Exhibit (10)(b)
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OPERATING AGREEMENT
FOR
FIRST AMERICAN REAL ESTATE SOLUTIONS LLC,
A CALIFORNIA LIMITED LIABILITY COMPANY
By and Among
FIRST AMERICAN REAL ESTATE INFORMATION SERVICES, INC.,
FIRST AMERICAN APPRAISAL CONSULTING SERVICES, INC.,
FIRST AMERICAN APPRAISAL SERVICES, INC.,
FIRST AMERICAN CREDCO, INC.,
FIRST AMERICAN FIELD SERVICES, INC.,
FIRST AMERICAN FLOOD DATA SERVICES, INC.,
FIRST AMERICAN PROPERTY SERVICES, INC.,
FIRST AMERICAN REAL ESTATE TAX SERVICE, INC.,
PASCO ENTERPRISES, INC.,
PRIME CREDIT REPORTS, INC.,
PROPERTY FINANCIAL SERVICES OF NEW ENGLAND, INC.,
DOCS ACQUISITION CORP.,
STRATEGIC MORTGAGE SERVICES, INC. (TEXAS)
and
EXPERIAN INFORMATION SOLUTIONS, INC.
Dated as of November 30, 1997
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TABLE OF CONTENTS/1/
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Page
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ARTICLE I
DEFINED TERMS; CONSTRUCTION ...................... 2
1.01. Defined Terms .................................................. 2
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1.02. Construction ................................................... 6
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ARTICLE II
ORGANIZATIONAL MATTERS ......................... 7
2.01. Formation of the Company....................................... 7
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2.02. Capital Contributions; Membership Interests.................... 7
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2.03. Name of the Company............................................ 8
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2.04. Effectiveness; Term............................................ 9
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2.05. Principal Office and Registered Agent.......................... 9
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2.06. Addresses of the Members and the Managers...................... 9
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2.07. Purpose and Business of the Company............................ 9
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ARTICLE III
THE MEMBERS................................ 9
3.01. Limited Liability.............................................. 9
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3.02. Admission of Additional Members................................ 9
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3.03. Termination of Membership Interest............................. 9
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3.04. Absence of Management Powers................................... 9
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3.05. Unanimous Consent of Members................................... 10
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ARTICLE IV
MANAGEMENT COMMITTEE; MAJOR DECISIONS................... 10
4.01. Management By Management Committee............................. 10
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4.02. Management Committee Representation; Officers.................. 10
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4.03. Major Decisions................................................ 11
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4.04. Acquisition Approval; Additional Capital....................... 13
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4.05. Voluntary Loans................................................ 14
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ARTICLE V
ALLOCATIONS OF NET PROFITS AND NET LOSSES; DISTRIBUTIONS.......... 15
5.01. Allocations of Net Profit and Net Loss......................... 15
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5.02. Special Allocations............................................ 15
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5.03. Code Section 704(c) Allocations................................ 17
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/1/ This Table of Contents is provided for convenience only, and does not
form a part of the attached Operating Agreement.
(i)
5.04. Allocations of Net Profits and Losses and Distributions
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in Respect of a Transferred Interest........................... 17
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5.05. Distributions by the Company................................... 18
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5.06. Form of Distribution........................................... 18
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5.07. Restriction on Distributions................................... 19
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5.08. Return of Distributions........................................ 19
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ARTICLE VI
MEMBERSHIP INTEREST TRANSFER RESTRICTIONS................. 19
6.01. Transfer Restrictions.......................................... 19
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6.02. Further Restrictions on Transfer of Interests.................. 20
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6.03. Void Transfer.................................................. 20
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6.04. Permitted Transfers............................................ 20
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6.05. Third-Party Offers............................................. 21
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ARTICLE VII
BUSINESS OPPORTUNITIES........................... 22
7.01. Business Opportunities......................................... 22
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ARTICLE VIII
CONSEQUENCES OF DISSOLUTION EVENTS;
TERMINATION OF MEMBERSHIP INTEREST..................... 23
8.01. Dissolution Event.............................................. 23
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8.02. Withdrawal..................................................... 23
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8.03. Purchase Price................................................. 23
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8.04. Notice of Intent to Purchase................................... 23
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8.05. Purchase Pro Rata.............................................. 23
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8.06. Winding Up the Company......................................... 24
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8.07. Final Statement................................................ 24
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ARTICLE IX
BOOKS AND RECORDS; TAX RETURNS; ACCESS BY MEMBERS.............. 24
9.01. Company Books and Records...................................... 24
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9.02. Tax Returns.................................................... 24
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ARTICLE X
MISCELLANEOUS............................... 26
10.01. Specific Performance........................................... 26
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10.02. Amendments and Modifications................................... 26
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10.03. Notices........................................................ 26
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10.04. Attorneys' Fees................................................ 27
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10.05. Further Assurances............................................. 27
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10.06. Counterparts................................................... 27
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10.07. Governing Law.................................................. 27
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10.08. Successors..................................................... 27
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10.09. Severability................................................... 28
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(ii)
10.10. Entire Agreement................................................ 28
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10.11. Confidentiality................................................. 28
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SCHEDULES
Schedule 1 Officers
Schedule 2 Approved Transactions
Schedule 3 Existing Borrowing Facilities
(iii)
OPERATING AGREEMENT
FOR
FIRST AMERICAN REAL ESTATE SOLUTIONS LLC,
A CALIFORNIA LIMITED LIABILITY COMPANY
OPERATING AGREEMENT FOR FIRST AMERICAN REAL ESTATE SOLUTIONS LLC, a
California limited liability company (the "Company"), dated as of November 30,
1997, by and among FIRST AMERICAN REAL ESTATE INFORMATION SERVICES, INC., a
California corporation ("FAREISI"), FIRST AMERICAN APPRAISAL CONSULTING
SERVICES, INC., a California corporation ("FAREISI Subsidiary 1"), FIRST
AMERICAN APPRAISAL SERVICES, INC., a California corporation ("FAREISI Subsidiary
2"), FIRST AMERICAN CREDCO, INC., a Washington corporation ("FAREISI Subsidiary
3"), FIRST AMERICAN FIELD SERVICES, INC., a New Jersey corporation ("FAREISI
Subsidiary 4"), FIRST AMERICAN FLOOD DATA SERVICES, INC., a Texas corporation
("FAREISI Subsidiary 5"), FIRST AMERICAN PROPERTY SERVICES, INC., a New York
corporation ("FAREISI Subsidiary 6"), FIRST AMERICAN REAL ESTATE TAX SERVICE,
INC., a Florida corporation ("FAREISI Subsidiary 7"), PASCO ENTERPRISES, INC., a
Texas corporation ("FAREISI Subsidiary 8"), PRIME CREDIT REPORTS, INC., a
California corporation ("FAREISI Subsidiary 9"), PROPERTY FINANCIAL SERVICES OF
NEW ENGLAND, INC., a Delaware corporation ("FAREISI Subsidiary 10"), DOCS
ACQUISITION CORP., a Nevada corporation ("DOCS"), STRATEGIC MORTGAGE SERVICES,
INC. (TEXAS), a Texas corporation ("SMS") and EXPERIAN INFORMATION SOLUTIONS,
INC., an Ohio corporation ("EXPERIAN").
W I T N E S S E T H:
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WHEREAS, pursuant to that certain Contribution and Joint Venture Agreement,
dated as of November 30, 1997 (the "JV Agreement"), by and among The First
American Financial Corporation, a California corporation ("FAFCO"), FAREISI,
FAREISI Subsidiary 1, FAREISI Subsidiary 2, FAREISI Subsidiary 3, FAREISI
Subsidiary 4, FAREISI Subsidiary 5, FAREISI Subsidiary 6, FAREISI Subsidiary 7,
FAREISI Subsidiary 8, FAREISI Subsidiary 9, FAREISI Subsidiary 10, DOCS, SMS,
(FAREISI, the foregoing FAREISI Subsidiaries, DOCS and SMS, collectively, the
"FAFCO Members") and EXPERIAN, the parties thereto have agreed that the FAFCO
Members and EXPERIAN shall become the joint owners of the Company which is being
formed hereunder to own and operate the combined FAREISI Business and RES
Business (each such term used herein as defined in the JV Agreement);
WHEREAS, in furtherance of the transactions contemplated in the JV
Agreement, the Company, the FAFCO Members and EXPERIAN desire to define in this
Agreement certain of their rights, duties and obligations with respect to the
ownership, operation and management of the Company;
NOW, THEREFORE, in order to carry out their intent as expressed above, and
in consideration of the mutual covenants and agreements hereinafter contained,
the parties hereto hereby covenant and agree as follows:
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ARTICLE I
DEFINED TERMS; CONSTRUCTION
1.011. Defined Terms. As used in this Agreement, the following terms
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shall have the following meanings:
"Act" means the Beverly-Killea Limited Liability Company Act, codified in
the California Corporations Code, Section 17000 et seq., as the same may be
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amended from time to time.
"Adjusted Capital Account Deficit" shall mean, with respect to any Member,
the deficit balance, if any, in such Member's Capital Account as of the end of
the applicable Fiscal Year after (i) crediting thereto any amounts which such
Member is, or is deemed to be, obligated to restore pursuant to Treasury
Regulations (S) 1.704-2(g)(1) and (S) 1.704-2(i)(5) and (ii) debiting such
Capital Account by the amount of the items described in Treasury Regulations (S)
1.704-1(b)(2)(ii)(d)(4), (5) and (6). The foregoing definition of Adjusted
Capital Account Deficit is intended to comply with the provisions of Treasury
Regulation (S) 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently
therewith.
"Affiliate" has the meaning given thereto in Section 1.01 of the JV
Agreement.
"Agreement" means this Operating Agreement, as the same may be amended,
modified and/or supplemented from time to time.
"Articles" means the Articles of Organization for the Company originally
filed with the California Secretary of State and as amended from time to time.
"Bankruptcy" means, with respect to any Person, the occurrence of one or
more of the following events: (i) such Person commences a voluntary case
concerning itself under Title 11 of the United States Code entitled
"Bankruptcy," as now or hereafter in effect, or any successor thereto (the
"Bankruptcy Code"); (ii) an involuntary case is commenced against such Person
and the petition is not controverted within 10 days, or is not dismissed within
60 days, after commencement of the case; (iii) a custodian (as defined in the
Bankruptcy Code) is appointed for, or takes charge of, all or substantially all
of the property of, such Person; (iv) such Person commences any other proceeding
under any reorganization, arrangement, adjustment of debt, relief of debtors,
dissolution, insolvency or liquidation or similar law of any jurisdiction
whether now or hereafter in effect; (v) there is commenced against such Person
any such proceeding which remains undismissed for a period of 60 days; (vi) such
Person is adjudicated insolvent or bankrupt or any order of relief or other
order approving any such case or proceeding is entered; (vi) such Person suffers
the appointment of a custodian or the like for it or any substantial part of its
property to continue undischarged or unstayed for a period of 60 days; (vii)
such Person makes a general assignment for the benefit of creditors; or (viii)
any corporate or partnership action is taken by such Person for the purpose of
effecting any of the foregoing.
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"Business Day" shall mean any day, excluding Saturday, Sunday or any day
which shall be a legal holiday in the State of California.
"By-Laws" means the By-Laws as initially adopted by the Management
Committee and as the same may be amended from time to time.
"Capital Account" means with respect to any Member the capital account
which the Company establishes and maintains for such Member pursuant to Section
2.02(b).
"Capital Contribution" means, with respect to any Member, the total amount
of cash and the fair market value of property contributed (net of liabilities
secured by such contributed property that the Company is considered to assume or
take subject to under Section 752 of the Code) to the Company by such Member.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, the provisions of any succeeding law.
"Company" has the meaning given thereto in the introductory paragraph of
this Agreement.
"Company Development Opportunity" means any business opportunity related to
real estate lending specifically involving the acquisition, development,
construction, operation or management of merged credit reporting, appraisal
services, flood compliance, real estate tax reporting, tax certification, tax
outsourcing, mortgage assignments, tax valuation, real property field services
and real estate transaction document preparation.
"Company Minimum Gain" has the meaning given to the term "partnership
minimum gain" in the Regulations Sections 1.704-2(b)(2) and 1.704-2(d).
"Corporations Code" means the California Corporations Code, as amended from
time to time, and the provisions of succeeding law.
"Dissolution Event" means, with respect to any Member, the withdrawal from
this Agreement, the Bankruptcy, the dissolution or the termination of such
Member.
"Distributable Cash" means the amount of cash which the Management
Committee deems available for distribution to the Members, taking into account
all debts, liabilities, and obligations of the Company then due, and working
capital and other amounts which the Management Committee deems necessary for the
Company's business or to place into reserves for customary and usual claims with
respect to such business.
"Effective Time" has the meaning given thereto in Section 1.01 of the JV
Agreement.
"EXPERIAN" has the meaning given thereto in the first WHEREAS clause of
this Agreement.
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"Experian Managers" has the meaning given thereto in Section 4.02(a)
hereof.
"FAFCO" has the meaning given thereto in the first WHEREAS clause of this
Agreement.
"FAFCO Managers" has the meaning given thereto in Section 4.02(a) hereof.
"FAFCO Members" has the meaning given thereto in the first WHEREAS clause
of this Agreement.
"Fiscal Year" means the Company's fiscal year, which shall be the calendar
year.
"Former Member" has the meaning given thereto in Section 8.01 hereof.
"Former Member's Interest" has the meaning given thereto in Section 8.01
hereof.
"GAAP" means generally accepted accounting principles in the United States
of America applied on a consistent basis and reasonable under the circumstances.
"JV Agreement" has the meaning given thereto in the first WHEREAS clause of
this Agreement.
"Major Decision" has the meaning given thereto in Section 4.03 hereof.
"Manager" has the meaning given thereto in Section 4.01 hereof.
"Management Committee" means the Management Committee of the Company.
"Member" means each Person who is an initial signatory to this Agreement
or has been admitted to the Company as a Member in accordance with the Articles
or this Agreement and has not become the subject of a Dissolution Event or
ceased to be a Member in accordance with Article VIII or for any other reason.
"Member Minimum Gain" shall mean an amount, determined in accordance with
Regulations Section 1.704-2(i)(3) with respect to any Member Nonrecourse Debt,
equal to the Company Minimum Gain that would result if such Member Nonrecourse
Debt were treated as a Nonrecourse Liability.
"Member Nonrecourse Debt" has the meaning given to the term "partner
nonrecourse debt" in Regulations Section 1.704-2(b)(4).
"Member Nonrecourse Deductions" has the meaning given to the term "partner
nonrecourse deductions" in Regulations Section 1.704-2(i).
"Membership Interest" means a Member's entire interest in the Company,
including, without limitation, the right to receive distributions of the
Company's assets and allocations of
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income, gain, loss, deduction, credit and similar items from the Company
pursuant to this Agreement and the Act, the right to vote on or participate in
the management, and the right to receive information concerning the business and
affairs, of the Company.
"Net Profits" and "Net Losses" mean, for any Fiscal Year, the net income or
net loss, respectively, of the Company for such Fiscal Year.
"Nonrecourse Deduction" has the meaning given to such term in Regulations
Section 1.704-2(b)(1).
"Nonrecourse Liability" has the meaning set forth in Regulations Section
1.752-1(a)(2).
"Offer" has the meaning given thereto in Section 6.04(c) hereof.
"Offered Interest" has the meaning given thereto in Section 6.04(c) hereof.
"Offering Price" has the meaning given thereto in Section 6.04(c) hereof.
"Offer Notice" has the meaning given thereto in Section 6.04(c) hereof.
"Offer Rejection" has the meaning given thereto in Section 6.04(d) hereof.
"Offer Terms" has the meaning given thereto in Section 6.04(c) hereof.
"Percentage Interest" means, with respect to a Member, the percentage set
forth in Section 2.02(f) with respect to such Member, as such percentage may be
adjusted from time to time pursuant to the terms of this Agreement.
"Permitted Transfer" has the meaning given thereto in Section 6.04(a)
hereof.
"Permitted Transferee" has the meaning given thereto in Section 6.04(a)
hereof.
"Person" means and includes any individual, partnership, association, joint
stock company, joint venture, corporation, trust, limited liability company,
unincorporated organization or other enterprise or any government or political
subdivision or any agency, department or instrumentality thereof.
"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.
"Proposed Transferee" has the meaning given thereto in Section 6.04(c)
hereof.
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"Regulations" shall, unless the context clearly indicates otherwise, mean
the regulations in force as final or temporary that have been issued by the U.S.
Department of Treasury pursuant to its authority under the Code, and any
successor regulations.
"Remaining Members" has the meaning given thereto in Section 8.01 hereof.
"Requested Amount" has the meaning given thereto in Section 4.04(b) hereof.
"RES Data" has the meaning given thereto in the Data License Agreement in
the form of Exhibit D to the JV Agreement.
"Secretary" means the Secretary of the Company appointed by the Management
Committee.
"Tax Matters Member" has the meaning given thereto in Section 9.02(b)
hereof.
"Third-Party Offer" has the meaning given thereto in Section 6.05 hereof.
"Third-Party Terms" has the meaning given thereto in Section 6.05 hereof.
"Trademark License Agreement" means the Trademark License Agreement in
substantially the form of Exhibit G to the JV Agreement.
"Transfer" means any sale, transfer, assignment, donation, pledge,
hypothecation, encumbrance or other disposition in any manner whatsoever,
voluntarily or involuntarily, including, without limitation, any attachment,
assignment for the benefit of creditors or transfer by operation of law or
otherwise.
"Transfer Notice" has the meaning given thereto in Section 6.04(e) hereof.
"Voluntary Loans" has the meaning given thereto in Section 4.05(a) hereof.
"$3MM Note" has the meaning given thereto in Section 1.01 of the JV
Agreement.
"$25MM Note" has the meaning given thereto in Section 1.01 of the JV
Agreement.
1.012. Construction.
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(a) To the fullest extent permissible, each of the FAFCO Members, EXPERIAN
and the Company hereby waives such provisions of the California Corporations
Code as are inconsistent with the terms hereof.
(b) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and Article, Section,
subsection and Schedule references are to this Agreement unless otherwise
specified.
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(c) All accounting terms not specifically defined herein shall be
construed in accordance with GAAP.
(d) The meanings given to terms used herein shall be equally applicable to
both the singular and plural forms of such terms.
(e) The Table of Contents hereto and the Article and Section headings
herein are for convenience only and shall not affect the construction hereof.
(f) This Agreement is the result of negotiations among and have been
reviewed by counsel to the Members and is the product of all the Members.
Accordingly, this Agreement shall not be construed against any Member merely
because of such Member's involvement in its preparation.
ARTICLE II
ORGANIZATIONAL MATTERS
2.021. Formation of the Company. The Members have formed a California
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limited liability company under the laws of the State of California by filing
the Articles with the California Secretary of State and entering into this
Agreement, which Agreement shall at the Effective Time be deemed effective as of
the date the Articles were so filed. The rights and liabilities of the Members
shall be determined pursuant to the Act and this Agreement. To the extent that
the rights or obligations of any Member are different by reason of any provision
of this Agreement than they would be in the absence of such provision, this
Agreement shall, to the extent permitted by the Act, control.
2.022. Capital Contributions; Membership Interests.
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(a) Each Member or an Affiliate of such Member shall contribute to the
Company the assets and liabilities described in Section 2.02 of the JV Agreement
as its respective initial Capital Contribution. No Member shall be required to
make any additional Capital Contributions; provided, however, that the Members
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may be permitted to make additional Capital Contributions if and to the extent
they so desire, in accordance with the provisions of Section 4.04.
(b) The Company shall establish and maintain a separate Capital Account
for each Member in accordance with Regulations Section 1.704-1(b)(2)(iv). Each
Member shall receive a credit to its Capital Account in the amount of (i) the
amount of any Capital Contribution made in cash, (ii) the fair market value (net
of liabilities that the Company is considered to assume, or take subject to,
under Section 752 of the Code) of any Capital Contribution made in property
other than cash, and (iii) allocations to such Member of Net Profits. Each
Member's Capital Account shall be debited with (i) the amount of any cash and
the fair market value of property distributed to such Member (net of liabilities
that such Member is considered to assume or take subject to Section 752 of the
Code), all as may be determined in accordance with this Agreement, and (ii)
allocations of Net Losses. If a Member transfers all or a part of
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its Membership Interest in accordance with this Agreement, such Member's Capital
Account attributable to the transferred Membership Interest shall carry over to
the new owner of such Membership Interest pursuant to Regulations Section 1.704-
1(b)(2)(iv)(l). If any property other than cash is distributed to a Member, the
Capital Accounts of the Members shall be adjusted as if the property had instead
been sold by the Company for a price equal to its fair market value and the
proceeds distributed. Upon liquidation and winding-up of the Company, any
unsold Company property shall be valued to determine the gain or loss which
would result if such property were sold at its fair market value at the time of
such liquidation. The Capital Accounts of the Members shall be adjusted to
reflect how any such gain or loss would have been allocated under Article V if
such property had been sold at the assigned values.
(c) The Capital Accounts of the Members shall be increased or decreased in
accordance with Regulations Section 1.704-1(b)(2)(iv)(f) to reflect a
revaluation of the property of the Company on the Company's books as of the
following times: (i) the acquisition of an additional interest in the Company
by any new or existing Member in exchange for more than a de minimis capital
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contribution; (ii) the distribution by the Company to a Member of more than a de
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minimis amount of money or other property as consideration for an interest in
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the Company; and (iii) the liquidation of the Company within the meaning of
Regulations Section 1.704-1(b)(2)(ii)(g).
(d) Except as provided herein, no Member shall be entitled to receive any
interest or other earnings on its Capital Contributions.
(e) Except upon the dissolution of the Company or as may be specifically
provided in this Agreement, no Member shall have the right to demand or receive
the return of all or any part of its Capital Account or its capital
contributions to the Company.
(f) The Percentage Interests of the Members at the Effective Time shall be
___% with respect to FAREISI Subsidiary 1, ___% with respect to FAREISI
Subsidiary 2, ___% with respect to FAREISI Subsidiary 3, ___% with respect to
FAREISI Subsidiary 4, ___% with respect to FAREISI Subsidiary 5, ___% with
respect to FAREISI Subsidiary 6, FAREISI Subsidiary 7, ___% with respect to
FAREISI Subsidiary 8, ___% with respect to FAREISI Subsidiary 9, ___% with
respect to FAREISI Subsidiary 10, ___% with respect to DOCS, ___% with respect
to SMS and 20% with respect to EXPERIAN. Immediately following any additional
Capital Contributions, the Percentage Interests shall be adjusted by the
Management Committee to reflect the new relative proportions of the Capital
Accounts of the Members.
2.023. Name of the Company. The name of the Company shall be "First
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American Real Estate Solutions LLC." The business of the Company may be
conducted under that name or, upon compliance with applicable laws, any other
name that the Management Committee deems appropriate or advisable. The Managers
shall file any fictitious name certificates and similar filings, and any
amendments thereto, that the Management Committee considers appropriate or
advisable. Notwithstanding the foregoing, the Company shall not use the name
"Experian" in the conduct of its business except as expressly permitted by the
Trademark License Agreement or as otherwise agreed to in writing by EXPERIAN.
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2.024 Effectiveness; Term. Notwithstanding any other provision of this
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Agreement to the contrary, this Agreement shall be effective as between the
Members at the Effective Time and shall continue in effect until November 30,
2027, unless extended or sooner terminated as hereinafter provided; provided
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that at the Effective Time the term of this Agreement shall be deemed to have
commenced on the filing of the Articles.
2.025. Principal Office and Registered Agent. The Company shall
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continuously maintain an office and registered agent in the State of California.
The principal office of the Company shall be located at 150 Second Avenue, Suite
1600, St. Petersburg, Florida 33701 or as the Management Committee may otherwise
determine. The Company may also have such offices, anywhere within and without
the State of California, as the Management Committee may determine from time to
time, or the business of the Company may require. The registered agent shall be
as stated in the Articles or as otherwise determined by the Management
Committee.
2.026. Addresses of the Members and the Managers. The respective addresses
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of the Members and the Managers are set forth on Exhibit A. A Member shall
notify the Management Committee of any change in its address by delivering
written notice thereof to the Management Committee.
2.027. Purpose and Business of the Company. The purpose of the Company is
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to engage in any lawful activity for which a limited liability company may be
organized under the Act.
ARTICLE III
THE MEMBERS
3.001. Limited Liability. Except as expressly set forth in this Agreement
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or required by law, no Member shall be personally liable for any debt,
obligation, or liability of the Company, whether that liability or obligation
arises in contract, tort, or otherwise.
3.002. Admission of Additional Members. Except for the admission of
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substitute Members in accordance with Article VI, no additional Members shall be
admitted to the Company.
3.003. Termination of Membership Interest. Upon the transfer of a Member's
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Membership Interest in violation of Article VI or the occurrence of a
Dissolution Event as to such Member which does not result in the dissolution of
the Company under Article VIII, the Membership Interest of a Member shall be
terminated by the Management Committee and thereafter that Member shall be
entitled only to the amounts set forth in Section 8.03. Each Member acknowledges
and agrees that such termination or purchase of a Membership Interest upon the
occurrence of any of the foregoing events is not unreasonable under the
circumstances existing as of the date hereof.
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3.004. Absence of Management Powers. The Members shall have no power to
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participate in the management of the Company except as expressly authorized by
this Agreement or the Articles and except as expressly required by the Act. No
Member, acting solely in the capacity of a Member, is an agent of the Company
nor does any Member, unless expressly and duly authorized in writing to do so by
the Management Committee, have any power or authority to bind or act on behalf
of the Company in any way, to pledge its credit, to execute any instrument on
its behalf or to render it liable for any purpose.
3.005. Unanimous Consent of Members. Notwithstanding Section 3.04 and
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Article IV, the following matters shall require the unanimous vote, approval or
consent of all Members who are not the subject of a Dissolution Event:
(a) a decision to dissolve the Company or voluntarily terminate this
Agreement or voluntarily commence a case concerning itself under the
Bankruptcy Code or under any other applicable bankruptcy, insolvency or
similar law now or hereafter in effect;
(b) a decision to continue the business of the Company after the
occurrence of a Dissolution Event;
(c) any amendment of the Articles, By-Laws or, in accordance with
Section 10.02, this Agreement; and
(d) a decision to compromise the obligation of a Member to make a
Capital Contribution or return money or property paid or distributed in
violation of the Act.
ARTICLE IV
MANAGEMENT COMMITTEE; MAJOR DECISIONS
4.001. Management By Management Committee. The business, property and
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affairs of the Company shall be managed exclusively by the Management Committee.
The Management Committee shall consist of ten managers (each, a "Manager").
Except for situations in which the approval of the Members is expressly required
by the Articles, the Act or this Agreement, the Management Committee shall have
full, complete and exclusive authority, power, and discretion to manage and
control the business, property and affairs of the Company, to make all decisions
regarding those matters and to perform any and all other acts or activities
customary or incident to the management of the Company's business, property and
affairs. Without limiting the generality of the foregoing, but subject to
Section 2.04 and to the express limitations set forth elsewhere in this
Agreement, the Management Committee shall have the power to exercise on behalf
and in the name of the Company all of the powers described in Corporations Code
Section 17003.
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4.002. Management Committee Representation; Officers.
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(a) So long as EXPERIAN shall own at least a 10% Membership Interest in
the Company, the number of Managers of the Company shall be ten, and the FAFCO
Members shall designate eight Managers (the "FAFCO Managers") and EXPERIAN shall
designate two Managers of the Company (the "Experian Managers"). The FAFCO
Members shall be entitled to remove or replace any FAFCO Manager in their sole
discretion upon written notice to EXPERIAN and the Company. EXPERIAN shall be
entitled to remove or replace any Experian Manager in its sole discretion upon
written notice to FAFCO and the Company. Each Manager of the Company so
designated shall hold office, subject to the applicable provisions of the
Articles and By-Laws of the Company, until the next annual meeting of the
Members and until their respective successors shall be duly elected or appointed
and qualified. Each member of the Management Committee shall have one vote, and
the vote of the majority of the members of the Management Committee
participating in a meeting of the Management Committee (subject to the quorum
requirements set forth in the By-Laws) shall constitute the act of the
Management Committee, unless otherwise expressly set forth herein.
(b) The Members acknowledge that the Managers are appointed to represent
and serve the interests of the Members who appointed such Managers. The Members
agree that no such Manager shall have any liability (including, without
limitation, for any claim of breach of fiduciary duty) to the Company or to any
Member as a result of taking any action as a Manager, or as an officer or
director of a Member, which action the Manager reasonably believes to be in the
best interests of the Member he or she represents.
(c) At the Effective Time, each individual listed on Schedule 1 hereto
shall become an officer of the Company holding the office(s) of the Company set
forth opposite his or her name on Schedule 1 hereto and shall, subject to the
applicable provisions of the Articles and By-Laws of the Company, hold such
office(s) until his or her successor shall be duly elected or appointed and
qualified. Without limiting the foregoing, John Long shall be elected the
President and Chief Executive Officer of the Company until his successor shall
be duly elected or appointed and qualified.
4.003. Major Decisions. Except for the transactions described on Schedule 2
---------------
which are hereby approved, so long as EXPERIAN shall own at least a 10%
Membership Interest in the Company, and subject to the provisions of Sections
4.04 and 4.05 below, the Company shall not take, or permit to occur, any action
which would constitute a Major Decision without the prior written consent of the
Experian Managers. Notwithstanding the preceding sentence, if the Company seeks
the written consent of the Experian Managers to take, or permit to occur, any
action which would constitute a Major Decision and the Experian Managers fail to
respond to such consent request by the thirtieth (30th) day after such written
consent is delivered to the Experian Managers via registered mail, return
receipt requested, then the Company shall, without further action, be entitled
to take, or permit to occur, any such action. Each of the following acts, events
or occurrences shall constitute a "Major Decision":
(a) any acquisition by the Company of any business of another Person, or
of any property, securities, rights or other assets in one or a series of
related transactions
11
if (i) the consideration for such acquisition exceeds, in the aggregate, US
$5,000,000 or (ii) the Company is required to make a cash down-payment in excess
of $1,250,000 in connection with such acquisition (regardless of the aggregate
consideration involved in such acquisition).
(b) any sale, transfer or other disposition of assets of the Company,
other than in the ordinary course of business, with a fair market value at
the time of such sale, transfer or disposition exceeding, in the aggregate,
US $5,000,000.
(c) the adoption, filing or amendment of any designation of rights,
preferences and privileges with respect to any equity security of the
Company;
(d) the issuance, redemption or repurchase by the Company of any
Membership Interest or any other equity security of the Company to any
Person;
(e) other than borrowings made, or permitted to be made, under the
Company's borrowing facilities listed on Schedule 3 hereto (together with
any extensions or refinancings thereof which do not increase the aggregate
principal amount of borrowings permitted to be made thereunder) and
Voluntary Loans, the borrowing of any sums of money;
(f) the creation of any liens or encumbrances on any of the Company's
assets, other than the creation of liens and encumbrances (i) securing
borrowings permitted under paragraph (e) above; (ii) liens for taxes not yet
due, or liens for taxes being contested in good faith and by appropriate
proceedings for which adequate reserves have been established; (iii) liens in
respect of property or assets of the Company imposed by law, which were incurred
in the ordinary course of business, including without limitation, carriers',
warehousemen's and mechanics' liens and other similar liens arising in the
ordinary course of business and (x) which do not in the aggregate materially
detract from the value of such property or assets or materially impair the use
thereof in the operation of the business of the Company or (y) which are being
contested in good faith by appropriate proceedings and for which adequate
reserves have been established, which proceedings have the effect of preventing
the forfeiture or sale of the property or assets subject to any such lien; (iv)
pledges or deposits in connection with worker's compensation, unemployment
insurance and other social security legislation; or (v) constituting purchase
money security interests;
(g) except as provided in paragraphs (a) and (b) of this Section 4.03, any
loan or other use of the Company's assets with a fair market value in excess of
$1,250,000 to, or the Company making an investment in, any Person not a Member
or an Affiliate of a Member; provided, however, the Company may loan or permit
the use of the Company's assets if the fair market value thereof does not
singularly or in the aggregate exceed $1,250,000;
12
(h) any change in the character of the business of the Company or the
undertaking of any new ventures or transactions or the engaging in any type
of business not incidental and directly related to the Company's present
business;
(i) the sale or other disposition of all or substantially all of the
assets and property of the Company;
(j) the merger or consolidation of the Company with or into any other
limited liability company or any corporation or other entity;
(k) except as contemplated by Sections 4.04 and 4.05, any transaction,
whether or not evidenced by a written agreement, between the Company, on the one
hand, and FAFCO or its Affiliates, on the other hand, involving estimated
consideration in excess of $25,000 over any twelve-month period;
(l) any determination by the Company to require that each of FAFCO and
EXPERIAN provide a guaranty to a third party in accordance with the provisions
of Section 5.09 of the JV Agreement; provided that if the Experian Managers fail
to consent to a request for such guaranties, then the FAFCO Members and their
Affiliates (including, without limitation, FAFCO) shall nevertheless have the
right, but not the obligation, to provide any such guaranties upon such terms
and conditions as they (or any of them) shall determine in their (or its) sole
and absolute discretion; or
(m) any sale or other transfer by the Company of RES Data to an
entity in a market served by EXPERIAN.
4.004. Acquisition Approval; Additional Capital.
----------------------------------------
(a) Upon the approval of any acquisition described in clause (a) of
Section 4.03 in accordance with the provisions of Section 4.03, any action
thereafter necessary or desirable in respect of such acquisition and any
additional terms of such acquisition (including, without limitation, the source
and the nature of the capital needed, if any), may be approved by the
affirmative vote of a majority of the Managers (whether or not such majority
includes the Experian Managers). Without limiting the generality of the
foregoing, if, in connection with any such approved acquisition, the Management
Committee shall determine that additional capital is required by the Company,
the Management Committee may request that each of the Members contribute such
additional capital in proportion to the Percentage Interests then held by each
of them. Subject to clause (b) below, the Company shall accept from each of the
FAFCO Members and EXPERIAN a contribution only in the full amount of its share
of the additional capital requested. The contribution shall be in such form,
cash or otherwise, as the Management Committee shall determine.
(b) Upon receipt by EXPERIAN of any request from the Management Committee
for an additional capital contribution pursuant to clause (a) above, EXPERIAN
shall have the option to contribute or decline to contribute such additional
capital by delivering a written notice to the Company and each of the FAFCO
Members specifying its election not more than
13
30 days after its receipt of such request for additional capital (it being
understood and agreed that if such written notice is not delivered within the 30
day period provided, EXPERIAN shall be deemed to have elected not to contribute
such additional capital). In the event that EXPERIAN elects not to contribute
its proportionate share of additional capital as requested (the "Requested
Amount"), the FAFCO Members (or any of them) shall have the right, but not the
obligation, to contribute to the Company for their (or its) own account as an
additional capital contribution the Requested Amount. EXPERIAN shall not be
considered in breach of this Agreement as a result of its election not to
contribute the Requested Amount.
(c) If any of the Members makes an additional contribution as provided in
this Section 4.04, then each such Member shall receive a credit to its
respective Capital Account in the amount of any additional capital which it has
contributed to the Company. Immediately following such Capital Contributions,
the Percentage Interests of the Members shall be adjusted by the Management
Committee to reflect the new relative proportions of the Capital Accounts of the
Members. Such adjustment shall be made by: first, adjusting the Capital
Accounts of all of the Members to reflect the fair market value of the Company's
assets and shall include any unrealized income, gain, loss or deduction in
Company assets immediately prior to the additional Capital Contributions;
second, determining relative proportions of the Capital Accounts, taking into
account the new Capital Contributions; and third, adjusting the Percentage
Interests to reflect the relative portions of the Capital Accounts as so
adjusted.
(d) In the event that the Experian Managers fail to consent pursuant to
Section 4.03 hereof to any acquisition described in clause (a) of such Section
4.03 that is proposed by the FAFCO Members or the FAFCO Managers, the FAFCO
Members and their Affiliates (including, without limitation, FAFCO) shall be
free to pursue such proposed acquisition and neither the Company nor EXPERIAN
nor its Affiliates shall have any right, claim or interest in or to any revenues
resulting therefrom. In the event that the FAFCO Managers fail to consent
pursuant to Section 4.03 hereof to any acquisition described in clause (a) of
such Section 4.03 that is proposed by EXPERIAN or the Experian Managers,
EXPERIAN and its Affiliates shall be free to pursue such proposed acquisition
and neither the Company nor the FAFCO Members shall have any right, claim or
interest in or to any revenues resulting therefrom. In the event that the
Company fails to diligently pursue any acquisition described in clause (a) of
Section 4.03 that is approved by the Management Committee in accordance with the
terms of such Section 4.03, then the party that proposed such acquisition to the
Company shall be free to pursue such acquisition (so long as the Company's
failure to diligently pursue such acquisition is not attributable to such
party's actions) and neither the Company nor any other Member nor any of such
Member's Affiliates shall have any right, claim or interest in or to any
revenues resulting therefrom.
4.005. Voluntary Loans.
---------------
(a) If, at any time or times hereafter, the Management Committee shall
determine that additional financing is required by the Company to conduct its
business and operations according to its ordinary and usual course of business
or in connection with any acquisition described in clause (a) of Section 4.03
and approved in accordance with the provisions of Section 4.03, the Management
Committee may request that each of the FAFCO Members and
14
EXPERIAN make one or more loans on a voluntary basis to the Company ("Voluntary
Loans"). The timing, terms and conditions of each such Voluntary Loan shall be
subject to the approval of each of the parties hereto; provided that in no event
--------
shall any Voluntary Loan bear interest in excess of the Prime Rate.
(b) Notwithstanding any other provision of this Agreement, for the three
year period from and after the Effective Time until the third anniversary
thereof, the FAFCO Members (or any of them) may at any time and from time to
time, without the consent of EXPERIAN or the Experian Managers, borrow money
from or lend money to the Company. Such borrowings and loans shall bear
interest at the Prime Rate and shall be disregarded for purposes of the
declaration and payment of distributions by the Management Committee of the
Company pursuant to Section 5.05. In the event that borrowings by any FAFCO
Member from the Company exceed loans made by such FAFCO Member to the Company
(in each case taking into account accrued but unpaid interest) at the time any
distribution is declared, the amount of the distribution to such FAFCO Member
shall be reduced by the amount of such excess.
ARTICLE V.
ALLOCATIONS OF NET PROFITS AND NET LOSSES; DISTRIBUTIONS
5.001. Allocations of Net Profit and Net Loss.
--------------------------------------
(a) Net Loss. Net Loss shall be allocated to the Members in proportion to
--------
their Percentage Interests.
Notwithstanding the previous sentence, losses allocated to a Member shall
not exceed the maximum amount of losses that can be allocated without causing a
Member to have an Adjusted Capital Account Deficit at the end of any Fiscal
Year. In the event that any Member would have an Adjusted Capital Account
Deficit as a consequence of an allocation of losses in proportion to Percentage
Interests, the amount of losses that would be allocated to such Member but for
such allocation shall be allocated to the other Members to the extent that such
allocations would not cause such other Members to have an Adjusted Capital
Account Deficit and allocated among such other Members in proportion to their
Percentage Interests. Any allocation of items of loss pursuant to this Section
5.01(a) shall be taken into account in computing subsequent allocations pursuant
to this Article V, and prior to any allocation of items in such Section so that
the net amount of any items allocated to each Member pursuant to this Article V
shall, to the maximum extent practicable, be equal to the net amount that would
have been allocated to each Member pursuant to this Article V if no reallocation
of losses had occurred under this Section 5.01(a).
(b) Net Profit. Net Profit shall be allocated to the Members in
----------
proportion to their Percentage Interests.
5.002. Special Allocations. Notwithstanding Section 5.01, the following
-------------------
special allocations shall be made in the following order:
15
(a) Minimum Gain Chargeback. If there is a net decrease in Company
-----------------------
Minimum Gain during any Fiscal Year, each Member shall be specially allocated
items of Company income and gain for such Fiscal Year (and, if necessary, in
subsequent fiscal years) in an amount equal to the portion of such Member's
share of the net decrease in Company Minimum Gain that is allocable to the
disposition of Company property subject to a Nonrecourse Liability, which share
of such net decrease shall be determined in accordance with Regulations Section
1.704-2(g)(2). Allocations pursuant to this Section 5.02(a) shall be made in
proportion to the respective amounts required to be allocated to each Member
under this Section 5.02(a). The items to be so allocated shall be determined in
accordance with Regulations Sections 1.704-2(f)(6) and 1.704-2(j)(2). This
Section 5.02(a) is intended to comply with the minimum gain chargeback
requirement contained in Regulations Section 1.704-2(f) and shall be interpreted
consistently therewith. To the extent permitted by such Regulations and for
purposes of this Section 5.02(a) only, each Member's net decrease in Company
Minimum Gain shall be determined prior to any other allocations pursuant to this
Article V with respect to such Fiscal Year and without regard to any net
decrease in Company Minimum Gain during such Fiscal Year.
(b) Chargeback of Minimum Gain Attributable to Member Nonrecourse Debt.
------------------------------------------------------------------
If there is a net decrease in Member Minimum Gain attributable to Member
Nonrecourse Debt, during any Fiscal Year, each member who has a share of the
Member Minimum Gain attributable to such Member Nonrecourse Debt (which share
shall be determined in accordance with Regulations Section 1.704-2(i)(5)) shall
be specially allocated items of Company income and gain for such Fiscal Year
(and, if necessary, in subsequent Fiscal Years) in an amount equal to that
portion of such Member's share of the net decrease in Member Minimum Gain
attributable to such Member Nonrecourse Debt that is allocable to the
disposition of Company property subject to such Member Nonrecourse Debt (which
share of such net decrease shall be determined in accordance with Regulations
Section 1.704-2(i)(5)). Allocations pursuant to this Section 5.02(b) shall be
made in proportion to the amounts required to be allocated to each Member under
this Section 5.02(b). The items to be so allocated shall be determined in
accordance with Regulations Sections 1.704-2(i)(4) and 1.704-2(j)(2)(ii). This
Section 5.02(b) is intended to comply with the minimum gain chargeback
requirement contained in Regulations Section 1.704-2(i)(4) and shall be
interpreted consistently therewith. Solely for purposes of this Section
5.02(b), each Member's net decrease in Member Minimum Gain shall be determined
prior to any other allocations pursuant to this Article V with respect to such
Fiscal Year, other than allocations pursuant to Section 5.02(a).
(c) Qualified Income Offset. If a Member unexpectedly receives any
-----------------------
adjustments, allocations, or distributions described in Regulations Section
1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of Company income and gain shall be
specifically allocated to such Member in an amount and manner sufficient to
eliminate such excess deficit balance as quickly as possible. Any specific
allocations of items of income and gain pursuant to this Section 5.02(c) shall
be taken into account in computing subsequent allocations of income and gain
pursuant to this Article V so that the net amount of any item so allocated and
the income, gain, and losses allocated to each Member pursuant to this Article V
to the extent possible, shall be equal to the net amount that would have been
allocated to each such Member pursuant to the provisions of this Section 5.02(c)
if such unexpected adjustments, allocations, or distributions had not
16
occurred, provided that an allocation pursuant to this Section 5.02(c) shall be
made if and only to the extent that such Member would have an Adjusted Capital
Account Deficit after all other allocations provided for in this Article V have
been tentatively made as if this Section 5.02(c) were not in this Agreement.
The foregoing provision is intended to comply with Regulations Section 1.704-
1(b)(2)(ii)(d) and shall be interpreted and applied in a manner consistent with
such Regulations.
(d) Gross Income Allocation. In the event that any Member has an Adjusted
-----------------------
Capital Account Deficit at the end of any Fiscal Year, then each such Member
shall be specially allocated items of income in the amount of such excess as
quickly as possible, provided that an allocation pursuant to this Section
5.02(d) shall be made if and only to the extent that such Member would have an
Adjusted Capital Account Deficit in excess of such sum after all other
allocations provided for in this Article V have been tentatively made as if this
Section 5.02(d) were not in this Agreement.
(e) Nonrecourse Deductions. Any nonrecourse deductions (as defined in
----------------------
Regulations Section 1.704-2(b)(1)) for any Fiscal Year or other period shall be
specially allocated to the Members in proportion to their then respective
Percentage Interests.
(f) Member Nonrecourse Deductions. Those items of Company loss,
-----------------------------
deduction, or Code Section 705(a)(2)(B) expenditures which are attributable to
Member Nonrecourse Debt for any Fiscal Year or other period shall be specially
allocated to the Member who bears the economic risk of loss with respect to the
Member Nonrecourse Debt to which such items are attributable in accordance with
Regulations Section 1.704-2(i).
(g) Section 754 Adjustments. To the extent an adjustment to the adjusted
-----------------------
tax basis of any Company asset is required to be taken into account in
determining Capital Accounts pursuant to Regulations Section 1.704-
1(b)(2)(iv)(m), the amount of such adjustment to the Capital Account shall be
treated as an item of gain (if the adjustment increases the basis of the asset)
or loss (if the adjustment decreases such basis), and such gain or loss shall be
specially allocated to the Members in a manner consistent with the manner in
which their Capital Accounts are required to be adjusted pursuant to such
Regulations Section.
(h) Subsequent Allocations. Any special allocation of items of income or
----------------------
gain pursuant to Section 5.02(a), (b), (c) or (d) shall be taken into account in
computing subsequent allocations pursuant to this Article V, so that the net
amount of any items allocated to each Member shall, to the extent practicable,
be equal to the net amount that would have been allocated to each such Member
pursuant to the provisions of this Article V if such special allocations under
this Section 5.02 had not occurred.
5.03. Code Section 704(c) Allocations. Notwithstanding any other provision
-------------------------------
in this Article V, in accordance with Code Section 704(c) and the Regulations
promulgated thereunder, income, gain, loss, and deduction with respect to any
property contributed to the capital of the Company shall, solely for tax
purposes, be allocated among the Members so as to take account of any variation
between the adjusted basis of such property to the Company for federal income
tax purposes and its fair market value on the date of contribution. Allocations
17
pursuant to this Section 5.03 are solely for purposes of federal, state and
local taxes. As such, they shall not affect or in any way be taken into account
in computing a Member's Capital Account or share of profits, losses, or other
items of distributions pursuant to any provision of this Agreement.
5.04. Allocations of Net Profits and Losses and Distributions in Respect of
---------------------------------------------------------------------
a Transferred Interest. If any Membership Interest is transferred, or is
- ----------------------
increased or decreased by reason of the admission of a new Member or otherwise,
during any Fiscal Year of the Company, Net Profit or Net Loss for such Fiscal
Year shall be assigned pro rata to each day in the particular period of such
Fiscal Year to which such item is attributable (i.e., the day on or during which
it is accrued or otherwise incurred) and the amount of each such item so
assigned to any such day shall be allocated to the Member based upon its
respective Membership Interest at the close of such day.
5.05. Distributions by the Company.
----------------------------
(a) Subject to applicable law and any limitations contained elsewhere in
this Agreement (including, without limitation, Section 4.05(b)), the Management
Committee (i) shall, at the time of any payment by the Members in respect of
their income tax obligations attributable to their respective Membership
Interests, distribute to the Members, based upon their then respective
Percentage Interests, 40% (which percentage the Management Committee may from
time to time hereafter, upon the unanimous vote of the Managers, adjust to
reflect material changes in tax rates) of the Net Profits and (ii) may, in its
sole discretion, elect from time to time to otherwise distribute Distributable
Cash to the Members; provided that, except as contemplated by clause (i), (x)
--------
the Management Committee shall not make any distribution unless the Company's
obligation to EXPERIAN under the $3MM Note shall have been satisfied in full and
(y) subject to satisfaction of the condition set forth in preceding subclause
(x), (1) for the three year period from and after the Effective Time until the
third anniversary thereof, the Management Committee shall not make any
distribution unless (A) the Company's obligation to FAFCO under the $25MM Note
shall have been satisfied in full and (B) the Company shall have, both before
and after giving effect to such distribution, operating cash balances of not
less than $35,000,000 (as such amount may from time to time hereafter be
adjusted in good faith by the Management Committee to reflect the average
monthly expenses of the Company) and (2) for the four year period from and after
the third anniversary of the Effective Time until the seventh anniversary of the
Effective Time, the Management Committee shall distribute for each year of such
period an amount equal to not less than one-half of the difference of (A) the
Net Profits for the applicable year minus (B) any distribution made pursuant to
-----
clause (i) above for such year.
(b) All distributions hereunder shall be made in the following order of
priority:
(i) To the Members in proportion to their unreturned Capital
Contributions until each Member has received cumulative distributions from
the Effective Date through the date of such distribution equal to its
Capital Contributions; and
(ii) To the Members in proportion to their Percentage Interests.
18
All such distributions shall be made only to the Persons who, according to the
books and records of the Company, are the holders of record of the Membership
Interests in respect of which such distributions are made on the actual date of
distribution.
5.06. Form of Distribution. A Member, regardless of the nature of the
--------------------
Member's Capital Contribution, has no right to demand and receive any
distribution from the Company in any form other than money. Except as provided
in Article VIII, no Member may be compelled to accept from the Company a
distribution of any asset in kind in lieu of a proportionate distribution of
money being made to other Members.
5.07. Restriction on Distributions.
----------------------------
(a) Except for distributions to the Members in accordance with Section
5.05(a)(i), no distribution shall be made if, after giving effect to the
distribution:
(i) The Company would not be able to pay its debts as they become
due in the usual course of business; or
(ii) The Company's total assets would be less than the sum of its
total liabilities plus, unless this Agreement provides otherwise, the
amount that would be needed, if the Company were to be dissolved at the
time of the distribution, to satisfy the preferential rights of other
Members, if any, upon dissolution that are superior to the rights of the
Member receiving the distribution.
(b) The Management Committee may base a determination that a distribution
is not prohibited on any of the following:
(i) Financial statements prepared in accordance with GAAP;
(ii) A fair valuation; or
(iii) Any other method that is reasonable in the circumstances.
5.08. Return of Distributions. Members who receive distributions made in
-----------------------
violation of the Act or this Agreement shall return such distributions to the
Company. Except for those distributions made in violation of the Act or this
Agreement, no Member shall be obligated to return any distribution to the
Company or pay the amount of any distribution for the account of the Company or
to any creditor of the Company. The amount of any distribution returned to the
Company by a Member or paid by a Member for the account of the Company or to a
creditor of the Company shall be added to the account or accounts from which it
was subtracted when it was distributed to the Member.
19
ARTICLE VI
MEMBERSHIP INTEREST TRANSFER RESTRICTIONS
6.01. Transfer Restrictions. EXCEPT FOR TRANSFERS REQUIRED OR PERMITTED
---------------------
PURSUANT TO ARTICLE VI OF THE JV AGREEMENT OR THIS ARTICLE VI, EACH MEMBER
AGREES THAT IT WILL NOT IN ANY WAY, DIRECTLY OR INDIRECTLY, TRANSFER ITS
MEMBERSHIP INTEREST (WHETHER NOW OWNED OR HEREAFTER ACQUIRED), OR ANY RIGHT OR
INTEREST THEREIN, WHETHER VOLUNTARILY OR BY OPERATION OF LAW.
6.02. Further Restrictions on Transfer of Interests. In addition to other
---------------------------------------------
restrictions found in this Agreement, no Member shall Transfer all or any part
of its Membership Interest: without compliance with all federal and state
securities laws, and if the Membership Interest to be transferred, when added
to the total of all other Membership Interests transferred in the preceding
twelve (12) consecutive months prior thereto, would cause the tax termination of
the Company under Code Section 708(b)(1)(B).
6.03. Void Transfer. Any purported transfer of any Member's Membership
-------------
Interest in violation of Sections 6.01 and 6.02 shall be void and the Company
shall not give effect to any such purported transfer or recognize any such
purported transferee. In the event of any such purported transfer, the Company
shall continue to recognize as a Member only those persons whose names appear in
the records of the Company.
6.04. Permitted Transfers.
-------------------
(a) Notwithstanding anything to the contrary contained in this Article
VI, any Member may effect a Transfer upon the terms and conditions of this
Section 6.04 set forth below (each a "Permitted Transfer" and each transferee
thereof, a "Permitted Transferee").
(b) The Membership Interest of any Member may be transferred to any other
Member, subject to compliance with Section 6.02, and without the prior written
consent of the other Members or the Management Committee.
(c) If any Member desires to sell all or any part of its Membership
Interest (other than pursuant to Section 6.04(b)) and (i) is not otherwise
prohibited from doing so under this Section 6.04 and (ii) identifies a proposed
Transferee that is willing to purchase all or part of such Membership Interest
for cash (a "Proposed Transferee"), such Member shall first offer to sell the
Offered Interest to the other Members (the "Offer") by giving the other Members
written notice thereof (an "Offer Notice") specifying (A) the identity of the
Proposed Transferee, (B) the Membership Interest offered (the "Offered
Interest"), (C) the price at which the Proposed Transferee is willing to
purchase the Offered Interest (the "Offering Price") and (D) any other terms of
the Offer (the "Offer Terms"). Following its receipt of an Offer Notice, each
Member shall have a ten (10) day period during which it may elect to accept the
Offer and acquire all or a portion of the Offered Interest at the Offering Price
and upon the Offer Terms. The failure of any Member to deliver a written
election notice within
20
the applicable period shall constitute an election on the part of that Member
not to purchase any of the Offered Interest. Each Member so electing to acquire
shall be entitled to purchase a portion of the Offered Interest in the same
proportion that the Percentage Interest of such Member bears to the aggregate of
the Percentage Interests of all of the Members electing to so purchase the
Offered Interest. In the event any Member elects to purchase none or less than
all of its pro rata share of the Offered Interest, then each other Member can
elect to purchase any such remaining portion of the Offered Interest in the same
proportion that the Percentage Interest of such Member bears to the aggregate of
the Percentage Interests of all of the Members electing to so purchase the
remaining portion of the Offered Interest.
(d) In the event the other Members elect not to purchase or obtain all of
the Offered Interest (an "Offer Rejection"), the transferring Member shall be
free, subject to compliance with the tag-along provisions of Section 6.04(e)
below, if applicable, to sell the Offered Interest to the Permitted Transferee
at the Offering Price and upon the Offer Terms. If such sale is not consummated
at the Offering Price and upon the Offer Terms within sixty (60) days from the
date of the Offer Rejection, then the provisions of Section 6.04(c) shall once
again apply.
(e) In the event that any FAFCO Member proposes to effect a Permitted
Transfer of all or any part of its Membership Interest pursuant to Section
6.04(d) above, such transferring FAFCO Member shall promptly give written notice
(such notice, a "Transfer Notice") thereof to EXPERIAN setting forth the name
of, and the portion of its Membership Interest to be purchased by, the Permitted
Transferee, the purchase price of the Membership Interest to be sold, any other
significant terms of such sale and the date such proposed sale will be
consummated. EXPERIAN shall have the right, exercisable upon irrevocable written
notice to the transferring FAFCO Member within ten (10) days after receipt of a
Transfer Notice, to participate in such sale on the same terms and conditions as
set forth in the Transfer Notice and to sell all or any portion of its
Membership Interest. EXPERIAN shall effect its participation in the sale by
delivering on the date scheduled for such sale to the transferring FAFCO Member
for delivery to the Permitted Transferee one or more certificates, if any,
representing the Membership Interest which EXPERIAN desires to sell in
accordance with this Section 6.04(e) and/or any other duly executed instruments
of transfer necessary to effect the transfer of its Membership Interest. Such
certificate or certificates and/or instruments of transfer delivered by EXPERIAN
to the transferring FAFCO Member shall be delivered on such date to such
Permitted Transferee in consummation of the sale of EXPERIAN's Membership
Interest pursuant to the terms and conditions specified in the Transfer Notice,
and the transferring FAFCO Member shall concurrently therewith remit to EXPERIAN
that portion of the sale proceeds or other consideration to which EXPERIAN is
entitled by reason of its participation in such sale. A transferring FAFCO
Member's sale of all or any portion of its Membership Interest shall be effected
on the terms and conditions set forth in the applicable Transfer Notice. In no
event shall a transferring FAFCO Member receive special consideration in such
sale. The exercise or non-exercise of the rights of EXPERIAN hereunder to
participate in one or more sales of a Membership Interest made by a FAFCO Member
shall not adversely affect its right to participate in subsequent sales of any
Membership Interest subject to this Section 6.04.
21
6.05. Third-Party Offers. Notwithstanding anything to the contrary
------------------
contained in this Article VI, in the event that an offer is made by an unrelated
third-party to purchase the entire Company (a "Third-Party Offer") and such
Third-Party Offer is acceptable to the FAFCO Members, then the FAFCO Members
shall first offer to sell 100% of their Membership Interests to EXPERIAN by
giving EXPERIAN written notice thereof specifying the terms of the Third-Party
Offer upon which the FAFCO Members are willing to sell their Membership
Interests (the "Third-Party Terms"). Following its receipt of such notice
pursuant to this Section 6.05, EXPERIAN shall have a thirty (30) day period
during which it may elect to acquire all of the Membership Interests of the
FAFCO Members upon the Third-Party Terms. In the event that EXPERIAN rejects the
offer of the FAFCO Members hereunder or fails to deliver a written notice
accepting such offer within the applicable period, (a) the FAFCO Members shall
be free to sell their Membership Interests to such third-party purchaser upon
the Third-Party Terms and (b) EXPERIAN shall be obligated to sell its Membership
Interest to such third-party purchaser upon the Third-Party Terms and otherwise
upon terms no less favorable than those given by the third-party purchaser to
the FAFCO Members (pro rata based upon the relative size of the Membership
--- ----
Interest of EXPERIAN vis-a-vis the aggregate Membership Interests of the FAFCO
Members).
ARTICLE VII
BUSINESS OPPORTUNITIES
7.01. Business Opportunities.
----------------------
(a) If the Company becomes aware of any Company Development Opportunity,
the Management Committee will give due consideration to the desirability of
pursuing such Company Development Opportunity. Except as provided in Section
7.01(c), if the Company does not promptly pursue such Company Development
Opportunity, each of the Members and their respective Affiliates shall be free
to pursue such Company Development Opportunity and the Company shall not have
any right, claim or interest in or to any revenues or assets resulting
therefrom.
(b) Should any Member or any of its Affiliates discover, develop or be
offered a Company Development Opportunity, such Person will first offer such
Company Development Opportunity to the Company. Except as provided in Section
7.01(c), if the Management Committee does not promptly pursue such Company
Development Opportunity, then the Person discovering, developing or being
offered such Company Development Opportunity and its Affiliates shall be free to
pursue such Company Development Opportunity and neither the Company nor any
other Member shall have any right, claim or interest in or to any revenues or
assets resulting therefrom.
(c) Notwithstanding anything in Sections 7.01(a) and 7.01(b) to the
contrary, no FAFCO Member nor any of its Affiliates shall be free to pursue any
Company Development Opportunity offered to but not promptly pursued by the
Company if (i) such Company Development Opportunity was offered to the Company
by a FAFCO Member or any of its
22
Affiliates and (ii) the Experian Managers voted to pursue such Company
Development Opportunity. Notwithstanding anything in Sections 7.01(a) and
7.01(b) to the contrary, neither EXPERIAN nor any of its Affiliates shall be
free to pursue any Company Development Opportunity offered to but not promptly
pursued by the Company if (i) such Company Development Opportunity was offered
to the Company by EXPERIAN or any of its Affiliates and (ii) the FAFCO Managers
voted to pursue such Company Development Opportunity.
(d) Notwithstanding anything in Sections 7.01(a), 7.01(b) or 7.01(c) to
the contrary, to the extent any provision of this Agreement regarding Company
Development Opportunities conflicts with the Data Services Agreement referenced
in Section 7.01(d) of the JV Agreement, the provisions of the Data Services
Agreement shall control.
ARTICLE VII
CONSEQUENCES OF DISSOLUTION EVENTS;
TERMINATION OF MEMBERSHIP INTEREST
8.01. Dissolution Event. Upon the occurrence of a Dissolution Event, the
-----------------
Company shall dissolve unless the remaining Members ("Remaining Members")
holding a majority of the Percentage Interests which all Remaining Members hold,
consent within ninety (90) days of the Dissolution Event to the continuation of
the business of the Company. If the requisite majority of the Remaining Members
consents to the continuation of the business of the Company, the Company and/or
the Remaining Members shall have the right to purchase, and if such right is
exercised, the Member whose actions or conduct resulted in the Dissolution Event
("Former Member") or such Former Member's legal representative shall sell, the
Former Member's Membership Interest ("Former Member's Interest") as provided in
this Article VIII.
8.02. Withdrawal. Notwithstanding Section 8.01, upon the termination of a
----------
Member's Membership Interest in accordance with Section 3.03, such Member shall
be treated as a Former Member, and, unless the Company is to dissolve, the
Company and/or the Remaining Members shall have the right to purchase, and if
such right is exercised, the Former Member shall sell, the Former Member's
Interest as provided in this Article VIII.
8.03. Purchase Price. The purchase price for the Former Member's Interest
--------------
shall be calculated using the formula for determining the Put Price (as defined
in the JV Agreement), provided that such purchase price shall not be subject to
--------
the limitations contained in Sections 6.01(c) and 7.01(c) of the JV Agreement,
and shall be paid in cash.
8.04. Notice of Intent to Purchase. Within thirty (30) days after the
----------------------------
Management Committee has notified the Remaining Members as to the purchase price
of the Former Member's Interest determined in accordance with Section 8.03, each
Remaining Member shall notify the Management Committee in writing of its desire
to purchase all or a portion of the Former Member's Interest. The failure of
any Remaining Member to submit a notice within the applicable period shall
constitute an election on the part of such Member not to purchase any of the
Former Member's Interest. Each Remaining Member so electing to purchase shall
23
be entitled to purchase a portion of the Former Member's Interest in the same
proportion that the Percentage Interest of the Remaining Member bears to the
aggregate of the Percentage Interests of all of the Remaining Members electing
to purchase the Former Member's Interest.
8.05. Purchase Pro Rata. If any Remaining Member elects to purchase none or
-----------------
less than all of its pro rata share of the Former Member's Interest, then each
other Remaining Member may elect to purchase any such remaining portion of the
Former Member's Interest in the same proportion that the Percentage Interest of
such Remaining Member bears to the aggregate of the Percentage Interests of all
of the Remaining Members electing to so purchase the remaining portion of the
Former Member's Interest. If the Remaining Members fail to purchase the entire
Membership Interest of the Former Member, the Company shall purchase any
remaining share of the Former Member's Interest.
8.06. Winding Up the Company. If, upon the occurrence of a Dissolution
----------------------
Event, the requisite majority of the Remaining Members fails to consent to the
continuation of the business of the Company, the Management Committee shall
promptly notify the Members of such dissolution and shall wind up the affairs of
the Company and liquidate the Company assets. Such winding up and liquidation
shall be accomplished as soon as practicable giving due regard to the prudent
liquidation of the Company's assets in such a manner as to preserve the value of
the Company's assets to the extent that the Management Committee deems
practicable. Distributions made with respect to the liquidation of the Company
shall be made to the Members no later than ninety days following completion of
the liquidation. The proceeds of such liquidation shall be paid in the
following order:
(a) First, in payment of the debts and liabilities of the Company
and the expenses of liquidation;
(b) Then, to the establishment of such reserves as may be deemed
reasonably necessary by the Management Committee for any contingent or
unforeseen liabilities or obligations of the Company; and
(c) Then, after making all allocations required by Section 5.01, to
Members, in proportion to the positive balance in the Members' respective
Capital Accounts after satisfaction of each Member's obligation to the
Company.
8.07. Final Statement. Each of the Members shall be furnished with a
---------------
statement which shall set forth the assets and liabilities of the Company (as of
the date of complete liquidation) and an accounting of the manner in which the
assets of the Company were distributed.
24
ARTICLE IX
BOOKS AND RECORDS; TAX RETURNS; ACCESS BY MEMBERS
9.01. Company Books and Records. Proper and complete records and books of
-------------------------
account of the Company business shall be kept by the Company under the
supervision of the Management Committee and shall be audited by certified public
accountants selected by the Management Committee. The financial books of the
Company shall be maintained in accordance with GAAP.
9.02. Tax Returns.
-----------
(a) Preparation; Filing. At the expense of the Company, the Tax Matters
-------------------
Member shall prepare or cause to be prepared all federal and state Company tax
returns required to be file. Except as otherwise expressly provided in this
Agreement, all positions and elections reflected on all Company tax returns
shall be taken, and all Company tax returns shall be filed, only after
consultation with the Members. For federal income tax purposes only, the
Members agree that their relationship under this Agreement shall constitute a
partnership within the meaning of Section 761(a) of the Code. Tax allocations
shall be made in accordance with Article V hereof. The Members agree to take
all action, including the amendment of this Agreement and the execution of other
documents as may be required to qualify for such tax treatment. Each Member
shall bear the sole expense and cost of preparing its separate tax return. Each
Member shall agree to file its separate federal income tax returns in a manner
consistent with the provisions of this Agreement and in accordance with
applicable federal income tax law. The Members shall provide each other with
copies of all correspondence or summaries of other communications with the
Internal Revenue Service or U.S. Treasury regarding any aspect of items of
Company income, gain, loss or deduction and no Member shall enter into
settlement negotiations with the Internal Revenue Service or U.S. Treasury with
respect to the federal income tax treatment of any Company item of income, gain,
loss or deduction without first giving reasonable written advance notice of such
intended action to the other Member.
(b) Tax Matters Member. FAREISI is hereby designated as the "tax matters
------------------
partner", as that term is defined in Section 6231(a)(7) of the Code (the "Tax
Matters Member"). The Tax Matters Member shall furnish promptly to the Internal
Revenue Service a written statement, in accordance with Temporary Treasury
Regulations (S) 301.6223(c)-IT (or any successor thereto) in order to cause the
Internal Revenue Service to mail to each Member all notices described in Section
6223(a) of the Code or any corresponding provision of any successor federal
internal revenue law (and comparable provisions of state and local income tax
laws).
(c) Duties of the Tax Matters Member. The Tax Matters Member shall
--------------------------------
cooperate with the other Members and shall promptly provide the other Members
with copies of notices or other materials from, and inform the other Member of
discussions engaged in with, any federal, state, local or international taxing
authority and shall provide the other Members with notice of all scheduled
administrative proceedings, including meetings with agents of any
25
federal, state, local or international taxing authority, technical advice
conferences and appellate hearings, as soon as possible after receiving notice
of the scheduling of such proceedings. The Tax Matters Member will schedule
such proceedings only after consulting the other Members with a view to
accommodating the reasonable convenience of both the Tax Matters Member and the
other Members. The Tax Matters Member shall not take any action of any nature
whatsoever including, without limitation, agreeing to extend the period of
limitations for assessments, filing a petition or complaint in any court, filing
a request for an administrative adjustment of Company items after any return has
been filed, or entering into any settlement agreement with the Internal Revenue
Service, the U.S. Treasury or any other federal, state, local or international
taxing authority with respect to Company items of income, gain, loss or
deduction, in any such case without first consulting each other Member. The Tax
Matters Member may request extensions to file any tax return or statement
without consulting with, but shall so inform, the Management Committee. The
provisions of this Agreement regarding the Company's tax returns shall survive
the termination of the Company and the transfer of any Member's Membership
Interest and shall remain in effect for the period of time necessary to resolve
any and all matters regarding the federal, state, local and international income
taxation of the Company and items of Company income, gain, loss and deduction.
9.03. Inspection, Audit and Copies of Records. Each Member shall have the
---------------------------------------
right to inspect, make a separate audit and make copies of the books and records
of the Company. The Member exercising such right shall bear all expenses
incurred in the exercise of these rights.
9.04. Access. Each Member shall have access at reasonable times and upon
------
reasonable notice, without undue disruption of the business and operations of
the Company, to such properties, employees, agents, representatives and
information of the Company as it deems reasonably necessary in connection with
the ownership of its Membership Interest.
ARTICLE X
MISCELLANEOUS
10.01. Specific Performance. Due to the fact that the parties hereto will
--------------------
be irreparably damaged in the event that this Agreement is not specifically
enforced, in the event of a breach or threatened breach of the terms, covenants
and/or conditions of this Agreement by any of the parties hereto, the other
parties shall, in addition to all other remedies, be entitled to a temporary or
permanent injunction, without showing any actual damage, and/or a decree for
specific performance, in accordance with the provisions hereof.
10.02. Amendments and Modifications. The provisions of this Agreement may
----------------------------
be waived, altered, amended, modified, or repealed, in whole or in part, only on
the written consent of all parties to this Agreement. Any oral representations
or modifications concerning this instrument shall be of no force or effect
unless contained in a subsequent written modification signed by all parties to
this Agreement.
26
10.03. 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 addressed as follows:
If to the Company:
First American Real Estate Solutions LLC
150 Second Avenue, Suite 1600
St. Petersburg, Florida 33701
Attn: Mr. John Long
Telephone: (800) 449-8732
Telecopy: (813) 895-3619
If to the FAFCO Members:
c/o The First American Financial Corporation
114 East Fifth Street (P.O. Box 267)
Santa Ana, California 92702
Attn: Mr. Parker Kennedy
Telephone: (714) 558-3211
Telecopy: (714) 647-2242
With a copy to:
White & Case
633 West Fifth Street, 19th Floor
Los Angeles, CA 90071
Attn: Neil W. Rust
Telephone: (213) 620-7700
Telecopy: (213) 687-0758
If to EXPERIAN:
Experian Information Solutions, Inc.
505 City Parkway West
Orange, California 92868
Attn: General Counsel
Telephone: (714) 385-8296
Telecopy: (714) 938-2513
or to such other Person or address as any party shall specify by notice in
writing to each of the other parties hereto. Except for a notice of a change of
address, which shall be effective only upon receipt thereof, all such notices,
requests, demands, waivers and communications properly addressed shall be
effective: (i) if sent by U.S. mail, three Business Days after deposit in the
U.S. mail, postage prepaid; (ii) if sent by FedEx or other overnight delivery
27
service, two Business Days after delivery to such service; (iii) if sent by
personal courier, upon receipt; and (iv) if sent by facsimile, upon receipt.
10.04. Attorneys' Fees. Should any litigation be commenced between the
---------------
parties hereto concerning any provision of this Agreement or the rights and
duties of any person in relation thereto, the party or parties prevailing in
such litigation shall be entitled, in addition to such other relief as may be
granted, to a reasonable sum as and for attorneys' fees in such litigation.
10.05. Further Assurances. Each of the parties hereto does hereby covenant
------------------
and agree on behalf of itself and its successors and assigns, without further
consideration, to execute and deliver such other instruments, documents and
statements, and to take such other action, as may be required by law or as are
necessary effectively to carry out the purposes of this Agreement.
10.06. 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.
10.07. Governing Law. This Agreement, including its existence, validity,
-------------
construction and operating effect, and the rights of each of the parties hereto,
shall be governed by and construed in accordance with the internal laws of the
State of California.
10.08. Successors. Subject to the restrictions against Transfer as herein
----------
contained, the provisions of this Agreement shall inure to the benefit of and
shall be binding upon the respective successors and permitted assigns of each of
the parties hereto. 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.
10.09. Severability. If any term, provision, covenant, or condition of this
------------
Agreement is held by a court of competent jurisdiction to be invalid, void, or
unenforceable, the rest of this Agreement shall remain in full force and effect
and shall in no way be affected, impaired, or invalidated.
10.10. Entire Agreement. This Agreement, including all Schedules attached
----------------
hereto and any agreements referred to herein (including, without limitation, the
JV Agreement), constitutes the entire agreement of the parties pertaining to the
subject matter hereof, and fully supersedes any and all prior agreements or
understandings between the parties pertaining to the subject matter hereof.
10.11. Confidentiality. Subject to the requirements of applicable law, each
---------------
party shall maintain in confidence all information received from the Company
and, except as may otherwise be expressly permitted by a separate written
agreement, shall use such information only for the benefit of the Company, and
shall not disclose any such information to any third
28
party or make any unauthorized use thereof. Each party shall treat all such
information with the same degree of care against disclosure or unauthorized use
which it affords to its own confidential information. The obligation of
confidentiality and non-use shall not apply to any information which (a) is or
becomes generally available to the public through no fault of the receiving
party, (b) is independently developed by the receiving party or (c) is received
in good faith from a third party who is lawfully in possession of such
information and has the lawful right to disclose or use it.
29
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the date first written above.
FIRST AMERICAN REAL ESTATE INFORMATION
SERVICES, INC.
By /s/ John Long
------------------------------------
Name: John Long
Title:
FIRST AMERICAN APPRAISAL SERVICES,
INC.
By /s/ Anand Nallathambi
------------------------------------
Name: Anand Nallathambi
Title:
FIRST AMERICAN APPRAISAL CONSULTING
SERVICES, INC.
By /s/ Anand Nallathambi
------------------------------------
Name: Anand Nallathambi
Title:
FIRST AMERICAN CREDCO, INC.
By /s/ Donald A. Robert
------------------------------------
Name: Donald A. Robert
Title: President
FIRST AMERICAN FIELD SERVICES, INC.
By /s/ Shari Nott
------------------------------------
Name: Shari Nott
Title: Vice President
30
FIRST AMERICAN FLOOD DATA
SERVICES, INC.
By /s/ Robert Douglas
------------------------------------
Name: Robert Douglas
Title: Senior Vice President
FIRST AMERICAN PROPERTY SERVICES,
INC.
By /s/ John Long
------------------------------------
Name: John Long
Title:
FIRST AMERICAN REAL ESTATE TAX
SERVICE, INC.
By /s/ David C. Yavorsky
------------------------------------
Name: David C. Yavorsky
Title: President
PASCO ENTERPRISES, INC.
By /s/ John Long
------------------------------------
Name: John Long
Title:
PRIME CREDIT REPORTS, INC.
By /s/ Donald A. Robert
------------------------------------
Name: Donald A. Robert
Title: Senior Vice President
31
PROPERTY FINANCIAL SERVICES OF NEW
ENGLAND, INC.
By /s/ Anand Nallathambi
------------------------------------
Name: Anand Nallathambi
Title:
DOCS ACQUISITION CORP.
By /s/ John Long
------------------------------------
Name: John Long
Title:
STRATEGIC MORTGAGE SERVICES,
INC. (TEXAS)
By /s/ Mark B. Rogers
------------------------------------
Name: Mark B. Rogers
Title: President
EXPERIAN INFORMATION SOLUTIONS, INC.
By /s/ D. V. Skilling
-----------------------------------
Name: D. Van Skilling
Title:
32
Schedule 1 to
Operating Agreement
-------------------
Officers of
First American Real Estate Solutions LLC
John W. Long -- President and Chief Executive Officer
John Lamson -- Chief Financial Officer and Treasurer
Parker Kennedy -- Senior Vice President
Craig J. Zinda -- Secretary
Schedule 2 to
Operating Agreement
-------------------
Approved Transactions
1. Experian is in the process of selling the real property located at
1700/1800 N.W. 66th Avenue, Plantation, Florida.
2. Experian has amended an Agreement with COMPS Infosystems, Inc. to
provide for the sale of its C&I Data Extract Business in Florida and
Georgia.
Schedule 3 to
Operating Agreement
-------------------
Existing Borrowing Facilities
1. Intercompany indebtedness in the amount of $33,500,000 owing by
FAREISI to its sister company, First American Title Insurance Company
("FATICO"), resulting in an accounts payable balance in the aforesaid
amount owing to FATICO.