CONTRIBUTION AGREEMENT

Exhibit 2.3

 

CONTRIBUTION AGREEMENT

 

between

 

FIRST AMERICAN REAL ESTATE SOLUTIONS, LLC

 

and

 

FIRST ADVANTAGE CORPORATION

 

 

Dated as of [                          ], 2005

 

 

TABLE OF CONTENTS ¹

 

1	This Table of Contents is provided for convenience only and does not form a part of this Contribution Agreement.

 

 

 

CONTRIBUTION AGREEMENT

 

This CONTRIBUTION AGREEMENT (as the same may be amended, modified and supplemented from time to time, this “ Agreement ”) is entered into as of [              ], 2005 by and between FIRST AMERICAN REAL ESTATE SOLUTIONS, LLC, a California limited liability company (“ Contributor ”), and FIRST ADVANTAGE CORPORATION, a Delaware corporation (“ FADV ”; Contributor and FADV are each a “ Party ” and are collectively the “ Parties ”).

 

W I T N E S S E T H :

 

WHEREAS, Contributor is (a) the record owner of a 50.1% membership interest in RELS, LLC, a Delaware limited liability company (“ RELS ”); and (b) the owner of the securities, assets, properties and rights constituting Contributor’s CREDCO Division (collectively, the “ Division ”), including all of the issued and outstanding capital stock of First American Credco of Puerto Rico, Inc., a Delaware corporation (the “ Company ”);

 

WHEREAS, Contributor, The First American Corporation, First American Real Estate Information Services, Inc. and FADV are parties to that certain Master Transfer Agreement, dated as of May 25, 2005 (the “ Master Transfer Agreement ”), pursuant to which, among other things, Contributor and FADV shall have entered into this Agreement as a condition precedent to closing of the transactions contemplated by the Master Transfer Agreement; and

 

WHEREAS, Contributor desires to contribute, and FADV desires to accept the contribution of, the Division pursuant to the terms and conditions of this Agreement.

 

NOW, THEREFORE, in consideration of the premises and of the mutual covenants, representations, warranties and agreements herein contained, the Parties agree as follows:

 

ARTICLE I.

DEFINITIONS AND INTERPRETATIONS

 

1.1 Defined Terms . Capitalized terms used in this Agreement but not defined herein shall have the meanings assigned in the Master Transfer Agreement. In this Agreement the following words and expressions shall have the following meanings (such meaning to be equally applicable to both the singular and plural forms of the terms defined):

 

“ 24/7 ” has the meaning provided in Section 2.14(k) .

 

“ Accredited Investor ” has the meaning set forth in Regulation D promulgated under the Securities Act of 1933, as amended.

 

“ Acquisition Agreements ” has the meaning provided in Section 5.2 .

 

“ Affiliate ” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with, such Person. For purposes of this definition, “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and

 

policies of such Person, whether through the ownership of voting securities, by Contract or otherwise; provided that FADV and its Subsidiaries shall not be deemed to be Affiliates of Contributor, the Company for purposes of this Agreement, and Contributor and its Subsidiaries (including the Company) shall not be deemed to be Affiliates of FADV for purposes of this Agreement.

 

“ Agreement ” has the meaning provided in the introductory paragraph.

 

“ Agreed Claims ” has the meaning provided in Section 6.3(d) .

 

“ Assumed Contracts ” has the meaning provided in Section 4.1(f) .

 

“ Assumed Liabilities ” has the meaning provided in Section 4.3 .

 

“ Balance Sheet Date ” means March 31, 2005.

 

“ Balance Sheet ” means the unaudited pro forma balance sheet of First American’s Credit Information Group for the quarter ended on the Balance Sheet Date.

 

“ Business Day ” means any day, other than a Saturday, Sunday or other day on which banks located in Los Angeles, California or St. Petersburg, Florida are authorized or required by law to close.

 

“ Certificate ” has the meaning provided in Section 6.3(a) .

 

“ Class A Common Stock ” means FADV’s Class A common stock, par value $0.001 per share.

 

“ Class B Common Stock ” means FADV’s Class B common stock, par value $0.001 per share.

 

“ Code ” means the Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated and the rulings issued thereunder.

 

“ Common Stock ” means the Class A Common Stock and the Class B Common Stock.

 

“ Company ” has the meaning provided in the first recital.

 

“ Contracts ” means any Contract, agreement, understanding, note, bond, mortgage, indenture, guarantee, license, franchise, commitment, lease or instrument, whether oral or written, including all amendments and supplements thereto and restatements thereof.

 

“ Contributed Assets ” has the meaning provided in Section 4.1 .

 

“ Contributed Intellectual Property ” has the meaning provided in Section 2.13(a) .

 

“ Contributor ” has the meanings provided in the introductory paragraph.

 

“ Contributor Indemnified Party ” has the meaning provided in Section 6.2(b) .

 

“ Division ” has the meaning provided in the first recital.

 

“ Division Permitted Liens ” has the meaning provided in Section 2.6(a) .

 

“ Ellie Mae ” has the meaning provided in Section 4.2(f) .

 

“ Encumbrances ” means all liens, security interests, options, rights of first refusal, claims, easements, mortgages, charges, indentures, deeds of trust, rights of way, restrictions on the use of real property, encroachments, licenses to third parties, leases to third parties, security agreements and any other encumbrances and other restrictions or limitations on use or irregularities in title thereto.

 

“ Entity ” means any Person that is not a natural person.

 

“ Exchange Act ” means the Securities Exchange Act of 1934, as amended.

 

“ Excluded Assets ” has the meaning provided in Section 4.2 .

 

“ Excluded Liabilities ” has the meaning provided in Section 4.4 .

 

“ FADV ” has the meaning provided in the introductory paragraph.

 

“ FADV Financial Statements ” has the meaning provided in Section 3.4 .

 

“ FADV Indemnified Party ” has the meaning provided in Section 6.2(a) .

 

“ FADV SEC Reports ” has the meaning provided in Section 3.4 .

 

“ Financial Statements ” means the unaudited balance sheet and income statement of First American’s Credit Information Group for the years ended December 31, 2002, 2003 and 2004, and the Balance Sheet and related income statement for the three months ended on the Balance Sheet Date.

 

“ First American Contribution Agreement ” means the Contribution Agreement, dated as of the date hereof, among Parent, First American Real Estate Information Solutions, Inc. and FADV.

 

“ GAAP ” means United States generally accepted accounting principles applied on a consistent basis.

 

“ Governmental Entity ” means any instrumentality, subdivision, court, administrative agency, commission, official or other authority of the United States or any other country or any state, province, prefect, municipality, locality or other government or political subdivision thereof, or any quasi-governmental or private body exercising any regulatory, taxing, importing or other governmental or quasi-governmental authority.

 

“ Indebtedness ” of any Person shall mean and include (a) indebtedness for borrowed money or indebtedness issued or incurred in substitution or exchange for indebtedness for borrowed money, (b) amounts owing as deferred purchase price for property or services, including all stockholder notes and “earn-out” payments, (c) indebtedness evidenced by any note, bond, debenture, mortgage or other debt instrument or debt security, (d) commitments or obligations by which such Person assures a creditor against loss (including contingent reimbursement obligations with respect to letters of credit), (e) indebtedness secured by an Encumbrance on assets or properties of such Person, (f) obligations under any interest rate, currency or other hedging agreement or (g) guarantees or other contingent liabilities (including so-called take-or-pay or keep-well agreements) with respect to any indebtedness, obligation, claim or liability of any other Person of a type described in clauses (a) through (f) above.

 

“ Indemnified Party ” has the meaning provided in Section 6.3(a) .

 

“ Indemnifying Party ” has the meaning provided in Section 6.3(a) .

 

“ Intellectual Property ” means all domestic and foreign patents, patent applications, trademarks, service marks and other indicia of origin, trademark and service mark registrations and applications for registrations thereof, copyrights, copyright registrations and applications for registration thereof, Internet domain names, applications and reservations therefor, uniform resource locators (“ URLs ”) and the Internet sites (collectively, the “ Sites ”) corresponding thereto, trade secrets, inventions (whether or not patentable), invention disclosures, moral and economic rights of authors and inventors (however denominated), technical data, customer lists, corporate and business names, trade names, trade dress, brand names, know-how, show-how, maskworks, formulae, methods (whether or not patentable), designs, processes, procedures, technology, source codes, object codes, computer software programs, databases, data collectors and other proprietary information or material of any type, whether written or unwritten (and all goodwill associated with, and all derivatives, improvements and refinements of, any of the foregoing).

 

“ IRS ” means the Internal Revenue Service.

 

“ Licenses ” has the meaning provided in Section 2.15 .

 

“ Losses ” has the meaning provided in Section 6.2(a) .

 

“ Master Lease ” has the meaning provided in Section 5.5 .

 

“ Master Transfer Agreement ” has the meaning provided in the second recital.

 

“ Material Adverse Effect ” means, (a) when used with respect to the Business, any material adverse change in or effect on the properties, assets, businesses, liabilities, results of operations or condition (financial or otherwise) of the Business, taken as a whole, and (b) when used with respect to FADV, (i) any materially adverse change in or effect on (including any material delay) the ability of FADV to perform its obligations under this Agreement, and (ii) any material adverse change in or effect on the properties, assets, businesses, liabilities, results of operations or condition (financial or otherwise) of FADV and its Subsidiaries, taken as a whole; provided , however , that the term “Material Adverse Effect” shall not include any adverse change

 

or effect that is proximately caused by (1) conditions affecting the United States economy generally or the economy of the regions in which the applicable Person and its Subsidiaries (if any), taken as a whole, conducts a material part of its business, (2) changes in financial markets, (3) conditions affecting the industries in which the applicable Person and its Subsidiaries (if any) compete or (4) the announcement, or other disclosure, of the Transaction (to the extent such announcement or disclosure is not effected in contravention of any term of this Agreement) or the consummation of the Transaction (including compliance by such Person with its covenants hereunder).

 

“ Material Contracts ” has the meaning provided in Section 2.9(b) .

 

“ Ordinary Course ” means, with respect to any Person, the ordinary course of commercial operations customarily engaged in by such Person, consistent with past practices (including with respect to quantity and frequency).

 

“ Overlap Period ” has the meaning provided in Section 7.2(a) .

 

“ Parent ” means The First American Corporation, a California corporation.

 

“ Party ” or “ Parties ” has the meaning provided in the introductory paragraph.

 

“ Person ” means and includes any individual, partnership, joint venture, association, joint stock company, corporation, trust, limited liability company, unincorporated organization (including the Division), a group and a government or other department, agency or political subdivision thereof.

 

“ Pre-Closing Period ” has the meaning provided in Section 2.12(b) .

 

“ RELS ” has the meaning provided in the first recital.

 

“ Retained Portal Agreements ” has the meaning provided in Section 4.2(g) .

 

“ Returns ” has the meaning provided in Section 2.12(a) .

 

“ RRS Services Agreement ” has the meaning provided in the Outsourcing Agreement, dated as of the date hereof, between First American and FADV.

 

“ SEC ” means the Securities and Exchange Commission.

 

“ Securities Act ” means the Securities Act of 1933, as amended.

 

“ Subsidiary ” means, with respect to any Person, (a) any corporation more than 50% of whose stock of any class or classes having by the terms thereof ordinary voting power to elect a majority of the directors of such corporation (irrespective of whether or not at the time stock of any class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time owned by such Person and/or one or more Subsidiaries of such Person and (b) any Entity (other than a corporation) in which such Person and/or one more Subsidiaries of such Person has more than a 50% equity interest or otherwise

 

controls the management and affairs of such Entity (including the power to veto any material act or decision); provided that FADV and its Subsidiaries shall not be deemed to be Subsidiaries of Parent for purposes of this Agreement.

 

“ Taxes ” means all taxes, assessments, charges, duties, fees, levies or other governmental charges, including all Federal, state, local, foreign and other income, franchise, profits, gross receipts, capital gains, capital stock, transfer, property, sales, use, value-added, occupation, property, excise, severance, windfall profits, stamp, license, payroll, social security, withholding and other taxes, assessments, charges, duties, fees, levies or other governmental charges of any kind whatsoever (whether payable directly or by withholding and whether or not requiring the filing of a Tax Return), all estimated taxes, deficiency assessments, additions to tax, penalties and interest and shall include any liability for such amounts as a result either of being a member of a combined, consolidated, unitary or Affiliated group or of a contractual obligation to indemnify any Person.

 

“ XRES Business ” has the meaning provided in Section 2.24 .

 

“ XRES Purchase Agreement ” has the meaning provided in Section 4.1(l) .

 

1.2 Principles of Construction .

 

(a) All references to Articles, Sections, subsections, Schedules and Exhibits are to Articles, Sections, subsections, Schedules and Exhibits in or to this Agreement unless otherwise specified. The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The term “including” is not limiting and means “including without limitation.”

 

(b) All accounting terms not specifically defined herein shall be construed in accordance with GAAP.

 

(c) In the computation of periods of time from a specified date to a later specified date, the words “from” and “within” each mean “from and including”; the words “to” and “until” each mean “to but excluding”; and the word “through” means “to and including.”

 

(d) The Article and Section headings herein are for convenience only and shall not affect the construction hereof.

 

(e) In the event that the final day of any time period provided herein does not fall on a Business Day, such time period shall be extended such that the final day of such period shall fall on the next Business Day thereafter.

 

(f) This Agreement is the result of negotiations among and has been reviewed by each Party’s counsel. Accordingly, this Agreement shall not be construed against any Party merely because of such Party’s involvement in its preparation.

 

(g) All references to (i) Schedules in Article II are to Schedules that form a part of the disclosure schedule delivered by Contributor to FADV on the date of the Master

 

Transfer Agreement as updated pursuant to Section 5.7 of the Master Transfer Agreement, and (ii) Schedules in Article III are to Schedules that form a part of the disclosure schedule delivered by FADV to Contributor on the date of the Master Transfer Agreement as updated pursuant to Section 5.7 of the Master Transfer Agreement. The Schedules referred to herein are incorporated herein by reference.

 

(h) It is understood and agreed that neither the specification of any dollar amount in the representations and warranties contained in this Agreement nor the inclusion of any specific item in the Schedules or Exhibits hereto is intended to imply that such amounts or higher or lower amounts, or the items so included or other items, are or are not material, and no Party shall use the fact of the setting of such amounts or the fact of the inclusion of any such item in the Schedules or Exhibits hereto in any dispute or controversy between the Parties as to whether any obligation, item or matter is or is not material for purposes of this Agreement. Whenever a representation or warranty made by Contributor is qualified by materiality or immateriality, such materiality or immateriality, as the case may be, shall be construed in respect of the Business, taken as a whole.

 

ARTICLE II.

REPRESENTATIONS OF CONTRIBUTOR

 

Subject to Section 8.12 , Contributor represents, warrants and agrees in favor of FADV as of the Closing Date (unless a representation speaks as of a specific date, in which case, as of such date), as follows:

 

2.1 Existence and Good Standing . Contributor (a) is a limited liability company validly existing and in good standing under the laws of the State of California, and (b) has all requisite limited liability company power and authority to own, lease and operate its properties and to carry on its business as now being conducted.

 

2.2 Binding Effect . Contributor has the requisite corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder. This Agreement (a) has been duly authorized and approved by all required limited liability company action of Contributor, (b) has been duly executed and delivered by Contributor, and (c) assuming the due execution and delivery hereof by FADV, constitutes the valid and binding agreement of Contributor enforceable against Contributor in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency or similar laws and equitable principles relating to or affecting the rights of creditors generally from time to time in effect.

 

2.3 Company; Subsidiaries .

 

(a) The Company is validly existing and in good standing under the laws of Delaware and has all requisite corporate power to own, lease and operate its properties and to carry on its business as now being conducted. The Company is not in violation of any of the provisions of its certificate of incorporation or bylaws.

 

(b) Set forth on Schedule 2.3(b) is a list of jurisdictions in which the Company is duly qualified or licensed to conduct its business, and the Company is in good standing in each such jurisdiction. Such jurisdictions are the only jurisdictions in which the character or location

 

of the properties owned, leased or operated by the Company, or the nature of the business conducted by the Company, makes such qualification or licensing necessary, except where the failure to be so qualified or licensed would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the Business.

 

(c) Contributor (solely with respect to the Division) has no Subsidiaries and does not otherwise own, directly or indirectly, any capital stock of, or other equity, ownership, proprietary or voting interest in, any Person, other than the Company.

 

(d) Schedule 2.3(d) sets forth the capitalization of the Company. All outstanding shares of the capital stock of the Company have been duly authorized and validly issued and are fully paid and nonassessable. Except as set forth on Schedule 2.3(d) , there are no outstanding options, warrants, rights, calls, commitments, conversion rights, rights of exchange, plans or other agreements of any character providing for the purchase, issuance or sale of any shares of capital stock of the Company, any other securities of the Company, or any equity interest in the Company or its business, and none of the foregoing will arise as a result of the execution or performance of this Agreement or the transactions contemplated herein. No Person has any demand or piggyback registration rights in respect of shares of common stock or other securities of the Company. All securities, rights, options and plans set forth (or required to be set forth) on Schedule 2.3(d) have been issued or granted in accordance with applicable law and not in contravention with the articles or certificate of incorporation, bylaws, articles of organization or operating agreement of the Company.

 

(e) Contributor owns, beneficially and of record, 100% of the capital stock of the Company, free and clear of all Encumbrances.

 

2.4 Financial Statements .

 

(a) Schedule 2.4(a) contains copies of the Financial Statements. Except as specifically disclosed therein and except as set forth in Schedule 2.4(a) , that portion of the Financial Statements relating to the Division has been prepared from, and in accordance with, the books and records of the Business, were prepared in accordance with GAAP and fairly present in all material respects, subject to the absence of notes with respect to interim periods and audit adjustments, the financial position of the Division on a combined basis with the other businesses constituting the Business as of the dates thereof and the results of operations of the Division on a combined basis with the other businesses constituting the Business for the periods presented therein.

 

(b) Except as set forth on Schedule 2.4(b) , from the Balance Sheet Date through the date of this Agreement, the Business has been conducted in the Ordinary Course and there has not been any incurrence, assumption or guarantee by Contributor with respect to the Division of any Indebtedness other than in the Ordinary Course.

 

2.5 Books and Records . Except as set forth on Schedule 2.5 , the Division has no material records, systems, controls, data or information recorded, stored, maintained, operated or otherwise wholly or partly dependent upon or held by any means (including any electronic, mechanical or photographic process, whether computerized or not) which (including all means of

 

access thereto and therefrom) are not under the exclusive ownership and direct control of the Division or an Affiliate of Contributor. The minute books of the Company contain, in all material respects, accurate records of all meetings of, and corporate action taken by (including action taken by written consent) the shareholders and Board of Directors of the Company.

 

2.6 Title to Properties; Encumbrances .

 

(a) Except (i) as set forth on Schedule 2.6(a) and (ii) for properties and assets reflected in the Balance Sheet or acquired since the Balance Sheet Date which have been sold or otherwise disposed of in the Ordinary Course, and except for the Excluded Assets, Contributor or the Company has good, valid and marketable title to, or in the case of leased assets, a valid leasehold interest in, all of the Contributed Assets, subject to no Encumbrance, except for (A) liens reflected in the Balance Sheet, (B) liens consisting of zoning or planning restrictions, easements, permits and other restrictions or limitations on the use of real property or irregularities in title thereto, and other liens or other imperfections in title, if any, which do not, individually or in the aggregate, materially detract from the value of, or impair the use of, such property by the Division in the operation of its business, (C) liens for current taxes, assessments or governmental charges or levies on property not yet due and delinquent and (D) liens described on Schedule 2.6(a) (liens of the type described in clauses (A), (B), (C) and (D) above are hereinafter sometimes referred to as “ Division Permitted Liens ”). Upon the consummation of the transactions contemplated hereby, and assuming the receipt of any and all consents required to assign the Assumed Contracts, Contributor shall transfer all of the Contributed Assets to FADV free and clear of any Encumbrances (other than Division Permitted Liens and the Assumed Liabilities).

 

(b) Except (i) as set forth on Schedule 2.6(b) (and except for property leased by the Company, which, for the avoidance of doubt, is represented and warranted to in Section 2.8 ) and (ii) for properties and assets reflected in the Balance Sheet or acquired since the Balance Sheet Date which have been sold or otherwise disposed of in the Ordinary Course, and except for the Excluded Assets, the Company has good, valid and marketable title to (A) all of its properties and assets (real and personal, tangible and intangible), including all of the properties and assets reflected in the Balance Sheet, except as indicated in the notes thereto, and (B) all of the properties and assets purchased by the Company since the Balance Sheet Date; in each case subject to no Encumbrance, except for Division Permitted Liens and liens described on Schedule 2.6(b) . The tangible personal property, real property and assets owned or leased by the Companies (as defined in the First American Contribution Agreement), together with the Contributed Assets, the tangible personal property, real property and assets subject to the Related Agreements, and the tangible personal property, real property and assets used by First American and its Affiliates to provide services to FADV and its Affiliates under the Related Agreements, constitute all of the tangible personal property, real property and assets necessary for the conduct of the Business as conducted in the Ordinary Course in all material respects.

 

2.7 Real Property . Neither Contributor nor the Company owns, directly or indirectly, in whole or in part, any fee interest in any real property used by the Division.

 

2.8 Leases . Schedule 2.8 contains an accurate and complete list of each real and personal property lease relating solely to the Division for which total annual rent payments equal

 

or exceed $200,000 to which Contributor is a party (as lessee or lessor), and each real and personal property lease for which total annual rent payments equal or exceed $25,000 to which the Company is a party (as lessee or lessor). Each lease set forth on Schedule 2.8 (or required to be set forth on Schedule 2.8 ) is in full force and effect; all rents and additional rents due by the Contributor or the Company, as applicable, to date on each such lease have been paid (other than any pass through expenses not yet invoiced to Contributor or the Company); in each case, the lessee has been in peaceable possession since the commencement of the original term of such lease and is not in default thereunder and no waiver, indulgence or postponement of the lessee’s obligations thereunder has been granted by the lessor; and there exists no event of default or event, occurrence, condition or act which, with the giving of notice, the lapse of time or the happening of any further event or condition, would become a default under such lease, except where such defaults would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the Business. The tangible personal property leased by the Company and leased by Contributor solely for use by the Division is in a state of good maintenance and repair, reasonable wear and tear excepted, except where the state of such property would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the Business.

 

2.9 Material Contracts .

 

(a) Except as set forth on Schedule 2.9(a) , neither Contributor, solely in connection with its operation of the Division, nor the Company is bound by (i) any agreement, Contract or commitment relating to the employment of any Person (as hereinafter defined) or any bonus, deferred compensation, pension, profit sharing, stock option, employee stock purchase, retirement or other employee benefit plan (including any agreement under which an employee would be entitled to payment, vesting of rights or benefits or other compensation upon consummation of the Transaction), (ii) any agreement, indenture or other instrument which contains restrictions with respect to payment of dividends or any other distribution in respect of the capital stock of the Company, (iii) any agreement, Contract or commitment relating to capital expenditures in excess of $500,000 per individual item or $1,000,000 in the aggregate, (iv) any loan or advance to, or investment in, any Person or any agreement, Contract or commitment relating to the making of any such loan, advance or investment, (v) any guarantee or other contingent liability in respect of any Indebtedness or obligation of any Person (other than the endorsement of negotiable instruments for collection in the Ordinary Course), (vi) any management service, consulting or any other similar type Contract, (vii) any agreement, Contract or commitment limiting the ability to engage in any line of business or to compete with any Person, (viii) any agreement, Contract or commitment not entered into in the Ordinary Course which involves $500,000 or more and is not cancelable without penalty within 30 days or (ix) any agreement, Contract or commitment which by its operation or termination would reasonably be expected to have a Material Adverse Effect on the Business. To the knowledge of Contributor, the Contracts listed on Schedule 2.9(a) and the other schedules attached hereto, together with the customer contracts not required to be listed on Schedule 2.9(a) , constitute all the material Contracts of the Division and the Company, taken as a whole.

 

(b) Each Assumed Contract and each other Contract set forth on Schedule 2.9(a) (or required to be set forth on Schedule 2.9(a) ) (the “ Material Contracts ”) is in full force and effect. Except as set forth in Schedule 2.9(b) , and except as would not, individually or in the

 

aggregate, reasonably be expected to have a Material Adverse Effect on the Business, assuming the receipt of any and all consents of third parties in connection with the assignment of the Assumed Contracts to FADV, each Material Contract is in full force and effect and there exists no (i) default or event of default by the Division or, to the knowledge of Contributor, any other party to any such Material Contract, or (ii) event, occurrence, condition or act which, with the giving of notice, the lapse of time or the happening of any other event or condition, would become a default or event of default by the Division or, to the knowledge of Contributor, any other party thereto, with respect to any term or provision of any such Material Contract. Neither Contributor nor the Company has violated any of the material terms or conditions of any Material Contract in any material respect, and, to the knowledge of Contributor, all of the material covenants to be performed by any other party thereto have been fully performed in all material respects.

 

2.10 Restrictive Documents . Assuming the receipt of any and all consents of third parties in connection with the transactions contemplated hereby, and except as set forth on Schedule 2.10 , neither Contributor nor the Company is subject to, or a party to, any charter, bylaw, mortgage, lien, lease, license, permit, agreement, Contract, instrument, law, rule, ordinance, regulation, order, judgment or decree, or any other restriction of any kind or character, which (a) would, individually or in the aggregate, reasonably be expected to have a material adverse effect on (including any material delay) the ability of Contributor to perform its obligations under this Agreement, or (b) by its own operation, and not by the breach or violation, as the case may be, thereof, (i) would materially restrict the ability of the Business to acquire any property or conduct business in any area or business line, (ii) has or would, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the Business or (iii) prevent or materially delay the consummation of the transactions contemplated by this Agreement.

 

2.11 Litigation . Except as set forth on Schedule 2.11 , there is no action, suit, proceeding at law or in equity, arbitration or administrative or other proceeding by or before (or to the knowledge of Contributor, any investigation by) any governmental or other instrumentality or agency, pending, or, to the knowledge of Contributor, threatened, against or impacting (a) Contributor that would, individually or in the aggregate, reasonably be expected to have a material adverse effect on (including any material delay) the ability of Contributor to perform its obligations under this Agreement, or (b) the Division or any of its properties or rights which would, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the Business. Neither Contributor nor the Company is subject to any judgment, order or decree entered in any lawsuit or proceeding which would, individually or in the aggregate, reasonably be expected to have (i) a material adverse effect on (including any material delay) the ability of Contributor to perform its obligations under this Agreement, or (ii) have a Material Adverse Effect on the Business.

 

2.12 Taxes .

 

(a) Tax Returns . Contributor and the Company have timely filed or caused to be timely filed, and will timely file or cause to be timely filed, with the appropriate taxing authorities all material tax returns, statements, forms and reports (including elections, declarations, disclosures, schedules, estimates and information tax returns) for Taxes (“ Returns ”)

 

that are required to be filed by it or them with respect to the Company, the Division and the Contributed Assets on or prior to the Closing Date. The Returns have accurately reflected in all material respects and will accurately reflect in all material respects all liability for Taxes with respect to the Company, the Division and the Contributed Assets for the periods covered thereby.

 

(b) Payment of Taxes . All material Taxes and Tax liabilities due by or with respect to the income, assets or operations of the Company, the Division and the Contributed Assets for all taxable years or other taxable periods that end on or before the Closing Date and, with respect to any taxable year or other taxable period beginning before and ending after the Closing Date, the portion of such taxable year or period ending on and including the Closing Date (the “ Pre-Closing Period ”), have been (or by the Closing Date will be) timely paid in full on or before the Closing Date or, with respect to the Company, adequately accrued and disclosed and fully provided for on the books and records of the Company in accordance with GAAP.

 

(c) Other Tax Matters . All material Taxes that Contributor (solely with respect to the Division and the Contributed Assets) or the Company are (or were) required by law to withhold or collect in connection with amounts paid or owing to any employee, independent contractor, creditor, stockholder or other third party have been duly withheld or collected, and have been timely paid over to the proper authorities to the extent due and payable.

 

2.13 Intellectual Properties .

 

(a) Schedule 2.13(a) is an accurate and complete list of all domestic and foreign patents, patent applications, trademarks, service marks and other indicia of origin, trademark and service mark registrations and applications for registrations thereof, registered copyrights and applications for registration thereof, Internet domain names, corporate and business names, trade names, brand names and material computer software programs owned by the Company or included in the Contributed Assets (collectively, the “ Contributed Intellectual Property ”. The Intellectual Property listed (or required to be listed) on Schedule 2.13(a) , except as indicated on such Schedule, has been duly registered in, filed in or issued by the United States Patent and Trademark Office, United States Copyright Office, a duly accredited and appropriate domain name registrar, the appropriate offices in the various states of the United States and the appropriate offices of other jurisdictions (foreign and domestic), and each such registration, filing and issuance remains in full force and effect as of the Closing Date.

 

(b) Except (i) as set forth in Schedule 2.13(b) and (ii) for licenses related to “off the shelf” or other software widely available on generally standard terms and conditions, none of the Company, or Contributor solely with respect to the Division and the Assumed Liabilities, is a party to any license or agreement, whether as licensor, licensee or otherwise, with respect to any Intellectual Property. To the extent any Intellectual Property is used in the business of the Division under license, no notice of a material default has been sent or received by the Company or Contributor under any such license that remains uncured and, assuming the receipt of any and all consents of third parties in connection with the assignment of the Assumed Contracts to FADV, the execution, delivery or performance of Contributor’s obligations hereunder will not result in such a material default. Each such license agreement is a legal, valid and binding obligation of Contributor and/or the Company and, to the knowledge of Contributor, each of the other parties thereto, enforceable by Contributor and/or the Company in accordance with the terms thereof.

 

(c) Except as set forth in Schedule 2.13(c) , Contributor or the Company owns or is licensed to use, all of the Contributed Intellectual Property (including all of the Intellectual Property set forth (or required to be set forth) in Schedule 2.13(a) ), free and clear of any Encumbrances, without obligation to pay any royalty or any other fees with respect thereto. The Division’s use of the Contributed Intellectual Property (including the marketing, licensing, sale or distribution of products and the general conduct and operations of the business of the Division) does not violate, infringe, misappropriate or misuse any intellectual property rights of any third party. No Contributed Intellectual Property has been cancelled, abandoned or otherwise terminated and all renewal and maintenance fees in respect thereof have been duly paid. The Company has the exclusive right to file, prosecute and maintain all applications and registrations with respect to the Intellectual Property that is owned by the Company, and Contributor has the exclusive right to file, prosecute and maintain all applications and registrations with respect to the Contributed Intellectual Property that is owned by Contributor.

 

(d) Except as set forth in Schedule 2.13(d) , none of Contributor and the Company has received any written notice or claim from any third party challenging the right of Contributor or the Company to use any of the Contributed Intellectual Property. Except as set forth in Schedule 2.13(d) , the Contributed Intellectual Property listed (or required to be listed) on Schedules 2.13(a) and 2.13(b) , together with the Intellectual Property listed on Schedule 3.12(a) and Schedule 3.12(b) of the First American Contribution Agreement, constitutes all the Intellectual Property necessary to operate the Division as of the Closing Date, in the manner in which it is presently operated, except for licenses related to “off the shelf” or other software widely available on generally standard terms and conditions.

 

(e) Except as set forth in Schedule 2.13(e) , neither Contributor nor the Company has made any claim in writing of a violation, infringement, misuse or misappropriation by any third party (including any employee or former employee of Contributor or the Company) of its rights to, or in connection with any Contributed Intellectual Property, which claim is still pending. Except as set forth in Schedule 2.13(e) , the Company has not entered into any agreement to indemnify any other person against any charge of infringement of any Intellectual Property, other than indemnification provisions contained in purchase orders or license agreements arising in the Ordinary Course.

 

(f) Except as set forth in Schedule 2.13(f) , there is no pending or, to the knowledge of Contributor, threatened claim by any third party of a violation, infringement, misuse or misappropriation by Contributor (solely with respect to its operation of the Division) or the Company of any Intellectual Property owned by any third party, or of the invalidity of any patent or registration of a copyright, trademark, service mark, domain name, or trade name included in the Contributed Intellectual Property. To the knowledge of Contributor, no valid basis exists for any such claims.

 

(g) Except as set forth in Schedule 2.13(g) , there are no interferences or other contested proceedings, either pending or, to the knowledge of Contributor, threatened, in the United States Copyright Office, the United States Patent and Trademark Office, or any governmental authority (foreign or domestic) relating to any pending application with respect to the Contributed Intellectual Property.

 

(h) Except as set forth on Schedule 2.13(h) , either Contributor or the Company has secured valid written assignments from all consultants and employees who contributed to the creation or development of Contributed Intellectual Property of the rights to such contributions that either Contributor or the Company does not already own by operation of law.

 

(i) Contributor and the Company have taken all necessary and reasonable steps to protect and preserve the confidentiality of all trade secrets, know-how, source codes, databases, customer lists, schematics, ideas, algorithms and processes included in the Contributed Intellectual Property and all use, disclosure or appropriation thereof by or to any third party has been pursuant to the terms of a written agreement between such third party and Contributor or the Company. The Division has not materially breached any agreements of non-disclosure or confidentiality included in the Contributed Assets.

 

(j) Each of the material computer software programs used or held for use in the Division and included in the Contributed Intellectual Property operates and runs in a commercially reasonable business manner, conforms in all material respects to the specifications thereof, and, with respect to each of such computer software programs that are owned by the Company, the applications can be compiled from their associated source code without undue burden.

 

(k) For the twelve-month period prior to the Closing Date, the active Internet domain names and URLs of the Division direct and resolve to the appropriate Internet protocol addresses and are and have been accessible to Internet users on those certain computers used by the Division to make the Sites so accessible substantially twenty-four (24) hours per day, seven (7) days per week (“ 24/7 ”), excluding maintenance periods, and are and have been operational for transacting from those certain computers used by the Division to make the Sites so accessible on a 24/7 basis, excluding maintenance periods. Except as set forth in Schedule 2.13(k) , Contributor has no reason to believe that the Sites will not operate or will not continue to be accessible to Internet users on substantially a 24/7 basis, excluding maintenance periods, prior to, at the time of and after the Closing Date.

 

2.14 Compliance with Laws . Except as set forth in Schedule 2.14 , each of the Company and Contributor (solely with respect to the Division, the Contributed Assets and the Assumed Liabilities), is in compliance with all applicable laws, regulations, orders, judgments and decrees, except where the failure to comply would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the Business. In furtherance of, and not by way of limitation of, the preceding sentence, neither the Company nor Contributor (solely with respect to the Division and the Contributed Assets) has violated any privacy, data protection, publicity, advertising or similar federal, state or local law of any kind in the United States or any other nation (including the Fair Credit Reporting Act, 15 U.S.C. §§ 1681 et seq.), nor has any of the Company and Contributor (solely with respect to the Division and the Contributed Assets) received written notice of any such violation, and Contributor is not aware of any facts that would give rise to such a violation, except where such violation would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the Business.

 

2.15 Governmental Licenses . Except as set forth in Schedule 2.15 , Contributor and the Company have all governmental licenses, permits, franchises, approvals, permits and other authorizations of, and have made all registrations and/or filings with, all Governmental Entities (“ Licenses ”) necessary to operate the Division as presently conducted, except where the failure to have such Licenses would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the Business. All Licenses held by Contributor (solely with respect to the Division and the Contributed Assets) and the Company are in full force and effect, except where the failure of such Licenses to be in full force and effect would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the Business. No such License is the subject of a proceeding for suspension or revocation or similar proceedings. Except as set forth in Schedule 2.15 , no jurisdiction has demanded or requested that the Company qualify or become licensed as a foreign corporation.

 

2.16 Labor Matters .

 

(a) Contributor (solely with respect to the Division and the Contributed Assets) and the Company is in compliance with all federal, state or other applicable laws, domestic or foreign, respecting employment and employment practices, terms and conditions of employment and wages and hours, and has not and is not engaged in any unfair labor practice, except in each case as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the Business. Contributor (solely with respect to the Division and the Contributed Assets) is not subject to or bound by any collective bargaining or labor union agreement applicable to any Person employed by the Division and no collective bargaining or labor union agreement is currently being negotiated by the Contributor (solely with respect to the Division and the Contributed Assets).

 

(b) No unfair labor practice complaint against Contributor (solely with respect to the Division and the Contributed Assets) or the Company is pending before the National Labor Relations Board and, to the knowledge of Contributor, no unfair labor practice complaint is threatened or pending against Contributor (solely with respect to the Division