EXHIBIT 2
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ASSET PURCHASE AGREEMENT
AND PLAN OF REORGANIZATION
AMONG
EQUIFAX INC.,
EQUIFAX ACQUISITION, INC.
COMPLIANCE DATA CENTER, INC.,
XXXXXXX X. AND XXXXXX X. XXXXX LIVING TRUST, OCTOBER 7, 1998,
XXXXXX XXXXXXXX XXXXXX 1991 LIVING TRUST,
XXXXXXX X. XXXXX AND
XXXXXX XXXXXXXX XXXXXX
October 13, 2000
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TABLE OF CONTENTS
1. DEFINITIONS. ............................................................ 1
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2. THE TRANSACTION. ........................................................ 5
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2.1 Transfer of Assets ................................................ 5
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2.2 Consideration ..................................................... 6
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2.3 Post Closing Purchase Price Adjustment ............................ 7
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2.4 Other Transactions ................................................ 9
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2.5 Allocation ........................................................ 9
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2.6 Accounts Receivable ............................................... 9
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2.7 Consents and Approvals ............................................ 9
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3. COVENANTS AND UNDERTAKINGS. ............................................. 10
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3.1 Conduct of the Business of the Company Prior to the Closing Date . 10
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3.2 Filing of Tax Returns ............................................. 11
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3.3 Certain Covenants With Respect to Tax Preparation and Audits ...... 11
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3.4 Examination of Records and Confidentiality ........................ 12
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3.5 Intentionally Omitted ............................................. 12
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3.6 Standstill ........................................................ 12
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3.7 Public Announcements .............................................. 12
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3.8 Intentionally Omitted ............................................. 12
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3.9 Waiver ............................................................ 12
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3.10 Shareholder Certifications ........................................ 13
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3.11 Investment Letter ................................................. 13
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3.12 Covenant Not to Compete ........................................... 13
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3.13 Directors and Officers of AqSub ................................... 13
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3.14 Registration Rights Agreement ..................................... 13
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3.15 Intentionally Omitted ............................................. 13
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3.16 Additional Agreements ............................................. 13
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3.17 Stock Repurchase Agreement ........................................ 14
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3.18 Intentionally Omitted ............................................. 14
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3.19 Obligations of the Company After the Closing Date ................. 14
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4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND GREEN TRUST. .......... 14
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4.1 Organization and Standing ......................................... 14
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4.2 Authority and Status .............................................. 15
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4.3 Capitalization .................................................... 15
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4.4 Absence of Equity Investments ..................................... 15
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4.5 Liabilities and Obligations of the Company ........................ 15
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4.6 Tax Returns ....................................................... 16
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4.7 Tax Audits ........................................................ 16
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4.8 Ownership of Assets and Leases, Etc................................ 16
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4.9 Accounts Receivable ............................................... 17
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4.10 Absence of Changes ................................................ 18
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4.11 Litigation and Claims ............................................. 20
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4.12 Licenses and Permits; Compliance With Law ......................... 20
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4.13 Contracts, Etc..................................................... 21
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4.14 Computer Programs and Software .................................... 23
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4.15 Intellectual Property Matters ..................................... 24
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4.16 Labor Matters ..................................................... 25
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4.17 ERISA and Related Matters ......................................... 25
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4.18 Certain Payments .................................................. 26
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4.19 Customers ......................................................... 27
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4.20 Insurance ......................................................... 27
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4.21 Approvals ......................................................... 27
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4.22 Transactions with Affiliates ...................................... 27
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4.23 Environmental and Safety Matters .................................. 28
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4.24 Agreement Does Not Violate Other Instruments ...................... 28
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4.25 Exhibits .......................................................... 28
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5. COVENANTS, REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS. .......... 29
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5.1 Authority ......................................................... 29
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5.2 Ownership of Shares ............................................... 29
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5.3 Agreement Does Not Violate Other Instruments ...................... 29
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5.4 Litigation and Claims ............................................. 29
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5.5 Certain Payments .................................................. 30
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5.6 Intentionally Omitted ............................................. 30
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5.7 Company Representations ........................................... 30
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6. REPRESENTATIONS AND WARRANTIES OF EQUIFAX AND AQSUB. .................... 30
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6.1 Organization and Standing ......................................... 30
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6.2 Corporate Power and Authority ..................................... 30
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6.3 Agreement Does Not Violate Other Instruments ...................... 30
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6.4 Stock Will be Validly Issued ...................................... 31
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6.5 Statements True and Correct ....................................... 31
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6.6 Filings True and Correct .......................................... 31
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7. ADDITIONAL AGREEMENTS OF THE PARTIES. ................................... 31
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7.1 Key Employees ..................................................... 31
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7.2 Intentionally Omitted ............................................. 31
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7.3 Covenant Not to Compete ........................................... 31
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7.4 Consulting Agreement .............................................. 31
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7.5 Escrow Agreement .................................................. 31
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7.6 Cooperation With Respect to Approvals ............................. 31
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7.7 Employees Matters ................................................. 32
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7.8 Certain Tax Matters ............................................... 32
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8. CONDITIONS PRECEDENT TO OBLIGATIONS OF EQUIFAX AND AQSUB. ............... 32
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8.1 Representations True at Closing ................................... 32
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8.2 Covenants of the Shareholders and the Company ..................... 33
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8.3 No Injunction Etc.................................................. 33
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8.4 Opinion of Counsel ................................................ 33
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8.5 Consents and Waivers .............................................. 33
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8.6 Regulatory Approvals .............................................. 33
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8.7 Absence of Adverse Changes ........................................ 33
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8.8 Cash and Working Capital .......................................... 33
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8.9 Intentionally Omitted ............................................. 34
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8.10 Key Employees ..................................................... 34
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9. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE COMPANY AND
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THE SHAREHOLDERS. ....................................................... 34
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9.1 Representations True at Closing ................................... 34
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9.2 Covenants of Equifax .............................................. 34
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9.3 Approvals ......................................................... 34
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9.4 Opinion of Counsel ................................................ 34
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9.5 Key Employees ..................................................... 34
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9.6 No Stop Trade or Delisting of Equifax Common Stock ................ 35
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10. CLOSING. ................................................................ 35
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10.1 Time and Place of Closing ......................................... 35
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10.2 Transactions at Closing ........................................... 35
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11. SURVIVAL OF REPRESENTATION AND WARRANTIES; INDEMNIFICATION. ............. 36
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11.1 Survival of Representations and Warranties of the Shareholders
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and the Company; Indemnification .................................. 36
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11.2 Survival of Representations and Warranties of Equifax and AqSub;
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Indemnification ................................................... 38
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11.3 Indemnification Procedure ......................................... 38
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11.4 Limits on Indemnification Obligation .............................. 39
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11.5 Escrow First ...................................................... 40
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11.6 Guaranty .......................................................... 40
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11.7 Exclusive Remedy .................................................. 41
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12. TERMINATION. ............................................................ 42
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12.1 Method of Termination ............................................. 42
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13. GENERAL PROVISIONS. ..................................................... 42
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13.1 Notices ........................................................... 42
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13.2 Brokers ........................................................... 43
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13.3 Further Assurances ................................................ 43
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13.4 Waiver ............................................................ 44
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13.5 Expenses .......................................................... 44
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13.6 Binding Effect .................................................... 44
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13.7 Headings .......................................................... 44
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13.8 Entire Agreement .................................................. 44
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13.9 Governing Law ..................................................... 44
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13.10 Counterparts ...................................................... 44
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13.11 Number and Gender ................................................. 44
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13.12 Exhibits Incorporated ............................................. 44
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13.13 Confidentiality; Public Announcements ............................. 45
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ASSET PURCHASE AGREEMENT AND PLAN OF REORGANIZATION
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THIS ASSET PURCHASE AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement")
made this 13th day of October, 2000, by and among Equifax Inc., a Georgia
corporation ("Equifax"), Equifax Acquisition, Inc., a Georgia corporation and
wholly owned subsidiary of Equifax ("AqSub"), Compliance Data Center, Inc., a
Nevada corporation (the "Company"), Xxxxxxx X. and Xxxxxx X. Xxxxx Living Trust,
October 7, 1998, a trust established under the laws of the State of Nevada
("Green Trust"), Xxxxxx Xxxxxxxx Xxxxxx 1991 Living Trust, a trust established
under the laws of the State of Nevada ("Xxxxxx Trust;" and collectively with
Green Trust, the "Shareholders"), Xxxxxxx X. Xxxxx ("Green") and Xxxxxx Xxxxxxxx
Xxxxxx ("Xxxxxx;" and collectively with Green, the "Guarantors").
W I T N E S S E T H:
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WHEREAS, Equifax has formed AqSub as a direct, wholly owned subsidiary of
Equifax; and
WHEREAS, Equifax and AqSub desire to acquire (the "Acquisition")
substantially all of the assets of the Company; and
WHEREAS, the Shareholders desire to enter into this Agreement with Equifax
and AqSub; and
WHEREAS, Equifax, AqSub, the Company and the Shareholders desire to qualify
the Acquisition as a tax free reorganization under Section 368(a)(1)(C) of the
Code pursuant to which the Company will transfer its business and substantially
all its assets to AqSub in exchange for a certain number of shares of common
stock of Equifax and certain cash consideration, upon the terms and subject to
the conditions hereinafter set forth (collectively, the "Transaction").
NOW, THEREFORE, in consideration of the premises and the mutual promises,
representations, warranties and covenants hereinafter set forth, the parties
hereto agree as follows:
1. DEFINITIONS.
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As used herein, the following terms shall have the following meanings
unless the context otherwise requires:
"Accounts Receivable" shall mean all accounts receivable of the Company.
"Affiliate" shall have the meaning set forth in Section 4.22 hereof.
"Agreement" shall mean this Asset Purchase Agreement.
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"AqSub" shall mean Equifax Acquisition, Inc., a Georgia corporation.
"Assets" shall mean all of the assets and properties owned, leased or held
for use by the Company, other than the Excluded Assets. The Assets shall
include, but not be limited to, all items of machinery, equipment, furniture,
fixtures and other personal property, including those items described or listed
in Exhibit 4.8 hereto; (a) all Accounts Receivable; (b) all Assigned Contracts;
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(c) all data (historical and current) and rights to data (historical and
current) of the Company and files related thereto, including, without
limitation, all customer files, data and information maintained by the Company
pursuant to any of the Assigned Contracts or otherwise, in any case, wherever
located, whether in the form of hard copies, electronic media, or otherwise; (d)
all licenses, authorizations and permits issued by any governmental agency
relating to the Business or the Assets to the extent same may be assigned
consistent with their terms; (e) all intangible property rights related to the
Business (including, without limitation, the name "Compliance Data Center" or
any derivation thereof and any other Intellectual Property of the Company); (f)
all trade secrets, customer lists and supplier lists with respect to the
Business owned by the Company (including without limitation, (A) the procedural
and operational manuals utilized by the Company in the operation of the
Business, (B) all proprietary information, technical information, "know how" and
like information utilized by the Company in the Business, and (C) all
advertising materials, source documents, materials, supplies and forms, in any
case, whether in the form of hard copies, electronic media, computer tape or
otherwise, and all books and records incident to and currently used in the
Business (except for corporate and tax books and records of the Company)); and
(g) all rights to insurance proceeds arising from any casualty relating to the
Assets that occurred on or after June 30, 2000, security deposits, and deposits
with utilities and governmental agencies attributable to the Business.
"Assigned Contracts" shall mean all of the contracts, leases, instruments,
licenses and other agreements listed on Exhibit 4.13.
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"Assumed Liabilities" shall have the meaning set forth in Section 2.2.4
hereof.
"Average Price" shall mean the average closing price of Equifax Common
Stock as listed on the NYSE for the five (5) trading days preceding the Closing
Date.
"Benefit Plans" shall have the meaning set forth in Section 4.17.1 hereof.
"Business" shall mean providing risk assessment, credit related
verification and other types of information to the brokerage industry for
purposes of assessing consumer or commercial risk, as such business is conducted
by the Company prior to the Closing Date.
"Cash Consideration" means the amount of cash set forth in Section 2.2.2
payable as part of the Consideration.
"Closing" shall mean the consummation of the Transaction.
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"Closing Date" shall mean the date on which the Closing occurs pursuant to
Section 10.1 hereof.
"Closing Date Balance Sheet" shall have the meaning set forth in Section
2.4.1 hereof.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Company" shall mean Compliance Data Center, Inc., a Nevada corporation.
"Company Common Stock" shall have the meaning set forth in Section 4.3
hereof.
"Company's Working Capital" shall mean the Company's current assets less
its current liabilities, with current assets and current liabilities being
determined consistent with generally accepted accounting principles.
"Consideration" shall have the meaning set forth in Section 2.2 hereof.
"Consulting Agreement" shall have the meaning set forth in Section 2.2.6
hereof.
"Control" with respect to any Person shall mean an entity in which such
Person actually or beneficially owns more than fifty percent (50%) of the total
voting or equity interest in such entity. For purposes of this Agreement, with
regard to the Shareholders, all voting and equity interests owned by both of the
Shareholders shall be aggregated in determining Control.
"Covenant Not to Compete" shall have the meaning set forth in Section 3.12
hereof.
"Customer Agreements" shall mean all verbal and written contracts and
agreements with present customers of the Company.
"Data Warehouse" means the database(s) and other information and data
compilations used by the Company in the Business, whether owned by the Company
or not.
"Developers" shall have the meaning set forth in Section 4.14.2 hereof.
"Developer Agreements" shall have the meaning set forth in Section 4.14.2
hereof.
"Environmental Laws" shall have the meaning set forth in Section 4.23
hereof.
"Equifax" shall mean Equifax Inc., a Georgia corporation.
"Equifax Common Stock" shall mean unregistered shares of the common stock
of Equifax.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
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"Escrow Agent" shall mean SunTrust Bank.
"Escrow Agreement" shall have the meaning set forth in Section 7.5 hereof.
"Escrowed Amount" shall have the meaning set forth in Section 2.2.3 hereof.
"Excluded Assets" shall have the meaning set forth in Section 2.1 hereof.
"Exhibits" shall mean the exhibits attached hereto which are hereby
incorporated herein by reference.
"Financial Statements" shall have the meaning set forth in Section 4.5.1
hereof.
"GBCC" means the Georgia Business Corporation Code.
"Green" shall mean Xxxxxxx X. Xxxxx, individually.
"Green Trust" shall mean the Xxxxxxx X. and Xxxxxx X. Xxxxx Living Trust,
October 7, 1998, a trust established under the laws of the State of Nevada.
"Guarantors" shall mean Green and Xxxxxx, collectively.
"Hardware" shall have the meaning set forth in Section 4.14.1 hereof.
"Hazardous Materials" shall have the meaning set forth in Section 4.23
hereof.
"Immaterial Contracts" shall have the meaning set forth in Section 4.13
hereof.
"Intellectual Property" shall have the meaning set forth in Section 4.15
hereof.
"Interim Financial Statements" shall have the meaning set forth in Section
4.5.2 hereof.
"Key Employees" shall mean Xxxxxx Xxxxx and Xxxxxx Xxxxxx.
"Leased Properties" shall have the meaning set forth in Section 4.8.1
hereof.
"Licensors" shall have the meaning set forth in Section 4.14.2 hereof.
"Liens" shall have the meaning set forth in Section 4.8.1 hereof.
"Marks" shall have the meaning set forth in Section 4.15 hereof.
"NGCL" shall mean the Nevada General Corporation Law.
"1933 Act" shall mean the Securities Act of 1933, as amended.
"NYSE" shall mean the New York Stock Exchange.
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"Person" shall mean an individual or a corporation, partnership, limited
liability company, trust, estate, unincorporated organization, association or
other entity.
"Proprietary Software" shall mean the software shown in Exhibit 4.14.1,
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which includes all computer software applications, programs and/or solutions
that have been developed by or for the Company or as an enhancement to the
commercial computer software application, and interfaces developed by the
Company or for the Company to the commercial computer software, together with
all user documentation in the Company's possession or which has been conveyed to
the customers of the Company and all files created by the use of the Proprietary
Software.
"Settlement Date" shall have the meaning set forth in Section 2.3.1 hereof.
"Shareholders" collectively shall mean Green Trust and Xxxxxx Trust.
"Software" shall have the meaning set forth in Section 4.14 hereof.
"Stock Consideration" shall have the meaning set forth in Section 2.2.1
hereof.
"System" shall have the meaning set forth in Section 4.14.1 hereof.
"Xxxxxx" shall mean Xxxxxx Xxxxxxxx Xxxxxx, individually.
"Xxxxxx Trust" shall mean the Xxxxxx Xxxxxxxx Xxxxxx 1991 Living Trust, a
trust established under the laws of the State of Nevada.
"Trade Secrets" shall have the meaning set forth in Section 4.15 hereof.
"Transferred Employees" shall have the meaning set forth in Section 7.7.1
hereof.
"Unaudited Financial Statements" shall have the meaning set forth in
Section 4.5.1 hereof.
2. THE TRANSACTION.
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2.1 Transfer of Assets.
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2.1.1 Transfer of Company's Assets. On the Closing Date, the Company
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shall, and the Shareholders shall cause the Company to, transfer and deliver to
AqSub all of the Assets free and clear of all Liens other than the Assumed
Liabilities (including without limitation the right to receive mail and other
communications and shipments of merchandise to the Company and the right to use
the names "Compliance Data Center," "CDC" and any derivations or modifications
thereof), except the following (collectively, the "Excluded Assets"); (1) the
amount of cash permitted to be retained by Sections 2.1.2 hereof; (2) the
Company's corporate seal, corporate minute book, stock record books, and such
other books and records as the Company is required by law to retain; (3) rights
that lawfully cannot be transferred by the
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Company (provided, however, that such rights shall be held by the Company for
the benefit of AqSub and that AqSub at its option may act as the Company's agent
in order to enforce and obtain for AqSub the benefits of such rights); (4) the
Company's rights under this Agreement; (5) those certain split dollar life
insurance policies insuring the lives of Green and each Key Employee; (6) any
insurance proceeds related to casualties that occurred prior to June 30, 2000;
(7) rights under the Company's pension plan; (8) the Company's rights under the
agreements set forth in Exhibit 2.4.1; and (9) the other assets listed on
Exhibit 2.1 hereof.
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2.1.2 Cash. Subject to Section 2.1.3 hereof, cash held by the Company
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at Closing that are in excess of Two Hundred Eighty Thousand Dollars ($280,000)
shall be an Excluded Asset.
2.1.3 Limit on Excluded Assets. On the Closing Date in no event shall
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the aggregate value of the Excluded Assets, including cash, exceed 10% of the
fair market value of the Company's net assets (assets net of the Company's
liabilities) or 30% of the fair market value of the Company's gross assets (not
taking into consideration liabilities).
2.2 Consideration. At the Closing, the Company, in consideration of the
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sale of the Assets to AqSub, shall be entitled to the following consideration
(collectively, the "Consideration"):
2.2.1 Equifax Common Stock having an aggregate value equal to Ten
Million Six Hundred Twenty Five Thousand Dollars ($10,625,000) (the "Stock
Consideration"). The number of shares of Equifax Common Stock to be delivered
to the Company shall be determined by dividing the Stock Consideration by the
Average Price. No fractional shares of Equifax Common Stock shall be issued.
Fractional shares shall be rounded upward or downward to the nearest whole
number. Equifax Common Stock shares to be issued hereunder shall be delivered
to the Company as set forth on Exhibit 2.2.1 hereto.
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2.2.2 One Million Eight Hundred Seventy Five Thousand Dollars
($1,875,000) payable by wire transfer to the Company at the Closing which shall
be delivered to the Company as set forth on Exhibit 2.2.2 hereto (the "Cash
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Consideration").
2.2.3 The Company shall, concurrently with its receipt of the
Consideration, deliver (i) cash in the aggregate amount of One Hundred Thousand
Dollars ($100,000), and (ii) an amount of Equifax Common Stock received pursuant
to this Agreement having an aggregate value of Four Hundred Thousand Dollars
($400,000) (collectively, the "Escrowed Amount") to the Escrow Agent to be held,
applied and disbursed in accordance with the Escrow Agreement. The number of
shares of Equifax Common Stock to be delivered to the Escrow Agent pursuant to
this Section 2.2.3 shall be determined by dividing the Escrowed Amount by the
Average Price.
2.2.4 Except for AqSub's assumption as of the Closing Date of (i) the
obligations of the Company which accrue from and after the Closing Date under
the Assigned Contracts actually assigned to AqSub in accordance with this
Agreement, and (ii) obligations
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arising from AqSub's conduct of the Business from and after the Closing Date,
other than any obligations arising from a breach by the Company or any
Shareholder of any of their obligations under this Agreement (those obligations
referred to in (i) and (ii) being collectively referred to herein as the
"Assumed Liabilities"), AqSub, by entering into this Agreement and consummating
the transactions contemplated hereby, is not assuming or agreeing to pay or
otherwise become liable for any indebtedness, obligations or liabilities of the
Company or any Shareholder of any type or nature whatsoever, and except as
aforesaid, AqSub shall not assume any such liabilities or obligations nor shall
AqSub become liable for any such debts, liabilities or obligations relating to
the operation of the Business prior to the Closing Date. Without limiting the
generality of the foregoing: AqSub shall not assume (a) any indebtedness,
obligation or liability for any litigation matter or other third party claim
arising from the conduct of the Business prior to the Closing Date, regardless
of whether such matter is disclosed on any exhibit hereto; (b) any liability for
any legal fees or expenses of the Company or Shareholders incurred for any
reason whatsoever; (c) any liability for any claims by employees or former
employees of the Company concerning acts or omissions of the Company or any
Shareholder occurring prior to the Closing Date; (d) any liability for any
insurance premium adjustments (including retroactive adjustments) that may arise
from insurance policies in force any time before the Closing Date; or (e) any
liabilities of the Company or Shareholders for any income or other tax
obligations or for any employee benefit obligations.
2.2.5 The Company and Shareholders shall pay all stamp, sales, use,
employment, property, ad valorem, income, realty transfer, franchise, net worth,
intangible, excise, license or other taxes, additions to tax, penalties and
interest, whether Federal, state, local, foreign or other, which result directly
from any and all transfers pursuant to the terms of this Agreement. Except to
the extent reflected in the Closing Date Balance Sheet, all property and ad
valorem taxes, leasehold rentals and other customarily proratable items relating
to the Assets, payable on or after the Closing Date and relating to a period of
time both prior to and on or after the Closing Date will be prorated as of the
Closing Date between the Company, on the one hand, and AqSub, on the other hand.
If the actual amount of any such item is not known as of the Closing Date, the
aforesaid proration shall be based on the previous year's assessment of such
item and the parties agree to adjust said proration and pay any underpayment or
reimburse any overpayment within thirty (30) days after the actual amount
becomes known.
2.2.6 At the Closing, Equifax and Green shall enter into a consulting
agreement substantially in the form attached hereto as Exhibit 2.2.6 (the
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"Consulting Agreement").
2.3 Post Closing Purchase Price Adjustment.
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2.3.1 Following the Closing, AqSub shall prepare an unaudited balance
sheet of the Company, dated as of the Closing Date (the "Closing Date Balance
Sheet"), with supporting schedules thereto, in accordance with generally
accepted accounting principles and in the format of accrual-based accounting.
AqSub shall cause the Closing Date Balance Sheet to be delivered to the Company
or, if then liquidated, to the Shareholders on or prior to the date ninety (90)
days subsequent to the Closing Date (the "Settlement Date"). The parties
acknowledge that the
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Closing Date Balance Sheet shall not take into account any of the Excluded
Assets and any liabilities of the Company other than the Assumed Liabilities and
any liabilities or reserves arising out of the preparation of the Closing Date
Balance Sheet on an accrual basis.
2.3.2 On the tenth day following the Settlement Date, the Company or,
if then liquidated, the Shareholders shall pay to AqSub, in cash and as a dollar
for dollar adjustment to the Consideration payable pursuant to Section 2.2
hereof, unless the Company or, if then liquidated, the Shareholders wish to
dispute any matter arising out of the Closing Date Balance Sheet in the manner
set forth below, the amount of any indebtedness of the Company paid or assumed
by AqSub with the consent of the Company (which consent shall not be
unreasonably withheld) other than the Assumed Liabilities. In addition, the
Company or, if then liquidated, the Shareholders shall pay to AqSub, or AqSub
shall pay to the Company or, if then liquidated, the Shareholders, as the case
may be, the amount by which the Company's Working Capital reflected on the
Closing Date Balance Sheet is less than (in which case the Shareholders pay) or
more than (in which case AqSub pays) Seven Hundred Thousand Dollars ($700,000).
The parties acknowledge and agree that the obligation of the Company and the
Shareholders under this Section 2.3.2 shall not be limited by the Escrowed
Amount, and AqSub shall be entitled to, but, have no obligation to, apply any of
the Escrowed Amount to satisfy such obligation of the Company and the
Shareholders. The parties further acknowledge that if the Purchase Price shall
be increased pursuant to this Section 2.3.2, eighty five percent (85%) of such
additional Purchase Price shall be paid in Equifax Common Stock and fifteen
percent (15%) of such additional Purchase Price shall be paid in immediately
available funds, with the number of shares of Equifax Common Stock being
determined by dividing the amount to be paid in Equifax Common Stock by the
average closing price of Equifax Common Stock as listed on the NYSE for the five
(5) trading days immediately preceding the Settlement Date.
2.3.3 In the event that the Company or, if then liquidated, the
Shareholders wish to dispute any matter arising out of the Closing Date Balance
Sheet, the Company or, if then liquidated, the Shareholders shall within ten
(10) days of receipt of the Closing Date Balance Sheet give written notice to
AqSub (in accordance with Section 13.1 hereof) of such dispute and the reason(s)
therefor. The Company or, if then liquidated, the Shareholders and AqSub shall
attempt to resolve such dispute within ten (10) business days after receipt by
AqSub of such notice, and in the event AqSub and the Company or, if then
liquidated, the Shareholders fail to resolve such dispute within said period,
the parties agree that the independent certified public accounting firm of
Xxxxxx Xxxxxxxx LLP (or any other independent certified public accounting firm
that shall be mutually agreed upon by such parties) shall be employed to resolve
such dispute as soon as reasonably practicable and that any determination of
such accounting firm as to the disputed matter shall be binding upon the parties
hereto. In the event Xxxxxx Xxxxxxxx LLP or any other accounting firm is
employed, the costs of any such independent accounting firm shall be divided
equally among AqSub, on the one hand, and the Company or, if then liquidated,
the Shareholders, on the other hand. In the event an accounting firm is
employed to resolve the dispute, all amounts due hereunder shall be paid, in the
manner set forth above, on or prior to the fifth business day following the
final determination of such accounting firm.
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2.4 Other Transactions. At or prior to the Closing Date, the following
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transactions shall be consummated:
2.4.1 Termination of Agreements and Other Obligations. The
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agreements and obligations set forth on Exhibit 2.4.1 shall be terminated and
any amounts owing thereunder shall be paid in full and satisfied or forgiven and
canceled.
2.5 Allocation. The aggregate purchase price for the Assets and the
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Covenants Not to Compete shall be allocated by AqSub, the Company and the
Shareholders as set forth in Exhibit 2.5 hereto, as required by Section 1060 of
------- ---
the Code. AqSub and the Company shall, and Shareholders shall cause the Company
to, file Form 8594, Asset Acquisition Statement under Section 1060, with their
respective income tax returns for the taxable year that includes the Closing
Date. AqSub and the Company agree to satisfy any and all reporting requirements
of Section 1060 of the Code and the Treasury regulations thereunder. AqSub and
the Company shall file Form 8594 in a manner consistent with the allocation of
the purchase price set forth on Exhibit 2.5 hereto. If, in subsequent taxable
------- ---
years, AqSub or the Company makes an allocation of any increase or decrease in
the purchase price for any asset, the party making such increase or decrease
agrees to file a supplemental Form 8594 as required.
2.6 Accounts Receivable. AqSub shall use commercially reasonable efforts,
-------------------
consistent with AqSub's customary practices (provided, however, that AqSub shall
have no responsibility to bring any action or commence any suit to enforce
collection of Accounts Receivable) to collect the Accounts Receivable for a
period of one year from the Closing Date. AqSub shall not discount or otherwise
settle the collection of any such Accounts Receivable for less than the full
amount without the prior written approval of the Shareholders. Within thirty
(30) days after the conclusion of such one year period, AqSub shall provide the
Shareholders with written notice of any such Accounts Receivable which remain
uncollected, and, after receiving cash payment for such uncollected Accounts
Receivable from the Shareholders, shall assign all of such uncollected Accounts
Receivable to the Shareholders for collection; provided, however, that the
Shareholders agree not to bring any action or commence any suit to enforce
collection of any Accounts Receivable without seeking AqSub's assistance and
approval, which shall not be unreasonably withheld, and provided further, that
AqSub shall have the right, though not the obligation, to purchase the Accounts
Receivable that is the subject of the dispute, at face value less the direct
expenses associated therewith, without payment of any interest or fee
whatsoever, prior to the Shareholders commencing suit. Any amounts subsequently
collected by AqSub in respect to any of the uncollected Accounts Receivable
assigned to the Shareholders at the conclusion of the one year period shall be
remitted as soon as practicable to the Shareholders.
2.7 Consents and Approvals. The Company and each Shareholder agrees to
----------------------
apply for and obtain the waiver, consent and approval of all persons or entities
whose waiver, consent or approval is required in order to consummate the
Transaction, or is required by any agreement, lease, instrument, arrangement,
judgment, decree, order or license to which any Shareholder or the Company is a
party or subject on the Closing Date (including, without limitation, the consent
of any customer, licensor or supplier of the Company, if required), and which
would prohibit, or
9
require the waiver, consent or approval of any Person to such transaction or
under which, without such waiver, consent or approval, such transaction would
constitute an occurrence of default under the provisions thereof, result in the
acceleration of any obligation thereunder, or give rise to a right of any party
thereto to terminate its obligations thereunder; provided, that neither the
--------
Company nor any Shareholder shall make any agreements or understandings
affecting the Company as a condition for obtaining any such waivers, consents or
approvals, except with the prior written consent of AqSub. All written waivers,
consents and approvals listed on Exhibit 2.7 hereto shall be produced at Closing
-----------
in form and content reasonably satisfactory to AqSub. Any and all other written
waivers, consents and approvals shall be delivered to AqSub (in form and content
reasonably satisfactory to AqSub) as soon as reasonably possible after the
Closing.
3. COVENANTS AND UNDERTAKINGS.
--------------------------
3.1 Conduct of the Business of the Company Prior to the Closing Date.
----------------------------------------------------------------
Except with the consent in writing of Equifax, and except as may be required to
effect the transactions contemplated by this Agreement, and except as set forth
on Exhibit 3.1, the Company shall, and each of the Shareholders shall cause the
-----------
Company to, between the date of this Agreement and the Closing, conduct and
operate its business in the regular and ordinary course consistent with past
business practices. Without limiting the generality of the foregoing, such
parties shall, except as otherwise provided in this Agreement:
3.1.1 use their commercially reasonable best efforts to preserve
intact the organization and goodwill of the Company and preserve the goodwill of
customers, vendors and others having business relations with the Company, which
efforts shall include, but not be limited to, the continuation of the Company's
usual and customary levels and standards of service and its usual and customary
billing and collection procedures and the payment of accounts payable;
3.1.2 maintain the properties of the Company in the same working
order and condition as such properties are in on the date of this Agreement,
reasonable wear and tear excepted and not make any capital expenditures in the
aggregate in excess of $25,000;
3.1.3 not sell, lease, mortgage, pledge or otherwise dispose of any
of the Company's Assets or properties except for transactions in the ordinary
and regular course of business and except with respect to the Excluded Assets;
3.1.4 not make or permit any change in the Articles of Incorporation
or Bylaws of the Company, or in its authorized, issued or outstanding
securities;
3.1.5 not sell or issue any shares of the Company's capital stock or
any class or grant any stock options, warrants, conversion or other rights to
acquire or purchase any security of the Company, sell or issue any security
convertible into such securities, or grant or enter into, any agreements,
commitments, arrangements or understandings of any kind, contingent or
otherwise, to sell or issue any such securities, or purchase, redeem, retire or
otherwise acquire
10
any such securities, grant any bonuses (other than bonuses heretofore agreed to
by the parties and disclosed in this Agreement and the Exhibits hereto), or
agree to do any of the foregoing and the Company shall not declare, set aside or
pay any dividend in respect of its securities;
3.1.6 not make any changes in the Company's accounting methods except
as agreed to by Equifax;
3.1.7 not take any action or permit any action to be taken that would
materially and adversely affect any of the Assets or the Business of the Company
as a going concern, or that would impair the ability of the Shareholders or the
Company to consummate the Transaction;
3.1.8 except as contemplated by this Agreement, not increase or
otherwise change the rate or nature of the compensation (including but not
limited to wages, salaries, benefits, bonuses and employer contributions to
401(k) plans) which is paid or payable to any employee, officer, director or
consultants or independent contractors of the Company except in the ordinary
course of business in accordance with past practices or pursuant to existing
compensation and benefit plans, practices and arrangements which have been
disclosed in writing to Equifax, and not enter into, renew or allow the renewal
of, any material employment or consulting agreement or other contract or
arrangement with respect to the performance of personal services;
3.1.9 promptly deliver to Equifax all regularly prepared unaudited
financial statements of the Company, in the format historically utilized
internally, as soon as available;
3.1.10 not permit the Company to enter into any material contract,
commitment, arrangement or transaction of the type described in Section 4.13
hereof nor to modify, amend or waive any material provision of any contract,
instrument or agreement described on Exhibit 4.13 hereto except in the ordinary
------------
course consistent with past practice; and
3.1.11 promptly advise Equifax, in writing, of any matters arising or
discovered after the date of this Agreement which, if existing or known at the
date hereof, would be required to be set forth or described in this Agreement or
the Exhibits hereto.
3.2 Filing of Tax Returns. The Company covenants to cause all of the
---------------------
Company's federal, state, local and foreign tax returns required to be timely
filed before Closing to be timely filed with the appropriate taxing authorities.
For purposes of this Section 3.2, such returns shall not be deemed untimely
filed if the Company has obtained an extension from the appropriate taxing
authority as to the time in which it may file such tax returns and such extended
due date is after the Closing Date.
3.3 Certain Covenants With Respect to Tax Preparation and Audits. Equifax,
------------------------------------------------------------
AqSub, the Shareholders, and the Company will provide each other with such
assistance as may reasonably be requested by any of them in connection with the
preparation of any tax return, or in connection with any audit or other
examination by any taxing authority, or in connection with
11
any judicial or administrative proceedings relating to liability for taxes of
the Company. Each will retain and provide the other with any records or
information which may be relevant to such return, audit or examination,
proceedings or determination. The party requesting assistance hereunder shall
reimburse the other party or parties for reasonable expenses incurred in
providing such assistance, if such party makes a written request for
reimbursement. Any information obtained pursuant to this Section 3.3 or pursuant
to any other Section hereof providing for the sharing of information or the
review of any tax return or other schedule relating to taxes shall be kept
confidential by the parties hereto.
3.4 Examination of Records and Confidentiality. Between the date of this
------------------------------------------
Agreement and the Closing Date, the Company will allow, and the Shareholders
will cause the Company to allow, Equifax and AqSub, their counsel and other
representatives full access to all the books, records, files, documents, Assets,
contracts and agreements of the Company which may be reasonably requested, and
shall furnish Equifax and AqSub and their officers and representatives during
such period with all information concerning the affairs of the Company which may
be reasonably requested. Equifax and AqSub will conduct any investigation during
normal business hours of the Company. All such information shall be held in
confidence by Equifax and AqSub and made available to Equifax's and AqSub's
advisors on a need to know basis. All such information shall be returned to the
Company or destroyed if the Closing does not occur.
3.5 Intentionally Omitted.
---------------------
3.6 Standstill. During the period commencing on the date of this Agreement
----------
and terminating at the Closing or the termination of this Agreement pursuant to
Section 12.1 hereof, neither the Company nor any of the Shareholders nor any of
their affiliates shall, directly or indirectly, solicit, encourage or initiate
any discussions with, or negotiate or otherwise deal with, or provide
information to, any person or entity other than Equifax concerning, or enter
into any agreement in respect of, (a) any merger, sale of substantially all of
the assets or business or any similar transaction involving or respecting the
Company, or (b) any sale of the outstanding capital stock of the Company;
provided, however, that upon prior notice to Equifax, the Shareholders may make
-------- -------
transfers for estate planning purposes and provided further that the recipient
of such shares shall execute this Agreement as a shareholder.
3.7 Public Announcements. No party shall make any public announcement of
--------------------
the transactions contemplated by this Agreement without first obtaining the
prior written consent of the other parties hereto.
3.8 Intentionally Omitted.
---------------------
3.9 Waiver. The Shareholders hereby irrevocably waive any and all rights
------
of first refusal, and any preemptive or other similar rights that the
Shareholders may have under the NGCL or any agreements or other arrangements
between the Shareholders and the Company with regard to any transactions
contemplated by this Agreement.
12
3.10 Shareholder Certifications. The Shareholders, by executing this
--------------------------
Agreement, hereby represent, warrant and covenant to Equifax and AqSub, with
respect to the transactions contemplated by this Agreement, that:
(a) the Shareholders are not relying upon any representation or
warranty by Equifax, AqSub, their affiliates, representatives and agents, or
anyone else, in connection with their decision to acquire Equifax Common Stock
hereunder, excepting only such representations and warranties specifically set
forth in this Agreement;
(b) the Shareholders have such knowledge and experience in financial
and business matters that they are capable of evaluating the risks and merits of
the transactions contemplated by this Agreement, including, without limitation,
an investment in Equifax Common Stock deliverable to them;
(c) the Shareholders have received, reviewed and had adequate
opportunity to inquire respecting Equifax's annual report, proxy statement and
other reports delivered hereunder to each of them; and
(d) the Shareholders are each an "accredited investor," as such term
is defined in the 1933 Act.
3.11 Investment Letter. At the Closing, the Shareholders shall execute and
-----------------
deliver to Equifax an Investment Letter and Investor Questionnaire in the form
of Exhibit 3.11 hereto.
------------
3.12 Covenant Not to Compete. At the Closing, each Shareholder, Green and
-----------------------
Xxxxxx shall enter into a Covenant Not to Compete agreement in the form of
Exhibit 3.12 hereto (each, a "Covenant Not to Compete").
------------
3.13 Directors and Officers of AqSub. At or prior to the Closing, Equifax
-------------------------------
and AqSub shall cause the individuals named on Exhibit 3.13 hereto to be
------------
appointed as directors and officers of AqSub.
3.14 Registration Rights Agreement. At the Closing, Equifax and the
-----------------------------
Shareholders shall enter into a Registration Rights Agreement in the form of
Exhibit 3.14 hereto.
------------
3.15 Intentionally Omitted.
---------------------
3.16 Additional Agreements. Subject to the terms and conditions herein
---------------------
provided, each of the parties hereto agrees to use all reasonable efforts to
take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable, whether under applicable law or
otherwise, or to remove any injunctions or other impediments or delays, legal or
otherwise, to consummate and make effective the transactions contemplated by
this Agreement. In case at any time after the Closing any further action is
necessary or desirable to carry out the purposes of this Agreement, the proper
officers and directors of Equifax, AqSub,
13
the Company and the Shareholders shall use all reasonable efforts to take, or
cause to be taken, all such necessary actions.
3.17 Stock Repurchase Agreement. Equifax agrees not to purchase and
--------------------------
Shareholders agree not to sell to Equifax any of the Equifax Common Stock issued
to Shareholders pursuant to this Agreement.
3.18 Intentionally Omitted.
---------------------
3.19 Obligations of the Company After the Closing Date.
-------------------------------------------------
Company covenants and agrees that:
3.19.1 Change of Name. On or immediately after the Closing Date,
--------------
Company will amend its Articles of Incorporation so as to change its corporate
name to Financial Reports Incorporated and will thereafter take such action as
may reasonably be requested by Equifax or AqSub to make its present corporate
name available to them.
3.19.2 Dissolution. From and after the Closing Date, the Company will
-----------
not engage in any business, will promptly liquidate and dissolve as a
corporation, and will distribute the shares of Equifax Common Stock received
pursuant to Section 2.2.1 hereof to the Shareholders in complete cancellation
and redemption of their shares of Company capital stock.
3.19.3 Company's Corporate Records. The Company will make available
---------------------------
for inspection and copying all books and records retained by it pursuant to
Section 2.1.1 hereof to Equifax or AqSub upon reasonable request for access
thereto, and if at any time the Company proposes to discard or destroy such
books and records, it will first offer to transfer them without charge to
Equifax or AqSub.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND GREEN TRUST.
-------------------------------------------------------------
The Company and Green Trust, jointly and severally, represent and warrant
to Equifax and AqSub as follows:
4.1 Organization and Standing.
-------------------------
4.1.1 The Company is a corporation duly organized, validly existing,
and in good standing under the laws of the State of Nevada and has the full
power and authority (corporate and otherwise) to carry on its business in the
places and as it is now being conducted and to own and lease the properties and
assets which it now owns or leases. The Company does not have any subsidiaries.
4.1.2 The Company is duly qualified and/or licensed to transact
business as a foreign corporation in the jurisdictions listed on Exhibit 4.1
-----------
hereto and is in good standing in
14
each such jurisdiction. The character of the property owned or leased by the
Company and the nature of the business conducted by the Company do not require
it to be qualified or licensed in any other jurisdiction, except for
jurisdictions in which the failure to be so qualified or licensed will not have,
individually or in the aggregate, a materially adverse effect on the business,
assets, operations or financial condition of the Company.
4.2 Authority and Status. The execution, delivery and performance by the
--------------------
Company of this Agreement and each and every agreement, document and instrument
provided herein have been duly authorized and approved by all necessary
corporate action on the part of the Company. This Agreement and each agreement,
document and instrument provided for herein constitute or will, when executed
and delivered, constitute the legal, valid and binding obligations of the
Company and the Shareholders enforceable against each of them in accordance with
their respective terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium, applicable equitable principles, or
similar laws from time to time in effect affecting the enforcement of creditors'
rights generally. Attached hereto as Exhibits 4.2(a) and 4.2(b), respectively,
--------------- ------
are true, correct and complete copies of the Articles of Incorporation, as
amended, and Bylaws, as amended, of the Company. The minute books of the
Company, true, correct and complete copies of which have previously been
delivered to Equifax, contain accurate and complete minutes of all meetings of,
and accurate and complete consents to all actions taken without meetings by, the
Board of Directors (and any committee thereof) and the shareholders of the
Company since the formation of the Company.
4.3 Capitalization. The entire authorized capital stock of the Company
--------------
consists of twenty-five thousand (25,000) shares of common stock, no par value
("Company Common Stock"), of which one hundred (100) shares are issued and
outstanding. All such shares of Company Common Stock are owned of record by the
Shareholders in the manner set forth on Exhibit 4.3 hereto. All of such
-----------
outstanding shares of the Company have been duly authorized and validly issued,
and are fully paid and non-assessable. All of such issued and outstanding shares
of Company Common Stock were offered and sold in compliance with all applicable
state and Federal securities laws, rules and regulations. There are no
outstanding options, warrants, calls, commitments or plans by the Company to
issue any additional shares of its capital stock, or to pay dividends on such
shares, or to purchase, redeem or retire any outstanding shares of its capital
stock, nor are there outstanding any securities or obligations that are
convertible into or exchangeable for any shares of capital stock of the Company.
There are no stock appreciation rights, phantom stock or similar rights in
existence with respect to the Company. There has been no change in the equity
interest of the capital stock of the Company in contemplation of this
transaction.
4.4 Absence of Equity Investments. The Company does not own, of record or
-----------------------------
beneficially, either directly or indirectly, any capital stock or other equity
or ownership or proprietary interest in any Person.
4.5 Liabilities and Obligations of the Company. Attached hereto as Exhibit
------------------------------------------ -------
4.5. are true, correct and complete copies of the Company's unaudited balance
----
sheet and the related
15
statements of earnings and retained earnings and cash flows for the Company's
fiscal years ended December 31, 1997, 1998 and 1999 (collectively, the
"Unaudited Financial Statements"), and its unaudited balance sheet as of June
30, 2000 and the related statements of earnings and retained earnings for the
six-month period then ended (collectively, the "Interim Financial Statements",
and together with the Unaudited Financial Statements, the "Financial
Statements"). The Financial Statements are complete, fairly present the
financial condition and results of operations of the Company as of the dates and
for the periods thereof on a cash basis.
4.6 Tax Returns. Except as described on Exhibit 4.6, the Company has, as
----------- -----------
of the date hereof, and will have prior to the Closing Date, timely filed all
federal, state, foreign and local tax returns and reports required to be filed
by it prior to such dates, and has timely and accurately paid or made adequate
provision for, or prior to the Closing Date will timely pay or make adequate
provision for, all taxes that are due and payable for all periods through and
including the Closing Date, including, without limitation, all income, property,
sales, intangible, use, franchise, added value, social security, withholding or
other payroll related taxes and all interest and penalties thereon, whether
disputed or not. All deposits required to be made by the Company with respect to
employees' withholding taxes have been duly made. There are, and on the Closing
Date will be, no unpaid taxes, additions to tax, penalties, or interest payable
by the Company or by any other Person that are or could become a lien on any
asset, or otherwise adversely affect the business, properties or financial
condition, of the Company. Neither Equifax nor AqSub shall become subject to any
taxes, interest, penalties or other similar charges as a result of the Company's
filing or failure to file timely or accurately, as required by applicable law,
any such tax return or to pay timely any amount required to be paid with respect
thereto, including, without limitation, any such taxes, interest, penalties or
charges resulting from the obtaining of an extension of time to file any return
or to pay any tax. No assessments or notices of deficiency or other
communications have been received by the Company with respect to any such return
which has not been paid, discharged, or fully reserved in the Interim Financial
Statements, and no amendments or applications for refund have been filed or are
planned with respect to any such return. The federal income tax liability of the
Company for all of its taxable years ending prior to and including the taxable
year ended December 31, 1996, have been closed as to deficiencies and refund of
taxes by applicable statutes of limitations. There are no agreements between the
Company and any taxing authority, including, without limitation, the Internal
Revenue Service, waiving or extending any statute of limitations with respect to
any tax return, and it has not filed any consent under Section 341(f) of the
Code.
4.7 Tax Audits. Except as disclosed on Exhibit 4.7 hereto there are no tax
---------- -----------
audits pending by any federal, state, foreign or local taxing authorities with
respect to the Company.
4.8 Ownership of Assets and Leases, Etc.
-----------------------------------
4.8.1 Asset and Lease List. Exhibit 4.8 attached hereto contains a
-------------------- -----------
true, correct and complete list and brief description of all material items of
tangible personal property owned or leased or used by the Company and of all
real property leased or used by the Company except for the Excluded Assets (the
"Leased Properties"). The Company does not own any real
16
property. Exhibit 4.8 identifies with particularity the Leased Properties and
-----------
the material personal properties owned and/or leased by the Company included in
the Assets and except for the Excluded Assets (a) all leases or agreements under
which the Company is lessor of such property and (b) all leases or agreements
under which the Company is lessee of or holds or operates any such property,
real or personal. Such assets, leases and agreements are sufficient to enable
the Company to conduct its business in the ordinary course. The Company has good
and marketable title to all of the properties and assets owned by the Company,
including those listed and described in Exhibit 4.8, excluding the Excluded
-----------
Assets, in each case, free and clear of all liens, claims, charges, options,
forfeitures, rights of seizure, rights of tenants or other encumbrances
(collectively, "Liens"), except as specifically disclosed or reserved against in
the Financial Statements or on Exhibit 4.8 (to the extent and in the amounts so
-----------
disclosed or reserved against) and except for Liens arising from current taxes
not yet past due. Except pursuant to this Agreement, neither the Company nor
Green is a party to any contract or obligation whereby there has been granted to
any Person an absolute or contingent right to purchase, obtain or acquire any
rights in any of the assets, properties or operations of the Company, except
with respect to the Excluded Assets.
4.8.2 Enforceability of Leases. Each of the leases and agreements
------------------------
described in Exhibit 4.8 is in full force and effect and constitutes a legal,
-----------
valid and binding obligation of the respective parties thereto, enforceable in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium, applicable equitable
principles or similar laws from time to time in effect affecting the enforcement
of creditors' rights generally. There is not under any of such leases or
agreements existing any default of the Company or, to the knowledge of the
Company and the Shareholders, of any of the other parties thereto (or event or
condition which, with notice or lapse of time, or both, would constitute a
default). Except as described in Exhibit 4.8.2, no consent of any other party to
-------------
any of such leases or agreements to the consummation of the transactions
contemplated by this Agreement is required for any of such leases or agreements
to remain in full force and effect following the Closing.
4.8.3 Operating Condition. All machinery and equipment owned or leased
-------------------
by the Company and used in the conduct of the Company's business are in good
operating condition and state of repair, subject only to ordinary wear and tear
which is not such as to affect adversely the operation of the business as
presently conducted.
4.8.4 No Notice of Violation. Except as described in Exhibit 4.8.4,
---------------------- -------------
the Company has not received any notice of violation, and the Company and Green
do not otherwise have knowledge of violation, of any applicable zoning
regulation, ordinance or other law, regulation or requirement relating to any of
the Company's operations and properties, whether owned or leased, and there is
no such violation or grounds therefor which could adversely affect the business,
goodwill or financial condition of the Company or the operation of the business
as presently conducted.
4.9 Accounts Receivable.
-------------------
17
4.9.1 All of the accounts receivable or client xxxxxxxx of the
Company shown on the Financial Statements or thereafter acquired (including, but
not limited to, the accounts receivable on the Closing Date Balance Sheet)
reflect actual transactions and the granting of credit to customers in a manner
consistent with the past practices of the Company, arose in the ordinary course
of business, and are not subject to offset or deduction. All of the accounts
receivable of the Company reflected on the Closing Date Balance Sheet will be
collected (without recourse to any judicial proceedings), on or before the date
one (1) year after the Closing Date, at the aggregate gross recorded amounts
thereof. There are no facts or circumstances known to the Company or Green
which would prevent the work-in-process of the Company from maturing in due
course into collectible accounts receivable.
4.9.2 The Company has complete and correct copies of all instruments,
documents and agreements evidencing all of its accounts receivable and of all
instruments, documents or agreements creating security therefor. Exhibit 4.9.2
-------------
contains a complete and accurate list of all such instruments, documents and
agreements creating security for such accounts receivable.
4.10 Absence of Changes. Since December 31, 1999, the Company has not,
------------------
except as specifically disclosed on Exhibit 4.10 attached hereto or with respect
------------
to the Excluded Assets:
4.10.1 transferred, assigned or conveyed any of its assets or
business or entered into any transaction or incurred any liability or
obligation, other than in the ordinary course of its business and consistent
with past practice;
4.10.2 suffered any material adverse change in its business,
operations, or financial condition or become aware of any event which may result
in any such adverse change, the effect of which has had or could have a material
adverse effect on the assets, business or financial condition of the Company;
4.10.3 written off as uncollectible any notes or accounts receivable
or any portion thereof, other than in the ordinary course of business;
4.10.4 suffered any destruction, damage or loss to property (casualty
or other), whether or not covered by insurance;
4.10.5 suffered, permitted or incurred the imposition of any lien,
charge, encumbrance (which as used herein includes, without limitation, any
mortgage, deed of trust, conveyance to secure debt or security interest) or
claim upon any of its assets, except for any current year lien with respect to
personal taxes not yet past due;
4.10.6 committed, suffered, permitted or incurred any default in any
material liability or obligation;
4.10.7 made or agreed to any material adverse change in the terms of
any contract or instrument to which it is a party;
18
4.10.8 waived, canceled, sold or otherwise disposed of, for less than
the face amount thereof, any material claim or right it has against others;
4.10.9 (a) disposed of or permitted to lapse, or otherwise failed to
preserve then existing exclusive rights, if any, of the Company to use any (i)
patent, trademark, trademark registration, logo, assumed name, trade name,
copyright or copyright registration, or (ii) any patent, trademark, trade name
or copyright application, (b) disposed of or permitted to lapse any license,
permit or other form of authorization, or any trade name, or (c) disposed of or
disclosed to any Person any trade secret, formula or process;
4.10.10 made any change in any method of accounting or accounting
practice;
4.10.11 declared, promised or made any distribution or other payment
to any Shareholder (other than compensation payable in the ordinary course to
employees of the Company consistent with past practice), or issued any
additional shares or rights, options or calls with respect to its shares, or
redeemed, purchased or otherwise acquired any of its shares, or made any change
whatsoever in its capital structure;
4.10.12 increased or changed, or agreed to increase or change, its
obligation for any payment for, any contribution or other amount to, or with
respect to, any employee benefit plan, or paid any bonus to, or granted any
increase in the compensation of, its directors, officers, agents or employees,
or made any increase in the pension, retirement or other benefits of its
directors, officers, agents or other employees;
4.10.13 paid, loaned or advanced any amount to or in respect of, or
sold, transferred or leased any properties or assets (whether real, personal,
mixed, tangible or intangible) to, or entered into any agreement, arrangement or
transaction with, any Shareholder, any of the officers or directors of the
Company, or any affiliate or associate of any of them, or any business or entity
in which any Shareholder or the Company or any affiliate or associate of either
of them has any direct or indirect interest, except for compensation to the
officers and employees of the Company or any Shareholder at rates not exceeding
the rates of compensation in effect as of December 31, 1999;
4.10.14 committed, suffered, permitted or incurred any transaction or
event which would increase its tax liability for any prior taxable year;
4.10.15 entered into any lease of real property or material lease of
personal property;
4.10.16 incurred any other liability or obligation or entered into
any transaction other than in the ordinary course of business;
19
4.10.17 terminated or amended or suffered the termination or
amendment of, or failed to perform in all material respects all of its
obligations or suffered or permitted any default to exist under any contract,
lease, agreement or license;
4.10.18 received any notice that any supplier or customer has taken
or contemplates any steps which could materially and adversely disrupt the
business relationship of the Company with said supplier or customer; or
4.10.19 agreed, whether in writing or otherwise, to take any action
described in this Section 4.10.
4.11 Litigation and Claims. Except as otherwise set forth in Exhibit 4.11
--------------------- ------------
hereto, there is no suit, action, proceeding, claim or investigation pending or
threatened against or affecting the Company. There exists no basis or grounds
for any such suit, action, proceeding, claim or investigation. None of the items
described in Exhibit 4.11, singly or in the aggregate, if pursued and/or
------------
resulting in a judgment or decision against the Company, would have a material
adverse effect on the assets, business, goodwill or financial condition of the
Company or the ability of any party to consummate the transactions contemplated
hereby.
4.12 Licenses and Permits; Compliance With Law.
-----------------------------------------
4.12.1 The Company holds all licenses, certificates, permits,
franchises and rights from all appropriate foreign, domestic, federal, state,
county, municipal or other public authorities necessary for the conduct of its
business. Except as noted in Exhibit 4.12, the Company is not presently charged
------------
with or, to the knowledge of the Company, under governmental investigation with
respect to, any actual or alleged violation of any statute, ordinance, rule or
regulation, or presently the subject of any pending or threatened adverse
proceeding by any regulatory authority having jurisdiction over its business,
properties or operations. Except as set forth on Exhibit 4.12.1, neither the
--------------
execution nor delivery of this Agreement, nor the consummation of the
transactions contemplated hereby will result in the termination of any license,
certificate, permit, franchise or right held by the Company and all such
licenses, certificates, permits, franchises and rights will remain vested in and
inure to the benefit of AqSub after the consummation of the transactions
contemplated by this Agreement.
4.12.2 Without limiting the generality of the foregoing Section
4.12.1, the Company has obtained all licenses, certificates, permits, franchises
and rights which are required under federal, foreign, state or local laws
relating to public health and safety, worker health and safety and pollution or
protection of the environment, including laws relating to emissions, discharges,
releases or threatened releases of pollutants, contaminants or hazardous or
toxic substances into ambient air, surface water, groundwater or land, or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of pollutants, contaminants or
hazardous or toxic substances. The Company is in compliance in all respects
with all terms and conditions of the required licenses, certificates, permits,
franchises and rights and is also in compliance in all respects with all other
limitations, restrictions,
20
conditions, standards, prohibitions, requirements, obligations, schedules and
timetables contained in any federal, foreign, state or local law or any rule,
regulation, code, plan, order, decree or judgment relating to public health and
safety, worker health and safety and pollution or protection of the environment.
Neither the Company nor Green has received notice or is otherwise aware that
certain facts, events or conditions, interfere with or prevent the Company's
continued compliance with, or give rise to any common law or legal liability
under any law or regulation related to, the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling, or the
emission, discharge, release or threatened release into the environment, of any
pollutant, contaminant or hazardous or toxic substance.
4.13 Contracts, Etc. Exhibit 4.13 hereto consists of (a) a true, correct
-------------- ------------
and complete list of all contracts, agreements and other instruments (including
insurance policies) to which the Company is a party other than the Excluded
Assets; provided, that no contract, agreement or instrument involving payments
--------
or potential payments by the Company of less than $5,000 per year need be
disclosed ("Immaterial Contracts"), and; (b) a true, correct and complete set of
the standard forms used for Customer Agreements together with a description of
any material deviations from such standard forms, and a description of all
special pricing arrangements and rebate programs between the Company and its
customers. The Company has made available a true and complete copy of each such
contract, agreement or instrument, or a summary of oral agreements to which the
Company is a party, including the Customer Agreements. Except as specifically
set forth and in detail described in Exhibits 4.13, 4.14.2, 4.17 and 4.20 and
-------------- ------ ---- ----
except for Immaterial Contracts, the Company is not a party or subject to,
whether oral or written, any of the following:
4.13.1 any contract or commitment which requires services to be
provided or performed by the Company or which authorizes others to perform
services for, through or on behalf of the Company;
4.13.2 any contract or commitment involving an obligation which
cannot be performed or terminated within thirty (30) days from the dates as of
which these representations are made;
4.13.3 any lease, rental agreement or other contract or commitment
affecting the ownership or leasing of, title to or use of any interest in real
or personal property;
4.13.4 any note receivable;
4.13.5 any contract or commitment which is outside of the normal,
ordinary and usual requirements of its businesses;
4.13.6 any franchise agreement;
21
4.13.7 any employment contract or arrangement which is not terminable
by the Company within fourteen (14) days without payment of any amount for any
reason whatsoever, or for any continuing payment of any type or nature,
including, without limitation, any bonuses;
4.13.8 any plan or other arrangement providing for life insurance,
disability insurance, medical insurance, dental insurance, pensions, stock
rights, distributions, options, deferred compensation, retirement payments,
profit sharing, medical reimbursements or other benefits for officers or other
employees except with respect to the Excluded Assets;
4.13.9 any contract, agreement, understanding or arrangement
restricting the Company from carrying on its businesses anywhere in the world;
4.13.10 any instrument or arrangement evidencing or related to
indebtedness for money borrowed or to be borrowed, whether directly or
indirectly, by way of purchase money obligation, guaranty, subordination,
conditional sale, lease-purchase, or otherwise;
4.13.11 any contract with any labor organization;
4.13.12 any policy of life, fire, liability, medical or other form of
insurance other than included in the Excluded Assets;
4.13.13 any order or written approval of any federal, state or local
regulatory agency required to conduct the Business; or
4.13.14 any contract or agreement, not of the type covered by any of
the other items of this Section 4.13, which is not in the ordinary course of
business or which has a material adverse impact on the Business or Assets.
All of the contracts, agreements, policies of insurance or instruments
described in Exhibits 4.13, 4.14.2, 4.17 and 4.20 hereto are valid and binding
------------- ------ ---- ----
upon the Company and the other parties thereto, and are in full force and effect
and constitute legal, valid and binding obligations of the respective parties
thereto, enforceable in accordance with their respective terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium, applicable equitable principles or similar laws from time to time in
effect affecting the enforcement of creditors' rights generally, and the Company
has not, and to the best of the Company's and Green's knowledge, no other party
to any such contract, agreement or instrument has, breached any material
provision of, or is in default in any material respect (including any event or
condition which, with notice or lapse of time, or both, would constitute a
default) under, the terms thereof; and there are no existing facts or
circumstances known to the Company or any Shareholder which would prevent the
work in process of the Company or its contracts and agreements from maturing in
due course into collectible accounts receivable. No consent of any other party
to any of such contracts, agreements or instruments to the consummation of the
22
transactions contemplated hereby is required for any of such contracts,
agreements or instruments to remain in full force and effect following the
Closing except as described in Exhibit 4.13.
------------
4.14 Computer Programs and Software.
------------------------------
4.14.1 Exhibit 4.14.1 contains a true, correct and complete list of
--------------
all computer hardware ("Hardware") and software (including Proprietary Software)
("Software," and collectively with the Hardware, the "System") used in the
conduct of the Business of the Company. Except as set forth on Exhibit 4.14.1,
--------------
the System and every severable component thereof performs in accordance with its
applicable documentation, if any, and is free of material defects in programming
and operation. The Company has delivered (or made available) to Equifax
complete and accurate copies of all user and technical documentation related to
the System which are in their possession.
4.14.2 No employee of the Company is, or is now expected to be, in
default under any term of any employment contract, agreement or arrangement
relating to the Proprietary Software or any noncompetition arrangement, or any
other contract or any restrictive covenant relating to the Proprietary Software
or its development or exploitation. Except for the commercial computer software
applications, the Proprietary Software (and all prior versions, modifications,
and releases thereof) was developed by employees, consultants and independent
contractors of the Company (the "Developers"), and such Proprietary Software
does not include any intellectual property of any previous employer of such
Developer, except for commonly used types of commercial computer software
applications. The Company has provided (or made available) to Purchaser all
employment contracts, independent contractor agreements, invention assignment
agreements, noncompete agreements and confidentiality agreements between the
Company, any affiliate of the Company, and/or any predecessor in interest of the
Company, on the one hand, and each Developer, on the other hand, (collectively,
the "Developer Agreements"). The Company has validly and effectively obtained
the right and license to use, copy, modify and distribute the commercial
computer software applications contained in the Proprietary Software from any
and all parties holding rights in such third-party programming and materials
(the "Licensors"). All right, title and interest in and to the Proprietary
Software is owned (free and clear of all liens, claims, charges of any
Developer, Licensor and/or third party) by the Company. Notwithstanding any
failure to obtain fully executed Developer Agreements from any Developer, the
Company's development, use, licensing, sublicensing or exploitation of the
Proprietary Software does not violate any rights of any Developer or Licensor,
and neither the Shareholders nor the Company has received any communication
alleging such a violation.
4.14.3 The software listed on Exhibit 4.14.1 is all of the computer
--------------
software used, licensed or sublicensed by the Company in the conduct of its
business. The Company does not have any obligation to compensate any person or
entity for the development, use, sale or exploitation of the Software nor has
the Company granted to any other person or entity any license, option or other
rights to develop, use, sell or exploit in any manner the Software, whether
requiring the payment of royalties or not. The Company has not granted,
transferred or assigned any right or interest in the Software to any person or
entity. There are no contracts, agreements,
23
licenses, or other commitments or arrangements in effect with respect to the
marketing, distribution, licensing or promotion of the Software by any
independent sales person, distributor, licensor, sublicensor or other remarketer
or sales organization.
4.14.4 The Company, the Shareholders and their respective affiliates
have (i) made reasonable efforts to keep secret and have not disclosed the
source code for the Proprietary Software to any person or entity, other than the
disclosure thereof to certain employees, contractors and consultants of the
Company who are bound to keep such information confidential and (ii) made
adequate provision to preserve the proprietary nature of such source code.
There have been no patents applied for and no copyrights registered for any part
of the Proprietary Software.
4.14.5 Except as disclosed in Exhibit 4.14.5, all right, title and
--------------
interest in and to the data contained in the Data Warehouse is owned by the
Company, free and clear of all liens, claims, charges or encumbrances. All data
contained in the Data Warehouse referenced in Exhibit 4.14.5 as being licensed
--------------
to the Company has been licensed pursuant to valid license agreements and,
except as set forth in Exhibit 4.14.5, all royalties, license or other fees due
--------------
and payable thereunder have been paid. The Company has all necessary and
required rights to license, use, sublicense and distribute the data contained in
the Data Warehouse and, in addition, use the System in the normal and ordinary
course off its business as currently conducted.
4.15 Intellectual Property Matters. Exhibit 4.15 hereto sets forth a
-----------------------------
complete, true and accurate list of all registered and non-registration or
common law: (a) patents, trademarks, service marks, design markets, copyrights,
trade names and brand names (or applications thereof) held by the Company or
used in the Company's Business, including all applicable registration or serial
numbers, countries and jurisdictions, dates of filing, grant, renewal and
expiration, xxxx, class and all other pertinent information (collectively,
"Marks"), and (b) all trade secrets, know-how, formulae, proprietary processes
and inventions used by the Company in the Business (collectively, the "Trade
Secrets", and together with the Marks and all other proprietary intellectual
property rights held by the Company, the "Intellectual Property"). Exhibit 4.15
------------
sets forth each world wide web domain name that is owned by the Company or the
Shareholders and which reflects a relationship to the Company's Business.
Exhibit 4.15 also sets forth each world wide web domain name that is owned by
------------
the Company and which does not reflect a relationship to the Company's Business
(in each case, such domain names also being included in the definition of
"Intellectual Property").
Except as set forth on Exhibit 4.15 hereto:
------------
(a) The Company possesses unencumbered ownership or the valid right to
use (pursuant to valid license or other agreements) all the Intellectual
Property used in the operation of its Business; all license and other agreements
from third parties for the Company's use of any Intellectual Property are valid
and binding, in full force and effect and are not infringing or otherwise
violating any rights of third parties;
24
(b) All registrations of Intellectual Property with governmental
authorities have been duly issued and have not been canceled, abandoned or
otherwise terminated; all renewals due through the Closing Date have been filed,
and all applications for registration of Intellectual Property have been duly
filed and are in process as of the Closing Date;
(c) The Company is not infringing upon the Intellectual Property
rights of any other person or entity in any respect, and has not received any
notice of infringement upon or conflict with respect to Intellectual Property of
any other person or entity;
(d) The Company has not received any notice challenging or questioning
the validity or effectiveness of any license or agreement held by the Company
with respect to any Intellectual Property;
(e) The Company has not granted any other person or entity any rights
with respect to any of the Intellectual Property;
(f) The Company has valid rights to sell and distribute each of the
products currently being sold and distributed by it, including without
limitation with respect to the programs and data received from third parties
which are included or embedded in such products pursuant to valid license
agreements;
(g) To the knowledge of the Company and/or the Shareholders, no person
is using any intellectual property that is confusingly similar to, which
infringes upon, or which violates the Company's rights with respect to the
Intellectual Property; and
(h) There are, and immediately after the Closing will be, no
restrictions or other limitations pursuant to any contracts or arrangements with
any party, or pursuant to any orders, decisions, injunctions, judgments, awards
or decrees of any governmental authority on the Company's right to own and use
exclusively the name and xxxx "Compliance Data Center" or "CDC" or any variation
thereof in the conduct of its business as presently conducted.
4.16 Labor Matters. Within the last three (3) years, the Company has not
-------------
been the subject of any union activity or labor dispute, nor has there been any
strike of any kind called, or threatened to be called against it, and it has not
violated any applicable federal or state law, rule or regulation relating to
labor or labor practices, including without limitation employment discrimination
laws relating to age, gender, ethnicity or minority status or sexual preference,
and is not a party to any collective bargaining agreement. The Company is not
bound by or subject to any labor agreement, union agreement or collective
bargaining agreement.
4.17 ERISA and Related Matters.
-------------------------
4.17.1 The term "Plan" shall include each bonus, deferred
compensation, incentive compensation, stock purchase, stock option, severance or
termination pay,
25
hospitalization and other medical, life and other insurance pension or
retirement, profit sharing, stock appreciation rights, supplemental
unemployment, layoff, consulting, fringe benefit including, but not limited to,
vacation, paid holidays, personal leave, or any similar plan, program,
agreement, arrangement, payroll procedure, policy or understanding (other than
arrangements involving the timing of payment of wages) sponsored, maintained or
contributed to by the Company or by any trade or business, whether or not
incorporated, that together with the Company would be deemed a "single employer"
within the meaning of Section 4001(a)(14) of the Employee Retirement Income
Security Act of 1974, as amended, and the rules and regulations promulgated
thereunder ("ERISA") (an "ERISA Affiliate"), whether or not subject to the laws
of a country or jurisdiction other than the United States, for the benefit of
any current or former employee, director, or independent contractor of the
Company whether foreign or domestic and whether formal or informal and whether
legally binding or not with respect to which the Company or any ERISA Affiliate
has or may in the future have any liability or obligation to contribute or make
payments of any kind.
4.17.2 Schedule 4.17 contains a true and complete list of each Plan.
-------------
The Company has heretofore made available to the Purchaser correct and complete
copies of each of the Plans. The Assets are not subject to a Lien imposed under
ERISA or the Internal Revenue Code of 1986, as amended (the "Code"), with
respect to any Plan subject to ERISA.
4.17.3 Neither the Company nor any ERISA Affiliate is contributing
to, is required to contribute to, or has contributed within the last six (6)
years to, any Multiemployer Plan, and neither the Company nor any ERISA
Affiliate has incurred within the last six (6) years, or reasonably expects to
incur, any "withdrawal liability," as defined under Section 4201 et seq. of
-- ---
ERISA.
4.17.4 Except as described in Schedule 4.17, with respect to each
-------------
Plan: (i) no condition or event exists or is expected to occur that could
subject, directly or indirectly, the Company or any ERISA Affiliate to any
material liability, contingent or otherwise, or the imposition of any lien on
the assets of the Company or any ERISA Affiliate under the Code or Title IV of
ERISA whether to the Pension Benefit Guaranty Corporation, the Internal Revenue
Service, or any other person; and (ii) all contributions, premiums or payments
accrued, in whole or in part, under each Plan or with respect thereto as of the
Closing will be paid by the Company, on or prior to Closing or, if later, within
the time period permitted by ERISA and the Code.
4.17.5 Except as disclosed on Schedule 4.17, neither the execution
-------------
and delivery of this Agreement nor the consummation of the transactions
contemplated hereby will result in any material payment (including, without
limitation, severance, or unemployment compensation) becoming due to any
employee of the Company.
4.18 Certain Payments. Neither the Company nor any officer, employee, agent
----------------
or affiliate of the Company, including, without limitation, Green, has, directly
or indirectly, given or agreed to give or solicited or received any gift, rebate
or similar benefit to any customer, supplier, governmental employee or other
Person which (i) might subject the Company or AqSub
26
to any damage or penalty in any civil, criminal or governmental litigation or
proceeding, (ii) if not given in the past might have had an adverse effect on
the assets, business or operation of the Company or (iii) if not continued in
the future might adversely affect the assets, business, operations or prospects
purchased by AqSub hereunder.
4.19 Customers. Except as described in Exhibit 4.19, the Company has not
--------- ------------
lost, during the past eighteen (18) months, any customer or group of related
customers or received notice of the possibility of any such loss, which
accounted for more than five percent (5%) of the aggregate fees received, or
products and services furnished by it during such period.
4.20 Insurance. Except with respect to the Excluded Assets, Exhibit 4.20
--------- ------------
sets forth a complete and accurate list of all insurance contracts (and their
expiration dates), including all policies of fire, liability (including products
and environmental liability), workers' compensation, casualty, business
interruption and all other forms of insurance owned, held by or maintained by or
on behalf of the Company. Copies of all such insurance contracts have been
delivered to Equifax. All such contracts are valid, outstanding, and enforceable
policies, provide insurance coverage typical for the type of business engaged in
by the Company, and provide that they will remain in full force and effect
through at least the respective dates set forth in Exhibit 4.20 without payment
------------
of additional premiums; and will not in any way be effected by, or terminate or
lapse by reason of the transactions contemplated by this Agreement. The
liability, workers' compensation and casualty insurance policies extend coverage
and insure the liability associated with each and every suit, action,
proceeding, claim or investigation listed on Exhibit 4.11. There presently are
------------
no claims outstanding, nor, to the best of the Company's knowledge, any basis
therefor, under any of the policies listed on Exhibit 4.13, except as disclosed
------------
on Exhibit 4.11. Attached as Exhibit 4.20 is a schedule setting forth the claims
------------ ------------
and loss history of the Company for the three (3) years prior to Closing under
all policies of worker's compensation insurance, employers' liability insurance,
general liability insurance and automobile liability insurance, property
insurance and errors and omissions insurance.
4.21 Approvals. No filing or registration with, and no consent, approval,
---------
permit, authorization, license, certificate or order of any governmental
authority is required by any applicable law or by any applicable judgment, order
or decree or any applicable rule or regulation of any governmental authority to
permit the Company or Green to execute, deliver or perform this Agreement or any
document, instrument or agreement required to be executed by such party at or
prior to the Closing.
4.22 Transactions with Affiliates. Except as described in Exhibit 4.22,
---------------------------- ------------
since June 30, 2000, the Company has not purchased, leased or otherwise acquired
any property or assets or obtained any property or assets or obtained any
services from, or sold, leased or otherwise disposed of any property or assets
or provided services to (except with respect to remuneration for services
rendered as an officer or employee of the Company in the ordinary course), (i)
any employee of the Company, (ii) any Shareholder, (iii) any Person that is,
directly or indirectly, controlled by any Shareholder, or (iv) any member of the
immediate family of a Shareholder (for purposes of this Section 4.22, each such
Person is referred to as an "Affiliate"). Except as set
27
forth in Exhibit 4.22, (a) the contracts, instruments and agreements listed on
------------
Exhibit 4.13 do not include any obligation or commitment between the Company and
------------
any Affiliate, (b) the assets of the Company do not include any receivable or
other obligation from an Affiliate to the Company, and (c) the liabilities
reflected in the Financial Statements, and those on the books and records of the
Company as of the Closing Date, do not include any obligation or commitment of
any Affiliate.
4.23 Environmental and Safety Matters. Except as set forth on Exhibit 4.23
-------------------------------- ------------
hereto: (i) the Company is and, without exception, has been in compliance with
all applicable Environmental Laws (as defined below) and all permits, licenses
and authorizations required thereunder for (a) the Leased Properties and any
properties owned or leased by the Company in the past, and (b) the conduct of
its business, (ii) no spill, release, disposal, burial or placement of any
material regulated under Environmental Laws (hereinafter "Hazardous Materials")
has occurred on, in, at, under or about any of the Company's past or present
property or facilities, and no other event has occurred or is pending or likely
to occur which could result in a material liability under Environmental Laws for
the Company or its predecessor(s) in interest. A complete list of all material
permits, licenses or other authorizations held by the Company pursuant to
Environmental Laws for the operation of the Leased Properties and the conduct of
the business of the Company, and the expiration date of each, is set forth on
Exhibit 4.23 hereto. The Company has made available to AqSub or its advisors or
------------
consultants true, complete and correct copies of all environmental reports,
analyses, tests or monitoring in the possession of or available to the Company
pertaining to any Leased Property or any other property owned or leased by the
Company in the past. Exhibit 4.23 contains a list of all the Property and other
------------
facilities to which Hazardous Materials from the Company have been taken in the
past. As used in this Agreement, "Environmental Laws" shall mean all federal,
state or local laws, rules, regulations, ordinances or other similar standards
relating to protection of the environment and worker health and safety.
4.24 Agreement Does Not Violate Other Instruments. Except as set forth on
--------------------------------------------
Exhibit 4.24, the execution and delivery of this Agreement by the Company and
------------
the Shareholders do not, and the consummation of the transactions contemplated
hereby will not, violate any provision of the Articles of Incorporation, as
amended, or Bylaws, as amended, of the Company or violate or constitute an
occurrence of default under any provision of, or conflict with, or result in
acceleration of any obligation under, or give rise to a right by any party to
terminate its obligations under, any mortgage, deed of trust, conveyance to
secure debt, note, loan, lien, lease, agreement or instrument, or any order,
judgment, decree or other arrangement to which the Company is a party or by
which it is bound or its assets are affected.
4.25 Exhibits. All Exhibits attached hereto are true, correct and complete.
--------
Matters disclosed on each Exhibit shall be deemed disclosed only for purposes of
the matters to be disclosed in such Exhibit and shall not be deemed to be
disclosed for any other purpose, unless expressly provided therein. No statement
contained herein or in any certificate, Exhibit, document or other instrument
furnished to Equifax pursuant to the provisions hereof contains any
28
untrue statement of any material fact or omits to state a material fact
necessary in order to make the statement contained herein or therein not
misleading.
5. COVENANTS, REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS.
-------------------------------------------------------------
Each Shareholder, severally but not jointly, represents and warrants to
Equifax and AqSub as follows:
5.1 Authority. Such Shareholder is a trust duly organized, validly
---------
existing and in good standing under the laws of its jurisdiction of
incorporation, (b) the execution, delivery and performance by such Shareholder
of this Agreement and each and every agreement, document and instrument
contemplated hereby have been duly authorized and approved by all necessary
action on the part of such Shareholder, and (c) the execution and delivery by
such Shareholder of this Agreement and the other agreements, documents and
instruments contemplated hereby and the consummation of the transactions
contemplated hereby and thereby do not require the act or consent of any other
Person.
5.2 Ownership of Shares. Such Shareholder owns, beneficially and of
-------------------
record, each of the shares of Common Stock shown as being held by such
Shareholder on Exhibit 4.3 hereto, free and clear of all liens, claims, charges,
-----------
security interests or other encumbrances of any type or nature whatsoever. Such
Shareholder does not own, beneficially or of record, either directly or
indirectly, more than one percent (1%) of the capital stock or other equity or
ownership or proprietary interest in any Person that is in competition with the
Company. There are no outstanding options, warrants, calls or commitments
granted by such Shareholder with respect to the shares of Common Stock shown as
being owned by such Shareholder on Exhibit 4.3 hereto.
-----------
5.3 Agreement Does Not Violate Other Instruments. The execution and
--------------------------------------------
delivery of this Agreement and the other documents, instruments and agreements
contemplated hereby by such Shareholder do not, and the consummation of the
transactions contemplated hereby will not, violate or constitute an occurrence
of default under any provision of, or conflict with, or result in any
acceleration of any obligation under, or give rise to a right by any party to
terminate its obligations under, any mortgage, deed of trust, conveyance to
secure debt, note, loan, lien, lease, agreement or instrument, or any order,
judgment, decree or other arrangement to which either the Company or such
Shareholder is a party or by which any such party is bound or their assets
affected. No Shareholder is a party to any contract or obligation whereby there
has been granted to any person an absolute or contingent right to purchase,
obtain or acquire any rights in any of the Assets or Business, except with
respect to the Excluded Assets.
5.4 Litigation and Claims. Except as otherwise set forth on Exhibit 5.4
--------------------- -----------
hereto, there is no suit, action, proceeding, claim or investigation pending or
the knowledge of such Shareholder, threatened against or affecting such
Shareholder which would have a material adverse effect on the assets, business
or financial condition of such Shareholder or the Company or the ability of such
Shareholder to consummate the transactions contemplated hereby.
29
5.5 Certain Payments. The Shareholders and their Affiliates, directly or
----------------
indirectly, have not given or agreed to give or solicited or received any gift,
rebate or similar benefit to any customer, supplier, governmental employee or
other Person which might subject the Company or AqSub to any damage or penalty
in any civil, criminal or governmental litigation or proceeding, (i) if not
given in the past might have had an adverse effect on the Assets, Business or
operation of the Company, or (ii) if not continued in the future might adversely
effect the Assets, Business, operations or prospects of the Company.
5.6 Intentionally Omitted.
---------------------
5.7 Company Representations. To the best knowledge of each Shareholder,
-----------------------
the representations and warranties of the Company contained in Section 4 hereof
are true and correct in all respects.
6. REPRESENTATIONS AND WARRANTIES OF EQUIFAX AND AQSUB.
---------------------------------------------------
Equifax and AqSub, jointly and severally, represent and warrant to the
Company as follows, and Equifax represents and warrants to Company only as to
Section 6.2 and 6.3 with respect to itself):
6.1 Organization and Standing. Equifax and AqSub are corporations duly
-------------------------
organized, validly existing and in good standing under the laws of the State of
Georgia.
6.2 Corporate Power and Authority. Equifax and AqSub have the full
-----------------------------
corporate power and authority to execute and deliver this Agreement, to perform
hereunder, and to consummate the transactions contemplated hereby without the
necessity of any act, approval or consent of any other person or entity
whomsoever. The execution, delivery and performance by Equifax and AqSub of this
Agreement and each and every agreement, document and instrument provided for
herein have been duly authorized and approved by the Board of Directors of
Equifax and AqSub, and the Executive Committee of Equifax. This Agreement, and
each and every other agreement, document and instrument to be executed,
delivered and performed in connection herewith constitute or will, when executed
and delivered, constitute the valid and binding obligations of Equifax and AqSub
enforceable against it in accordance with their terms, except as enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium, applicable
equitable principles, or similar laws from time to time in effect affecting the
enforcement of creditors' rights generally.
6.3 Agreement Does Not Violate Other Instruments. The execution and
--------------------------------------------
delivery of this Agreement by Equifax and AqSub does not, and the consummation
of the transactions contemplated hereby will not, violate any provisions of the
Articles of Incorporation, as amended, or Bylaws, as amended, of Equifax or
AqSub or violate or constitute an occurrence of default under any provision of,
or conflict with, result in acceleration of any obligation under, or give rise
to a right by any party to terminate its obligations under, any mortgage, deed
of trust, conveyance to secure debt, note, loan, lien, lease, agreement,
instrument, or any order, judgment,
30
decree or other arrangement to which it is a party or by which it is bound or
its assets are affected.
6.4 Stock Will be Validly Issued. Upon consummation of the Transaction as
----------------------------
herein contemplated and satisfaction of all other terms and conditions hereof,
the shares of Equifax Common Stock to be issued to the Company pursuant hereto
will be duly authorized, validly issued and outstanding, fully paid and
nonassessable.
6.5 Statements True and Correct. No statement contained herein or in any
---------------------------
certificate, Exhibit, document or other instrument furnished to the Company or
the Shareholders pursuant to the provisions hereof concerning Equifax or AqSub
contains any untrue statement of any material fact or omits to state a material
fact necessary in order to make the statement contained herein or therein not
misleading.
6.6 Filings True and Correct. As of their respective dates, Equifax's (i)
------------------------
Annual Reports on Form 10-K for the years ended December 31, 1999 and December
31, 1998 as filed with the SEC, (ii) proxy statements relating to all of
Equifax's meetings of stockholders (whether annual or special) since October 13,
1998 and (iii) all other reports, statements and registration statements
(including Quarterly Reports on Form 10-Q and current Reports on Form 8-K) filed
by Equifax since October 13, 1998, including all exhibits and schedules thereto
and documents incorporated by reference therein (together, the "SEC Filings")
did not contain any untrue statement of a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Since October 13,
1998, no event has occurred that would require the filing of a Current Report on
Form 8-K that has not been filed or otherwise disclosed in the SEC Filings.
7. ADDITIONAL AGREEMENTS OF THE PARTIES.
------------------------------------
7.1 Key Employees. The Company and each Shareholder agrees to use its best
-------------
efforts to induce the Key Employees to execute employment agreements in the form
of Exhibit 7.1(b) hereto (the "Employment Agreements").
7.2 Intentionally Omitted.
---------------------
7.3 Covenant Not to Compete. Each of the Shareholders agrees to execute
-----------------------
and deliver at the Closing a Covenant Not to Compete Agreement in the form of
Exhibit 3.12 hereto.
------------
7.4 Consulting Agreement. At the Closing, Green agrees to execute and
--------------------
deliver a Consulting Agreement in the form of Exhibit 2.2.6 hereto.
-------------
7.5 Escrow Agreement. Each of the Shareholders hereby agrees at the
----------------
Closing to deliver an executed Escrow Agreement in the form of Exhibit 7.5
-----------
hereto.
7.6 Cooperation With Respect to Approvals. Equifax, AqSub, the Company and
-------------------------------------
the Shareholders will cooperate in all respects in connection with (i) securing
any nongovernmental
31
approvals, consents and waivers of third parties necessary for the consummation
of the transactions contemplated hereby and (ii) giving notices to any
governmental authority, or securing the permission, approval, determination,
consent or waiver of any governmental authority, required by law in connection
with the transactions contemplated hereby.
7.7 Employees Matters.
-----------------
7.7.1 All employees of the Company (including, but not limited to the
Key Employees) shall be transferred to AqSub, subject to the transferred
employees meeting the standard employment criteria of Equifax and its Affiliates
(the "Transferred Employees"), and the Company and the Shareholders shall use
their reasonable best efforts to assist Equifax in obtaining the employment of
the Transferred Employees.
7.7.2 The Transferred Employees shall be eligible for and to
participate in the benefits of Equifax as offered to employees of Equifax in
such similar position as the Transferred Employee, provided, however, that if
Equifax should so request, the Company shall cooperate as necessary to permit
Equifax to continue to provide all or certain of the Company's welfare benefit
plans for the Transferred Employees for a period beginning on the Closing and
ending no earlier than December 31, 2000. Each Transferred Employee further is
eligible to receive credit for his or her length of service with the Company for
such benefits plans of Equifax that are similar to those of the Company to which
the Transferred Employee was a participant prior to and on the Closing Date. In
no event shall the provisions of the previous sentence apply to (i) Equifax Inc.
U.S. Retirement Income Plan and (ii) Equifax Inc. Severance Plan for Salaried
Employees.
7.8 Certain Tax Matters. The Company and the Shareholders, jointly and
-------------------
severally, shall be responsible for the payment of and shall pay all federal,
state, local or foreign taxes of the Company due any taxing authority with
respect to all periods up to and including the Closing Date and periods after
the Closing Date.
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF EQUIFAX AND AQSUB.
--------------------------------------------------------
The obligations of Equifax and AqSub to consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction, on or
before the Closing Date, of each and every one of the following conditions, all
or any of which may be waived in writing, in whole or in part, by Equifax and
AqSub for purposes of consummating such transactions, but without prejudice to
any other right or remedy which Equifax may have hereunder as a result of any
misrepresentations by, or breach of any covenant or warranty of any Shareholder
or the Company contained in this Agreement or any other certificate or
instrument furnished by any Shareholder or the Company hereunder:
8.1 Representations True at Closing. The representations and warranties
-------------------------------
made by the Shareholders and the Company in this Agreement, the Exhibits hereto
or any document or instrument delivered to Equifax or its representatives
hereunder shall be true and correct in all
32
material respects on the Closing Date hereunder with the same force and effect
as though such representations and warranties had been made on and as of such
time (except for changes contemplated by this Agreement or occurring in the
ordinary course of business which do not singly or in the aggregate have a
material adverse effect on the business, operations or financial condition of
the Company).
8.2 Covenants of the Shareholders and the Company. The Shareholders and
---------------------------------------------
the Company shall have duly performed all of the covenants, acts and
undertakings to be performed by them on or prior to the Closing Date and they
shall deliver to Equifax certificates dated as of the Closing Date certifying to
the fulfillment of this condition and the condition set forth in Section 8.1
hereof. Such certificates shall be deemed representations and warranties of the
Shareholders and the Company hereunder.
8.3 No Injunction Etc. No action, proceeding, investigation, regulation or
-----------------
legislation shall have been instituted, threatened or proposed before any court,
governmental agency or legislative body to enjoin, restrain, prohibit, or obtain
substantial damages in respect of, or which is related to, or arises out of,
this Agreement or the consummation of the transactions contemplated hereby, or
which is related to or arises out of the business of the Company or the
Shareholders, if such action, proceeding, investigation, regulation or
legislation, in the judgment of Equifax, would make it inadvisable to consummate
such transactions.
8.4 Opinion of Counsel. A favorable opinion of Xxxxx Xxxx LLP and Walther,
------------------
Key, Maupin, Oats, Cox, Klaich & Legoy, counsel for the Shareholders and the
Company, shall have been delivered to Equifax, dated as of the Closing Date,
substantially in form and substance of the opinion attached hereto as Exhibit
-------
8.4.
---
8.5 Consents and Waivers. Equifax shall have received from the
--------------------
Shareholders and the Company a true and correct copy of each consent and waiver
required (a) in Section 2.7 hereof, or (b) for the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby.
8.6 Regulatory Approvals. The execution and the delivery of this Agreement
--------------------
and the consummation of the transactions contemplated hereby shall have been
approved by all regulatory authorities whose approvals are required by law.
8.7 Absence of Adverse Changes. Since June 30, 2000, the Company shall not
--------------------------
have suffered (a) any change in its financial condition, business, properties or
assets which singly or in the aggregate adversely affects the business, assets,
operations or financial condition of the Company, or (b) any transaction or
event described in Section 4.10 hereof, and the President of the Company shall
deliver to Equifax a certificate to such effect.
8.8 Cash and Working Capital. On the Closing Date, the Assets shall
------------------------
include cash of an amount not less than Two Hundred Eighty Thousand Dollars
($280,000) and Working Capital with an aggregate value of not less than Seven
Hundred Thousand Dollars ($700,000).
33
8.9 Intentionally Omitted.
---------------------
8.10 Key Employees. Equifax and the Key Employees shall have executed and
-------------
delivered the Employment Agreements.
9. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE COMPANY AND THE
--------------------------------------------------------------
SHAREHOLDERS.
------------
The obligations of the Company and the Shareholders to consummate the
transactions contemplated by this Agreement shall be subject to the
satisfaction, on or before the Closing Date, of each and every one of the
following conditions, all or any of which may be waived, in whole or in part, by
the Company and the Shareholders but without prejudice to any other right or
remedy which the Company and the Shareholders may have hereunder as a result of
any misrepresentation by, or breach of any covenant or warranty of Equifax or
AqSub contained in this Agreement, or any certificate or instrument furnished by
it hereunder:
9.1 Representations True at Closing. The representations and warranties
-------------------------------
made by Equifax and AqSub in this Agreement or any document or instrument
delivered to the Shareholders or their representatives hereunder shall be true
and correct in all material respects on the Closing Date hereunder with the same
force and effect as though such representations and warranties had been made on
and as of such date, except for changes contemplated by this Agreement.
9.2 Covenants of Equifax. Equifax and AqSub shall have duly performed all
--------------------
of the covenants, acts and undertakings to be performed by it on or prior to the
Closing Date, and a duly authorized officer of Equifax shall deliver to the
Shareholders a certificate dated as of the Closing Date certifying to the
fulfillment of this condition and the condition set forth under Section 9.1
above. Said certificate shall be deemed a representation and warranty of Equifax
hereunder.
9.3 Approvals. The execution and the delivery of this Agreement and the
---------
consummation of the transactions contemplated hereby shall have been approved by
all regulatory authorities whose approvals are required by law and all third
party consents and approvals have been obtained.
9.4 Opinion of Counsel. A favorable opinion of Hunton & Xxxxxxxx, counsel
------------------
for Equifax and AqSub, shall have been delivered to the Company and the
Shareholders, dated as of the Closing Date, substantially in form and substance
of the opinion attached hereto as Exhibit 9.4.
-----------
9.5 Key Employees. Equifax and the Key Employees shall have executed and
-------------
delivered the Employment Agreements.
34
9.6 No Stop Trade or Delisting of Equifax Common Stock. The Securities and
--------------------------------------------------
Exchange Commission shall not have issued a stop transfer order affecting the
Equifax Common Stock nor shall the NYSE have delisted the Equifax Common Stock.
10. CLOSING.
-------
10.1 Time and Place of Closing. The Closing shall be held at the offices of
-------------------------
Hunton & Xxxxxxxx, 000 Xxxxxxxxx Xxxxxx, X.X., Xxxxx 0000, Xxxxxxx, Xxxxxxx
00000, commencing at 10:00 a.m. local time, unless another place or date is
agreed to in writing by the Company, the Shareholders, Equifax and AqSub, but in
no event will the Closing be held later than October 31, 2000, after which this
Agreement may be terminated as provided in Article 12.
10.2 Transactions at Closing. At the Closing, each of the following
-----------------------
transactions shall occur:
10.2.1 The Company's and the Shareholders' Performance. At the
-----------------------------------------------
Closing, the Company and the Shareholders shall deliver to Equifax, the
following:
(a) such good and sufficient bills of sale, licenses, assignments and
other good and sufficient instruments of sale, conveyance, transfer and
assignment as shall be required or as may be appropriate in order to vest
effectively in AqSub good and marketable title to the Assets free and clear of
all Liens other than the Assumed Liabilities;
(b) certificates of compliance or certificates of good standing of the
Company as of the most recent practicable date from the Secretary of State of
the State of Nevada, or other appropriate governmental authority;
(c) certified copies of the resolutions of the Board of Directors of
the Company approving the transactions set forth in this Agreement;
(d) opinion of counsel for the Shareholders and the Company in the
form of Exhibit 8.4;
-----------
(e) the Covenant Not to Compete to be delivered by each of the
Shareholders, as contemplated by Section 3.12;
(f) incumbency certificates from the officers of the Company executing
this Agreement or any agreement delivered ancillary hereto;
(g) satisfactory evidence of approvals described in Section 3.5;
(h) executed Escrow Agreement for the Shareholders in the form of
Exhibit 7.5 hereto, as contemplated by Section 7.5 hereof;
-----------
35
(i) executed Consulting Agreement in the form of Exhibit 2.2.6,
-------------
hereof, as contemplated by Section 2.3.4 hereof;
(j) the investment letter and investment questionnaire to be delivered
by each of the Shareholders, as contemplated by Section 3.11; and
(k) such other evidence of the performance of all covenants and
satisfaction of all conditions required of the Company and the Shareholders by
this Agreement, at or prior to the Closing, as Equifax or its counsel may
reasonably require.
10.2.2 Performance by Equifax and AqSub. At the Closing, Equifax and
--------------------------------
AqSub shall deliver to the Shareholders, the following:
(a) certificates of Equifax Common Stock, duly issued, to the Company,
as contemplated by Section 2.2.1 hereof (less the Escrowed Amount);
(b) cash, by certified check or wire transfer, payable to the Company
for an amount equal to the Cash Consideration;
(c) satisfactory evidence of the approvals;
(d) certified copies of resolutions of the Board of Directors of AqSub
and the Executive Committee of Equifax approving the transactions set forth in
this Agreement;
(e) incumbency certificate for the officers of Equifax and AqSub
executing this Agreement and any agreement delivered ancillary hereto;
(f) executed Escrow Agreement in the form of Exhibit 7.5 hereto, as
contemplated by Section 7.5 hereof; and
(g) such other evidence of all covenants and satisfaction of all
conditions required of Equifax or AqSub by this Agreement, as the Shareholders
or their counsel may reasonably require.
10.2.3 Escrow. At the Closing, the Company shall deliver to the
------
Escrow Agent the Escrowed Amount.
10.2.4 Key Employees. At the Closing, Equifax and the Key Employees
-------------
shall execute and deliver the Employment Agreements.
11. SURVIVAL OF REPRESENTATION AND WARRANTIES; INDEMNIFICATION.
----------------------------------------------------------
11.1 Survival of Representations and Warranties of the Shareholders and
------------------------------------------------------------------
the Company; Indemnification.
----------------------------
36
11.1.1 All representations and warranties by the Shareholders and the
Company in this Agreement, the Exhibits hereto, or in any document or instrument
executed and delivered pursuant hereto are material, have been relied upon by
Equifax and AqSub, shall survive the Closing hereunder and shall not merge in
the performance of any obligation by any party hereto. Any examination,
inspection or audit of the properties, financial condition or other matters of
the Company and its business conducted by Equifax or on its behalf on or prior
to the Closing Date shall in no way limit, affect or impair the ability of
Equifax and AqSub to rely upon the representations, warranties, covenants and
obligations of the Shareholders and the Company set forth herein.
11.1.2 Subject to Section 11.4 hereof, each Shareholder and the
Company, jointly and severally, hereby agrees to indemnify and hold Equifax and
AqSub harmless from and against all liability, loss, damage, or injury and all
reasonable costs and expenses (including reasonable counsel fees and costs of
any investigation or suit related thereto) arising from (i) any
misrepresentation, or breach of any covenant or warranty of the Company
contained in this Agreement or the Exhibits hereto, or from any
misrepresentation in or omission from any certificate or other instrument
furnished or to be furnished by the Company hereunder; (ii) any claim for
workers' compensation that relates to an occurrence prior to Closing, to the
extent not covered by insurance maintained by the Company prior to Closing;
(iii) the assertion by any taxing authority against the Assets, the Business,
Equifax or AqSub of any liability for taxes, assessments, fees, charges,
additions to tax, interest or penalties, federal, state, local, foreign or other
relating to the Company for any period or relating to the Assets for a period or
event prior to and through the Closing Date, or the imposition of any lien or
other encumbrance arising therefrom against the Assets or the Business or which
attach thereto; (iv) any suit, action, proceeding, claim or investigation,
pending or threatened, or which may be filed in the future, which relates to the
operations of the Company prior to the Closing or the Company's officers,
directors, employees or affiliates prior to the Closing, including, but not
limited to, the development, maintenance, use, licensing, sublicensing,
exploitation or distribution of the System, Data Warehouse or any component
thereof, regardless of whether it is disclosed on Exhibits 4.11, 4.12, 4.14.1,
-------- ---- ---- ------
4.14.2, 4.14.3, 4.14.4 or 4.14.5 hereto; (v) any suit, action, proceeding, claim
------ ------ ------ ------
or investigation arising from any claim by or on behalf of any party of any
direct, equitable or beneficial interest in the Company; (vi) any claim for a
debt, obligation or liability of the Company or any Shareholder which is not
specifically assumed by AqSub; (vii) the Company's failure to conduct its
business so as to comply in all respects with any and all applicable foreign,
domestic, federal, state and local laws, statures, ordinances, rules,
regulations, and orders of any governmental agency, including, without
limitation, the Fair Credit Reporting Act and the Gramm Xxxxx Xxxxxx Act, both
as amended through the date hereof, and any state laws similar to such acts;
(viii) any suit, action, proceeding or claim made or instituted by Auricom
Corporation ("Auricom") or any affiliate, agent or owner of Auricom as a result
of or relating to the termination by the Company of any contract, agreement or
arrangement between Auricom, its affiliates, agents or owners, on the one hand,
and the Company, on the other hand, including, without limitation, that certain
Agreement, dated as of January 8, 1991, by and between Auricom and the Company,
regardless of whether such suit, action, proceeding or claim
37
is based on AqSub or Equifax tortuously interfering with Auricom's contractual
relations; or (ix) any claim or right, or any alleged claim or right, of third
persons by virtue of application of bulk sales laws, laws relating to sales and
use taxes or otherwise which may be asserted against any of the Assets in
connection with the transactions contemplated by this Agreement.
11.1.3 Subject to Section 11.4, each Shareholder and the Company,
severally and not jointly, hereby agrees to indemnify and hold Equifax and AqSub
harmless from and against all liability, loss, damage, or injury and all
reasonable costs and expenses (including reasonable counsel fees and costs of
any investigation or suit related thereto) arising from any misrepresentation,
or breach of any covenant or warranty of such Shareholder or the Company
contained in this Agreement or the Exhibits hereto, or from any
misrepresentation in or omission from any certificate or other instrument
furnished or to be furnished by such Shareholder or the Company hereunder.
11.2 Survival of Representations and Warranties of Equifax and AqSub;
----------------------------------------------------------------
Indemnification. All representations, warranties, agreements, covenants and
---------------
obligations made or undertaken by Equifax and AqSub in this Agreement or in any
document or instrument executed and delivered pursuant hereto are material, have
been relied upon by the Shareholders, shall survive the Closing and shall not
merge in the performance of any obligation by any party hereto. Subject to
Section 11.4 hereof, Equifax (with respect to its misrepresentations and
breaches only), and AqSub agree to indemnify and hold the Shareholders harmless
from and against all liability, loss, damage or injury and all reasonable costs
and expenses (including reasonable counsel fees and costs of any suit related
thereto) suffered or incurred by the Shareholders arising from any
misrepresentations, or breach of any covenant or warranty of Equifax (with
respect to its misrepresentations and breaches only), Equifax or AqSub contained
in this Agreement or the Exhibits hereto, or from any misrepresentation in or
omission from any certificate or other instrument furnished or to be furnished
by Equifax (with respect to its misrepresentation or omission only), or AqSub
hereunder.
11.3 Indemnification Procedure.
-------------------------
11.3.1 Any party entitled to indemnification hereunder (the
"Indemnified Party") shall notify the party obliged to indemnify (the
"Indemnifying Party") promptly after it becomes aware of any suit, claim,
action, proceeding, arbitration or investigation (each, an "Action") as to which
indemnity may be sought. In the event that the Indemnifying Party acknowledges
in writing its indemnification obligation with respect to any such Action, the
Indemnifying Party shall be entitled, at its expense, to control the defense of
such Action; provided, however, that (i) counsel for the Indemnifying Party must
-------- -------
be approved by the Indemnified Party (which approval shall not be unreasonably
withheld), and (ii) the Indemnified Party may also participate in such defense
at its own expense; provided, further, that an Indemnifying Party shall not be
-------- -------
entitled to assume the defense or control of any Action if: (v) the Indemnified
Party agrees, in writing, to assume the cost of such Action and forgo any
indemnity claimed under this Article 11, (w) in the opinion of legal counsel for
the Indemnified Party, such Action involves the potential imposition of a
criminal liability on the Indemnified Party, its officers, directors, employees
or agents, (x) in
38
the opinion of legal counsel for the Indemnified Party, an actual or potential
conflict of interest exists where it is advisable for such Indemnified Party to
be represented by separate counsel, (y) with respect to AqSub only, failure to
stay the enforcement of such Action will result in the imminent risk of sale,
forfeiture or loss of the Assets or any material portion thereof or a material
disruption in the operation of the business purchased by AqSub pursuant to this
Agreement, or (z) with respect to AqSub only, such Action results in the
creation of any lien on the Assets or any portion thereof unless the
Indemnifying Party shall have filed with the court an appropriate security bond
securing payment of any such lien and all costs associated therewith; provided,
--------
however, with respect to clauses (x) and (y) in this Section 11.3.1, the
-------
Indemnified Party shall conduct the defense of the Action in a manner, in the
Indemnified Party's reasonable good faith judgment, reasonably designed to avoid
or minimize potential damages for which the Indemnifying Party will ultimately
be responsible for hereunder. In the circumstances described in the foregoing
subsections 11.3.1(v) through (z), (I) the Indemnified Party shall provide
notice to the Indemnifying Party of the assumption of the defense by the
Indemnified Party and shall be entitled to control and assume responsibility for
the defense of such Action, at the cost and expense of the Indemnifying Party;
(II) the Indemnifying Party may, in any event, participate in all such
proceedings at its own cost and expense; and (III) the Indemnified Party will
provide copies of pleadings and other documents necessary to permit the
Indemnifying Party to participate in such proceedings or to follow the course of
such proceedings.
11.3.2 The failure of the Indemnified Party to give notice as
provided herein shall relieve the Indemnifying Party of any obligation under
this Article 11 only if and to the extent that such failure materially
prejudices the ability of the Indemnifying Party to defend such action.
11.3.3 In the defense of any such Action, regardless of who is in
control thereof, the controlling party shall not, except with the prior written
consent of the non-controlling party, consent to entry of any judgment or enter
into any settlement, which consent of the non-controlling party will not be
unreasonably withheld provided such judgment or settlement includes as an
unconditional term thereof the giving by the claimant or plaintiff to the non-
controlling party of a release from liability with respect to such claim or
litigation and, in the case of indemnification under Section 11.1 hereof, would
not result in a material impairment of AqSub's ability to conduct the business
of the Company in the ordinary course.
11.3.4 In the defense of any such Action, regardless of who is in
control thereof, the Indemnifying Party and the Indemnified Party shall
cooperate fully with each other, and shall cause their legal counsel,
accountants and affiliates to do so, and shall make available to the other party
all relevant books, records and information (in such party's control) during
normal business hours, and shall furnish to each other, at the Indemnifying
Party's expense, such other assistance as the other party may reasonably require
in connection with such defense.
11.4 Limits on Indemnification Obligation. Notwithstanding anything in
------------------------------------
Sections 11.1 or 11.2 to the contrary or in conflict:
39
11.4.1 Subject to the applicable statutes of limitation, a claim for
indemnification by AqSub may be made at any time based on the representations
and warranties contained in Sections 4.1, 4.2, 4.3, 4.4, 4.6, 4.7, 4.11, 4.12,
4.14.2, 4.17, 4.18, 4.22, 5.1 and 5.2 (collectively, "Type I Claims"). Except
for Type I Claims, a claim for indemnification by AqSub under this Agreement
shall be forever barred unless made by notifying the Company and the
Shareholders within two (2) years after the Closing Date.
11.4.2 Except on account of Type I Claims, fraud or matters described
in items (iii), (vi), (vii) or (viii) of Section 11.1.2 (for which the Basket
shall not apply), neither the Company and the Shareholders, on the one hand, nor
AqSub and Equifax, on the other hand, shall be liable under the indemnity
provisions of Section 11.1 or Section 11.2, as applicable, in any instance until
such time as the aggregate liability under such section exceeds $125,000 (the
"Basket"), in which event the Company, Shareholders, Equifax or AqSub, as is
applicable, shall be liable only to the extent such liability exceeds the
Basket.
11.4.3 Except on account of Type I Claims, fraud or matters described
in items (iii), (vi), (vii) or (viii) of Section 11.1.2 (for which there shall
be no limit on liability), in no event shall the liability of the Company and
Green Trust under Section 11.1 exceed, in the aggregate, Six Million Two Hundred
Fifty Thousand Dollars ($6,250,000). Except on account of fraud or matters
described in items (iii), (vi) or (vii) of Section 11.1.2 (for which there shall
be no limit on liability), in no event shall the liability of Xxxxxx Trust under
Section 11.1 exceed, in the aggregate, Two Million Dollars ($2,000,000). Except
on account of fraud, in no event shall the liability of Equifax and AqSub under
Section 11.2 exceed, in the aggregate, Eight Million Two Hundred Fifty Thousand
Dollars ($8,250,000).
11.5 Escrow First. Except as otherwise set forth in this Agreement, Equifax
------------
and AqSub agree to proceed against the Escrowed Amount prior to seeking
indemnification from the Company or the Shareholders.
11.6 Guaranty.
--------
11.6.1 In consideration of the execution and delivery by Equifax and
AqSub of this Agreement and the purchase of the Assets by AqSub hereunder,
Xxxxxx (as to the obligations of the Xxxxxx Trust only) and Green (as to the
obligations of the Green Trust only), as primary obligor and not as surety
merely, hereby guarantee absolutely and unconditionally to Equifax and AqSub the
due and punctual payment, when and as due, and performance of all obligations of
the Xxxxxx Trust or the Green Trust, as the case may be, under this Agreement,
including, but not limited to, the indemnification obligations of the Xxxxxx
Trust or the Green Trust, as the case may be, under Article 11 hereof, whether
now existing or hereafter arising (hereinafter referred to as the "Guaranteed
Obligations"), and agree to pay any and all expenses (including, but not limited
to, reasonable legal fees and disbursements) which may be incurred by Equifax
and/or AqSub in enforcing its rights under this Guaranty. The liability of the
Guarantors under this Guaranty is primary, unlimited and unconditional, and
shall be effective regardless of the solvency or insolvency of the Xxxxxx Trust
or the Green Trust, as the case may be, at any time,
40
the extension or modification of any of the Guaranteed Obligations by operation
of law or the subsequent dissolution, winding up or termination of the Xxxxxx
Trust or the Green Trust, as the case may be, or any change in their nature or
ownership. Xxxxxx (as to the Xxxxxx Trust only) and Green (as to the Green Trust
only) acknowledge, agree and confirm that this is a guaranty of payment and not
of collection only and that demand for payment may be made hereunder on any
number of occasions in the amount of all or any portion of the Guaranteed
Obligations then due and no single demand shall exhaust the rights of Equifax
and/or AqSub hereunder.
11.6.2 Payment by Guarantor. If the Shareholders shall fail to pay,
--------------------
when due and payable, any Guaranteed Obligation, Green (as to the Green Trust)
and Xxxxxx (as to the Xxxxxx Trust), as the case may be, will, without demand or
notice, immediately pay the same to Equifax and/or AqSub. All payments by Green
and/or Xxxxxx under this section shall be made without any setoff, counterclaim
or deduction whatsoever, and in the same currency and funds as are required to
be paid by the Shareholders.
11.6.3 Waiver. Green (as to the obligations of the Green Trust) and
------
Xxxxxx (as to the obligations of the Xxxxxx Trust) waive without any requirement
of any notice to or further assent by such guarantor, to the fullest extent
permitted by applicable Law, (i) diligence, presentment, demand, protest and
notice of any kind whatsoever, (ii) any requirement that Equifax and/or AqSub
exhaust any right or take any action against any obligor or other person for the
Guaranteed Obligations, (iii) the benefit of all principles or provisions of
applicable Law which are or might be in conflict with the terms of this Section
11.6, including, without limitation, Section 10-7-24 of the Official Code of
Georgia Annotated, (iv) notice of acceptance hereof, (v) all other notice to
which such guarantor or Shareholder might otherwise be entitled, (vi) all
defenses, set-offs and counterclaims of any kind whatsoever (but not the right
to bring an independent action), (vii) notice of the existence or creation of
any Guaranteed Obligations, (viii) notice of any alteration, amendment,
increase, extension or exchange of any of the Guaranteed Obligations, (ix)
notice of any amendments, modifications or supplements to this Agreement or any
document or agreement entered into in connection herewith, (x) the right to
require the Equifax and/or AqSub to proceed against any Obligor.
11.7 Exclusive Remedy. Except for remedies that cannot be waived as a
----------------
matter of law, including without limitation, claims under applicable state and
federal securities laws and fraud claims, the remedies provided for in this
Article 11 shall be the sole and exclusive remedies of the parties hereunder and
shall preclude assertion by any such party of any other rights or the seeking of
any other remedies (whether in contract, tort or otherwise) against another
party hereto with respect to any matter covered by the indemnification
provisions contained in this Article 11; provided that nothing herein shall be
construed or interpreted as limiting or impairing the rights or remedies that
the parties hereto may have in equity for injunctive relief or specific
performance.
41
12. TERMINATION.
-----------
12.1 Method of Termination. This Agreement constitutes the binding and
---------------------
irrevocable agreement of the parties to consummate the transactions contemplated
hereby, the consideration for which is (a) the covenants set forth in Articles 3
and 7 hereof, and (b) expenditures and obligations incurred and to be incurred
by AqSub, Equifax, the Company and the Shareholders in respect of this
Agreement, and this Agreement may be terminated or abandoned only as follows:
12.1.1 by the mutual consent of AqSub and the Company;
12.1.2 by AqSub on or after October 31, 2000, if any of the
conditions set forth in Article 8 hereof, to which the obligations of Equifax
and AqSub are subject, have not been fulfilled or waived, unless such
fulfillment has been frustrated or made impossible by any act or failure to act
of Equifax or AqSub;
12.1.3 by the Company on or after October 31, 2000, if any of the
conditions set forth in Article 9 hereof, to which the obligations of the
Company and Shareholders are subject, have not been fulfilled or waived, unless
such fulfillment has been frustrated or made impossible by any act or failure to
act of the Company or the Shareholders.
13. GENERAL PROVISIONS.
------------------
13.1 Notices. All notices, requests, demands and other communications
-------
hereunder shall be in writing and shall be delivered by hand or overnight
courier or mailed by registered or certified mail, return receipt requested,
first class postage prepaid, addressed (or sent) as follows:
If to the Company, at:
Compliance Data Center, Inc.
000 Xxxxx Xx., Xxxxx 000
Xxxxxx Xxxx, Xxxxxx 00000-0000
If to Green or Green Trust, at:
Xxxxxxx X. Xxxxx
X.X. Xxx 000
Xxxxxx Xxxx, Xxxxxx 00000-0000
With a copy to:
Xxxxxx X. Xxxxx, Esq.
Xxxxx Xxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
42
If to Xxxxxx or Xxxxxx Trust, at:
Xxxxxx Xxxxxx
0000 Xxxxxx Xxxxxx Xxxxxxxxx
Xxx Xxxxx, XX 00000
With a copy to:
Xxxxxxx Hug, Esq.
Walther, Key, Maupin, Oats, Cox,
Klaich & Legoy
X.X. Xxx 00000
Xxxx, Xxxxxx 00000
If to Equifax or AqSub, at:
Equifax Credit Information Services, Inc.
0000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxx, Senior Vice President
and Assistant General Counsel
With a copy to:
Hunton & Xxxxxxxx
Bank of America Plaza - Suite 4100
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx, Xx., Esq.
If delivered personally or by overnight courier, the date on which a
notice, request, instruction or document is delivered shall be the date on which
shall delivery is made and, if delivered by mail, the date on which such notice,
request, instruction or document is received shall be the third business day
following the date of mailing. Any party hereto may change its address
specified for notices herein by designating a new address by notice in
accordance with this Section 13.1.
13.2 Brokers. Equifax, on the one hand, and the Shareholders and the
-------
Company, on the other, represent and warrant to each other that no broker or
finder has acted for them or any entity controlling, controlled by or under
common control with them in connection with this Agreement.
13.3 Further Assurances. At any time, and from time to time, after the
------------------
Closing Date, the Shareholders shall execute such additional instruments and
take such actions as may be
43
reasonably requested by Equifax to confirm or perfect or otherwise to carry out
the intent and purposes of this Agreement.
13.4 Waiver. Any failure on the part of any party hereto to comply with any
------
of its obligations, agreements or conditions hereunder may be waived by the
party or parties to whom such compliance is owed. No waiver of any provision of
this Agreement shall be deemed, or shall constitute, a waiver of any other
provision, whether or not similar, nor shall any waiver constitute a continuing
waiver. No waiver shall be effective unless it is made in writing and delivered
as provided in this Agreement.
13.5 Expenses. All expenses incurred by the parties hereto in connection
--------
with or related to the authorization, preparation and execution of this
Agreement and the Closing of the transactions contemplated hereby, including,
without limitation of the generality of the foregoing, all fees and expenses of
agents, representatives, counsel and accountants employed by any such party,
shall be borne solely and entirely by the party or parties which has incurred
the same, except that all expenses of the Company shall be borne solely by the
Shareholders.
13.6 Binding Effect. This Agreement shall be binding upon and inure to the
--------------
benefit of the parties hereto and their respective successors and assigns.
13.7 Headings. The section and other headings in this Agreement are
--------
inserted solely as a matter of convenience and for reference, and are not and
shall not be deemed to be a part of this Agreement.
13.8 Entire Agreement. This Agreement constitutes the entire agreement
----------------
between the parties hereto and supersedes and cancels any prior agreements,
representations, warranties, or communications, whether oral or written, among
the parties hereto relating to the transactions contemplated hereby or the
subject matter herein. Neither this Agreement nor any provision hereof may be
changed, waived, discharged or terminated orally, but only by an agreement in
writing signed by both parties.
13.9 Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of Georgia.
13.10 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
13.11 Number and Gender. Whenever the context requires, references in this
-----------------
Agreement to the singular number shall include the plural, the plural number
shall include the singular and words denoting gender shall include the
masculine, feminine and neuter.
13.12 Exhibits Incorporated. All Exhibits attached hereto are incorporated
---------------------
herein by reference.
44
13.13 Confidentiality; Public Announcements. The Company, each Shareholder
-------------------------------------
and Equifax agree that each will maintain the confidentiality of the terms and
provisions of this Agreement and the information and materials marked as
Confidential and delivered to them or made available for their inspection
pursuant to this Agreement. In the event the Closing does not occur, the
Company, each Shareholder and Equifax will as soon as practicable return all
material of or concerning the other party obtained from such other party then in
their possession and hereby covenant to keep confidential any information
concerning the other party and ascertained from their review for a period of two
years commencing upon the termination of this Agreement. Notwithstanding the
foregoing, the prohibitions and restrictions set forth in this Section 13.13
shall not apply to any information (a) in the public domain not as a result of
the violation of Equifax's, any Shareholder's or the Company's undertaking
herein, (b) available to Equifax, the Shareholders or the Company on a non-
confidential basis without regard to the disclosure by Equifax, the Shareholders
or the Company to the other party, (c) available to Equifax, the Shareholders or
the Company from a source other than the other party (provided that such source
in so acting is not violating any duty or agreement of confidentiality), or (d)
required to be disclosed by any law, rule or regulation.
No party hereto shall, without the approval of the other parties hereto,
make any press release or other public announcement concerning the transactions
contemplated by this Agreement unless such party determines in good faith, based
on the advice of legal counsel, that such disclosure is required by law, in
which case that party will consult with the other prior to making such
disclosure.
45
IN WITNESS WHEREOF, each party hereto has executed or caused this Agreement
to be executed on its behalf, all on the day and year first above written.
EQUIFAX INC.:
/s/ Xxxxxxx X. Xxxxxxx
----------------------
Xxxxxxx X. Xxxxxxx
Executive Vice President
AQSUB:
EQUIFAX ACQUISITION, INC.
/s/ Xxxxxxx X. Xxxxxxx
-----------------------
Xxxxxxx X. Xxxxxxx
President
COMPANY:
COMPLIANCE DATA CENTER, INC.
/s/ Xxxxxxx X. Xxxxx
---------------------
Xxxxxxx X. Xxxxx
C.E.O.
SHAREHOLDERS:
XXXXXXX X. AND XXXXXX X. XXXXX LIVING
TRUST, OCTOBER 7, 1998
/s/ Xxxxxxx X. Xxxxx
---------------------
Xxxxxxx X. Xxxxx
Trustee
XXXXXX XXXXXXXX XXXXXX 1991 LIVING TRUST
/s/ Xxxxxx Xxxxxxxx Xxxxxx
--------------------------
Xxxxxx Xxxxxxxx Xxxxxx
Trustee
GUARANTORS:
/s/ Xxxxxxx X. Xxxxx
---------------------
Xxxxxxx X. Xxxxx, individually
/s/ Xxxxxx Xxxxxxxx Xxxxxx
---------------------------
Xxxxxx Xxxxxxxx Xxxxxx, individually
Exhibit Title Comments
------- ----- --------
2.1 Excluded Assets
2.2.1 Issuance Instructions for Equifax Shares
2.2.2 Cash Wiring Instructions
2.2.6 Consulting Agreement
2.4.1 Agreements and Obligations Terminated Prior
to Closing
2.5 Allocation of Purchase Price
2.7 Contracts/Agreements/Leases Requiring
Consent to Assignment
3.1 Exceptions to Company Operating As Usual to
Closing
3.11 Investment Letter & Investor Questionnaire
3.12 Covenant Not to Compete
3.13 Directors & Officers of AqSub
3.14 Registration Rights Agreement
4.1 State Qualifications
4.2(a) CDC Articles of Incorporation
4.2(b) CDC By-Laws
4.3 CDC Shareholder List
Exhibit Title Comments
------- ----- --------
4.5 Unaudited Financial Statements 1997, 1998
and 1999, and Interim Financial Statements
as of June 30, 2000
4.6 Outstanding Federal, State, Foreign and
Local Tax Filings
4.7 Outstanding Tax Audits
4.8 All Assets and Leased Property
4.8.2 Leases and Agreements Requiring Consent
4.8.4 Notices of Violations
4.9.2 Security Agreements Securing Accounts Payable
4.10 Material Changes Since December 31, 1999
4.11 Pending Litigation and Claims
4.12 Pending Charges, Governmental Investigations
and Regulatory Violations
4.12.1 Exceptions to Transfer of Licenses,
Certificates, Permits or Franchises Upon Sale
4.13 List of Contracts, Subscriber Agreements
(with notations of deviations from standard
agreements), Leases, and Insurance Policies
Exhibit Title Comments
------- ----- --------
4.14 Licensed and Sublicensed Software
4.14.1 Software and Hardware
4.14.5 Data Warehouse Data Subject to Licenses
4.15 Intellectual Property
4.17 ERISA and Related Matters
4.19 Lost Customers/Customer Groups of 5% or More
Aggregate Fees or Services
4.20 Insurance Policies
4.22 Transactions with Affiliates
4.23 Environmental Violations, Environmental
Permits and Property From Which Hazardous
Materials Have Been Removed
4.24 Violations of Other Instruments by Agreement
Exhibit Title Comments
------- ----- --------
5.4 Pending Litigation and Claims Against
Shareholders
7.1(b) Employment Agreement for Key Employees H&W to provide
7.5 Escrow Agreement
8.4 Opinion of Counsel - Shareholders and CDC Xxxxx Xxxx
Walther, Key, Maupin, Oats, Xxx
9.4 Opinion of Counsel - Equifax and AqSub Hunton & Xxxxxxxx
Exhibits intentionally omitted. Information will be provided upon request.
