. All consents, approvals and other action
----------------------
by, all notices to and all filings with all Persons, including all courts
and administrative and governmental bodies that are required to have been
obtained, taken or made to consummate the transactions contemplated by this
Agreement and the Implementing Agreements (including those disclosed in
Schedule 4.08 attached hereto) shall have been obtained, undertaken or
made, except for such consents, approvals, notices and filings, the failure
to obtain which (i) would not have a Material Adverse Effect on NEWCO,
after giving effect to the transactions contemplated hereby and by the
Implementing Agreements and/or (ii) is the subject of the indemnification
obligation of FAFCO contained in Section 5.04(a).
(d) No Material Adverse Effect. Prior to the Closing Date no event
--------------------------
shall have occurred or failed to occur, which occurrence, or failure to
occur, as the case may be, has had, or is reasonably likely to have, a
Material Adverse Effect on the FAFCO Interests or the FAREISI Business,
taken as a whole, whether as a result of any legislative or regulatory
change, revocation of any license or rights to do business, fire,
explosion, accident, casualty, labor trouble, flood, drought, riot, storm,
condemnation or act of God or other public force or otherwise.
(e) Charter Documents; Good Standing and Other Certificates. FAFCO
-------------------------------------------------------
shall have delivered to EXPERIAN (i) copies of FAFCO'S charter or similar
organizational documents and the charter or similar organizational
documents of FAREISI and each of the other FAFCO Members, including all
amendments thereto, in each case certified by the appropriate official of
its jurisdiction of organization, (ii) a certificate from the appropriate
official of their respective jurisdictions of organization to the effect
that each
41
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.
(f) Officer's Certificate. FAFCO shall have delivered to EXPERIAN a
---------------------
certificate of the President or any Vice President of FAFCO, dated the
Closing Date certifying that the conditions set forth in Sections 7.01(b),
7.03(a), 7.03(b) and 7.03(d) have been satisfied.
(g) EXPERIAN Note. EXPERIAN shall have received the $3MM Note, duly
-------------
authorized and executed by NEWCO and dated the Effective Date.
(h) Due Diligence Completed. On or prior to the Closing Date,
-----------------------
EXPERIAN shall have completed its due diligence review of the FAREISI
Business and shall be satisfied, it its sole and unfettered discretion,
with all aspects thereof.
(i) Proceedings. All proceedings to be taken in connection with the
-----------
transactions contemplated by this Agreement and all documents incident
thereto shall be satisfactory in form and substance to EXPERIAN and its
counsel, and EXPERIAN 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.
ARTICLE VII
SURVIVAL OF REPRESENTATION; INDEMNIFICATION
8.01. Survival of Representations. The respective representations and
---------------------------
warranties of the Parties hereto contained in this Agreement or in any Schedule,
Exhibit or certificate delivered together herewith or pursuant hereto shall
survive until January 1, 1999; provided, that the representations contained in
--------
Sections 3.10 and 4.10 shall survive until the applicable statutes of
limitations under the Code have expired; provided further, that the obligations
----------------
to indemnify specified in Section 8.02 hereof shall not terminate at the time
provided above if, prior to such time, a notice of claim relating to Losses
specifying in detail the nature thereof (although the amount of Losses, if not
yet determinable, need not be specified) has been given to FAFCO or EXPERIAN,
as the case may be; and provided further, that the obligations to indemnify
----------------
specified in Section 8.03 hereof shall not terminate until such time as the
liability for Taxes of NEWCO and each Party hereto has been conclusively
determined.
8.02. 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,
42
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.
8.03. Post-Effective-Time Tax Indemnification.
---------------------------------------
(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
9.01. Events of Termination. This Agreement may be terminated and the
---------------------
transactions contemplated hereby may be abandoned at any time prior to the
Closing by mutual consent of the Parties.
9.02. Effect of Termination. In the event that this Agreement shall be
---------------------
terminated pursuant to Section 9.01, all further obligations of the Parties
hereto under this Agreement shall terminate without further liability or
obligation of either Party to the other Parties hereunder; provided, however,
-------- -------
that no Party shall be released from liability hereunder if this Agreement is
terminated and the transactions abandoned by reason of (i) willful failure of
such Party to have performed its obligations hereunder or (ii) any knowing
misrepresentation made by such Party of any matter set forth herein.
43
ARTICLE X
MISCELLANEOUS
10.01. Fees and Expenses. Except as provided in Section 2.01 above, all
-----------------
costs and expenses incurred in connection with this Agreement and the
Implementing Agreements and the consummation of the transactions contemplated
hereby and thereby shall be paid by the Party incurring such costs and expenses.
10.02. Extension; Waiver. At any time prior to the Closing, the Parties
-----------------
hereto, by action taken by or on behalf of the respective Boards of Directors or
other governing body of such Parties, may (i) extend the time for the
performance of any of the obligations or other acts of the other Parties hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein or in any of the Implementing Agreements of the other Parties or in any
document, certificate or writing delivered pursuant hereto or thereto by the
other Parties or (iii) waive compliance with any of the agreements or conditions
contained herein. Any agreement on the part of any Party to any such extension
or waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such Party.
10.03. Confidentiality. Subject to the requirements of applicable law, each
---------------
Party shall maintain in confidence all information (i) transferred to NEWCO by
reason of the transfer of Interests and (ii) all information received from the
other Party as a result of any due diligence investigation conducted relative to
the execution of the Agreement and shall use such information only for the
benefit of NEWCO and or in connection with evaluating the transactions
contemplated hereby, except in accordance with the immediately succeeding
sentence, shall not disclose any such information to a third party or make any
unauthorized use thereof. 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.
10.04. Public Announcements. The Parties agree to consult promptly with
--------------------
each other prior to issuing any press release or otherwise making any public
statement with respect to the transactions contemplated hereby or by the
Implementing Agreements, and shall not issue any such press release or make any
such public statement prior to such consultation and review by the other Party
of a copy of such release or statement, unless required by applicable law.
10.05. Records Retained by FAFCO, EXPERIAN and NEWCO. Except as may
---------------------------------------------
otherwise be provided in this Agreement, FAFCO and EXPERIAN shall transfer and
deliver, or cause to be transferred and delivered, and FAFCO and EXPERIAN shall
cause their Affiliates to transfer and deliver to NEWCO after the Closing all
data, records and other information which pertain to its respective Interests
(with the exception of documents created for this transaction) including,
without limitation, tax records and personnel records necessary for NEWCO to
conduct the NEWCO Business (all of the foregoing being hereinafter called the
"Business Records"). To the extent that the original copies of any such
Business Records also contain information relating to any Party or any of its
Subsidiaries not relating to its Interests, said Party may deliver to
44
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.
10.06. Notices. All notices, requests, demands, waivers and other
-------
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if delivered in person or
by mail, postage prepaid, sent by telecopier, as follows:
(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
45
after delivery to such service; (iii) if sent by personal courier, upon receipt;
and (iv) if sent by facsimile, upon receipt.
10.07. Entire Agreement. This Agreement and the Schedules, Exhibits and
----------------
other documents referred to herein or delivered pursuant hereto, collectively
contain the entire understanding of the Parties hereto with respect to the
subject matter contained herein and supersede all prior agreements and
understandings, oral and written, with respect thereto unless specifically set
forth to the contrary herein.
10.08. Binding Effect; Benefit; Assignment.
-----------------------------------
(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.
(b) Notwithstanding anything stated in the foregoing paragraph (a), upon
acknowledging this Agreement by its execution of the signature page hereto,
NEWCO will be, for all purposes, treated as third party beneficiary to the
representations and warranties of each Party in this Agreement, and subject to
the limitations of Sections 8.01 and 8.02 shall be entitled to the benefits of
Article VIII with respect to any breach thereof; provided, that NEWCO may not
--------
assign such benefits without the written consent of each Party.
10.09. Amendment and Modification. Subject to applicable law, this
--------------------------
Agreement may be amended, modified and supplemented in writing by the Parties
hereto in any and all respects before the Closing (notwithstanding any
shareholder approval), by action taken by the respective Boards of Directors of
such Parties, or by the respective officers authorized by such Boards of
Directors, provided, that after any such shareholder approval, no amendment may
--------
be made which by law requires further approval by such shareholders without such
further approval.
10.10. Further Actions. Each of the Parties hereto agrees that, subject to
---------------
its legal obligations, it will use its reasonable best efforts to fulfill all
conditions precedent specified herein, to the extent that such conditions are
within its control, and to do all things reasonably necessary to consummate the
transactions contemplated hereby.
10.11. Counterparts. This Agreement may be executed in several
------------
counterparts, each of which shall be deemed to be an original, and all of which
together shall be deemed to be one and the same instrument.
46
10.12. Applicable Law; Submission to Jurisdiction.
------------------------------------------
(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.
10.13. Severability. If any term, provision, covenant or restriction
------------
contained in this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void, unenforceable or against its regulatory
policy, the remainder of the terms, provisions, covenants and restrictions
contained in this Agreement shall remain in full force and effect and shall in
no way be affected, impaired or invalidated.
47
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:
48
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
49
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
50
EXPERIAN INFORMATION SOLUTIONS, INC.
By /s/ D.V. Skilling
------------------------------------
Name: D. Van Skilling
Title:
51
ACKNOWLEDGED AND AGREED TO:
FIRST AMERICAN REAL ESTATE SOLUTIONS LLC
By /s/ Parker S. Kennedy
-------------------------------------
Name: Parker S. Kennedy
Title:
52