Exhibit 2.1
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT dated as of March 16, 2002 by and
between Experian Holdings, Inc., a Delaware corporation ("Buyer") and
Xxxxxxxxx.xxx, Inc., a Delaware corporation ("Seller"). Certain capitalized
terms used in this Agreement are defined in Section 13.2 hereof.
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, Seller owns all of the capital stock outstanding on the date
of this Agreement (the "Stock") of Homestore Consumer Information Corp., a
Delaware corporation (together with all successor corporations thereof, the
"Company");
WHEREAS, Company owns all of the capital stock outstanding on the date
of this Agreement of ConsumerInfo, Inc., a Delaware corporation (together with
all successor corporations thereof, "ConsumerInfo"); and
WHEREAS, Seller desires to sell, and Buyer desires to purchase, the
Stock on the terms and conditions hereinafter set forth.
NOW THEREFORE, in consideration of the mutual promises and covenants
contained herein and intending to be legally bound, Buyer and Seller do hereby
agree as follows:
ARTICLE I
PURCHASE AND SALE/CLOSING
1.1 Transfer of the Stock by Seller. Subject to the terms and
-------------------------------
conditions of this Agreement, Seller agrees to sell all of the right, title and
interest in and to the Stock free and clear of all Encumbrances, and deliver the
certificate representing the Stock, to Buyer at the
Closing. The certificate shall be properly endorsed for transfer to, or
accompanied by a duly executed stock power in favor of, Buyer.
1.2 Purchase of the Stock by Buyer; Purchase Price; Amount Payable at
-----------------------------------------------------------------
Closing.
-------
(a) Subject to the terms and conditions of this Agreement, Buyer
agrees to purchase all of the right, title and interest in and to the Stock from
Seller and to pay to Seller the Purchase Price. The "Purchase Price" shall be
$130,000,000.
(b) At the Closing, Buyer shall pay an amount equal to (X) the
Purchase Price minus (Y) the Escrow Amount to Seller by wire transfer of funds
immediately available in the City of Los Angeles, California; and
(c) an amount equal to the Escrow Amount to the Escrow Agent (as
defined in Section 1.4) to be held and applied pursuant to the Escrow Agreement
(as defined in Section 1.4).
1.3 The Closing. The Closing shall take place at the offices of O'Melveny
-----------
& Xxxxx, 000 X. Xxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000 on March 29, 2002, or as
soon thereafter as is practicable, but not later than the second business day
following the date that all conditions specified in Articles VI, VII and VIII
have been satisfied or waived in accordance with this Agreement, or at such
other place or on such other date as Seller and Buyer may mutually agree.
1.4 Escrow. On the Closing Date, Buyer will deposit the Escrow Amount into
------
an escrow account with Citibank, N.A., as escrow agent (the "Escrow Agent"),
pursuant to that certain Escrow Agreement (the "Escrow Agreement") dated as of
the Closing Date among
2
Buyer, Seller and the Escrow Agent in the form attached hereto as Exhibit A. The
Escrow Amount will secure the indemnification obligations of Seller under
Article X and Article XI.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Except as otherwise indicated on the Disclosure Schedule, Seller
represents and warrants to Buyer as follows:
2.1 Organization and Related Matters. Seller and Company are each
--------------------------------
corporations duly organized, validly existing and in good standing under the
laws of their respective jurisdictions of incorporation. Seller has all
necessary corporate power and authority to execute, deliver and perform its
obligations under this Agreement. Schedule 2.1(a) sets forth, as of the date
---------------
hereof, the name of each corporation of which the Company directly or indirectly
owns shares of capital stock or other ownership having in the aggregate 50% or
more of the total combined voting power as of the issued and outstanding shares
of capital stock or ownership entitled to vote generally in the election of
directors of such corporation (individually, a "Subsidiary" and collectively,
----------
the "Subsidiaries"), the equity capitalization of each Subsidiary and Company's
------------
direct or indirect ownership interest therein and the jurisdiction in which each
Subsidiary was organized. Except as set forth on Schedule 2.1(a), neither
----------------
Company nor any Subsidiary holds any Equity Securities in any Person. As of the
Closing, Company will hold no Equity Securities in any Person other than
ConsumerInfo. ConsumerInfo is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation. Neither the
Company nor ConsumerInfo has agreed or is obligated to make, or bound by any
Contract to make, any future investment in or capital contribution to any other
Person. Neither the Company nor ConsumerInfo has, at any time, been a general
partner of any general
3
partnership, limited partnership or other Person. Schedule 2.1(b) sets forth the
---------------
current directors and executive officers of the Company and ConsumerInfo. The
Company and ConsumerInfo have all necessary corporate power and authority to own
or lease their respective properties and assets, as applicable, and to carry on
the Business as now conducted and are duly qualified or licensed to do business
as a foreign corporation in good standing in all jurisdictions, except where the
failure to be so qualified or licensed is not material to the Business. Neither
the Company nor ConsumerInfo is a registered or reporting company under the
Exchange Act. True, correct and complete copies of the charter documents and by-
laws, including all amendments, and minute books, of the Company and
ConsumerInfo have been delivered to Buyer.
2.2 Stock. Seller beneficially and of record owns all of the shares
-----
of capital stock of Company outstanding on the date hereof. Company beneficially
and of record directly owns all of the outstanding Equity Securities of
ConsumerInfo outstanding on the date hereof. All of such Equity Securities of
Company and ConsumerInfo are owned free and clear of any Encumbrances. At the
Closing, Buyer will acquire good title to and complete ownership of the Stock,
free and clear of any Encumbrances. The authorized capital stock of Company
consists of 40,000,000 shares of common stock, $0.01 par value, of which 1,000
shares are issued and outstanding on the date hereof. There are no outstanding
Contracts or other rights to subscribe for or purchase, or Contracts or other
obligations to issue or grant any rights to acquire, any Equity Securities of
Company or ConsumerInfo, or to restructure or recapitalize Company or
ConsumerInfo. There are no outstanding Contracts of Seller, Company or
ConsumerInfo to repurchase, redeem or otherwise acquire any Equity Securities of
Company or ConsumerInfo. All outstanding Equity Securities of Company and
ConsumerInfo are duly authorized, validly issued and outstanding and are fully
paid and nonassessable, and were issued in conformity with
4
applicable laws. There are no preemptive rights in respect of any Equity
Securities of Company or ConsumerInfo. There are no outstanding stock
appreciation, phantom stock, profit participation, or similar rights with
respect to the Company or ConsumerInfo. There are no voting trusts, proxies, or
other Contracts with respect to the voting of any capital stock of the Company
or ConsumerInfo.
2.3 Financial Statements; No Other Liabilities.
------------------------------------------
(a) Seller has delivered to Buyer true, correct and complete
copies of ConsumerInfo's audited balance sheets at June 30, 2000 and June 30,
2001 and an unaudited balance sheet of ConsumerInfo as of December 31, 2001 (the
"Interim Balance Sheet") and the related financial statements (including balance
sheet, statement of operations and accumulated deficit and, except with respect
to the Interim Balance Sheet, statement of cash flows) for the periods then
ending (the "Financial Statements"). Such Financial Statements have been
prepared in conformity with GAAP in all material respects except as disclosed
therein or in the footnotes thereto. The statements of operations and, with
respect to the audited balance sheets, cash flows present fairly, in accordance
with GAAP, in all material respects, the results of operations and cash flows of
ConsumerInfo for the respective periods covered, and the balance sheets present
fairly, in accordance with GAAP, in all material respects the financial
condition of ConsumerInfo as of their respective dates. All of the financial
books and records of the Company and ConsumerInfo have been made available to
Buyer, and such books and records completely and fairly record in all material
respects such entity's financial affairs.
(b) Prior to August 24, 2001, to our knowledge, except as listed
in Schedule 2.3(b), none of the revenues included in the Financial Statements
---------------
include any barter or
5
other forms of non-cash remuneration made to Company or ConsumerInfo and, except
as listed in Schedule 2.3(b), nor include any revenues received from or
---------------
generated by any stockholder or Affiliate of the Company or ConsumerInfo. Since
August 24, 2001, none of the revenues included in the Financial Statements
include any barter or other forms of non-cash remuneration made to Company or
ConsumerInfo and do not include any revenues received from or generated by any
stockholder or Affiliate of the Company or ConsumerInfo other than revenues
derived from Seller's network of websites. Other than as set forth in the
Financial Statements or in Schedule 2.3(b), none of the expenses included in the
---------------
Financial Statements include any payments or other forms of remuneration paid by
Company or ConsumerInfo to any stockholder or Affiliate of the Company or
ConsumerInfo.
(c) Since August 24, 2001 to the date hereof, whether or not in the
Ordinary Course, there has not been, occurred or arisen any change in or event
affecting the Company that has had, or is reasonably likely to have, a Material
Adverse Effect (other than matters of general applicability to Company's or
ConsumerInfo's industry).
(d) Neither Company nor ConsumerInfo has any material liabilities of
any nature, whether accrued, absolute, contingent or otherwise, and whether due
or to become due, probable of assertion or not, except liabilities that (i) are
reflected or disclosed in the Interim Balance Sheet, (ii) are reflected in the
notes to the balance sheet included in the Financial Statements (iii) are
disclosed in any of the Schedules to this Agreement, or (iv) were incurred after
December 31, 2001, in the Ordinary Course.
(e) Except as set forth on Schedule 2.3(e), all outstanding accounts
---------------
receivable listed on the Interim Balance Sheet or accrued by the Company or
ConsumerInfo after
6
the date thereof and prior to the Closing Date arose in the Ordinary Course and
are not subject to defenses, offsets or counterclaims, except to the extent
reserved against on the Interim Balance Sheet in accordance with GAAP. Except as
set forth on Schedule 2.3(e), neither Company nor ConsumerInfo has any
---------------
obligation to repay, return or forfeit any receivable collected by the Company
or ConsumerInfo prior to the Closing Date, except to the extent reserved for in
the Interim Balance Sheet in accordance with GAAP. Except as reflected in the
Interim Balance Sheet neither Company nor ConsumerInfo has incurred any material
liabilities to customers, suppliers or others for discounts, promotional
allowances or otherwise.
2.4 Taxes. The representations contained in this Section 2.4 are
-----
qualified to the knowledge of Seller with respect to any period prior to August
24, 2001. All federal Tax Returns and all material state, local and foreign Tax
Returns that are required to be filed by or with respect to Company and
ConsumerInfo on or before the Closing Date have been or prior to the Closing
will be duly filed or an extension will be filed for, and all Taxes shown as due
on such Tax Returns have been paid or will be paid in full. All such Tax
Returns are, or will be when filed, complete and correct in all material
respects. Company and ConsumerInfo have withheld all Taxes required to be
withheld by them under the Federal Insurance Contributions Act, as amended, the
Federal Unemployment Tax act, as amended, and other Taxes required to be
withheld from amounts paid or owing to any employee or other person (including
without limitation, to the extent withholding is required, any person considered
a consultant by Company or ConsumerInfo) and have or will timely remit the same
to the applicable Taxing Authorities. Neither Company nor ConsumerInfo is
obligated to make any payment, nor is it a party to any agreement that under
certain circumstances could obligate it to make any payment that is not
deductible under Section 162(m) or 280G of the Code; nor is Company or
ConsumerInfo
7
obligated to pay or reimburse any person for excise taxes under Section 4999 of
the Code. No issues relating to Company or ConsumerInfo that have been raised in
writing by the IRS or any other taxing authority in connection with the
examination of any of such Tax Returns or otherwise relating to the failure to
pay any Taxes which are alleged to be due and owing, are currently pending. No
federal, state, local or foreign Tax Return is currently under examination or
audit and no written notice of any such examination or audit or similar
examination has been received by Company or ConsumerInfo. All unpaid Taxes
payable by Company or ConsumerInfo for periods (or portions thereof) ending on
or before the date of the December 31, 2001 balance sheet, whether or not
disputed, are adequately reserved against in accordance with GAAP in the
December 31, 2001 balance sheet. Neither the Company nor ConsumerInfo is, or has
been, a member of any combined, unitary or consolidated group other than a group
including Seller or iPlace, Inc. or Memberworks Incorporated. Neither Company
nor ConsumerInfo is party to or bound by any Tax allocation or Tax sharing
agreement and does not have any current or potential contractual obligation to
indemnify any other Person with respect to Taxes. Neither Company nor
ConsumerInfo has any permanent establishment in any foreign country as defined
in the relevant tax treaty between the United States of America and no foreign
country has taken a position in writing that the operations of Company or
ConsumerInfo are subject to taxation in that country.
2.5 Material Contracts. Schedule 2.5 lists, as of the date hereof,
------------------ ------------
each Contract which is a Material Contract. Each Material Contract is valid,
binding and enforceable, except as limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
creditors' rights generally (including, without limitation, fraudulent
conveyance laws) and by general principles of equity, including, without
limitation, concepts of materiality,
8
reasonableness, good faith and fair dealing, regardless of whether considered in
a proceeding in equity or at law. Each of Company and ConsumerInfo has duly
performed all its obligations under each Material Contract to the extent that
such obligations to perform have accrued. With respect to the Material
Contracts, no breach or default or, to Seller's knowledge, alleged breach or
default, or event which would (with the passage of time, notice or both)
constitute a breach or default by Company or ConsumerInfo thereunder, as the
case may be, or, to Seller's knowledge, any other party or obligor with respect
thereto, has occurred, except in each case for such as do not have, individually
or in the aggregate, a Material Adverse Effect. Assuming the requisite Approvals
and Permits set forth on Schedule 2.9 are sought and obtained and compliance
------------
with the consent and notice requirements set forth in Schedule 2.5(b), the
---------------
execution, delivery and performance of this Agreement will not contravene,
conflict with or result in a breach or default under any Material Contract,
except in each case for such as do not have, individually or in the aggregate, a
Material Adverse Effect. True, correct and complete copies of the agreements
identified in Schedule 2.5, including all amendments and supplements, have been
------------
delivered to Buyer. None of the Company, ConsumerInfo or Seller have received
written notice, or otherwise has knowledge, of any plan or intent of any other
party to terminate or fail to renew (upon their termination) any of the Material
Contracts or to otherwise materially change their pattern of performance
thereunder (including, without limitation, any reduction in the volume of
transactions thereunder). To the knowledge of the Company and ConsumerInfo, no
material customer, supplier or key strategic partner intends or has under
consideration a proposal to cease doing business with, to materially alter the
amount of business done with, or to materially alter the terms upon which it
does business with the Company or ConsumerInfo in the Ordinary Course or as a
result of the transaction contemplated herein.
9
2.6 Changes. Since December 31, 2001, there has not been:
-------
(a) Other than changes relating in general to the industry in which
the Company and ConsumerInfo operates, any change in the assets, liabilities,
financial condition, cash flows or operating results of Company from that
reflected in the Interim Balance Sheet, except changes in the Ordinary Course,
which have not had, and are not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect.
(b) any damage, destruction or loss, whether or not covered by
insurance, which has had or is reasonably likely to have a Material Adverse
Effect;
(c) any waiver by Company or ConsumerInfo of a valuable right or of a
debt owed to it, except such as have not had, and are not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect;
(d) any satisfaction or discharge of any lien, claim of encumbrance or
payment of any obligation by Company or ConsumerInfo, except in the Ordinary
Course;
(e) except as set forth on Schedule 2.6(e), any change or amendment to
---------------
a Material Contract by which Company or ConsumerInfo or any of its assets or
properties is bound or subject;
(f) any change in the outstanding capital stock of Company or
ConsumerInfo;
(g) any loan, guaranty or other extension of credit to any Person or
from Company or ConsumerInfo;
10
(h) since August 24, 2001, except as described on Schedule 2.6(h), any
---------------
material change in any compensation arrangement or agreement with any key
employee or Company or ConsumerInfo; or
(i) any change in the financial or tax accounting practices of Company
or ConsumerInfo, except insofar as may be required by a change in GAAP; or
(j) except as expressly provided for in Section 5.9 of this Agreement,
any change in the cash management practices of Company or ConsumerInfo
(including collection of receivables, payments of payables and dividends), other
than in the Ordinary Course; or
(k) any material transaction by Company or ConsumerInfo other than in
the Ordinary Course.
2.7 Properties.
----------
(a) Except for any assets and properties that were disposed of since
the date of the Interim Balance Sheet in the Ordinary Course, Company and
ConsumerInfo have good title to or, in the case of leased assets and properties,
valid leasehold interests in, all tangible real and personal assets and
properties that they respectively own or lease and that are used in and material
to conduct of the Business, including, but not limited to, all such assets that
they respectively own or lease as reflected in the Interim Balance Sheet. Except
for services provided as set forth in Section 5.10, such assets are sufficient
for the conduct of the Business as currently conducted. None of such tangible
assets or properties is subject to any Encumbrances other than Permitted
Encumbrances. Schedule 2.7(a) lists in reasonable detail the tangible real and
---------------
personal property of Company and ConsumerInfo but may not list personal property
that is
11
immaterial in nature to the Business, has minimal cost or is not readily subject
to identification and inventory (such as office supplies).
(b) Company and ConsumerInfo do not own, and, with respect to Company,
have never owned, any real property. With respect to ConsumerInfo, ConsumerInfo
has not owned any real property since August 24, 2001 and, to the Company's
knowledge, ConsumerInfo has never owned any real property. Schedule 2.7(b) sets
---------------
forth a list of all real property currently leased, subleased or otherwise
occupied by Company or ConsumerInfo (each a "Lease"). With respect to each
property listed on Schedule 2.7(b):
---------------
(i) the Lease is valid, binding, and enforceable, except as
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting creditors' rights generally
(including, without limitation, fraudulent conveyance laws) and by general
principles of equity, including, without limitation, concepts of
materiality, reasonableness, good faith and fair dealing, regardless of
whether considered in a proceeding in equity or at law, and there is not,
under such Lease, any existing default or event of default (or event which
with notice or lapse of time, or both, would constitute a default) by
Company or, to Seller's knowledge, any other party thereto; and
(ii) to Seller's knowledge, no third party to the Lease has
repudiated any provisions thereof.
(c) All material items of equipment owned or leased by Company or
ConsumerInfo used in the Business are in adequate operating condition, regularly
and properly maintained, subject to normal wear and tear, except, in each case,
for such failures in condition
12
and maintenance as do not have a Material Adverse Effect. The buildings,
structures and improvements situated on the real estate leased by the Company or
ConsumerInfo and appurtenances thereto (including, without limitation, utility
and related services) are in reasonable operating condition (subject to normal
wear and tear), and as such are adequate to conduct the Business.
2.8 Intellectual Property.
---------------------
(a) Paragraph (a) of Schedule 2.8 attached hereto sets forth a list of
------------
all registered Intellectual Property owned by Company or ConsumerInfo
("Registrations"). The Registrations are valid and subsisting and Company or
ConsumerInfo is the exclusive owner of, and enjoys all rights of ownership with
respect to, the Registrations. Neither Company nor ConsumerInfo is a licensor
nor a licensee with respect to any of the Registrations except in the Ordinary
Course.
(b) Paragraph (b) of Schedule 2.8 sets forth a list of all domain
------------
names used or owned by Company or ConsumerInfo. The domain names are validly
registered in Company's or ConsumerInfo's name or licensed for Company's or
ConsumerInfo's use. Paragraph (b) of Schedule 2.8 sets forth a true, complete
------------
and correct list of all such licenses. Company or ConsumerInfo has the right to
use all of the Intellectual Property as necessary or required to conduct its
Business, except as listed on paragraph (b-2) of Schedule 2.8.
------------
(c) Company or ConsumerInfo has applied for the patents as set forth
in Schedule 2.8(c). Schedule 2.8(c), in conjunction with Schedule 2.8(a),
--------------- --------------- ---------------
Schedule 2.8(b), Schedule 2.8 (e) and Schedule 2.8 (b-2), constitutes all the
--------------- ---------------- ------------------
Intellectual Property necessary for the Company and ConsumerInfo to conduct the
Business, except as which would not, individually or
13
in the aggregate, have a Material Adverse Effect. Company or ConsumerInfo is the
licensee or exclusive owner of all trademarks and trade names used in connection
with the operation or conduct of the Business, including the sale of any
products or the provision of any services by Company or ConsumerInfo.
(d) None of Seller, Company or ConsumerInfo has received any written
threat, demand or notice of claim from any person or entity asserting that
Company's or ConsumerInfo's use of any of the Intellectual Property or the
Registrations constitutes any infringement, interference, violation,
misappropriation, breach or wrongful use of the intellectual property rights of
any other person or entity and neither Company nor ConsumerInfo is a Party to
any Action, Order or Contract (other than the licenses by which it obtains such
property) restricting or seeking to restrict, in any manner the use, transfer,
or licensing by Company or ConsumerInfo of any Intellectual Property used by the
Company or ConsumerInfo in the conduct of the Business, or which may affect the
validity, use or enforceability of such Intellectual Property by Company or
ConsumerInfo. To Company's knowledge, the Company's and ConsumerInfo's
Intellectual Property does not infringe, misappropriate or violate any
Intellectual Property owned or controlled by any third party except as which
would not, individually or in the aggregate, have a Material Adverse Effect.
(e) Paragraph (e) of Schedule 2.8 sets forth each item of proprietary
------------
software owned by Company or ConsumerInfo. All such proprietary software was
created by employees or independent contractors, including any works for hire,
and Company or ConsumerInfo is the exclusive owner of all right, title and
interest therein, including all Intellectual Property rights therein by virtue
of valid and enforceable Intellectual Property assignment agreements between
Company or ConsumerInfo and each of the employees or
14
independent contractors responsible for creating such software. Except as
described in paragraph (e) of Schedule 2.8, no third-party software is integral
------------
to Company's or ConsumerInfo's proprietary software (other than information
feeds from subscription sources and operating systems and software programs of
general availability and application, none of which is integral to the source
codes of Company's or ConsumerInfo's proprietary software). Except as set forth
in paragraph (e-1) of Schedule 2.8, the rights of Company or ConsumerInfo in the
------------
proprietary software listed in paragraph (e) of Schedule 2.8, together with the
------------
proprietary software listed on Schedule 2.23 and the third-party software held
-------------
under valid operation licenses, constitute all material software used by Company
or ConsumerInfo in the conduct of the Business.
2.9 Authorization; No Conflicts. The execution, delivery and
---------------------------
performance of this Agreement by Seller has been duly and validly authorized by
the Board of Directors of Seller and by all other necessary corporate action on
the part of Seller. This Agreement constitutes the legally valid and binding
obligation of Seller, enforceable against Seller in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws and equitable principles
relating to or limiting creditors' rights generally. The execution, delivery
and performance of this Agreement by Seller will not directly or indirectly (a)
contravene, conflict with, violate, or constitute a breach or default (whether
upon lapse of time and/or the occurrence of any act or event or otherwise) under
any provision of the charter documents or by-laws of Seller, Company or
ConsumerInfo or any resolution adopted by the Board of Directors or shareholders
of Seller or Company, (b) result in the imposition of any Encumbrance against
any material asset or property owned, licensed or leased by Company or
ConsumerInfo, or (c) contravene, conflict with or
15
result in a violation of any Law or Order to which Company, ConsumerInfo or any
of the assets owned licensed or leased by any of them are subject, each of
clauses (b) through (c), for such contraventions, conflicts, violations, which,
individually or in the aggregate, do have a Material Adverse Effect. Schedule
--------
2.9 lists, as of the date hereof, all material Approvals and Permits required to
---
be obtained by Seller, Company or ConsumerInfo to consummate the purchase and
sale of the Stock. Except for the Approvals and Permits identified on Schedule
--------
2.9 as requiring that certain actions be taken by or with respect to a
---
Governmental Entity or other Person, the execution, delivery and performance of
this Agreement by Seller will not require any filing or registration with, or
the issuance of any Approval or Permit by, any Governmental Entity or other
Person; except such that if not made or obtained would not have, individually or
in the aggregate, a Material Adverse Effect.
2.10 Legal Proceedings. Except as set forth in Schedule 2.10, as of
----------------- -------------
the date of this Agreement, there is no Order or Action pending, or, to the
knowledge of Seller, threatened, against Company or ConsumerInfo or any of their
respective properties or assets. Except as set forth in Schedule 2.10, as of the
-------------
date of this Agreement, there is no Order or Action pending, or, to the
knowledge of Seller, threatened, against Seller or any of its Affiliates which
if adversely determined would have a Material Adverse Effect.
2.11 Insurance. Schedule 2.11 lists, as of the date hereof, all
--------- -------------
insurance policies owned by Seller, Company or ConsumerInfo under which Company
or ConsumerInfo is insured. All of such insurance policies to the extent Company
or ConsumerInfo is insured thereby or participate therein, are in full force and
effect and neither Seller, Company nor ConsumerInfo is in material default
thereunder. Neither Company nor ConsumerInfo has been denied any insurance
coverage that it has requested, nor has either Company or ConsumerInfo made,
since
16
August 24, 2001, any material reduction in the scope or change in the nature of
its insurance coverage.
2.12 Permits. Company and ConsumerInfo hold all Permits that are
-------
required by any Governmental Entity to permit them to conduct the Business as
now conducted, and all such Permits are valid and in full force and effect,
except, in each case, for those the absence of which do not have a Material
Adverse Effect. No suspension, cancellation or termination of any material
Permits is pending or, to the knowledge of Seller, threatened.
2.13 Compliance with Law. Company and ConsumerInfo have conducted the
-------------------
Business in all material respects in accordance with applicable Law (including
the receipt of all Permits material to the conduct of the Business).
2.14 Environmental Compliance. To the Seller's knowledge, the
------------------------
Company's and ConsumerInfo's properties are, in all material respects, in
compliance with all applicable Environmental Laws, and neither Seller nor
Company nor ConsumerInfo has knowledge or has received notice of any material
unresolved violation, liability or alleged violation or liability of or pursuant
to any Environmental Laws in the conduct of the Business, the ownership of its
properties or the occupancy of any real estate.
2.15 Dividends and Other Distributions. Other than as permitted by
---------------------------------
Section 5.9 this Agreement, there has been no dividend or other distribution of
assets or securities by Company or ConsumerInfo, whether consisting of money,
property or any other thing of value, declared, issued or paid subsequent to the
date of the Interim Balance Sheet.
17
2.16 Employee Benefits. Schedule 2.16 sets forth, as of the date
----------------- -------------
hereof, a complete list of all Employee Pension Benefit Plans (as defined in
Section 3(2) of ERISA), Employee Welfare Benefit Plans (as defined in Section
3(1) of ERISA) and any other material employee benefit arrangements or
employment, bonus, severance or similar agreements maintained by Company or
ConsumerInfo or to which Company or ConsumerInfo contributes or to which the
Company or ConsumerInfo would have any liability or obligation (collectively,
the "Company Plans"). No Company Plan is subject to Title IV of ERISA, nor is
any such plan a multiemployer plan (within the meaning of Section 3(37) of
ERISA). With respect to each Company Plan:
(a) such Company Plan has been administered in all material
respects in accordance with its terms and, to the extent it is subject thereto,
ERISA and the Code;
(b) all contributions or other payments payable by Company or
Seller which are due, if any, to or on account of such Company Plan have been
paid in full;
(c) Seller has made available to Buyer complete copies of the
current plan documents with respect to the Company Plans, together with copies
of any and all amendments thereof adopted through the date hereof;
(d) there is no pending or threatened legal action, proceeding or
investigation against such Company Plan or the assets of any of the trusts under
such Company Plan that is reasonably likely to have a Material Adverse Effect;
and
18
(e) there have been no non-exempt "prohibited transactions"
within the meaning of Section 406 of ERISA and Section 4975 of the Code or
breaches of fiduciary duty with respect to such Company Plan that are reasonably
likely to have a Material Adverse Effect.
2.17 Bank Accounts, Powers, etc. Schedule 2.17 lists, each bank, trust
-------------------------- -------------
company, savings institution, brokerage firm, mutual fund or other financial
institution with which Company or ConsumerInfo has an account or safe deposit
box and the names and identification of all Persons authorized to draw thereon
or to have access thereto.
2.18 Certain Interests. No Affiliate of Seller, Company or
-----------------
ConsumerInfo nor any officer, director or affiliate thereof, (i) has any
material interest in any property used in or pertaining to the Business or, to
Seller's knowledge, any customer or supplier or other Person doing business with
Company or ConsumerInfo or (ii) is a party to any Material Contract with the
Company or ConsumerInfo other than Company Plans and the Continuing Intercompany
Agreement.
2.19 No Brokers or Finders. No agent, broker, finder or investment or
---------------------
commercial banker, or other Person or firms engaged by or acting on behalf of
Seller, Company or ConsumerInfo or their respective Affiliates in connection
with the negotiation, execution or performance of this Agreement or the
transactions contemplated by this Agreement, is or will be entitled to any
broker's or finder's or similar fees or other commissions as a result of this
Agreement or such transactions, except for Xxxxxx Xxxxxxx & Co. (for their
services provided on behalf of Seller), as to which Seller shall have full
responsibility and neither Company, ConsumerInfo nor Buyer shall have any
liability. Neither Company nor ConsumerInfo has made
19
any payments or advances to Xxxxxx Xxxxxxx & Co. which pursuant to the preceding
sentence are the obligation of Seller.
2.20 Privacy Policies. Company and ConsumerInfo have provided true and
----------------
correct copies of all privacy policies adopted by them in connection with the
Business. Neither Company nor ConsumerInfo has materially violated the
applicable privacy policies posted on its web sites and both Company and
ConsumerInfo have taken commercially reasonable steps to protect and maintain
the confidential nature of the personal information provided to the Company or
ConsumerInfo by Persons who do not consent to the disclosure of such information
or have expressly requested that the Company or ConsumerInfo not disclose such
information. To the knowledge of Company, all personally identifiable
information collected by Company or ConsumerInfo has been used in accordance
with the applicable privacy policy at the time of such collection.
2.21 Fair Value. The Purchase Price was arrived at based on "arm's-
----------
length" negotiations between the parties, with each party represented by counsel
and with Seller assisted by its financial adviser and, in Seller's opinion,
constitutes fair value.
2.22 Holding Company. Other than the Material Contracts which are the
---------------
subject of the second sentence of this Section 2.22, Company operates primarily
as a holding company and has no material assets other than the Equity Securities
of the Subsidiaries and, as of the Closing Date, will have no material assets
other than the Equity Securities of ConsumerInfo and those Material Contracts.
Other than the Material Contracts to which it is a party and which are listed on
Schedule 2.5 or on Schedule 2.22, Company is not party to any contract and has
-------------
not
20
incurred any material liabilities of any nature. Company has never had any
employees (excluding directors or officers who have served without compensation
from Company).
2.23 Q-Space Intellectual Property. The Q-Space Intellectual Property,
-----------------------------
consisting of all the assets listed on Schedule 2.23, constitutes all of the
-------------
material assets used in the Business owned by Q-Space, Inc. as of the date
hereof. The registrations set forth on Schedule 2.23 are valid and subsisting
-------------
and, as of Closing, ConsumerInfo will be the exclusive owner of, enjoy all
rights of ownership with respect to, such registrations. As of the Closing,
ConsumerInfo will not be a licensor or licensee with respect to any of the
registrations. As of the Closing, the domain names set forth on Schedule 2.23
-------------
will be validly registered in ConsumerInfo's name for ConsumerInfo's use. As of
the Closing Date, ConsumerInfo will own and have good and exclusive title to, or
have licensee interests to the Intellectual Property described in Schedule 2.23.
-------------
As of the Closing, ConsumerInfo will be the licensee or exclusive owner of all
trademarks and trade names listed on Schedule 2.23. There has been no written
-------------
threat, demand or notice of claim from any person or entity asserting that the
use of any of the Intellectual Property listed on Schedule 2.23 constitute any
-------------
infringement, interference, violation, misappropriation, breach or wrongful use
of the intellectual property rights of any other person or entity and there is
no Action, Order or Contract (other than the licenses by which it obtains such
property) that would, as of the Closing, restrict or seek to restrict, in any
manner the use, transfer or licensing of such Intellectual Property by
ConsumerInfo in the conduct of the Business, or which would affect the validity,
use or enforceability of such Intellectual Property by ConsumerInfo. To
Company's knowledge, the Intellectual Property listed on Schedule 2.23 does not
-------------
infringe, misappropriate or violate any Intellectual Property owned or
controlled by any third party. Schedule 2.23 sets forth each item of proprietary
-------------
software that is a Q-Space Asset.
21
All such proprietary software was created by employees or independent
contractors, including any works for hire, and, as of the Closing, ConsumerInfo
will be the exclusive owner of all right, title and interests therein.
2.24 Disclaimer of Representations and Warranties. Seller acknowledges
--------------------------------------------
and agrees that the purchase and sale of the Stock hereunder shall be without
representation or warranty by Buyer, express or implied, except as specifically
set forth in Article III.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
3.1 Organization and Related Matters. Buyer is a corporation duly
--------------------------------
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation. Buyer has all necessary corporate power and
authority to execute, deliver and perform its obligations under this Agreement
and to carry on its business as now being conducted.
3.2 Authorization; No Conflicts. The execution, delivery and
---------------------------
performance of this Agreement by Buyer has been duly and validly authorized by
the Board of Directors of Buyer and by all other necessary corporate action on
the part of Buyer and its Affiliates. This Agreement constitutes the legal,
valid and binding obligation of Buyer, enforceable against Buyer in accordance
with its terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar laws and equitable
principles relating to or limiting creditors' rights generally. The execution,
delivery and performance of this Agreement by Buyer will not (a) violate, or
constitute a breach or default (whether upon lapse of
22
time and/or the occurrence of any act or event or otherwise) under, the charter
documents or by-laws of Buyer, (b) result in the imposition of any Encumbrance
against any material asset or property of Buyer, or (c) violate any Law, the
violation of which has a material adverse effect on Buyer's ability to perform
its obligations under this Agreement. Schedule 3.2 lists, as of the date hereof,
------------
all material Approvals and Permits required to be obtained by Buyer to
consummate the purchase and sale of the Stock. Except for matters identified on
Schedule 3.2 as requiring that certain actions be taken by or with respect to a
------------
third party or Governmental Entity, the execution, delivery and performance of
this Agreement by Buyer will not require any material filing or registration
with, or the issuance of any material Approval or Permit by, any third party or
Governmental Entity.
3.3 No Brokers or Finders. No agent, broker, finder or investment or
---------------------
commercial banker, or other Person or firms engaged by or acting on behalf of
Buyer or its Affiliates in connection with the negotiation, execution or
performance of this Agreement or the transactions contemplated by this
Agreement, is or will be entitled to any broker's or finder's or similar fees or
other commissions as a result of this Agreement or such transactions, except for
Digital Coast Partners, LLC (for their services provided on behalf of Buyer), as
to which Buyer shall have full responsibility and Seller shall not have any
liability.
3.4 Legal Proceedings. There is no Order or Action pending, or to
-----------------
the knowledge of Buyer, threatened, against or affecting Buyer or any of its
properties or assets that individually or when aggregated with one or more other
Actions has or, if determined adversely to the interest of Buyer, might
reasonably be expected to have, a material adverse effect on Buyer's ability to
perform its obligations under this Agreement.
23
3.5 WARN Act. Buyer is not planning or contemplating, and has not made
--------
or taken, and will not take any decisions or actions concerning Company or
ConsumerInfo after the Closing that would require the service of notice under
the Worker Adjustment and Retraining Act of 1988 (the "WARN Act") at or prior to
the Closing.
3.6 Investment Representation. Buyer is acquiring the Stock from Seller
-------------------------
for Buyer's own account, for investment purposes only and not with a view to, or
for sale in connection with, any distribution thereof.
3.7 Investment Experience. Buyer understands that the purchase of the
---------------------
Stock pursuant to this Agreement involves substantial risk. Buyer can bear the
economic risk of such Buyer's investment in the Stock and has such knowledge and
experience in financial or business matters that such Buyer is capable of
evaluating the merits and risks of this investment in the Stock and protecting
its own interests in connection with this investment. Buyer is an "accredited
investor" as defined in 15 U.S.C. 77b(15)(ii).
3.8 Fair Value. The Purchase Price was arrived at based on "arm's-
----------
length" negotiations between the parties, with each party represented by counsel
and, in the opinion of Buyer, constitutes fair value.
3.9 Disclaimer of Representations and Warranties. Buyer acknowledges
--------------------------------------------
and agrees that the purchase and sale of the Stock hereunder shall be without
representation or warranty by Seller, express or implied, except as specifically
set forth in Article II.
24
ARTICLE IV
COVENANTS WITH RESPECT TO CONDUCT OF COMPANY
PRIOR TO CLOSING
4.1 Access. Seller shall and shall cause Company and ConsumerInfo to
------
authorize and permit Buyer, its representatives (which term shall be deemed to
include its independent accountants, financial advisers, agents and counsel) to
have reasonable access during normal business hours, upon reasonable notice and
in such manner as will not unreasonably interfere with the conduct of the
Business, to all of its properties, books, records, operating instructions and
procedures and all other information with respect to the Business as Buyer may
from time to time request, and to make copies of such books, records and other
documents and to discuss the Business with the officers of the Company and
ConsumerInfo as is reasonably necessary or appropriate for the purposes of
preparing to transition control of the Business and in connection with obtaining
any necessary Approvals of or Permits for the transactions contemplated by this
Agreement; provided, however, that under no circumstances shall Seller be
-------- -------
required to provide to Buyer, its prospective financing sources and their
respective representatives access to any privileged attorney-client
communications or attorney work-product.
4.2 Conduct of Business. Except as set forth on Schedule 4.2,
------------------- ------------
between the date of this Agreement and the Closing Date:
(a) Seller shall promptly notify Buyer of any Material Adverse Effect,
any material Action or Order or the breach, to its knowledge, in any material
respect, of any provision hereof binding upon the Company, ConsumerInfo or
Seller; and
25
(b) Seller shall not and shall cause Company and ConsumerInfo not to,
without the prior written consent of Buyer (which consent shall not be
unreasonably withheld):
(1) conduct the Business in any manner except in the Ordinary Course;
(2) change its cash management practices (including collection of
receivables and payments of payables), other than in the Ordinary Course;
(3) terminate, or fail to use commercially reasonable efforts to renew
or preserve, any material Permits;
(4) make any loan, guaranty or other extension of credit, or enter into
any commitment to make any loan, guaranty or other extension of credit, to or
for the benefit of any director, officer, employee, stockholder or any of its
Affiliates, except pursuant to the Company Plans;
(5) grant any general or uniform increase in the rates of pay or
benefits to officers, directors or employees (or a class thereof), or any
material increase in salary or benefits of any officer, director or key employee
or pay any special bonus to any person, except for (i) any increase or bonus
mandated by any of the Company Plans, (ii) any normal increase or bonus in
connection with a promotion, and (iii) annual merit salary increases in the
Ordinary Course; provided, that the amounts in each of (i) through (iii) shall
--------
not be in excess of $25,000 individually;
(6) sell, transfer, mortgage, encumber or otherwise dispose of any
assets or properties except dispositions of assets in the Ordinary Course or in
accordance with Sections 4.7 or 4.8;
26
(7) issue, sell, redeem or acquire for value, or agree to issue, sell,
redeem or acquire for value, any Equity Securities of Company or ConsumerInfo,
except as in accordance with Section 4.7 and 4.8;
(8) declare, issue, make or pay any dividend or other distribution of
assets, whether consisting of money, other personal property, real property or
other thing of value, to its stockholders, or split, combine, dividend,
distribute or reclassify any shares of its Equity Securities, except in
accordance with Section 5.9 or in accordance with Sections 4.7 or 4.8;
(9) change or amend its certificate of incorporation or bylaws;
(10) amend the Continuing Intercompany Agreement;
(11) terminate, amend or fail to use its commercially reasonable efforts
to renew any existing insurance coverage;
(12) other than trade payables incurred in the Ordinary Course, agree to
incur any obligations or liabilities (absolute or contingent) that call for
payment by Company or ConsumerInfo of more than $100,000 in any specific case or
$1,000,000 in the aggregate;
(13) issue, sell, redeem or acquire for value, or agree to do so, any
debt obligations (other than advances to or from Seller made in the Ordinary
Course) of Company or ConsumerInfo;
(14) make any investment, by purchase, contributions to capital,
property transfers, or otherwise, in any other Person;
27
(15) other than as expressly provided herein, make any Tax election or
make any change in any method or period of accounting or in any accounting
policy, practice or procedure;
(16) dispose of or fail to use commercially reasonable efforts to
preserve any material Intellectual Property it owns or any rights to use such;
(17) take any action which would cause any of the representations or
warranties set forth in Article II to be untrue in any material respect as of
the Closing Date;
(18) enter in to or amend any agreement or transaction with Seller or
any of its Affiliates;
(19) enter into or amend any Material Contract; or
(20) agree to or make any commitment to take any actions prohibited by
this Section 4.2(b).
4.3 Permits and Approvals. Seller and Buyer shall use their
---------------------
commercially reasonable efforts to obtain, and will promptly prepare all
registrations, filings and applications, requests and notices in order to
obtain, all Approvals and Permits identified on Schedules 2.9 and 3.2. Buyer
and Seller shall each bear half of any out-of-pocket costs, expenses incurred or
fees paid to Governmental Entities in order to obtain such Approvals and
Permits, including fees paid or expenses incurred in connection with any and all
filings or proceedings required under the Xxxx-Xxxxx-Xxxxxx Act and state or
federal securities laws. To the extent that the Approval of a third party with
respect to any Material Contract is required in connection with the transactions
contemplated by this Agreement but is not obtained prior to the Closing Date,
Buyer and Seller
28
shall cooperate in good faith to develop an alternative arrangement to ensure
that Buyer obtains the benefits of each such Material Contract consistent with
the economic results intended by this Agreement; provided that none of Company,
--------
ConsumerInfo, Buyer or Seller shall be required to incur any out-of-pocket
expenses in connection with the same.
4.4 Government Filings. Buyer and Seller shall promptly make any and
------------------
all filings required under the Xxxx-Xxxxx-Xxxxxx Act and any other Law requiring
filings with any Governmental Entity with respect to the transactions
contemplated hereby. Subject to such confidentiality restrictions as may be
reasonably requested, Seller and Buyer shall furnish each other such necessary
information and reasonable assistance as the other may reasonably request in
connection with its preparation of necessary filings or submissions under the
provisions of such Laws. Seller and Buyer will immediately supply to each other
copies of all correspondence, filings or communications, by such party or its
Affiliates with any Governmental Entity or members of its staff, with respect to
the transactions contemplated by this Agreement and any related or contemplated
or inconsistent transactions, except for documents filed pursuant to Item 4(c)
of the Xxxx-Xxxxx Xxxxxx Notification and Report Form or communications
regarding the same.
4.5 Preservation of Business Prior to Closing Date. During the
----------------------------------------------
period beginning on the date hereof and ending on the Closing Date, (a) Seller
will use its commercially reasonable efforts to preserve the Business and to
preserve the goodwill of customers, suppliers and others having business
relations with the Company, ConsumerInfo or the Business and (b) Seller and
Buyer will consult with each other concerning, and Seller will cooperate with
Buyer in connection with Buyer's efforts to keep the services of the officers
and employees of the Company and ConsumerInfo that Buyer may wish to have the
Company or ConsumerInfo retain.
29
Nothing in this Section 4.5 shall obligate Buyer, the Company or ConsumerInfo
after the Closing to retain or offer renewed employment to any officer or
employee of the Company.
4.6 Acquisition Proposals.
---------------------
(a) Seller (and its subsidiaries and Affiliates) shall not, and Seller
(and its subsidiaries and Affiliates) shall cause their respective officers,
directors, employees, investment bankers, attorneys, accountants, consultants or
other agents or advisors not to, directly or indirectly, (1) solicit, initiate
or take any action to facilitate or encourage the submission of any Acquisition
Proposal, (2) enter into or participate in any discussions or negotiations with,
furnish any information relating to the Company or ConsumerInfo or afford access
to the business, properties, assets, books or records of the Company or
ConsumerInfo to, or assist, participate in, cooperate with, facilitate or
encourage any effort by any Third Party to make, an Acquisition Proposal, (3)
approve, endorse or recommend any Acquisition Proposal or (4) enter into any
letter of intent or similar document or any contract, agreement or commitment
contemplating or otherwise relating to any Acquisition Proposal. Seller shall
promptly provide written notice to Buyer to the effect that it has received an
Acquisition Proposal, including the identity of the Person making the
Acquisition Proposal and the terms and conditions of the Acquisition Proposal.
Except as permitted by Section 4.6(b), Seller shall, and shall cause each of its
subsidiaries to, immediately cease and cause to be terminated any existing
activities, discussions or negotiations by Seller, any of its subsidiaries or
any officer, director, employee or affiliate of, or investment banker, attorney,
accountant or other advisor or representative of, Seller or any of its
subsidiaries with parties conducted heretofore with respect to any of the
foregoing.
30
(b) Notwithstanding the foregoing, Seller may (i) negotiate and
participate in discussions and negotiations with a Third Party concerning an
Acquisition Proposal if such Third Party, which has not been solicited by or on
behalf of the Seller after the date hereof or which did not otherwise result
from a breach of this Section 4.6, has submitted a Superior Proposal and (ii)
enter into an agreement with respect to a Superior Proposal at any time after
the second business day following Buyer's receipt of written notice advising
Buyer that the Board of Directors of the Seller has received a Superior
Proposal, specifying the material terms and conditions of such Superior Proposal
and identifying the person making such Superior Proposal; provided that Seller
--------
shall not enter into an agreement with respect to a Superior Proposal unless
Seller shall have furnished Buyer with written notice not later than noon (New
York time) two business days in advance of any date that it intends to enter
into such agreement and shall have caused its financial and legal advisors to
negotiate with Buyer to make such amendments to the terms and conditions of this
Agreement as would make this Agreement as so amended at least as favorable to
Seller from a financial point of view as the Superior Proposal. In addition, if
Seller proposes to enter into an agreement with respect to any Acquisition
Proposal, it shall concurrently with entering into such agreement pay, or cause
to be paid, to Buyer the Break-up Fee by wire transfer of immediately available
funds.
(c) The parties acknowledge that Seller, Company and ConsumerInfo may
receive unsolicited Acquisition Proposals, that the receipt of such unsolicited
Acquisition Proposals does not in itself constitute a violation of this Section
4.6 or entitle Buyer to the Break-Up Fee and that contact by Seller, Company and
ConsumerInfo with the senders of such unsolicited Acquisition Proposals solely
in order to inform them that the Seller is subject to a
31
definitive agreement to sell the Company (without disclosing the terms of this
Agreement) does not constitute a violation of this Section 4.6 or entitle Buyer
to the Break-Up Fee.
4.7 Transfer of Q-Space Assets. Except as pursuant to Section 5.11, prior
---------------------------
to the Closing Seller will cause Company to transfer all of the Q-Space
Intellectual Property to ConsumerInfo for cash consideration paid prior to the
Closing.
4.8 Dividend of Equity Securities of Subsidiaries other than ConsumerInfo.
---------------------------------------------------------------------
Prior to the Closing Seller shall cause Company to dividend or, with the consent
of Buyer, which shall not be unreasonably withheld, otherwise transfer all of
the Equity Securities of all Subsidiaries other than ConsumerInfo to Seller or
an Affiliate of Seller.
4.9 Notice and Consent Provisions of Material Contracts. Prior to the
---------------------------------------------------
Closing Seller shall use its commercially reasonable efforts to obtain the
consents and comply with the notice provisions set forth in Schedule 2.5(b).
---------------
Buyer and Seller shall each bear half of any out-of-pocket costs, expenses
incurred or fees paid to Equifax or Transunion in connection with obtaining
consents of such Persons with respect to the transactions contemplated by this
Agreement; provided, however that, with respect to any payments to Equifax or
--------
Transunion, Buyer shall be responsible for half of such payment only to the
extent it consents to the payment, which shall be in its sole discretion.
ARTICLE V
ADDITIONAL CONTINUING COVENANTS
5.1 Seller's Post-Closing Access.
----------------------------
32
(a) Subject to Section 11.5(e) hereof (relating to the preservation of
Tax records), Seller and Buyer agree that each of them shall preserve and keep
the records held by it, their subsidiaries or their Affiliates relating to the
business of the Company and ConsumerInfo for a period of three years from the
Closing Date and shall make such records and personnel available to the other as
may be reasonably required by such party, including without limitation in
connection with, among other things, any insurance claims by, legal proceedings
against or governmental investigations of Seller or Buyer or any of their
Affiliates or in order to enable Seller or Buyer to comply with their respective
obligations under this Agreement and each other agreement, document or
instrument contemplated hereby. In the event Seller or Buyer wishes to destroy
such records after that time, such party shall first give ninety days' prior
written notice to the other and such other party shall have the right at its
option and expense, upon prior written notice given to such party within that
ninety day period, to take possession of the records within one hundred and
eighty days after the date of such notice.
(b) Buyer shall cause Company and ConsumerInfo to make available to
Seller all financial, Tax and other information (including the Books and
Records) reasonably required by Seller in connection with (a) any audit or other
investigation by any taxing authority or any required reports or submissions
(including any consolidated financial or statutory reporting obligations of
Seller or its Affiliates) to Governmental Entities with respect to Company or
ConsumerInfo relating to any period (or portion thereof) ending on or before the
Closing Date, and (b) matters relating to insurance coverage of Company, third-
party litigation, claims, proceedings and investigations. Any information
obtained pursuant to this Section 5.1 or pursuant to any other section hereof
(including Section 11.5(e)) providing for the sharing of
33
information or the review of any Tax Return or other schedule relating to Taxes
shall be subject to Section 12.2.
5.2 No Rights to Seller Intellectual Property. Buyer acknowledges and
-----------------------------------------
agrees that Company and ConsumerInfo shall not have, and Buyer shall not acquire
pursuant to this Agreement, any rights of ownership or use whatsoever with
respect to any Intellectual Property of any kind that is owned by Seller or any
Affiliate of Seller other than Company or ConsumerInfo or that constitutes Q-
Space Intellectual Property, including, but not limited to, the names and Marks
"Homestore," and any derivatives thereof. Buyer agrees that, effective as of the
Closing, it shall cause Company and ConsumerInfo to immediately cease and desist
from any use of any such Intellectual Property in connection with any
advertising, marketing, or solicitation efforts, and not later than 120 days
after the Closing Date, to cease and desist from any other use of any such
Intellectual Property.
5.3 Insurance; Indemnity Obligations.
--------------------------------
(a) Seller shall maintain in effect, with respect to Company and
ConsumerInfo until 12:00 a.m. on the date following the Closing Date all
casualty and liability insurance policies listed on Schedule 2.11 (or comparable
-------------
replacement policies). Effective at 12:01 a.m. on the date following the
Closing Date, all insurance coverage maintained by Seller under which Company
and ConsumerInfo are insured, including any and all bonds or other indemnity
obligations, shall be cancelled and terminated by Seller (except to the extent
that they may not, by their terms, be so cancelled or terminated). All premium
refunds paid to Seller relating to insurance covering Company shall be the
property of Seller, regardless of whether such refunds are paid on, before or
after the Closing Date.
34
(b) Company and ConsumerInfo shall continue to be entitled to such
claims or rights to receive any insurance proceeds under pre-Closing insurance
covering Company and ConsumerInfo as Seller may have, to the extent such
coverage was maintained on an "occurrence" basis. From and after the Closing
Date, Seller and Buyer shall cooperate in connection with the adjustment and
administration of claims under all such insurance coverage. Buyer, Company and
ConsumerInfo shall be responsible for any deductible, retention or other charge
provided for by the terms of any such coverage. Buyer shall be responsible for
all premium audits and future retrospective premium increases or returns for all
"open" years with respect to retrospectively rated workers' compensation and
employer's liability coverage and similar experience-rated insurance.
(c) Buyer and Seller shall cooperate to ensure that no certificates of
insurance indicating coverage under Seller (or by reason of being a subsidiary
or Affiliate of Seller) shall be issued after the Closing Date and that all such
insurance certificates which are outstanding as of the Closing Date are promptly
returned to Seller. In the event that Seller is unable to notify the holder of
a certificate of insurance indicating such coverage of the termination of
coverage as of the Closing Date, or Seller is unable to cancel or terminate any
such coverage as of the Closing Date, and Seller or its insurer thereafter
receives a claim or purported claim under any such coverage, Buyer shall be
responsible for all Losses incurred by Seller or its insurers in respect of the
same.
(d) Buyer shall use commercially reasonable efforts (i) to substitute
itself for Seller or Affiliates, as of the Closing Date, with respect to each
guaranty, bond or other indemnity obligation of Seller relating to the Business
up to an aggregate of $50,000, a complete list of which will be delivered at
Closing, and (ii) to cause Seller or Affiliates to be forever
35
released from all liability in respect thereof for events which occur after the
Closing Date. Buyer shall be responsible for, and indemnify and hold harmless
Seller from, all Losses incurred by it or its insurers under any such guaranty,
bond or other indemnity obligation up to $50,000 in the aggregate.
5.4 WARN Act. Buyer agrees that it will not take any action which causes
--------
the notice provisions of the WARN Act to be applicable to Seller or, prior to
the Closing, the Company or ConsumerInfo in connection with the transactions
contemplated by this Agreement.
5.5 Intercompany Agreement. Buyer agrees to perform or cause Company and
----------------------
ConsumerInfo to perform all of the obligations of Company and ConsumerInfo under
such agreement. Except with respect to the Continuing Intercompany Agreement,
Buyer and Seller acknowledge and agree that all Contracts between Company and
ConsumerInfo on the one hand, and Seller or any of its Affiliates other than
Company and ConsumerInfo on the other hand, shall be terminated as of the
Closing Date without further payment by or obligation of either party thereto.
5.6 Mutual Releases.
---------------
(a) As of the Closing Date, Seller, on behalf of itself and its
Affiliates, does hereby forever release, discharge and acquit the Company and
ConsumerInfo from any and all manner of action or actions, cause or causes of
action whether class, derivative or individual in nature, in law or in equity
for indemnity or otherwise, suits, debts, liens, commitments, contracts,
agreements, obligations, promises, liabilities, claims, demands, damages,
losses, costs, or expenses, of any kind or nature whatsoever, known or unknown,
suspected or unsuspected, fixed or contingent ("Claims") based upon, arising
from, or in any way connected with or related
36
to any act, omission, or state of facts taken or existing on or prior to the
Closing Date. Notwithstanding the foregoing, Seller and its Affiliates are not
releasing hereunder Company or ConsumerInfo with respect to any claims: (i)
arising under the terms of this Agreement or the Escrow Agreement, and the
transition service agreements described in Schedule 5.10 or (ii) arising under
the Continuing Intercompany Agreement.
(b) As of the Closing Date, Company and ConsumerInfo do hereby forever
release, discharge and acquit the Seller all Claims based upon, arising from, or
in any way connected with or related to any act, omission, or state of facts
taken or existing on or prior to the Closing Date. Notwithstanding the
foregoing, Company and ConsumerInfo are not releasing hereunder Seller with
respect to any claims: (i) arising under the terms of this Agreement or the
Escrow Agreement, and the transition service agreements described in Schedule
5.10 or (ii) arising under the Continuing Intercompany Agreement.
(c) Seller, Company and ConsumerInfo further agree that any and all
rights granted to them under Section 1542 of the California Civil Code or any
analogous state law or federal law or regulation are hereby expressly waived.
Said Section 1542 of the Civil Code of the State of California reads as follows:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS
WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT
TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING
THE RELEASE, WHICH, IF KNOWN BY HIM, MUST HAVE
MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
DEBTOR.
37
5.7 Facilities. Seller shall take all reasonable efforts to effect the
----------
assignment to Buyer (or if acceptable to the applicable landlord, the Company or
ConsumerInfo) of the real property leases set forth on Schedule 5.7 and Buyer
------------
(or if acceptable to the applicable landlord, the Company or ConsumerInfo) shall
assume all obligations of Seller under such leases as of the Closing Date.
5.8 Nonsolicitation; Non-compete; Confidentiality.
---------------------------------------------
(a) During the period beginning on the date of this Agreement and
ending two years after the Closing Date, neither Seller nor any of its
controlled Affiliates, on the one hand, nor Buyer, on the other hand (nor any of
its controlled Affiliates), will, without the other's prior consent (which
consent may be withheld in the other's sole discretion), directly or indirectly,
solicit for employment, in the case of Seller, any employee of the Company or
ConsumerInfo, and in the case of Buyer, any employee of Seller or any of its
subsidiaries. For purposes of this Section 5.8, the term "solicit" shall be
deemed not to include advertisements or other generalized employment searches,
including advertisements in various media (including trade media) or any job
postings system not specifically directed to a particular employee.
(b) Except as provided in Section 5.8(c) or as expressly provided by
the Continuing Intercompany Agreement, neither Seller nor any of its controlled
Affiliates will for two years from the Closing Date, directly or indirectly, as
an owner, partner, shareholder, joint venturer, corporate officer, director,
employee, manager, consultant, principal, trustee or licensor, or in any other
capacity whatsoever of or for any Person:
(1) own, manage, operate, control or participate in the ownership,
management, operation, or control of, serve as a technical advisor to any
business that engages in
38
the business of online and offline marketing, sale and provision of credit
information and credit reporting-related products (the "Competing Business"); or
(2) solicit, divert, take away, or attempt to solicit, divert, take
away, the business or patronage of any of the clients, customers or suppliers of
the Company or ConsumerInfo; or
(3) lend or allow its name or reputation to be used or otherwise allow
its skill, knowledge of experience to be used by any Competing Business.
The restrictions in this Section 5.8(b) will be effective (w) in the
counties of Los Angeles and Ventura, (x) in the state of California, (y) in the
United States of America, and (z) throughout the world (each a "Restricted
Territory"). Seller acknowledges that the Business, given that it is conducted
on the Internet, is national and international, rather than local, in scope.
(c) Nothing contained in this Agreement shall prohibit Seller or its
Affiliates from:
(1) acquiring or holding shares of capital stock or a partnership or
other equity interest in any person that engages within a Competing Business in
a Restricted Territory, where such shares or interest represent no more than 10%
of the outstanding voting power in such person; provided, however, that in any
--------
such case, such shares or interests are purchased and/or held solely for
investment purposes and Seller or its Affiliates are not in control of such
Person; or
(2) acquiring (whether by merger, consolidation, stock or asset
purchase or other similar transaction) all or substantially all of the business
of any person whose principal
39
business is not the Competing Business but that engages in a Competing Business
within a Restricted Territory; provided, however, that, within twelve months
-------- -------
after its acquisition, Seller or its Affiliates shall (A) use all commercially
reasonable efforts to sell the portion of the business of such person which is
then operating as a Competing Business within a Restricted Territory and (B)
give Buyer the reasonable right to participate in any sales process with respect
to the sale of such portion of the business.
(d) Seller has had access to information of a confidential nature that
has great value to the Business and constitutes a substantial basis upon which
the Business is predicated. Such information includes trade secrets, customer
or supplier lists, pricing information, marketing arrangements, strategies,
business plans, internal performance statistics, training manuals, and other
information concerning Company or ConsumerInfo that is competitively sensitive
or confidential (the "Confidential Information"). Seller will treat the
Confidential Information with the same care as it treats its own proprietary
information.
(e) The Seller acknowledges that the restrictions in this Section 5.8
are reasonable both individually and in the aggregate and that the duration,
geographic scope, extent and application of each of such restrictions are no
greater than is necessary for the protection of Buyer's legitimate business
interest, which include but are not limited to Company's and ConsumerInfo's
trade secrets and other valuable confidential business information acquired by
Buyer, its substantial relationships with prospective or existing customers and
suppliers, and the goodwill associated with the Business.
(f) The parties hereto intend that the covenants in Section 5.8(b) will
be construed as a series of separate covenants, each consisting of the covenants
in Section 5.8 for
40
each of the Restricted Territories. Except for the Restricted Territories, all
such separate covenants will be deemed identical. The parties hereto desire and
intend that this Section 5.8 be enforced to the fullest extent permissible under
the laws and public policies applied in each jurisdiction in which enforcement
is sought. If any particular provision of this Section 5.8 is adjudicated to be
invalid or unenforceable, (i) each of the parties hereto agrees that if such
provisions would be valid or enforceable if some part or parts of them were
deleted or the period or area of application reduced, the applicable
restrictions will apply with the modifications necessary to make them valid and
enforceable, and (ii) such adjudication will apply only with respect to the
operation of this Agreement in the particular jurisdiction in which the
adjudication is made, and the unenforceable covenant will be eliminated from
this Agreement to the extent necessary to permit the remaining separate
covenants (or portions of time) to be enforced.
(g) Seller and Buyer recognize and agree that a breach of their
respective covenants set forth in this Section 5.8 could cause irreparable harm
to the other, that remedies at law in the event of such breach would be
inadequate, and that accordingly, in the event of such breach, a restraining
order or injunction or both may be issued against it, in addition to any other
rights and remedies which are available. If this Section 5.8 is more
restrictive than permitted by the Laws of any jurisdiction in which enforcement
is sought, this Section 5.8 shall be limited to the extent required to permit
enforcement under such Laws.
5.9 Dividends. At any time prior to the Closing, the Company may pay
---------
cash dividends to its shareholder of record as of the date thereof; provided
that (i) Seller has otherwise complied with Section 4.2, and (ii) ConsumerInfo
has at least $2,000,000 of cash on hand immediately after the Closing. Buyer
shall as promptly as practicable following the 90th day after the Closing notify
Seller of the amount of cash payments made by ConsumerInfo during
41
such 90 days as a result of cancellations or refunds of membership sales made on
or prior to the Closing Date (the "Cash Payments"). Buyer shall provide
reasonable documentation to support such calculation and any disputes shall be
handled under Section 14.15. To the extent that the Cash Payments exceed
$2,000,000, Seller shall promptly pay Buyer the amount of such excess. To the
extent that the Cash Payments are less than $2,000,000, Buyer shall promptly pay
Seller the amount of such deficit.
5.10 Transition Services. Seller and Buyer shall use reasonable efforts
-------------------
to enter into arrangements for the provisions of transition services including
those listed on Schedule 5.10.
-------------
5.11 Transfer of Q-Space Intellectual Property After Closing. To the
-------------------------------------------------------
extent that Buyer reasonably determines that any Q-Space Intellectual Property
was not transferred prior to the Closing or any other assets used in the
Business owned by Q-Space, Inc. were not transferred to ConsumerInfo prior to
the Closing, Seller shall execute and deliver such additional instruments of
conveyance and transfer as Buyer may reasonably request in order to more
effectively vest in ConsumerInfo such Q-Space Intellectual Property and assets.
ARTICLE VI
GENERAL CONDITIONS OF PURCHASE
The obligations of the parties to effect the Closing shall be subject
to the following conditions unless waived in writing by each of the parties
hereto:
6.1 No Orders; Legal Proceedings. No Law or Order shall have been
----------------------------
enacted, entered, issued, promulgated or enforced by any Governmental Entity,
nor shall any Action have
42
been instituted and remain pending by any Governmental Entity at what would
otherwise be the Closing Date, which prohibits or would (if successful) prohibit
the sale and purchase of Stock contemplated by this Agreement.
6.2 Approvals. To the extent required by applicable Law, all material
---------
Permits and Approvals required to be obtained from any Governmental Entity and
listed on Schedule 2.9 or 3.2 in connection with the sale of the Stock hereunder
shall have been received or obtained on or prior to the Closing Date, and any
applicable waiting period under the Xxxx-Xxxxx-Xxxxxx Act or comparable
applicable pre-merger notification statutes of foreign Governmental Entities
shall have expired or been terminated, except to the extent that noncompliance
with any such foreign pre-merger notification statute is not reasonably likely
to have a material adverse impact on the transactions contemplated by this
Agreement.
6.3 Escrow Agreement. On or prior to the Closing Date, Buyer, Seller and
----------------
Escrow Agent shall have executed and delivered the Escrow Agreement.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF BUYER
The obligations of Buyer to effect the Closing shall be subject to the
following conditions except to the extent waived in writing by Buyer:
7.1 Representations and Warranties and Covenants of Seller. The
------------------------------------------------------
representations and warranties of Seller herein contained shall be true in all
material respects (provided, however, that where a representation or warranty is
already qualified as to materiality, such materiality qualifier shall be
disregarded for purposes of this condition) at the Closing Date with the same
effect as though made at such time, Seller shall have performed all obligations
and
43
complied with all covenants and conditions required by this Agreement to be
performed, or complied with by it, on or prior to the Closing Date, and Seller
shall have delivered to Buyer a certificate of Seller ("Seller's Closing
Certificate") dated as of the Closing Date and signed by its General Counsel to
such effect. The representations and warranties made by Seller in Seller's
Closing Certificate shall constitute, upon execution and delivery thereof,
representations and warranties of Seller for all purposes of this Agreement
including Article II hereof.
7.2 Resignation of Directors. The directors of Company and ConsumerInfo
------------------------
shall have submitted their respective resignations in writing to Company and
ConsumerInfo, as applicable. Such resignations shall be effective as of the
Closing.
7.3 No Material Adverse Change. Since the date of this Agreement no event
--------------------------
shall have occurred which has caused or is reasonably likely to result in, a
Material Adverse Effect other than (i) any event, change, circumstance relating
in general to the industry in which the Company or ConsumerInfo operates or (ii)
the lack of obtaining the consent of Equifax to the assignment of its agreements
with Company or ConsumerInfo pursuant to the change of control of Company or
ConsumerInfo as a result of the transactions contemplated by this Agreement.
7.4 Legal Opinion. Buyer shall have received the legal opinion of
-------------
O'Melveny & Xxxxx LLP, special counsel to Seller in the form attached as Exhibit
-------
B.
--
7.5 Transfer of Q-Space Intellectual Property. Seller shall have
-----------------------------------------
delivered to Buyer evidence reasonably satisfactory to Buyer that pursuant to
Section 4.7 the Q-Space Intellectual Property has been transferred to
ConsumerInfo in accordance with Section 4.7.
44
7.6 Dividend of Equity Securities other than ConsumerInfo. Seller
-----------------------------------------------------
shall have delivered to Buyer evidence reasonably satisfactory to Buyer that the
Equity Securities of all Subsidiaries other than ConsumerInfo have been
transferred to Seller pursuant to Section 4.8.
7.7 No Action. Except for the iPlace Litigation, no Action shall
---------
have been instituted and remain pending by any Third Party which, in the
reasonable judgment of Buyer after consultation with its counsel, Seller and
Seller's counsel, would result in an Order that would (i) prohibit or restrict
the transactions contemplated by this Agreement, (ii) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation, (iii) affect adversely the right of the Buyer to operate the
businesses of Company or ConsumerInfo, or (iv) affect adversely the right of the
Company or ConsumerInfo to own its assets and to operate its businesses, except
in the cases of (iii) and (iv) would not constitute a Material Adverse Effect.
However, if any Action is brought alleging substantially similar issues of law
and fact as the iPlace Litigation or if additional plaintiffs are added to the
iPlace Litigation, then Buyer must determine, in its reasonable judgment after
consultation with its counsel, Seller and Seller's counsel, that such Action or
additional plaintiffs increases the likelihood that an Order would be granted to
(i) prohibit or restrict the transactions contemplated by this Agreement, (ii)
cause any of the transactions contemplated by this Agreement to be rescinded
following consummation, (iii) affect adversely the right of the Buyer to operate
the businesses of Company or ConsumerInfo, or (iv) affect adversely the right of
the Company or ConsumerInfo to own its assets and to operate its businesses,
except in the cases of (iii) and (iv) would not constitute a Material Adverse
Effect, in order to not consummate the Closing due to the failure to satisfy
this condition.
45
7.8 Good Standing. Seller shall have delivered evidence reasonably
-------------
satisfactory to Buyer of the good standing of Seller, Company and ConsumerInfo
in the State of Delaware as of a date within 7 days of the Closing Date.
7.9 Employee Bonuses. Seller shall have paid employees of
----------------
ConsumerInfo an amount of at least $225,000 in the aggregate for bonuses related
to 2001 on or prior to the Closing Date.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF SELLER
The obligations of Seller to effect the Closing shall be subject to
the following conditions, except to the extent waived in writing by Seller:
8.1 Representations and Warranties and Covenants of Buyer. The
-----------------------------------------------------
representations and warranties of Buyer herein contained shall be true in all
material respects (provided, however, that where a representation or warranty is
already qualified as to materiality, such materiality qualifier shall be
disregarded for purposes of this condition) at the Closing Date with the same
effect as though made at such time, Buyer shall have performed all obligations
and complied with all covenants and conditions required by this Agreement to be
performed, or complied with by it, on or prior to the Closing Date, and Buyer
shall have delivered to Seller a certificate of Buyer ("Buyer's Closing
Certificate") dated as of the Closing Date and signed by its President to such
effect. The representations and warranties made by Buyer in Buyer's Closing
Certificate shall constitute, upon execution and delivery thereof,
representations and warranties of Buyer for all purposes of this Agreement
including Article III hereof.
46
ARTICLE IX
TERMINATION OF OBLIGATIONS; SURVIVAL
9.1 Termination of Agreement. Anything herein to the contrary
------------------------
notwithstanding, this Agreement and the transactions contemplated by this
Agreement shall automatically terminate, without any notice, demand or action by
either party, if the Closing does not occur on or before the close of business
on May 15, 2002 unless extended (i) by mutual, written consent of Buyer and
Seller or (ii) by the written election of either Buyer or Seller for an
additional period not to exceed 60 business days if the principal reason that
the Closing has not occurred is the failure of the applicable waiting period
under the Xxxx-Xxxxx-Xxxxxx Act or comparable applicable pre-merger notification
statutes of any foreign government to have expired (provided that the party
electing such an extension has filed promptly and answered information requests
from the relevant Governmental Entity as soon as commercially possible), and
otherwise may be terminated at any time before the Closing as follows and in no
other manner:
(a) Mutual Consent. By mutual written consent of Buyer and
--------------
Seller.
(b) Conditions to Buyer's Performance Not Met. By Buyer by
-----------------------------------------
written notice to Seller if any event occurs or condition exists which would
render impossible the satisfaction of one or more conditions to the obligations
of Buyer to consummate the transactions contemplated by this Agreement as set
forth in Articles VI or VII.
(c) Conditions to Seller's Performance Not Met. By Seller by
------------------------------------------
written notice to Buyer if any event occurs or condition exists which would
render impossible the
47
satisfaction of one or more conditions to the obligation of Seller to consummate
the transactions contemplated by this Agreement as set forth in Articles VI or
VIII.
(d) Material Breach. By Buyer or Seller if there has been a
---------------
material misrepresentation or other material breach by the other party in its
representations, warranties and covenants set forth herein; provided, however,
-------- -------
that the breaching party shall have 20 business days after receipt of notice
from the other party of its intention to terminate this Agreement if such breach
continues, in which to cure such breach.
(e) Superior Proposal. By Seller in connection in accordance
-----------------
with Section 4.6(b), provided it has complied with all provisions of such
section, including the notice provisions therein, and that it makes simultaneous
payment of the Break-Up Fee.
(f) Injunction. By Buyer if any Law or Order shall have been
----------
enacted, entered, issued, promulgated or enforced by any Governmental Entity at
or prior to what would otherwise be the Closing Date which prohibits the sale
and purchase of Stock contemplated by this Agreement.
9.2 Effect of Termination. In the event that this Agreement shall be
---------------------
terminated pursuant to Section 9.1, all further obligations of the parties under
this Agreement shall terminate; provided that the obligations of the parties
--------
contained in Sections 12.2, 14.11, 14.12 and 14.15 (and, in the case of Section
9.1(e), Section 4.6(b)) shall survive any such termination, and that a
termination under Section 9.1(b), 9.1(c), 9.1(d), 9.1(e) or 9.1(f) shall not
relieve either party of any liability for a breach of, or for any
misrepresentation under, this Agreement, or be deemed to constitute a waiver of
any available remedy (including specific performance if available) for any such
breach or misrepresentation. In the event Buyer shall
48
terminate this Agreement pursuant to Section 9.1(f), then Seller shall pay, or
cause to be paid, to Buyer by wire transfer of immediately available funds to an
account designated by Buyer an amount equal to Buyer's documented out-of-pocket
fees and expenses (including, without limitation, reasonable legal fees and
expenses) incurred by Buyer and its Affiliates in connection with the due
diligence investigation, this Agreement and the proposed consummation of the
transactions contemplated hereby.
9.3 Survival of Representations and Warranties. The representations
------------------------------------------
and warranties contained in Article II and Article III of this Agreement
(including the representations and warranties made in Seller's Closing
Certificate and Buyer's Closing Certificate) shall survive the Closing and
expire 18 months after the Closing Date, except that (i) the representations and
warranties contained in Sections 2.1, 2.2, 2.4, 2.19, 2.22, 3.1, the first 2
sentences of 3.2 and the first two sentences of Section 2.9 shall continue
through the expiration of the applicable statute of limitations as the same may
be extended, the representations and warranties in Sections 2.14 and 2.16 will
survive the Closing for a period of two years and the representations and
warranties in Section 2.8 and Section 2.23 will survive the Closing for a period
of three years; and (ii) if a claim or notice is given under Article X with
respect to any representation or warranty prior to the applicable expiration
date, such claim shall continue indefinitely until it is finally resolved.
ARTICLE X
INDEMNIFICATION
10.1 Obligations of Seller. Subject to the provisions of Section
--------------------
10.4, but regardless of any pre-Closing investigation by Buyer, from and after
the Closing, Seller agrees to
49
indemnify, save and hold harmless Buyer, Company and ConsumerInfo, and their
respective directors, officers, employees, Affiliates, agents and assigns
("Buyer Indemnitee") from and against any and all Losses, directly or
indirectly, as a result of or arising from:
(a) any inaccuracy in or breach of any of the representations
and warranties made by Seller in or pursuant to this Agreement (other than any
set forth in Section 2.4);
(b) any breach of any covenants or agreements made by Seller in
or pursuant to this Agreement;
(c) any Subsidiaries other than ConsumerInfo;
(d) any actions, suits, petitions, proceeding, hearings, orders,
charges, complaints or claims by MemberWorks Incorporated ("MemberWorks") or any
of its Affiliates (whether not Buyer or Buyer Indemnitee is named as a party)
including, without limitation, MemberWorks v. Xxxxxxxxx.xxx, Inc., No. 302CV371
----------------------------------
JBA (United States District Court, District of Connecticut), whether brought in
the Federal District Court of Connecticut or another venue or jurisdiction;
(e) any actions, suits, petitions, proceeding, hearings, orders,
charges, complaints or claims by Xxxxxx Xxxxxx, including the civil claim
brought in Federal District Court in the Middle District of Alabama; provided,
however that Seller is hereby entitled to assume the defense, control and
settlement of such claim pursuant to the procedures set forth in Section
10.3(b); and
50
(f) the Lease between Household OPEB I, Inc. and iPlace dated
October 26, 2000 and the Sublease Agreement between iPlace and Ripple
Technologies, Inc dated May 17, 2001.
10.2 Obligations of Buyer. Subject to the provisions of Section 10.4,
--------------------
from and after the Closing, Buyer agrees to indemnify, save and hold harmless
Seller and its directors, officers, employees, Affiliates, agents and assigns
from and against any Losses, directly or indirectly, as a result of or arising
from:
(a) any inaccuracy in or breach of any of the representations
and warranties made by Buyer in or pursuant to this Agreement; and
(b) any breach of any covenants or agreements made by Buyer in
or pursuant to this Agreement.
10.3 Procedure.
---------
(a) Notice. Any party seeking indemnification of any Loss or
------
potential Loss arising from a claim asserted by a third party shall give written
notice to the party from whom indemnification is sought. Written notice to the
Indemnifying Party of the existence of a third-party claim shall be given by the
Indemnified Party within 30 days after its receipt of a written assertion of
liability from the third party. The Indemnified Party shall not be foreclosed by
any failure to provide timely notice of the existence of a third party claim to
the Indemnifying Party except to the extent that the Indemnifying Party incurs
an out-of-pocket expense or otherwise has been materially prejudiced as a result
of such delay.
51
(b) Defense. To the extent that the Indemnifying Party
-------
acknowledges the right of the Indemnified Party to indemnity pursuant hereto,
the Indemnifying Party shall be entitled to assume the defense, control and
settlement of any Indemnifiable Claim asserted by a third party. If the
Indemnifying Party assumes the defense of any such Indemnifiable Claim, it shall
retain experienced counsel reasonably satisfactory to the Indemnified Party. If
the Indemnifying Party does not assume such defense, the Indemnified Party may
compromise or settle any claim; however, the compromise or settlement of a claim
shall be evidence of potential liability but not binding upon Indemnifying
Party.
(c) Settlement Limitations. Notwithstanding anything in this
----------------------
Section 10.3 to the contrary, the Indemnifying Party shall not, without the
written consent of the Indemnified Party, settle or compromise any third party
Indemnifiable Claim or permit a default or consent to entry of any judgment
therein unless the claimant provides to the Indemnified Party an unqualified
release from all liability in respect of the claim and such settlement does not
in any manner restrict the future conduct of the Business. Notwithstanding the
foregoing, if a settlement offer solely for money damages is made by the
applicable third party claimant, and the Indemnifying Party notifies the
Indemnified Party in writing of the Indemnifying Party's willingness to accept
the settlement offer and pay the amount called for by such offer, and the
Indemnified Party declines to accept such offer, the Indemnified Party may
continue to contest such claim, free of any participation by the Indemnifying
Party, and the amount of any ultimate liability with respect to such
Indemnifiable Claim that the Indemnifying Party has an obligation to pay
hereunder shall be limited to the lesser of (i) the amount of the settlement
offer that the Indemnified Party declined to accept, or (ii) the aggregate
Losses of the Indemnified Party with respect to such claim. If the Indemnifying
Party makes any payment on any claim, the
52
Indemnifying Party shall be subrogated, to the extent of such payment, to all
rights and remedies of the Indemnified Party to any insurance benefits or other
rights and claims of the Indemnified Party with respect to such claim.
10.4 Mitigation; Limitations on Indemnification.
------------------------------------------
(a) To the extent required by Law the Indemnified Party
shall take all reasonable steps to mitigate all Losses, and shall provide such
evidence and documentation of the nature and extent of any Loss as may be
reasonably requested by the Indemnifying Party.
(b) Any Indemnifiable Claim governed by this Article X
shall be limited to the amount of actual damages sustained by the Indemnified
Party by reason of such breach or nonperformance, net of (i) any Tax benefits
realized or realizable by the Indemnified Party based on the present value
thereof by reason of such Losses, and (ii) the dollar amount of any insurance
proceeds actually received (provided that the Indemnified Party shall use
commercially reasonable efforts to collect any available insurance proceeds with
respect to such Losses) by the Indemnified Party with respect to such Losses.
Seller shall not be required to pay any amounts under Sections 10.1(a) (except
for Section 2.22) unless the aggregate of all amounts which would otherwise be
payable by Seller thereunder exceeds $500,000, and, in such event, Seller shall
be responsible for the entire amount. Buyer shall not be required to pay any
amounts under Sections 10.2(a) unless the aggregate of all amounts for which
indemnity would otherwise be payable by Buyer exceeds $500,000, and in such
event, Buyer shall be responsible for the entire amount. With the exception of
(i) indemnification by Seller related to breaches of the representations and
warranties contained in Section 2.1, 2.2, 2.4, 2.19, 2.22 and the first two
sentences of Section 2.9, (ii) any Losses that arise from fraud by the
indemnifying party, in
53
which case with respect to each of clauses (i) and (ii) above the responsibility
of the indemnifying party shall not be limited, Seller's indemnity obligations
under Sections 10.1(a) shall be limited, in the aggregate, to $29,250,000.
Seller's indemnity obligations under Sections 10.1(b), 10.1(c), 10.1(d), 10.1(e)
and 10.1(f) shall start from the first dollar and shall not be limited.
10.5 Remedies Exclusive. The remedies provided for in this Article X
------------------
shall constitute the sole and exclusive remedy for any post-Closing claims made
for breach of this Agreement or in connection with the transactions contemplated
hereby, except for claims arising out of any breach of Section 5.8 or Section
12.2, arising under Article XI or which arise out of conduct that is finally
determined by a court of competent jurisdiction to constitute fraud. Each party
hereby waives any provision of law to the extent that it would limit or restrict
the agreement contained in this Section 10.5. Notwithstanding anything to the
contrary elsewhere in this Agreement, in the absence of fraud, no party or its
Affiliates shall seek or be liable for any punitive or consequential damages,
including, but not limited to, loss of business reputation or opportunity
relating to any breach or alleged breach of this Agreement.
ARTICLE XI
TAX MATTERS
11.1 Allocation of Tax Liabilities; Indemnification.
----------------------------------------------
(a) Subject to the provisions of Section 11.2, Seller shall be
liable for and shall indemnify and hold Buyer harmless against any liability for
Taxes (which shall be net of any Tax benefits realized by Company, Buyer or
Buyer Affiliates as a result of such Taxes) of (i) Company or ConsumerInfo for
any taxable year or other taxable period that ends on or before
54
the Closing Date (including Taxes related to the transactions described in
Sections 4.7 and 4.8) and, in the case of any taxable year or other taxable
period that includes the Closing Date, that part of the taxable year or other
taxable period that ends at the Closing Date, and (ii) Company or ConsumerInfo
that are attributable to any other corporation and that are imposed on Company
or ConsumerInfo as a result of membership of Company or ConsumerInfo in any
consolidated, combined or unitary group prior to the day after the Closing Date.
Buyer shall be liable for and shall hold Seller harmless against any liability
for Taxes of Company and ConsumerInfo for any taxable year or other taxable
period that begins after the Closing Date and, in the case of any taxable year
or other taxable period that includes the Closing Date, that part of the taxable
year or other taxable period that begins after the close of the Closing Date.
(b) Whenever it is necessary for purposes of this Section 11.1
to determine the liability for Taxes of Company or ConsumerInfo for a taxable
year or period that begins on or before and ends after the Closing Date, the
determination shall be made by assuming that Company had a taxable year which
ended at the close of business on the Closing Date, except that exemptions,
allowances or deductions that are calculated on an annual basis (such as the
deduction for depreciation) shall be apportioned on a pro-rata basis.
(c) Buyer shall promptly (and in any event within 30 days)
notify Seller in writing upon receipt by Buyer, any of its Affiliates, Company
or ConsumerInfo of notice of any pending or threatened audits or written notices
of proposed assessments relating to Taxes for which Seller would be required to
indemnify Buyer pursuant to Section 11.1(a). Seller shall have the sole right to
represent Company's or ConsumerInfo's interest in any audit or administrative or
court proceeding relating to any Tax that Seller is required to indemnify
pursuant to Section 11.1(a), and to employ counsel of its choice at its expense.
Notwithstanding
55
the foregoing, Seller shall not be entitled to settle, either administratively
or after the commencement of litigation, any claim for Taxes which would
adversely affect the liability for Taxes of Buyer, Company or ConsumerInfo for
any period or portion thereof after the Closing Date without the prior written
consent of Buyer. Such consent shall not be unreasonably withheld. If Seller
elects not to assume the defense of any claim for Taxes which may be the subject
of indemnification by Seller pursuant to Section 11.1(a), Seller shall be
entitled to participate at its expense in such defense. Neither Buyer nor
Company nor ConsumerInfo may agree to settle any claim for Taxes which may be
the subject of indemnification by Seller under Section 11.1(a) without the prior
written consent of Seller, which consent shall not be unreasonably withheld.
(d) Seller shall have no liability under Section 11.1(a) for the
payment of any Tax attributable to or resulting from any action described in
Section 11.2.
(e) Neither party shall be required to pay any amounts under
this Section 11.1(a) unless the aggregate of all amounts which would otherwise
be payable by such party hereunder exceeds $50,000.
11.2 Tax Covenants.
-------------
(a) Buyer covenants that it will not cause or permit Company,
ConsumerInfo or any Affiliate of Buyer to make or change any Tax election, amend
any Tax Return, take any Tax position, take any action, or enter into any
transaction that results in any increased Tax liability of Seller, Company or
ConsumerInfo in respect to any Tax period including the Closing Date or ending
on or before the close of business on the Closing Date.
56
11.3 Refunds. Any refunds (including interest thereon) of Taxes paid or
-------
indemnified by Seller pursuant to Section 11.1(a) (except for refunds related to
the carryback of net operating losses of Company or ConsumerInfo) shall be for
the account of Seller for purposes of this Section. Any refunds (including
interest thereon) of Taxes paid or indemnified by Buyer pursuant to Section
11.1(a) shall be for the account of Buyer. Buyer agrees to assign and promptly
remit (and to cause Company and ConsumerInfo to assign and promptly remit) to
Seller all refunds (including interest thereon) of Taxes related to Company or
ConsumerInfo for the period prior to the Closing Date (except for refunds
related to the carryback of net operating losses of Company or ConsumerInfo).
Seller agrees to assign and promptly remit to Buyer all refunds (including
interest thereon) of Taxes related to Company or ConsumerInfo for the period
after the Closing Date. Buyer agrees that, upon the reasonable request and at
the sole expense of Seller, Buyer shall file, or cause Company or ConsumerInfo
to file, a claim for refund of any Tax which Seller is entitled to hereunder;
provided, however, that if Buyer reasonably believes that the filing of such a
--------
claim would be improper under applicable law, the question whether the claim
should be filed will be determined pursuant to Section 11.6.
11.4 Tax Benefits.
------------
(a) If any adjustment shall be made to any Tax Return relating to
Seller or Company for any taxable period of Company or ConsumerInfo ending prior
to or on or including the Closing Date which results in any Tax detriment
(including any indemnity payment pursuant to Section 11.1(a)) to Seller or any
Affiliate of Seller (including, prior to the close of business on the Closing
Date, Company ) and results in any deduction, exclusion from income or other
allowance (a "Tax Benefit") to Company, ConsumerInfo, Buyer, or any Affiliate of
Buyer, Buyer shall pay to Seller the amount of the present value of the Tax
reduction using the long-
57
term applicable federal rate as of the Closing Date attributable to such Tax
Benefit at such time or times as, and to the extent that, Company, ConsumerInfo,
Buyer, or any Affiliate of Buyer realizes such Tax reduction.
(b) If any adjustment shall be made to any Tax Return relating to
Buyer or Company for any taxable period of Company or ConsumerInfo ending after
the Closing Date which results in any Tax detriment to Buyer or any Affiliate of
Buyer (including, after the close of business on the Closing Date, Company and
ConsumerInfo) and results in any Tax Benefit to Seller or any Affiliate of
Seller for any taxable period of Company or ConsumerInfo ending on or prior to
the Closing Date, or including the Closing Date (to the extent of the portion of
such period treated as ending on the Closing Date pursuant to Section 11.1(c)),
Seller shall pay to Buyer the amount of the present value of the Tax reduction
using the long-term applicable federal rate as of the Closing Date attributable
to such Tax Benefit at such time or times as and to the extent that Seller or
any Affiliate of Seller realizes such Tax reduction.
11.5 Returns and Reports.
-------------------
(a) Seller shall file or cause to be filed when due all Tax Returns
with respect to Taxes that are required to be filed by or with respect to
Company and ConsumerInfo for taxable years or periods ending on or before the
Closing Date (and to the extent not yet filed, Buyer will have the right to
review and comment on such returns at least 30 days, or if such returns are not
available at such time, with as much notice as can be reasonably provided, prior
to the date of such Tax return) and shall pay any Taxes shown as due on such Tax
returns. Unless otherwise required, Tax Returns with respect to Taxes for
taxable years ending on the Closing Date shall be prepared on a basis consistent
with Treasury Regulations 1.1502 76(b)((1);
58
provided, however, that if the Closing Date falls in the middle of a month,
--------
Seller and Buyer may agree to allocate the tax items ratable to such month
consistent with Treasury Regulations Section 1.1502 76(b)(2)(iii). Buyer shall
file or cause to be filed when due all Tax Returns that are required to be filed
by or with respect to Company and ConsumerInfo for taxable years or periods
ending after the Closing Date and shall pay any Taxes shown as due on such Tax
Returns subject to any reimbursement to which Buyer may be entitled pursuant to
Section 11.1. Buyer shall cause Company and ConsumerInfo to consent to join, for
all taxable periods of Company or ConsumerInfo ending on or before the Closing
Date for which Company or ConsumerInfo is eligible to do so, in any
consolidated, combined or unitary Tax Returns relating to Tax which Seller shall
request it to join.
(b) With respect to any Tax Return with respect to Taxes that covers
a period beginning before and ending after the Closing Date, a copy of such Tax
Return shall be provided to Seller within 30 days prior to the due date
(including extensions) for the filing thereof, and Seller shall have the right
to approve (which approval shall not be unreasonably withheld) such Tax Return
to the extent it relates to the portion of the period ending on the Closing
Date. Seller shall promptly pay to Buyer the amount of Taxes attributable to
such period less any Taxes previously paid relating to such period (as
determined pursuant to Section 11.1(a) above) at the time such Tax Return is
filed.
(c) With respect to any taxable year of Company and ConsumerInfo
ending after December 31, 2001 and on or prior to the Closing Date, Buyer shall
promptly cause Company and ConsumerInfo to prepare and provide to Seller a
package of tax information materials (the "Tax Package") containing information
reasonably necessary to permit Seller to prepare tax returns for such period or
periods, which shall be completed in accordance with past practice including
past
59
practice as to providing the information, schedules and work papers and as to
the method of computation of separate taxable income or other relevant measure
of income of Company and ConsumerInfo. Seller shall not make any elections with
respect to Tax Returns for Company or ConsumerInfo for periods, or portions
thereof, ending on or prior to the Closing Date, except with the consent of
Buyer, which shall not be unreasonably withheld.
(d) Company or ConsumerInfo shall recognize in full any adjustment
required under Section 481 of the Code to the taxable income of Company or
ConsumerInfo in the period prior to the Closing Date. Seller shall indemnify
Buyer for any Tax related thereto in accordance with Section 11.1(a).
(e) Cooperation with Respect to Tax Returns. Buyer and Seller
---------------------------------------
agree to furnish or cause to be furnished to each other, and each at their own
expense, as promptly as practicable, such information (including access to books
and records) and assistance, including making employees available on a mutually
convenient basis to provide additional information and explanations of any
materials provided, relating to the Company and ConsumerInfo as is reasonably
necessary for the filing of any Tax Return, for the preparation for any audit,
and for the prosecution or defense of any claim, suit or proceeding relating to
any adjustment or proposed adjustment with respect to Taxes. Buyer, the Company
or ConsumerInfo shall retain in its possession, and shall provide Seller
reasonable access to (including the right to make copies of), such supporting
books and records and any other materials that Seller may specify with respect
to Tax matters relating to any taxable period ending on or before to the Closing
Date until 180 days after the relevant statute of limitations has expired. After
such time, Buyer may dispose of such material. Seller shall either (i) retain
all books and records in the possession of Seller or an Affiliate with respect
to Tax matters pertinent to Company and ConsumerInfo
60
relating to any taxable period beginning before the Closing Date until 180 days
after the expiration of the statute of limitations (and, to the extent notified
by Buyer or the Sellers, any extensions thereof) for the respective taxable
periods, and to abide by all record retention agreements with respect thereto
entered into with any Governmental Entity or (ii) offer such books and records
to Buyer prior to disposal of such material.
11.6 Disputes. If Buyer and Seller cannot agree on any calculation
--------
required to be made under Sections 11.1(a), 11.3, 11.4 or 11.5(b), Buyer and
Seller shall jointly select a national accounting firm acceptable to both Buyer
and Seller (or, if they cannot agree on such selection, they shall select a
national (big-five) accounting firm by lot after eliminating the Auditors and
Buyer's independent public accountants) and shall direct the firm so selected to
make such calculation as promptly as practicable, but in any event not later
than 30 days after such direction, and to deliver a written notice to each of
Buyer and Seller setting forth the results of such calculation. The results of
such calculation as made by such firm shall be final and binding, and the fees
and expenses of such firm shall be paid 50% by Buyer and 50% by Seller.
11.7 Tax Sharing Agreements. All Tax-sharing agreements or similar
----------------------
agreements with respect to or involving Company or ConsumerInfo shall be
terminated as of the Closing Date and, after the Closing Date, Company or
ConsumerInfo shall not be bound thereby and shall have no liability thereunder.
11.8 Survival. Notwithstanding anything in this Agreement to the
--------
contrary, the provisions of this Article XI shall survive through the expiration
of the applicable statute of limitations as the same may be extended.
61
ARTICLE XII
PUBLICITY/CONFIDENTIALITY
12.1 Publicity and Reports. If Buyer or Seller should issue a press
---------------------
release in connection with the execution of this Agreement, Buyer agrees that
its press release shall be reasonably acceptable to Seller and Seller agrees
that its press release shall be reasonably acceptable to Buyer. Seller and
Buyer shall coordinate all publicity relating to the transactions contemplated
by this Agreement, and neither party shall issue any press release, publicity
statement or other public notice relating to this Agreement or the transactions
contemplated by this Agreement without the prior written consent of the other
party, except that neither party shall be precluded from making such filings or
giving such notices as may be required by Law or the rules of any stock exchange
if prior to making such filing or notice it consults with the other party
regarding the nature and terms of such disclosure. Subject to the foregoing,
Seller and Buyer shall also mutually endeavor to agree on the form of any press
release to be issued following the Closing announcing the consummation of the
transactions contemplated by this Agreement.
12.2 Confidentiality. All non-public information disclosed by any party
---------------
or its representatives, whether before or after the date hereof, in connection
with the transactions contemplated by, or the discussions and negotiations
preceding, this Agreement to any other party or its representatives shall be
kept confidential by such other party and its representatives and shall not be
used by any such Persons other than as contemplated by this Agreement, except to
the extent that such information (i) was known by the recipient when received,
(ii) is or hereafter becomes lawfully obtainable from other sources, (iii) is
necessary or appropriate to disclose to a Governmental Entity having
jurisdiction over the parties, (iv) as may otherwise be
62
required by law, or (v) to the extent such duty as to confidentiality is waived
in writing by the other party; provided, however, that following the Closing the
-------- -------
foregoing restrictions will not apply to Buyer's use of documents and
information concerning the Business, the Company or ConsumerInfo furnished by
Seller hereunder in the conduct of the Business. If this Agreement is terminated
in accordance with its terms, each party shall return all documents and
reproductions thereof received by it or its representatives from the other party
and, in the case of reproductions, all such reproductions made by the receiving
party that include information not within the exceptions contained in the first
sentence of this Section 12.2, unless the recipients provide assurances
satisfactory to the requesting party that such documents have been destroyed.
ARTICLE XIII
DEFINITIONS
13.1 General Provisions. For all purposes of this Agreement, except as
------------------
otherwise expressly provided:
(a) the terms defined in this Article XIII have the meanings
assigned to them in this Article XIII and include the plural as well as the
singular;
(b) all accounting terms used herein have the meanings assigned to
them under generally accepted accounting principles, except to the extent
otherwise provided herein;
(c) all references in this Agreement to designated "Articles,"
"Sections" and other subdivisions and to "Exhibits" and "Schedules" are to the
designated Articles, Sections and other subdivisions of the body of this
Agreement and to the Exhibits and Schedules to this Agreement;
63
(d) pronouns of either gender or neuter shall include, as
appropriate, the other pronoun forms; and
(e) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Article, Section or other subdivision.
13.2 Specific Provisions. As used in this Agreement the following
-------------------
definitions shall apply:
"Acquisition Proposal" means, other than the transactions contemplated
by this Agreement, any inquiry, proposal or offer from any Person to acquire all
or a substantial part of the business or property of the Company or ConsumerInfo
or any capital stock of the Company or ConsumerInfo, whether by merger, tender
offer, exchange offer, sale of assets or other transaction involving the Company
or ConsumerInfo or any division or operating or principal business unit of the
Company or ConsumerInfo.
"Action" means any action, complaint, petition, suit, investigation or
other proceeding, whether civil, criminal, regulatory or governmental, in law or
in equity, or before any arbitrator or Governmental Entity.
"Affiliate" means a Person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
a specified Person; provided, however, that "Affiliate" of Company shall refer
-------- -------
only to ConsumerInfo.
"Agreement" means this Agreement by and between Buyer and Seller as amended
or supplemented together with all Exhibits and Schedules hereto.
64
"Approval" means any approval, authorization, consent, qualification
or registration, or any waiver of any of the foregoing, required to be obtained
from, or any notice, statement or other communication required to be filed with
or delivered to, any Governmental Entity or any other Person.
"Auditors" means PricewaterhouseCoopers LLP, independent public
accountants to Company.
"Books and Records" means all books, ledgers, files, reports,
documents, plans and operating records of or maintained by Seller, Company or
ConsumerInfo relating to or otherwise reasonably required for the operation of
the Business.
"Break-Up Fee" shall mean the amount of consideration payable pursuant
to the Superior Proposal minus $133,000,000, with such difference divided by 2.
For example, if the Superior Proposal consideration were equal to $143,000,000,
the corresponding Break-Up Fee would be $5,000,000 [($143,000,000 -
$133,000,000)/2 = $5,000,000].
"Business" means the business of Company taken as a whole, and shall
be deemed to include the following incidents of such business: income, cash
flow, operations, goodwill, business relationships, condition (financial or
other), assets, properties, revenues and liabilities.
"Buyer's Closing Certificate" is defined in Section 8.1.
"Closing" means the consummation of the purchase and sale of the Stock
pursuant to this Agreement.
65
"Closing Date" means the date of the Closing.
"Code" means the Internal Revenue Code of 1986, as amended or as
hereafter amended.
"Company" is defined in the recitals to this Agreement.
"ConsumerInfo" is defined in the preamble to this Agreement.
"Continuing Intercompany Agreement" means the agreement identified as
such on Schedule 5.5(a).
---------------
"Contract" means any agreement, arrangement, bond, commitment,
franchise, indemnity, indenture, instrument, lease, license or understanding,
option, warrant, subscription or note, whether or not in writing.
"Disclosure Schedule" means the Disclosure Schedule of even date
herewith delivered by Seller to Buyer which sets forth certain exceptions to the
representations and warranties made by Seller in Article II.
"Encumbrance" means any encumbrance, security interest, lien, pledge,
or similar restriction, whether imposed by agreement, understanding, law, equity
or otherwise, provided, however, that "Encumbrance" shall not mean any
-------- -------
restrictions on transfer generally arising under any applicable federal or state
securities laws.
"Environmental Laws" means all federal, state, local and foreign laws
and regulations relating to the protection of the environment (including ambient
air, surface water, ground water, land surface or subsurface strata) including
laws and regulations relating to the
66
actual or threatened release, discharge or emission of Hazardous Materials, or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of, or exposure to, Hazardous
Materials.
"Equity Securities" means any capital stock or other equity interest
or any securities convertible into or exchangeable for capital stock or other
equity interest or any other rights, warrants or options to acquire any of the
foregoing securities.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the related regulations and published interpretations.
"Escrow Agent" is defined in Section 1.4
"Escrow Agreement" is defined in Section 1.4
"Escrow Amount" shall mean $10,000,000.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Financial Statements" is defined in Section 2.3(a).
"GAAP" means generally accepted accounting principles in the United
States as in effect as of the respective dates of the financial statements
referred to in Section 2.3(a).
"Governmental Entity" means any government or any agency, bureau,
board, commission, court, department, official, political subdivision, tribunal
or other instrumentality of any government, whether federal, state or local,
domestic or foreign.
"Xxxx-Xxxxx-Xxxxxx Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements
67
Act of 1976, as amended, and the related regulations and published
interpretations.
"Hazardous Materials" means chemicals, pollutants, contaminants,
wastes, toxic substances, radioactive materials, asbestos-containing materials
(ACM), hazardous substances, petroleum and petroleum products or any fraction
thereof and any other substance that is currently regulated by an Environmental
Law.
"Indemnifiable Claim" means any Loss for or against which any party is
entitled to indemnity under this Agreement.
"Indemnified Party" means a party entitled to indemnity under this
Agreement.
"Indemnifying Party" means a party obligated to provide indemnity
under this Agreement.
"Intellectual Property" means all patents, patent applications,
trademarks, maskworks, service marks, logos, trade names, copyrights,
proprietary software inventions, know how and other proprietary information and
rights.
"Interim Balance Sheet" is defined in Section 2.3(a).
"iPlace Litigation" means MemberWorks v. Xxxxxxxxx.xxx, Inc., No.
----------------------------------
302CV371 JBA (United States District Court, District of Connecticut) or any
other Action by Memberworks alleging substantially similar issues of law and
fact whether brought in the Federal District Court of Connecticut or another
venue or jurisdiction.
"IRS" means the Internal Revenue Service or any successor entity.
68
"Knowledge", "to Company's knowledge" or "to Seller's knowledge" or
any phrase of similar import or other limitation shall mean and be limited to
the knowledge of the persons identified in Schedule 1.0.
------------
"Law" means any applicable constitutional provision, statute,
ordinance or other law, rule, regulation, or interpretation of any Governmental
Entity and any Order applicable to the operation of Company's business and the
ownership of its properties and assets.
"Loss" means any cost, damage, disbursement, expense, loss, penalty or
settlement of any kind or nature, whether foreseeable or unforeseeable,
including, but not limited to, interest or other carrying costs, penalties,
legal, accounting and other professional fees and expenses reasonably incurred
in the investigation, collection, prosecution and defense of claims and amounts
paid in settlement, that may be imposed on or otherwise incurred or suffered by
the specified person. The term "Loss" as used in this Agreement is not limited
to matters asserted by third parties against any specified person, and includes
Losses incurred or sustained by such person in the absence of any third party
claim.
"Xxxx" means any brand name, copyright, patent, service xxxx,
trademark, tradename, and all registrations or applications for registration of
any of the foregoing.
"Material Adverse Effect" means a material adverse effect on (i) the
Business, employee, customer, supplier and/or other key relationships or
condition (financial or otherwise) of the Company or ConsumerInfo or (ii) the
ability of the Company, ConsumerInfo or the Seller to consummate the
transactions contemplated hereby and perform their respective obligations
hereunder; provided, however, that a change in the Seller's stock price shall
--------
not in itself constitute a Material Adverse Effect.
69
"Material Contract" means each Contract (including all amendments,
supplements or modifications thereto) to which Company or ConsumerInfo is a
party that (a) is a material facilities lease, (b) by its terms obligates
Company or ConsumerInfo to pay an amount in excess of $200,000 per year and
which cannot be terminated or cancelled by Company or ConsumerInfo, without
liability or penalty upon 60 days' or less prior notice, (c) limits or restricts
the ability of Company or ConsumerInfo to compete or otherwise to conduct its
business in any manner or place, (d) is a credit agreement, note, bond,
mortgage, deed of trust or indenture evidencing any indebtedness of Company or
ConsumerInfo for borrowed money or is a guaranty by Company , (e) contains a
right or obligation, other than pursuant to any Company Plan, of any Affiliate
(other than Company ), officer or director, of Seller or Company or
ConsumerInfo, from or to Company or ConsumerInfo, (f) represents a contract upon
which the Business is substantially dependent or which is otherwise material to
the Business, (g) grants a power of attorney, agency or similar authority to
another person or entity, (h) grants to a third party a right of first refusal
with respect to a material property of the Company or ConsumerInfo, (i) provides
for an indemnity by the Company or ConsumerInfo, or (j) is between Seller or any
Affiliate of Seller on the one hand and the Company or ConsumerInfo on the other
hand; provided, however, that "Material Contract" shall not mean any of the
-------- -------
Company Plans.
"Order" means any decree, injunction, judgment, order, ruling,
assessment or writ.
"Ordinary Course" shall mean the ordinary and usual course of the
conduct of the Business substantially as currently conducted and conducted since
August 24, 2001.
"Permit" means any license, permit, franchise, certificate of
authority, or order, or
70
any waiver of the foregoing, required to be issued by any Governmental Entity.
"Permitted Encumbrance" means any Encumbrance that:
(i) is reflected in the financial statements referred to in
Section 2.3(a);
(ii) is a lien of a landlord, carrier, warehouseman, mechanic,
materialman, or any other lien arising in the Ordinary Course by
operation of law with respect to liability that is not yet due or
delinquent;
(iii) is a lien for Taxes not yet due or being contested in
good faith by appropriate proceedings for which adequate reserves have
been established in accordance with GAAP;
(iv) with respect to the right of a Person to use any property
leased or licensed from Company or ConsumerInfo arises by the terms of
the applicable lease or license;
(v) with respect to the right of Company or ConsumerInfo to
use any property leased or licensed to Company or ConsumerInfo, arises
by the terms of the applicable lease or license;
(vi) is a purchase money security interest arising in the
Ordinary Course; or
(vii) does not materially detract from the value of the
encumbered property or materially detract from or interfere with the
use of the
71
encumbered property in the ordinary conduct of the Business and is not
otherwise material to the Business or to the Company and ConsumerInfo,
taken as a whole.
"Person" means an association, a corporation, a limited liability
company, an individual, a partnership, a trust or any other entity or
organization, including a Governmental Entity.
"Purchase Price" is defined in Section 1.1(a).
"Q-Space Intellectual Property" means those assets (consisting of
Intellectual Property) listed on Schedule 2.23.
-------------
"Seller's Closing Certificate" is defined in Section 7.1.
"Stock" is defined in the preamble to this Agreement.
"Subsidiary" is defined in Section 2.1.
"Superior Proposal" means any bona fide written Acquisition Proposal
relating to an all cash, fully financed acquisition in an amount no less than
$143,000,000 (with an escrow or other form of holdback not exceeding
$10,000,000) by a Third Party of all or substantially all of the assets of the
Company or ConsumerInfo or all of the equity securities of the Company or
ConsumerInfo which the Board of Directors of Seller concludes in good faith,
based on a written opinion from a nationally recognized investment banking firm,
(A) is more favorable to Seller from a financial point of view than the
transactions contemplated hereby and (B) is reasonably capable of being
completed by April 12, 2002.
72
"Tax" means any foreign, federal, state, county or local income, sales
and use, excise, franchise, real and personal property, transfer, gross receipt,
ad valorem, stamp, premium, profits, customs, duties, windfall profits, capital
stock, production, business and occupation, disability, employment, payroll,
severance or withholding tax, fee, assessment or charge imposed by any
Governmental Entity, any similar amount of any member of a consolidated group in
which Company or ConsumerInfo is or was a member on or prior to the Closing Date
under Reg. (S)1.1502-6 (or any comparable provision of state, local or foreign
law), any payments required under any existing or prior tax sharing or
comparable agreement, any interest and penalties (civil or criminal) related
thereto or to the nonpayment thereof, and any Loss in connection with the
determination, settlement or litigation of any Tax liability.
"Tax Benefit" is defined in Section 11.4(a).
"Tax Package" is defined in Section 11.5(c).
"Tax Return" means a declaration statement, report, return or other
information required to be supplied to a Governmental Entity with respect to
Taxes including, where permitted or required, combined or consolidated returns
for any group of entities that includes Company.
"Third Party" means any Person as defined in this Agreement or in
Section 13(d) of the Exchange Act, other than the Company or any of its
Affiliates.
"WARN Act" is defined in Section 3.5.
73
ARTICLE XIV
GENERAL
14.1 Amendments; Waivers. This Agreement and any Exhibit or Schedule
-------------------
attached hereto may be amended only by an agreement in writing executed on
behalf of both Buyer and Seller. No waiver of any provision nor consent to any
exception to the terms of this Agreement shall be effective unless in writing
and signed by the party to be bound and then only to the specific purpose,
extent and instance so provided, except as provided in Section 9.4.
14.2 Exhibits and Schedules; Integration. Each Exhibit and Schedule
-----------------------------------
delivered pursuant to the terms of this Agreement shall be in writing and shall
constitute a part of this Agreement. This Agreement, together with such
Exhibits and Schedules, and the Confidentiality Agreements dated January 29,
2002 and February 2002 constitute the entire agreement between the parties
pertaining to the subject matter hereof and supersedes all prior agreements and
understandings of the parties in connection therewith.
14.3 Commercially Reasonable Efforts. Each party will use its
-------------------------------
commercially reasonable efforts to cause all conditions to its and the other
party's obligations hereunder to be timely satisfied, to the end that the
transactions contemplated by this Agreement shall be effected substantially in
accordance with its terms as soon as reasonably practicable.
14.4 Governing Law. This Agreement, the legal relations between the
-------------
parties and any Action, whether contractual or non-contractual, instituted by
any party with respect to matters arising under or growing out of or in
connection with or in respect of this Agreement shall be governed by and
construed in accordance with the laws of the State of California
74
applicable to contracts made and performed in such State and without regard to
conflicts of law doctrines.
14.5 No Assignment. Neither this Agreement nor any rights or
-------------
obligations under it are assignable, except that Buyer may assign its rights and
obligations hereunder to any Affiliate of Buyer provided that Buyer agrees to
unconditionally guarantee the performance of all obligations hereunder in their
entirety upon terms satisfactory to Seller.
14.6 Headings. The descriptive headings of the Articles, Sections and
--------
subsections of this Agreement are for convenience only and do not constitute a
part of this Agreement.
14.7 Counterparts. This Agreement and any amendment hereto or any
------------
other agreement or document delivered pursuant hereto may be executed in one or
more counterparts and by different parties in separate counterparts. All of
such counterparts shall constitute one and the same agreement or other document
and shall become effective unless otherwise provided therein when one or more
counterparts have been signed by each party and delivered to the other party.
14.8 Parties in Interest. This Agreement shall be binding upon and
-------------------
inure to the benefit of each party, and nothing in this Agreement, express or
implied, is intended to confer upon any other person any rights or remedies of
any nature whatsoever under or by reason of this Agreement.
14.9 Performance by Subsidiaries. Each party agrees to cause its
---------------------------
subsidiaries to comply with any obligations hereunder relating to such
subsidiaries and to cause its
75
subsidiaries to take any other action which may be necessary or reasonably
requested by the other party in order to consummate the transactions
contemplated by this Agreement.
14.10 Notices. Any notice or other communication hereunder must be
-------
given in writing and (a) delivered in person, (b) transmitted by confirmed
telex, telefax or telecommunications mechanism provided that any notice so given
is also mailed or sent as provided in clause (c), or (c) mailed by certified or
registered mail, postage prepaid, receipt requested or sent by reputable
overnight courier as follows:
If to Buyer, addressed to:
Experian Holdings, Inc.
000 Xxxxx Xxxxxxxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Telecopy: (000) 000-0000
Attn: General Counsel
With a copy to:
Sonnenschein, Nath & Xxxxxxxxx
0000 Xxxxx Xxxxx
Xxxxxxx, XX 00000
Telecopy: 312 876 7934
Attn: Xxxx Xxxxxxxxxx, Esq.
If to Seller, addressed to:
Xxxxxxxxx.xxx, Inc.
00000 Xxxxxxx Xxxxx Xxxx
Xxxxxxxx Xxxxxxx, Xxxxxxxxxx 00000
Telecopy: 000-000-0000
Attn: General Counsel
With copies to:
O'Melveny & Xxxxx LLP
000 Xxxxx Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telecopy: 000-000-0000
Attn: C. Xxxxx Xxxxx, Esq.
76
or to such other address or to such other person as either party shall have last
designated by such notice to the other party. Each such notice or other
communication shall be effective (i) if given by telecommunication, when
transmitted to the applicable number specified in (or pursuant to) this Section
14.10 and an appropriate answerback is received, (ii) if given by mail or
courier or any other means, when actually delivered.
14.11 Expenses. Except as otherwise provided in Sections 4.3, 5.1,
--------
9.2, 11.6, 11.11 or 14.11, Seller and Buyer shall each pay their own expenses
incident to the negotiation, preparation and performance of this Agreement and
the transactions contemplated hereby, including, but not limited to, the fees,
expenses and disbursements of their advisers. Neither Company nor ConsumerInfo
shall pay, or has paid, any expenses incident to the negotiation, preparation
and performance of this Agreement, and Seller shall reimburse the Company and
ConsumerInfo for any such expenses paid by either of them on or prior to the
Closing.
14.12 Attorneys' Fees. In the event of any Action by any party arising
---------------
under or out of, in connection with or in respect of this Agreement, including
any participation in bankruptcy proceedings to enforce against a party a right
or claim in such proceedings, the prevailing party shall be entitled to
reasonable attorneys' fees, costs and expenses incurred in such Action.
Attorneys' fees incurred in enforcing any judgment in respect of this Agreement
are recoverable as a separate item. The parties intend that the preceding
sentence be severable from the other provisions of this Agreement, survive any
judgment and, to the maximum extent permitted by law, not be deemed merged into
such judgment.
14.13 Representation By Counsel; Interpretation. Seller and Buyer each
-----------------------------------------
acknowledge that each party to this Agreement has been represented by counsel in
connection
77
with this Agreement and the transactions contemplated by this Agreement.
Accordingly, any rule of Law or any legal decision that would require
interpretation of any claimed ambiguities in this Agreement against the party
that drafted it has no application and is expressly waived. The provisions of
this Agreement shall be interpreted in a reasonable manner to effect the intent
of Buyer and Seller.
14.14 Severability. If any provision of this Agreement is determined
------------
to be invalid, illegal or unenforceable by any Governmental Entity, the
remaining provisions of this Agreement shall remain in full force and effect
provided that the essential terms and conditions of this Agreement for both
parties remain valid, binding and enforceable. To the extent permitted by Law,
the parties hereby to the same extent waive any provision of Law that renders
any provision hereof prohibited or unenforceable in any respect.
14.15 Dispute Resolution; Agreement to Arbitrate. Except to the extent
------------------------------------------
that any specific dispute resolution mechanism has been otherwise provided for
with respect to any specific provision of this Agreement (or such mechanism has
been pursued to its conclusion and either the dispute in question remains
unresolved or the resolution reached by such process has not been honored), and
subject to Section 14.15(c), in the event that any dispute arises between Buyer
and Seller with respect to this Agreement or the transactions contemplated
hereby, the following procedures shall apply.
(a) The parties will attempt in good faith to resolve any
dispute, controversy or claim under, arising out of, relating to or in
connection with this Agreement, including, but not limited to, the negotiation,
execution, interpretation, construction, performance, non-performance, breach,
termination, validity, scope, coverage or enforceability
78
of this Agreement or any alleged fraud in connection therewith, promptly by
negotiations between representatives of the parties. If any such dispute,
controversy or claim should arise, appropriate senior officers of Buyer and
Seller will meet at least once within 20 days after notice of such dispute,
controversy or claim and will attempt to resolve the matter. Nothing herein,
however, shall prohibit a party from initiating arbitration proceedings pursuant
to Section 14.15(c) if such party reasonably believes it would be substantially
prejudiced by a 50-day delay in commencing arbitration proceedings. Either
representative may request the other to meet again within 14 days thereafter, at
a mutually agreed time and place.
(b) If the matter has not been resolved pursuant to the foregoing
procedures within 60 days after the first meeting (which period may be extended
by mutual agreement), the matter shall be settled, at the request of either
party, by arbitration conducted in accordance with the provisions of the Federal
Arbitration Act (9 U.S.C. (S)(S)1-16) and in accordance with the Center for
Public Resources Rules for Non-Administered Arbitration of Business Disputes, by
one arbitrator mutually selected by the parties. If the parties are unable to
agree on the selection of an arbitrator, they shall select an arbitrator through
the procedures established by the Center for Public Resources Rules for Non-
Administered Arbitration of Business Disputes. The arbitration of such issues,
including the determination of any amount of damages suffered by any party
hereto by reason of the acts or omissions of any party, shall be final and
binding upon the parties, except that the arbitrator shall not be empowered to
act as amiable compositeur or authorized to award punitive damages with respect
to any such claim, dispute or controversy. No party shall seek any punitive
damages relating to any matters under, arising out of, in connection with or
relating to this Agreement. Equitable remedies shall be available in any such
arbitration. The parties intend that this agreement to arbitrate be valid,
79
binding, enforceable and irrevocable. The substantive and procedural law of the
State of California shall apply to any such arbitration proceedings. The place
of any such arbitration shall be Los Angeles, California. Judgment upon the
award rendered by the arbitrators may be entered by any court having
jurisdiction thereof.
(c) Notwithstanding the provisions of this Section 14.15, either
party may seek injunctive or other equitable relief to maintain the status quo
before any court of competent jurisdiction in connection with any claim, dispute
or controversy arising out of this Agreement.
14.16 Mutual Drafting. This Agreement is the joint product of the
----------------
parties hereto and their respective counsel, and each provision hereof has been
subject to the mutual consultation, negotiation and agreement of such parties
and counsel, and shall not be construed for or against any party hereto on the
basis of authorship thereof.
80
IN WITNESS WHEREOF, each of Buyer and Seller has caused this Agreement to be
executed by its duly authorized representative as of the date first above
written.
EXPERIAN HOLDINGS, INC.
By:_________________________
Name:_______________________
Title:______________________
XXXXXXXXX.XXX, INC.
By:_________________________
Name:_______________________
Title:______________________
S-1
STOCK PURCHASE AGREEMENT
dated as of
March 16, 2002
by and between
EXPERIAN HOLDINGS, INC.
and
XXXXXXXXX.XXX, INC.
TABLE OF CONTENTS
Page
ARTICLE I PURCHASE AND SALE/CLOSING............................ 1
1.1 Transfer of the Stock by Seller...................... 1
1.2 Purchase of the Stock by Buyer; Purchase Price;
Amount Payable at Closing............................ 2
1.3 The Closing.......................................... 2
1.4 Escrow............................................... 2
ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLER............. 3
2.1 Organization and Related Matters..................... 3
2.2 Stock................................................ 4
2.3 Financial Statements; No Other Liabilities........... 5
2.4 Taxes................................................ 7
2.5 Material Contracts................................... 8
2.6 Changes.............................................. 10
2.7 Properties........................................... 11
2.8 Intellectual Property................................ 13
2.9 Authorization; No Conflicts.......................... 15
2.10 Legal Proceedings.................................... 16
2.11 Insurance............................................ 16
2.12 Permits.............................................. 17
2.13 Compliance with Law.................................. 17
2.14 Environmental Compliance............................. 17
2.15 Dividends and Other Distributions.................... 17
2.16 Employee Benefits.................................... 18
2.17 Bank Accounts, Powers, etc........................... 19
2.18 Certain Interests.................................... 19
2.19 No Brokers or Finders................................ 19
2.20 Privacy Policies..................................... 20
2.21 Fair Value........................................... 20
-i-
TABLE OF CONTENTS
(continued)
Page
2.22 Holding Company...................................... 20
2.23 Q-Space Intellectual Property........................ 21
2.24 Disclaimer of Representations and Warranties......... 22
ARTICLE III REPRESENTATIONS AND WARRANTIES OF BUYER.............. 22
3.1 Organization and Related Matters..................... 22
3.2 Authorization; No Conflicts.......................... 22
3.3 No Brokers or Finders................................ 23
3.4 Legal Proceedings.................................... 23
3.5 WARN Act............................................. 24
3.6 Investment Representation............................ 24
3.7 Investment Experience................................ 24
3.8 Fair Value........................................... 24
3.9 Disclaimer of Representations and Warranties......... 24
ARTICLE IV COVENANTS WITH RESPECT TO CONDUCT OF COMPANY PRIOR
TO CLOSING........................................... 25
4.1 Access............................................... 25
4.2 Conduct of Business.................................. 25
4.3 Permits and Approvals................................ 28
4.4 Government Filings................................... 29
4.5 Preservation of Business Prior to Closing Date....... 29
4.6 Acquisition Proposals................................ 30
4.7 Transfer of Q-Space Assets........................... 32
4.8 Dividend of Equity Securities of Subsidiaries other
than ConsumerInfo.................................... 32
4.9 Notice and Consent Provisions of Material Contracts.. 32
ARTICLE V ADDITIONAL CONTINUING COVENANTS...................... 32
5.1 Seller's Post-Closing Access......................... 32
5.2 No Rights to Seller Intellectual Property............ 34
5.3 Insurance; Indemnity Obligations..................... 34
-ii-
TABLE OF CONTENTS
(continued)
Page
5.4 WARN Act............................................. 36
5.5 Intercompany Agreement............................... 36
5.6 Mutual Releases...................................... 36
5.7 Facilities........................................... 38
5.8 Nonsolicitation; Non-compete; Confidentiality........ 38
5.9 Dividends............................................ 41
5.10 Transition Services.................................. 42
5.11 Transfer of Q-Space Intellectual Property After
Closing.............................................. 42
ARTICLE VI GENERAL CONDITIONS OF PURCHASE........................ 42
6.1 No Orders; Legal Proceedings......................... 42
6.2 Approvals............................................ 43
6.3 Escrow Agreement..................................... 43
ARTICLE VII CONDITIONS TO OBLIGATIONS OF BUYER................... 43
7.1 Representations and Warranties and Covenants of
Seller............................................... 43
7.2 Resignation of Directors............................. 44
7.3 No Material Adverse Change........................... 44
7.4 Legal Opinion........................................ 44
7.5 Transfer of Q-Space Intellectual Property............ 44
7.6 Dividend of Equity Securities other than
ConsumerInfo......................................... 45
7.7 No Action............................................ 45
7.8 Good Standing........................................ 46
7.9 Employee Bonuses..................................... 46
ARTICLE VIII CONDITIONS TO OBLIGATIONS OF SELLER.................. 46
8.1 Representations and Warranties and Covenants of
Buyer................................................ 46
ARTICLE IX TERMINATION OF OBLIGATIONS; SURVIVAL................. 47
9.1 Termination of Agreement.....,....................... 47
9.2 Effect of Termination................................ 48
9.3 Survival of Representations and Warranties........... 49
-iii-
TABLE OF CONTENTS
(continued)
Page
ARTICLE X INDEMNIFICATION...................................... 49
10.1 Obligations of Seller................................ 49
10.2 Obligations of Buyer................................. 51
10.3 Procedure............................................ 51
10.4 Mitigation; Limitations on Indemnification........... 53
10.5 Remedies Exclusive................................... 54
ARTICLE XI TAX MATTERS.......................................... 54
11.1 Allocation of Tax Liabilities; Indemnification....... 54
11.2 Tax Covenants........................................ 56
11.3 Refunds.............................................. 57
11.4 Tax Benefits......................................... 57
11.5 Returns and Reports.................................. 58
11.6 Disputes............................................. 61
11.7 Tax Sharing Agreements............................... 61
11.8 Survival............................................. 61
ARTICLE XII PUBLICITY/CONFIDENTIALITY............................ 62
12.1 Publicity and Reports................................ 62
12.2 Confidentiality...................................... 62
ARTICLE XIII DEFINITIONS.......................................... 63
13.1 General Provisions................................... 63
13.2 Specific Provisions.................................. 64
ARTICLE XIV GENERAL.............................................. 74
14.1 Amendments; Waivers.................................. 74
14.2 Exhibits and Schedules; Integration.................. 74
14.3 Commercially Reasonable Efforts...................... 74
14.4 Governing Law........................................ 74
14.5 No Assignment........................................ 75
14.6 Headings............................................. 75
-iv-
TABLE OF CONTENTS
(continued)
Page
14.7 Counterparts......................................... 75
14.8 Parties in Interest.................................. 75
14.9 Performance by Subsidiaries.......................... 75
14.10 Notices.............................................. 76
14.11 Expenses............................................. 77
14.12 Attorneys' Fees...................................... 77
14.13 Representation By Counsel; Interpretation............ 77
14.14 Severability......................................... 78
14.15 Dispute Resolution; Agreement to Arbitrate........... 78
14.16 Mutual Drafting...................................... 80
-v-
TABLE OF CONTENTS
SCHEDULES
Exhibits
A Escrow Agreement
B Legal Opinion of Seller
Disclosure Schedule
1.0 Knowledge
2.1(a) Subsidiaries
2.1(b) Directors and Executive Officers
2.2 Contracts to Acquire Equity Securities
2.3(b) Barter of Non-cash Remuneration; Receivables from Stockholders or
Affiliates
2.3(e) Accounts Receivables Exceptions
2.5 Material Contracts
2.5(b) Notice and Consent Requirements of Material Contracts
2.6(e) Material Contract Changes
2.6(h) Compensation Arrangements
2.7(a) Tangible and Real Personal Property
2.7(b) Leased Real Property
2.8(a) Intellectual Property - Registrations
2.8(b) Intellectual Property - Domain Names
2.8(b-2) Intellectual Property - Exceptions
2.8(c) Intellectual Property
2.8(e) Intellectual Property - Proprietary Software and Third Party Software
2.8(e-1) Intellectual Property - Exceptions to Proprietary Software
2.9 Seller Approvals and Permits
2.10 Legal Proceedings
2.11 Insurance
2.16 Company Plans
2.17 Bank Accounts
2.22 Holding Company Exceptions
2.23 Q-Space Assets
3.2 Buyer Approval and Permits
4.2 Conduct of Business
5.5(a) Continuing Intercompany Agreement
5.7 Real Property Leases to be Assigned
5.10 Transition Services
-vi-
Exhibit A
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Escrow Agreement") is made and entered
into as of ________, 2002, by and among Citibank N.A., a national banking
association organized and existing under the laws of the United States of
America, acting in its capacity as escrow agent (the "Escrow Agent"),
XXXXXXXXX.XXX, Inc., a Delaware corporation ("Seller") and Experian Holdings,
Inc., a Delaware corporation ("Buyer").
BACKGROUND
Pursuant to that certain Stock Purchase Agreement (the "Agreement")
dated March __, 2002, by and between Buyer and Seller, Seller has agreed to
sell, and Buyer has agreed to buy all of the equity interests of Homestore
Consumer Information Corp., a Delaware corporation (the "Stock Purchase").
Included within the Agreement are indemnification responsibilities of the
parties thereto, with respect to the subject matter therein contained.
As a material inducement for the parties to consummate the Stock
Purchase and in order to provide security for indemnification liabilities, the
parties hereto desire to enter into an escrow arrangement (the "Escrow") for a
portion of the Purchase Price as provided for herein.
NOW, THEREFORE, in consideration of the foregoing, and for good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, and intending to be legally bound hereby, the parties hereto agree
as follows:
1. THE ESCROW FUND
1.1 Escrow. Immediately following the execution of this Escrow
------
Agreement, Buyer has delivered to the Escrow Agent $10,000,000 into an escrow
account (the "Escrow Account") with the Escrow Agent pursuant to this Escrow
Agreement. The funds so deposited in the Escrow Account, including any
investment made with such funds, together with all interest and income on those
investments, less amounts disbursed in accordance with the terms of this
Agreement, are referred to in this Escrow Agreement as the "Escrow Fund" and
shall secure Seller's indemnification obligations under Articles X and XI of the
Agreement (the "Obligations").
1.2 Escrow Arrangements.
--------------------
(A) Escrow Fund. The Escrow Fund will be deemed to have been
deposited with the Escrow Agent without any act of Seller.
(B) Purpose of Escrow Fund. The Escrow Fund shall be available to
secure the Obligations; provided however that nothing herein shall limit in any
-------- -------
way the remedies provided for under the Agreement.
(C) Escrow Period. Subject to the following requirements, the Escrow
Fund shall be in existence immediately following the date of the consummation of
the transactions
contemplated by the Agreement (the "Closing Date") and shall terminate at 5:00
p.m., New York City time, on the day that is 546 calendar days after the Closing
Date or the next following business day (the "Escrow Period"); provided,
--------
however, that the Escrow Period shall not terminate with respect to that portion
-------
of the Escrow Fund that is necessary in the reasonable judgment of Buyer,
subject to the objection of Seller and the subsequent arbitration of the matter
in the manner provided herein, required to secure the Obligations which are
alleged to be due and owing pursuant to one or more Officer's Certificates
delivered pursuant to subsection 1.4(A) hereof (the "Holdback").
(D) Distributions of Escrow Fund. The Escrow Agent shall make the
following distributions via wire transfer from the Escrow Fund:
(1) on the one year anniversary of this Escrow Agreement, Buyer and Seller
shall give joint written instructions signed by an authorized individual (an
"Authorized Person") as set forth on Exhibit A or B (as applicable) attached
hereto of each of the Seller and Buyer to the Escrow Agent to release to Seller
the amount of $3,000,000 minus the sum of (i) any amounts that have been
distributed to date from the Escrow Fund to satisfy Obligations and (ii) any
amounts which are alleged at such time to be due and owing pursuant to one or
more Officer's Certificates delivered pursuant to subsection 1.4(A) hereof but
which have not yet been distributed by Escrow Agent;
(2) from time to time in accordance with the joint written instructions,
signed by an Authorized Person of each of the Seller and Buyer; or
(3) pursuant to orders, judgments or decrees of any arbitrator selected in
accordance with Section 14.14 of the Agreement or court of law and provided to
the Escrow Agent in a signed writing.
(E) Final Distribution of Escrow Fund. As soon as practicable (but no
later than 10 business days) after the expiration of the Escrow Period Buyer and
Seller shall give joint written instructions signed by an Authorized Person
instructing the Escrow Agent to deliver to Seller the Escrow Fund less the
Holdback and any amounts previously distributed pursuant to Section 1.2(G). As
soon as practicable (but no later than 10 business days) after Escrow Agent has
received a joint instruction signed by an Authorized Person of each of the Buyer
and Seller evidencing the final resolution of any and all claims, the Escrow
Agent shall deliver that portion of the Holdback specified in the joint
instruction via wire transfer to Seller.
(F) Investment of Escrow Fund. The Escrow Fund shall be invested in a
business savings account, money market fund, certificates of deposit or short
term U.S. Treasury funds [AGREED BY BUYER AND SELLER PRIOR TO CLOSING DATE], as
directed in writing, signed by an Authorized Person of Seller, from time to time
consistent herewith. Any investment direction contained herein may be executed
through an affiliated broker or dealer of the Escrow Agent and such broker or
dealer shall be entitled to its usual and customary fee.
(G) Tax Treatment of Escrow Fund. Prior to distribution of the Escrow
Fund, the parties agree that Seller shall be treated as the owner of the Escrow
Fund for all federal and state income tax purposes. Seller shall report any
taxable income generated by (and shall be
2
solely responsible for any and all taxes resulting from) an investment of the
Escrow Fund. Buyer and Seller hereby instruct Within 10 days following the end
of each calendar month, the Escrow Agent shall distribute from the Escrow Fund
to the Seller an amount equal to the taxable income generated by the investment
of the Escrow Fund for the prior month. The parties hereto authorize and
instruct that the Escrow Agent shall distribute such amount automatically to
Seller without further instructions. The accumulated income from all investments
and reinvestments of the Escrow Fund not yet distributed shall be distributed
upon termination of this Escrow Agreement to Seller. The Escrow Agent does not
have any interest in the Escrow Fund deposited hereunder but is serving as
escrow holder only and having only possession thereof. The Buyer and Seller
shall pay or reimburse the Escrow Agent upon request for any transfer taxes or
other taxes relating to the Escrow Fund incurred in connection herewith and
shall indemnify and hold harmless the Escrow Agent from any amounts that it is
obligated to pay in the way of such taxes in accordance with Section 1.6. The
parties acknowledge that Escrow Agent will have no obligations or
responsibilities with respect to tax reporting of the parties. This Section
1.2(G) shall survive notwithstanding any termination of this Escrow Agreement or
the resignation or removal of the Escrow Agent.
1.3 Protection of Escrow Fund.
--------------------------
(A) The Escrow Agent shall hold and safeguard the Escrow Fund during the
Escrow Period, shall treat such fund as a trust fund in accordance with the
terms of this Escrow Agreement and not as the property of either Seller or Buyer
and shall hold and dispose of the Escrow Fund only in accordance with the terms
hereof. The Escrow Agent shall not be under any duty to give the Escrow Funds
any greater degree of care than it gives its own similar property and shall not
be required to invest any funds held hereunder except as directed in this Escrow
Agreement. Uninvested funds held hereunder shall not earn or accrue interest.
(B) Any earnings, interest accrued or dividends paid in respect of the
Escrow Fund shall not be added to the Escrow Fund and become a part thereof.
Interest or dividends in respect of the Escrow Fund which has been released from
the Escrow Fund shall not be added to the Escrow Fund but shall be distributed
to Seller.
1.4 Claims and Objections.
----------------------
(A) Claims Upon Escrow Fund. Upon receipt by the Escrow Agent at any time
on or before the last day of the Escrow Period of a certificate signed by an
Authorized Person of Buyer (an "Officer's Certificate"): (i) stating that Buyer
or any director, officer, employee, affiliate, agent or assignee (collectively,
"Buyer Indemnitees") is making a claim under the Obligations, including the
amount of the payment requested and the disbursement instructions, and (ii)
specifying in reasonable detail the basis for the statement that said
Obligations must be satisfied, the Escrow Agent shall, subject to the provisions
of subsections 1.4(B) and 1.4(C) hereof, deliver to Buyer out of the Escrow
Fund, as promptly as practicable, an amount in immediately available funds equal
to the amount of the Obligations claimed in the Officer's Certificate.
(B) Objections to Claims. At the time of delivery of any Officer's
Certificate to the Escrow Agent by Buyer, a duplicate copy of such certificate
shall be delivered by Buyer to
Seller and O'Melveny & Xxxxx, LLP by certified mail, return receipt requested.
For a period of thirty (30) days after such delivery of the Officer's
Certificate to the Escrow Agent, the Escrow Agent shall make no delivery to
Buyer of any amounts from the Escrow Fund unless the Escrow Agent shall have
received written authorization signed by an Authorized Person of Seller to make
such delivery. After the expiration of such thirty (30) day period, the Escrow
Agent shall make delivery of amounts from the Escrow Fund, in accordance with
Section 1.4(A) hereof; provided that if Seller has objected in good faith to the
claim made in the Officer's Certificate by delivering to the Escrow Agent prior
to the expiration of such thirty (30) day period a certificate signed by an
Authorized Person of Seller (i) objecting to Buyer's or any Buyer Indemnitee's
claim to all or part of the amount of the payment requested in the Officer's
Certificate (the "Disputed Amount"), and (ii) specifying in reasonable detail
the basis of such objection (an "Objection"), then Escrow Agent shall make
delivery of amounts from the Escrow Funds in accordance with Section 1.4(A)
hereof less the Disputed Amount. At the time of delivery of any Objection to the
Escrow Agent, a duplicate copy of such certificate shall be delivered by Seller
to Buyer and Xxxxxxxxxxxx Xxxx & Xxxxxxxxx by certified mail, return receipt
requested.
(C) Resolution of Conflicts; Arbitration. If Seller shall provide an
Objection to any claim or claims made in any Officer's Certificate, Seller and
Buyer shall attempt in good faith to agree upon the rights of the respective
parties with respect to each of such claims. If Seller and Buyer should so
agree, a memorandum setting forth such agreement shall be prepared and signed by
an Authorized Person of each party and shall be furnished to the Escrow Agent.
The Escrow Agent shall be entitled to rely on any such memorandum and distribute
amounts from the Escrow Fund in accordance with the terms thereof. In the event
that Seller and Buyer cannot agree, Seller and Buyer shall resolve their
differences in accordance with the procedure set forth in Section 14.14 of the
Agreement and shall prepare and furnish to the Escrow Agent, a memorandum,
signed by an Authorized Person of each party, setting forth such resolution.
The Escrow Agent shall be entitled to rely on any such memorandum and distribute
amounts from the Escrow Fund in accordance with the terms thereof.
1.5 Escrow Agent's Duties.
----------------------
(A) The Escrow Agent shall be obligated only for the performance of such
duties as are specifically set forth herein, and as set forth in any additional
written escrow instructions which the Escrow Agent may receive after the date of
this Escrow Agreement which are signed by an Authorized Person of each of Buyer
and Seller (or its designee), and may rely and shall be protected in relying or
refraining from acting on any instrument reasonably believed to be genuine and
to have been signed or presented by the proper party or parties. The Escrow
Agent shall not be liable for any act done or omitted hereunder as Escrow Agent
while acting in good faith and in the exercise of reasonable judgment, and any
act done or omitted pursuant to the advice of counsel shall be conclusive
evidence of such good faith.
(B) The Escrow Agent is hereby expressly authorized to comply with and
obey orders, judgments or decrees of any court of law delivered in writing to
it, notwithstanding any notices, warnings or other communications from any party
or any other person to the contrary. In case the Escrow Agent obeys or complies
with any such order, judgment or decree of any arbitrator or court, the Escrow
Agent shall not be liable to any of the parties hereto or to any other person by
reason of such compliance, notwithstanding any such order, judgment or
decree being subsequently reversed, modified, annulled, set aside, vacated or
found to have been entered without jurisdiction.
(C) The Escrow Agent shall not be liable in any respect on account of the
identity, authority or rights of the parties executing or delivering or
purporting to execute or deliver this Escrow Agreement or any documents or
papers deposited or called for hereunder.
(D) The Escrow Agent shall not be liable for the expiration of any rights
under any statute of limitations with respect to this Escrow Agreement or any
documents deposited with the Escrow Agent.
(E) In performing any duties under the Escrow Agreement, the Escrow Agent
shall not be liable to any party for damages, losses, or expenses, except for
gross negligence or willful misconduct on the part of the Escrow Agent. The
Escrow Agent shall not incur any such liability for (i) any act or failure to
act made or omitted in good faith, or (ii) any action taken or omitted in
reliance upon any instrument, including any written statement or affidavit
provided for in this Escrow Agreement that the Escrow Agent shall in good faith
believe to be genuine, nor will the Escrow Agent be liable or responsible for
forgeries, fraud, impersonations, or determining the scope of any representative
authority. In addition, the Escrow Agent may consult with the legal counsel in
connection with Escrow Agent's duties under this Escrow Agreement and shall be
fully protected in any act taken, suffered, or permitted by him/her in good
faith in accordance with the advice of counsel. The Escrow Agent is not
responsible for determining and verifying the authority of any person acting or
purporting to act on behalf of any party to this Escrow Agreement.
(F) If any controversy arises between the parties to this Escrow Agreement,
or with any other party, concerning the subject matter of this Escrow Agreement,
its terms or conditions, the Escrow Agent will not be required to determine the
controversy or to take any action regarding it. The Escrow Agent may hold all
documents and the Escrow Fund and may wait for settlement of any such
controversy by final appropriate legal proceedings or other means as, in the
Escrow Agent's discretion, the Escrow Agent may require, despite what may be set
forth elsewhere in this Escrow Agreement. In such event, the Escrow Agent will
not be liable for damage. Furthermore, the Escrow Agent may at its option, file
an action of interpleader requiring the parties to answer and litigate any
claims and rights among themselves. The Escrow Agent is authorized to deposit
with the clerk of the court all documents and the Escrow Fund held in escrow,
less all outstanding costs, expenses, charges and reasonable attorney fees
incurred by the Escrow Agent due to the interpleader action and which the
parties jointly and severally agree to pay. Upon initiating such action, the
Escrow Agent shall be fully released and discharged of and from all obligations
and liability imposed by the terms of this Escrow Agreement.
(G) Buyer and Seller agree to jointly and severally indemnify and hold
Escrow Agent (including its employees, officers, directors, agent, subsidiaries
and affiliates) harmless against any and all actions, judgment, costs, losses,
claims, damages, liabilities, and expenses, including reasonable costs of
investigation, counsel fees, and disbursements that may be imposed on Escrow
Agent or incurred by Escrow Agent in connection with the performance of its
duties under this Escrow Agreement in accordance with the terms hereof,
including but not limited to
any litigation arising from this Escrow Agreement or involving its subject
matter, except for bad faith, gross negligence or willful misconduct of the
Escrow Agent. The provisions of this Section 1.5(G) shall survive
notwithstanding termination of this Escrow Agreement or resignation or removal
of the Escrow Agent.
(H) The Escrow Agent may resign at any time upon giving at least thirty
(30) days written notice to Buyer and Seller; provided, however, that no such
-------- -------
resignation shall become effective until the appointment of a successor escrow
agent which shall be accomplished as follows: Prior to the effectiveness of
such resignation (the "Resignation Effective Date"), Buyer and Seller shall use
their best efforts to mutually agree on a successor escrow agent within thirty
(30) days after receiving such notice. The successor escrow agent shall execute
and deliver an instrument accepting such appointment and it shall, without
further acts, be vested with all the estates, properties, rights, powers, and
duties of the predecessor Escrow Agent as if originally named as Escrow Agent.
Upon the Resignation Effective Date, the Escrow Agent shall be discharged from
any further duties and liability under this Escrow Agreement, except that Escrow
Agent agrees to transfer the Escrow Fund as promptly as practicable following
its receipt of a joint written instruction signed by the Buyer and Seller.
(I) In the event of any ambiguity or uncertainty hereunder or in any
notice, instruction or other communication received by the Escrow Agent
hereunder, the Escrow Agent may, in its sole discretion, refrain from taking any
action other than retain possession of the Escrow Fund, unless the Escrow Agent
receives written instructions, signed by an Authorized Person of each of Seller
and Buyer, which eliminates such ambiguity or uncertainty.
1.6 Fees. Each of Seller and Buyer shall be responsible for all fees, if
----
any, of the Escrow Agent for performance of its duties hereunder. It is
understood that the fees and usual charges agreed upon for services of the
Escrow Agent shall be considered compensation for ordinary services as
contemplated by this Escrow Agreement. In the event that the conditions of this
Escrow Agreement are not promptly fulfilled, or if the Escrow Agent renders any
service not provided for in this Escrow Agreement, or if the parties request a
substantial modification of its terms, or if any controversy arises, or if the
Escrow Agent is made a party to, or intervenes in, any litigation pertaining to
this escrow or its subject matter, the Escrow Agent shall be reasonably
compensated for such extraordinary services and reimbursed for all costs,
attorney's fees, and expenses occasioned by such default, delay, controversy or
litigation. To the extent Buyer or Seller pays to Escrow Agent more than 50% of
all amounts paid pursuant to subsection 1.5(G) or this Section 1.6, the other
party shall be liable for such excess (and if Seller is so liable, such excess
shall constitute "Obligations" reimbursable to Buyer from the Escrow Fund).
2. MISCELLANEOUS
2.1 Successors and Assigns. Except as otherwise expressly provided
----------------------
herein, all covenants and agreements contained in this Escrow Agreement by or on
behalf of any of the parties hereto shall bind and inure to the benefit of the
respective successor, assigns, personal representative and heirs of the parties
hereto whether so expressed or not.
2.2 Severability. Whenever possible, each provision of this Escrow
------------
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Escrow Agreement is held to be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of this Escrow Agreement.
2.3 Counterparts. This Escrow Agreement may be executed
------------
simultaneously in two or more counterparts, any one of which need not contain
the signatures of more than one party, but all such counterparts taken together
shall constitute one and the same agreement. Facsimile signatures on
counterparts of this Escrow Agreement shall be deemed original signatures;
provided, however, that Buyer and Seller shall provide original signatures to
Escrow Agent.
2.4 Descriptive Headings; Interpretation. The descriptive headings
------------------------------------
of this Escrow Agreement are inserted for convenience only and do not constitute
a part of the body of this Escrow Agreement.
2.5 Governing Laws. This Escrow Agreement shall be construed and
--------------
enforced in accordance with, and all questions concerning the construction,
validity, interpretation and performance of this Escrow Agreement shall be
governed by, the laws of the State of New York without giving effect to
provisions thereof regarding conflict of laws. Any lawsuit brought by a party
to this Escrow Agreement against any other party hereto shall be filed in the
state or federal courts with proper jurisdiction sitting in the county and state
in which the party being sued is located, and any counter-suits arising
therefrom shall be brought in the same court.
2.6 Amendment or Waiver. This Escrow Agreement can be changed, waived,
-------------------
discharged, or terminated only by a writing signed by Buyer, Seller and Escrow
Agent. No delay or omission by any party in exercising any right under this
Escrow Agreement will operate as a waiver. A waiver on any one occasion will not
be construed as a bar to, or waiver of, any right or remedy on any future
occasion.
2.7 Entire Agreement; No Third Party Beneficiary. This Escrow Agreement
--------------------------------------------
constitutes the entire agreement between the parties relating to the holding,
investment, and disbursement of the Escrow Fund and sets forth in their entirety
the obligations and duties of Escrow Agent with respect to the Escrow Fund.
Other than Buyer Indemnitees, no third party will be a beneficiary of this
Escrow Agreement, or derive any rights or benefits, or have any causes of
action, under this Escrow Agreement.
2.8 Notices. Any notice or other communication required or permitted
-------
under this Escrow Agreement shall be deemed to have been duly given (i) five (5)
business days following deposit in the mails if sent by registered or certified
mail, postage prepaid, (ii) when sent, if sent by facsimile transmission, if
receipt thereof is confirmed by successful transmission, (iii) when delivered,
if delivered personally to the intended recipient and (iv) three (3) business
days following deposit with a nationally recognized courier service, in each
case addressed as follows:
7
(1) If to Buyer:
Experian Holdings, Inc.
000 Xxxxx Xxxxxxxxx
Xxxxx Xxxx, 00000
Attn: Xxxxx Xxxxxx, Asst. General Counsel
Tel: (000) 000-0000
Fax: (000) 000-0000
Wire instructions:
(2) With a copy to:
Xxxx Xxxxxxxxxx, Esq.
Xxxxxxxxxxxx Xxxx &
Xxxxxxxxx
0000 Xxxxx Xxxxx
Xxxxxxx XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(3) If to Seller:
Xxxxxxxxx.xxx, Inc.
00000 Xxxxxxx Xxxxx Xxxx
Xxxxxxxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: General Counsel
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Wire instructions:
(4) With a copy to:
C. Xxxxx Xxxxx, Esq.
O'Melveny & Xxxxx LLP
000 X. Xxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(5) If to the Escrow Agent:
8
Citibank, N.A.
000 Xxxx Xxxxxx, 00/xx/ Xxxxx, Xxxx 0
Xxx Xxxx, Xxx Xxxx 00000
Attn: Agency & Trust
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(6) With a copy to:
Xxxxxx X. Xxxxx, Esq.
Patterson, Belknap, Xxxx & Xxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Telephone: 000.000.0000
Facsimile: 212.336.2222
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
2.9 Mutual Drafting. This Escrow Agreement is the joint product of
---------------
the parties hereto and their respective counsel, and each provision hereof has
been subject to the mutual consultation, negotiation and agreement of such
parties and counsel, and shall not be construed for or against any party hereto
on the basis of authorship thereof.
2.10 Payments. At any time the Escrow Agent is required to
---------
distribute any amounts held by or received by it under any provisions of this
Escrow Agreement to Seller or Buyer, such distribution shall be effected by wire
transfer of such amounts to the corresponding account designated by Seller or
Buyer set forth in Section 2.8 above.
2.11 Force Majeure. Escrow Agent shall not incur any liability for
-------------
not performing any act or fulfilling any duty, obligation or responsibility
hereunder by reason of any occurrence beyond the control of Escrow Agent
(including but not limited to any act or provision of any present or future law
or regulation or governmental authority, any act of God or war or terrorism, or
the unavailability of the Federal Reserve Bank wire or facsimile or other wire
or communication facility).
[remainder of page intentionally left blank]
9
IN WITNESS WHEREOF, the parties hereby have executed this Escrow
Agreement on the date first written above.
XXXXXXXXX.XXX, INC.
By:__________________________
Name:
Title:
EXPERIAN HOLDINGS, INC.
By:__________________________
Name:
Title:
CITIBANK, N.A., as Escrow Agent
By:__________________________
Name:
Title:
S-1
EXHIBIT A TO ESCROW AGREEMENT
[INSERT INCUMBENCY CERTIFICATE OF XXXXXXXXX.XXX, INC.]
XXXXXXXXX.XXX, INC.
INCUMBENCY CERTIFICATE
The undersigned certifies that s/he is the [INSERT TITLE] of Xxxxxxxxx.xxx, Inc.
(the "Company"), and as such s/he is authorized to execute this Certificate and
further certifies that the following persons have been elected or appointed, are
qualified, and are now acting as officers of the Company in the capacity or
capacities indicated below, and that the signatures set forth opposite their
respective names are their true and genuine signatures. S/he further certifies
that any of the persons listed below is authorized [individually or jointly with
one other person (please choose one)] to sign agreements and give written
instructions with regard to any matters pertaining to the Escrow Agreement dated
March 2002 and the appointment of Citibank N.A. as Escrow Agent:
Name Title / Phone Signature
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the corporate seal
of the Company this ______ day of _____________, _______.
__________________________
SIGNED BY SOMEONE WHOSE
NAME IS NOT INCLUDED IN THE
ABOVE LIST
Call Back Authorized Individuals:
The below listed persons (must list at least two individuals) have been
designated Call Back Authorized Individuals of Company and will be notified by
Citibank N.A. upon the release of Escrow Funds from the Escrow Account unless an
original "Standing or Predefined Instruction" letter is on file with the Escrow
Agent.
Name: Telephone #:
EXHIBIT B TO ESCROW AGREEMENT
[INSERT INCUMBENCY CERTIFICATE OF EXPERIAN HOLDINGS, INC.]
[EXPERIAN HOLDINGS, INC.]
INCUMBENCY CERTIFICATE
The undersigned certifies that s/he is the [INSERT TITLE] of Experian Holdings,
Inc. (the "Company"), and as such s/he is authorized to execute this Certificate
and further certifies that the following persons have been elected or appointed,
are qualified, and are now acting as officers of the Company in the capacity or
capacities indicated below, and that the signatures set forth opposite their
respective names are their true and genuine signatures. S/he further certifies
that any of the persons listed below is authorized [individually or jointly with
one other person (please choose one)] to sign agreements and give written
instructions with regard to any matters pertaining to the Escrow Agreement dated
March , 2002 and the appointment of Citibank N.A. as Escrow Agent:
Name Title / Phone Signature
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the corporate seal
of the Company this ______ day of _____________, _______.
__________________________
SIGNED BY SOMEONE WHOSE
NAME IS NOT INCLUDED IN THE
ABOVE LIST
Call Back Authorized Individuals:
The below listed persons (must list at least two individuals) have been
designated Call Back Authorized Individuals of Company and will be notified by
Citibank N.A. upon the release of Escrow Funds from the Escrow Account unless an
original "Standing or Predefined Instruction" letter is on file with the Escrow
Agent.
Name: Telephone #:
Exhibit B
Legal Opinion of Seller's Counsel
[Closing Date]
Experian Holdings, Inc.
000 Xxxxx Xxxxxxxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Re: Sale of Stock of Homestore Consumer Information Corp.
-----------------------------------------------------
Ladies and Gentlemen:
We have acted as special counsel to XXXXXXXXX.XXX, Inc., a Delaware
corporation ("Seller"), in connection with the sale by Seller and the purchase
by Experian Holdings, Inc., a Delaware corporation ("Buyer") of all the common
stock of Homestore Consumer Information Corp., a Delaware corporation (the
"Shares") pursuant to the Stock Purchase Agreement dated as of March __, 2002
(the "Stock Purchase Agreement"), by and between the Buyer and Seller. We have
also reviewed the Escrow Agreement dated __________ __, 2002 executed by
Citibank, N.A., as escrow agent, Buyer and Seller (the "Escrow Agreement,"
together with the Stock Purchase Agreement, collectively, the "Agreements"). We
are providing this opinion to you at the request of the Seller pursuant to
Section 7.4 of the Stock Purchase Agreement. All capitalized terms used in this
opinion and not defined herein will have the meanings given in the Stock
Purchase Agreement.
In our capacity as such counsel, we have examined originals or copies
of those corporate and other records and documents we considered appropriate.
As to relevant factual matters, we have relied upon, among other
things, the Sellers' factual representations in the Certificate of Seller, dated
__________, 2002 (the "Certificate of Seller"), a copy of which is attached
hereto as Exhibit A. In addition, we have obtained and relied upon those
certificates of public officials we considered appropriate.
We have assumed the genuineness of all signatures, the authenticity of
all documents submitted to us as originals and the conformity with originals of
all documents submitted to us as copies. To the extent the Seller's obligations
under the Agreements to which any Seller is a party depend on the due
authorization, execution and delivery of the Agreements by the other parties to
the Agreements (other than the Seller), we have assumed that the Agreements have
been so authorized, executed and delivered.
On the basis of such examination, our reliance upon the assumptions in
this opinion and our consideration of those questions of law we considered
relevant, and subject to the limitations and qualifications in this opinion, we
are of the opinion that:
(a) Seller, Company and ConsumerInfo, Inc. (the "Subsidiary"), are
corporations duly incorporated and validly existing under the laws of the State
of Delaware. Seller has corporate power to enter into the Agreements and to
perform its obligations under the Agreements. Seller has corporate power to
conduct any activity that a corporation organized under the General Corporation
Law of Delaware may conduct.
(b) The execution, delivery and performance by Seller of the
Agreements to which Seller is a party have been duly authorized by all necessary
corporate action on the part of Seller, and the Agreements to which Seller is a
party have been duly executed and delivered by Seller.
(c) The Agreements to which Seller is a party constitute the legally
valid and binding obligations of Seller, enforceable against Seller in
accordance with their terms, except as limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
creditors' rights generally (including, without limitation, fraudulent
conveyance laws) and by general principles of equity, including, without
limitation, concepts of materiality, reasonableness, good faith and fair
dealing, regardless of whether considered in a proceeding in equity or at law.
(d) The authorized capital stock of the Company consists of
40,000,000 shares of Common Stock. The outstanding shares of the capital stock
of the Company have been duly authorized by all necessary corporate action on
the part of the Company and are validly issued, fully paid and non-assessable.
(e) Upon payment for and delivery to Buyer in California of the
Shares in accordance with the Stock Purchase Agreement, assuming Buyer is
acquiring the Shares without notice of any adverse claim, Buyer will acquire the
Shares free and clear of any adverse claim as defined in Division 8 of the
Uniform Commercial Code.
(f) The execution and delivery by the Seller of the Agreements do
not, and the Seller's performance of its obligations under the Agreements, will
not (i) violate the charter documents or by-laws of Seller, Company or the
Subsidiary or (ii) breach or otherwise violate any existing obligation of or
restriction on the Company, Seller or the Subsidiary under any order, judgment
or decree of any California or federal court or governmental authority binding
on the Company or the Subsidiary and identified in the Certificate of Seller.
(g) The execution and delivery by the Seller of the Agreements do
not, and the Seller's performance of its obligations under the Agreements will
not, violate the current Delaware General Corporation Law or any current
California or federal statute, rule or regulation that we have, in the exercise
of customary due diligence, recognized as applicable to the Seller or to
transactions of the type contemplated by the Agreements.
(h) No order, consent, permit or approval of any California or
federal governmental authority that we have, in the exercise of customary
professional diligence, recognized as applicable to the Company, the Subsidiary,
Seller or to the transactions of the type
contemplated by the Agreements is required on the part of the Seller or the
Company or the Subsidiary for the execution and delivery of, and performance of
its obligations under, the Agreements, except ______
Our opinion in paragraph (c) above as to the enforceability of the
Agreement is subject to:
(i) public policy considerations, statutes or court decisions that
may limit the rights of a party to obtain indemnification against its
own negligence, willful misconduct or unlawful conduct;
(ii) the unenforceability under certain circumstances of covenants
not-to-compete;
(iii) the unenforceability under certain circumstances of provisions
waiving the right to a jury trial; and
(iv) the unenforceability under certain circumstances of choice of
law provisions.
We express no opinion with respect to the creation, attachment or
priority of any security interests, or your ability to collect attorney's fees
and costs in an action involving the Agreement if you are not the prevailing
party in that action (we call your attention to the effect of Section 1717 of
the California Civil Code, which provides that where a contract permits one
party thereto to recover attorney's fees, the prevailing party in any action to
enforce any provision of the contract shall be entitled to recover its
reasonable attorney's fees). We also express no opinion regarding (i) any
federal securities law, or Blue Sky or state securities laws, (ii) (except as to
filings under the Xxxx Xxxxx Xxxxxx Antitrust Act of 1974, as amended) any
federal or state antitrust or unfair competition laws, (iii) any pension and
employee benefit laws or regulations, (iv) compliance with fiduciary
requirements, (v) federal or state environmental laws or regulations and (vi)
federal or state land use or subdivision laws or regulations.
The law covered by this opinion is limited to the present federal law
of the United States, the General Corporation Law of the state of Delaware (as
to paragraphs (a) and (b) and (d)) and the present law of the State of
California. We express no opinion as to the laws of any other jurisdiction and
no opinion regarding the statutes, administrative decisions, rules, regulations
or requirements of any county, municipality, subdivision or local authority of
any jurisdiction.
For purposes of the opinion expressed in paragraphs (f), (g) and (h),
we have assumed that the Seller will not in the future take any discretionary
action (including a decision not to act) permitted by the Agreement that would
cause the performance of the Agreement to constitute a violation or breach of or
default under any of the orders, judgments or decrees referred to in clause (ii)
of paragraph (f) or violate any California or federal statute, rule or
regulation, require an order, consent, permit or approval to be obtained from a
California or federal governmental authority.
This opinion is furnished by us as counsel for the Seller and may be
relied upon by you only in connection with the Agreements. It may not be used
or relied upon by you for
any other purpose or by any other person, nor may copies be delivered to any
other person, without in each instance our prior written consent.
Respectfully submitted,
