Exhibit 10.2
OUTSOURCING
AGREEMENT
This OUTSOURCING AGREEMENT (this
“ Agreement ”) is entered into as of [
] 2005 between FIRST AMERICAN REAL ESTATE SOLUTIONS, LLC, a
California limited liability company (including, for the avoidance
of doubt, the Division (as defined below), “ FARES
”), and FIRST ADVANTAGE CORPORATION, a Delaware corporation
(“ FADV ”).
W I T N E S
S E T H :
WHEREAS, First American CREDCO, a
division of FARES (the “ Division ”), has
previously entered into that certain Marketing and Support
Agreement, effective as of June 26, 2000, with RESdirect LLC,
a wholly-owned subsidiary of the RELS companies (“
RESdirect ”), attached hereto as Exhibit A (as
amended, supplemented or restated from time to time, the “
Support Agreement ”), whereby FARES agreed to sell
credit reports to customers of RESdirect and provide certain other
services described therein to RESdirect;
WHEREAS, the Division has previously
entered into that certain Service Bureau Agreement, effective as of
November 1, 1998, with RELS, LLC, a Delaware limited liability
company (“ RELS ”), attached hereto as
Exhibit B (as amended, supplemented or restated from time to
time, the “ Service Bureau Agreement ”), whereby
FARES agreed to provide certain services described therein to
RELS;
WHEREAS, the Division and RELS
Reporting Services LLC, a wholly-owned subsidiary of RELS (“
RRS ”), are parties to an oral agreement (the “
RRS Services Agreement ”) which provides that
(a) the Division will manage the business operations of RRS,
including, without limitation, daily operation and financial
reporting and the activities described on Exhibit C ,
(b) the Division will, through its networks and systems
(electronic or otherwise) order credit reports and related products
and services from the credit report repositories and other entities
involved in assessing the credit worthiness of individuals
(including, without limitation, Fair Isaac Corporation) on behalf
of RRS and its customers using the subscriber codes of Foothill
Capital or one of its affiliates, including, without limitation,
Wells Fargo Bank N.A. (collectively, the “ Wells
Entities ”), (c) the Division, if required, will
format and/or merge such credit reports and related products and
services (based on requirements of the Wells Entities or their
respective customers) using the Division’s systems,
(d) the Division will deliver the merged and/or formatted
credit reports and related products and services, or, if required,
the unmerged and/or unformatted credit report and related products
and services (the credit report and related products and services
required to be delivered by the Division, the “ CREDCO
Report ”), to the Wells Entity requesting such CREDCO
Report, or its customer or designee, using the Division’s
networks and systems (electronic or otherwise), (e) CREDCO
Reports delivered by the Division may be private labeled in
RRS’ name or the name of an RRS designee or a Wells Entity
designee, (f) the Division will provide customer support
services in connection with the CREDCO Reports, (g) the
Division will provide technical support in connection with the
CREDCO Reports, (h) the Division will provide product
development services and product enhancements, whether requested
by
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RRS, RELS, the Wells Entities or otherwise,
(i) RRS will pay the Division $3.45 for each CREDCO Report
which only involves the merging of credit reports pulled from at
least two credit bureau repositories and $2.00 for each CREDCO
Report which involves only the formatting and processing of a
single credit report pulled from one of the three credit bureau
repositories, (j) and $0.50 per report for batch or bulk
servicing transactions, (k) the Division will bill RRS’
customers on behalf of RRS, collect payment from RRS’
customers, deduct therefrom any amounts owed the Division by RRS
under the RRS Services Agreement and remit to RRS and/or RELS the
balance, (l) RRS will pay the Division the allocations and
direct charges described on Exhibit C and (m) RRS can
terminate the RRS Services Agreement at any time.
WHEREAS, FARES and FADV (each, a
“ Party ” and collectively, the “
Parties ”) have entered into that certain Contribution
Agreement, dated as of the date hereof (the “ Contribution
Agreement ”), whereby FARES has agreed to contribute the
Division to FADV (the “ Transaction ”);
and
WHEREAS, in connection with the
consummation of the Transaction, FARES desires to outsource
performance of all of its obligations, covenants and agreements
under the Support Agreement, the Service Bureau Agreement and the
RRS Services Agreement to FADV, and FADV is willing to perform all
obligations, covenants and agreements of FARES under the Support
Agreement, the Service Bureau Agreement and the RRS Services
Agreement.
NOW, THEREFORE, in consideration of
these premises and the terms and conditions set forth herein, and
for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, FARES and FADV agree
as follows:
1. Defined Terms . Unless
otherwise defined herein, capitalized terms used herein shall have
the meanings assigned in the Contribution Agreement.
2. Services . From and after
the date hereof (the “ Effective Date ”), FADV
shall, and shall cause its Affiliates to, on behalf of FARES,
(a) fully perform all obligations, covenants and agreements of
FARES under the Support Agreement for so long as the Support
Agreement remains in effect (the “ RESdirect Services
”), (b) fully perform all obligations, covenants and
agreements of FARES under the Service Bureau Agreement for so long
as the Service Bureau Agreement remains in effect (the “
RELS Services ”) and (c) fully perform all
obligations, covenants and agreements of FARES under the RRS
Services Agreement (the “ RRS Services ” and
collectively with the RESdirect Services and the RELS Services, the
“ Services ”).
3. Performance . In providing
Services hereunder, FADV shall, and shall cause its Affiliates to,
(a) comply with applicable laws and regulations and the terms
of the Support Agreement, the Service Bureau Agreement and the RRS
Services Agreement, as applicable, and (b) act in a good faith
commercially reasonable manner and at least in accordance with the
standards for the provision of the Services used by FARES in the
performance of the Services prior to the Effective Date. With
respect to its obligation to prepare the financial statements of
the credit division of RELS and its
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subsidiaries under the RRS Services Agreement,
FADV agrees to deliver such financial statements to RELS within 6
Business Days of the end of each calendar month and within 8
Business Days of the end of each calendar year, which financial
statements will be prepared in accordance with GAAP.
4. Payment . From and after
the Effective Date and until the earlier to occur of the date
(a) RELS dissolves or ceases to exist and (b) FARES or
one or more of its Affiliates is no longer a member of RELS (such
earlier date, the “ Termination Date ”), FARES
shall, as full consideration for the performance of the Services,
pay to FADV:
(i) within (1) 40 days
following the end of each of the first, second and third calendar
quarters of each year prior to the Termination Date and within 70
days following the end of the fourth calendar quarter of each year
prior to the Termination Date if FADV or one of its Subsidiaries is
not preparing the financial statements of the credit report
division of RELS and its Subsidiaries (whether pursuant to the RRS
Services Agreement or otherwise) or (2) 10 Business Days
following the date on which FADV delivers to RELS the financial
statements for each of the first, second and third calendar
quarters and the full calendar year if FADV or one of Subsidiaries
is preparing the financial statements of the credit report division
of RELS and its Subsidiaries (whether pursuant to the RRS Services
Agreement or otherwise), an amount in cash equal to the product of
(A) the pre-tax income of RELS (as defined in accordance with
GAAP, but excluding the effects of any depreciation or amortization
of any asset purchased in connection with a Capital Expenditure (as
defined below)) derived from the sale during the applicable
calendar quarter (or, with respect to the first calendar quarter
during which this Agreement is effective, the period between the
Effective Date and the end of the calendar quarter in which the
Effective Date occurs) of CREDCO Reports, less the amount of any
capital expenditures made during the applicable calendar quarter
(or, with respect to the first calendar quarter during which this
Agreement is effective, the period between the Effective Date and
the end of the calendar quarter in which the Effective Date occurs)
by RELS in connection with the sale of CREDCO Reports acquired by
RELS from FADV and/or its Subsidiaries (each such capital
expenditure, a “ Capital Expenditures ”), and
(B) the percentage interest in RELS collectively owned by
FARES and/or its Affiliates as of the end of the applicable
calendar quarter, and
(ii) within five Business Days of
receipt thereof all amounts paid to FARES pursuant to the Support
Agreement, the Service Bureau Agreement and the RRS Services
Agreement for services provided by FADV and/or its Affiliates
thereunder after the Effective Date.
5. Term . The term of this
Agreement shall begin on the Effective Date and shall terminate
(a) with respect to the performance of the RESdirect Services
by FADV hereunder, on the earlier to occur of (i) the date the
Support Agreement is terminated or is otherwise no longer in full
force and effect in accordance with its terms and (ii) the
Termination Date, (b) with respect to the performance of the
RELS Services by FADV hereunder, on the earlier to occur of
(i) the date the Service Bureau Agreement is
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terminated or is otherwise no longer in full
force and effect in accordance with its terms and (ii) the
Termination Date, and (c) with respect to the performance of
the RRS Services by FADV hereunder, on the earlier to occur of
(i) the date the RRS Services Agreement is terminated or is
otherwise no longer in full force and effect in accordance with its
terms and (ii) the Termination Date.
6. Enforcement of Rights .
FARES shall use reasonable efforts to provide FADV with the rights
and benefits under the Support Agreement, the Service Bureau
Agreement and the RRS Services Agreement, including enforcement for
the benefit of FADV and at FADV’s sole expense of any and all
rights of FARES against RESdirect, RELS and RRS, respectively,
arising out of any breach of the Support Agreement, the Service
Bureau Agreement and/or the RRS Services Agreement by RESdirect,
RELS and/or RRS, respectively, and if requested by FADV, acting as
an agent on behalf of FADV or as FADV shall otherwise reasonably
require; provided that FADV shall bear FARES’
reasonable out-of-pocket expenses and costs as such agent and shall
indemnify FARES for actions taken or not taken as such agent. FARES
for itself only (and not, for the avoidance of doubt, for any
Affiliate, including, without limitation, RESdirect, RELS and RRS)
will not agree to amend or modify, or agree to any waiver of any
provision of, the Support Agreement, the Service Bureau Agreement
or the RRS Services Agreement without the prior written consent of
FADV.
7. Indemnity . FADV agrees to
indemnify and hold FARES and its Subsidiaries, each of their
Affiliates, and each of their respective officers, managers,
employees, agents and any assignees and successors thereto,
harmless, from and against any and all claims, losses, liabilities,
damages, costs, disbursements, interest, and reasonable
out-of-pocket expenses (including reasonable attorney fees)
suffered, incurred or paid, directly or indirectly, as a result of
or arising out of FADV’s or its Affiliates’ performance
of FADV’s obligations under this Agreement. FARES agrees to
indemnify and hold FADV and its Subsidiaries, each of their
Affiliates, and each of their respective officers, managers,
employees, agents and any assignees and successors thereto,
harmless, from and against any and all claims, losses, liabilities,
damages, costs, disbursements, interest, and reasonable
out-of-pocket expenses (including reasonable attorney fees)
suffered, incurred or paid, directly or indirectly, as a result of
or arising out of FARES or its Affiliates’ performance of
FARES’s obligations under this Agreement.
8. Cooperation; Assignment of
Agreements; Financials .
(a) The Parties will cooperate in
good faith to carry out the purposes of this Agreement. Without
limiting the generality of the foregoing, each Party will assist
the other Party and furnish the other Party with such information
and documentation as the other Party may reasonably
request.
(b) In the event FARES desires to
exercise its right, if any, to terminate the Support Agreement, the
Service Bureau Agreement or the RRS Services Agreement, FARES shall
no less than five Business Days prior to the date of such desired
termination (the “ Intended Termination Date ”)
provide FADV with notice of its desire to terminate such agreement,
which notice shall specify the Intended Termination
Date.
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FADV, by written notice to FARES delivered no
later than one Business Day prior to the Intended Termination Date,
may cause FARES to delay such termination for a period of 45
calendar days during which time FARES will use commercially
reasonable best efforts (which efforts shall not require FARES to
make any payment or forgo any right) to obtain the consent of the
other parties to such agreement and any other necessary consents
(including, without limitation, any consent of a Wells Entity
required under RELS operating agreement or otherwise) to the
assignment of such agreement to FADV. If such consent is obtained
during such 45 calendar day period (or such longer period as FARES
and FADV shall mutually agree), FARES shall assign to FADV (or its
designee) all of FADV’s right, title and interest in and to
such agreement and FADV shall assume and become responsible for all
liabilities and obligations related thereto.
(c) At any time during the Term of
this Agreement, FARES shall have the right to assign to FADV (and
FADV shall assume FARES’s obligations under) the Support
Agreement, the Service Bureau Agreement and/or the RRS Services
Agreement, provided FARES has obtained the consent of the
other parties thereto and any other necessary consents (including,
without limitation, any consent of a Wells Entity required under
RELS operating agreement or otherwise). FADV shall cooperate in the
execution of any reasonably necessary documentation (including,
without limitation, the execution of any assumption agreement) to
effect any assignment contemplated by this
Section 8(c).
(d) For any calendar month or
calendar year during the Term during which FADV or one of its
Subsidiaries does not prepare the financial statements of the
credit report division of RELS and its Subsidiaries (whether
pursuant to the RRS Services Agreement or otherwise), FARES will
deliver to FADV an income statement for the credit report division
of RELS, which income statement will describe, in accordance with
GAAP, the revenues, expenses and income of RELS derived from, or
incurred in connection with, the sale of CREDCO Reports by RELS and
its Subsidiaries. FARES will deliver such income statement within 8
Business Days following the end of each such calendar month or 10
Business Days following the end of each such calendar
year.
9. Notices . Any notice or
other communication required or permitted under this Agreement
shall be sufficiently given if delivered in person or sent by
facsimile or by registered or certified mail, postage prepaid,
addressed as follows:
First Advantage
Corporation
One Progress Plaza
Suite 2400
St. Petersburg, Florida
33701
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Facsimile:
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(727) 214-3401
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First American Real Estate
Solutions, LLC
c/o The First American
Corporation
1 First American Way
Santa Ana, California
92707
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Facsimile:
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(714) 800-3325
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Kennedy Kenneth
D. DeGiorgio
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or such other address or number as shall be
furnished in writing by any such Party. Except for a notice of a
change of address, which shall be effective only upon receipt
thereof, all such notices, requests, demands, waivers and
communications properly addressed shall be effective: (i) if
sent by U.S. mail, three (3) Business Days after deposit in
the U.S. mail, postage prepaid; (ii) if sent by FedEx or other
overnight delivery service, one (1) Business Day after
delivery to such service; (iii) if sent by personal courier,
upon receipt; and (iv) if sent by facsimile, upon
receipt.
10. Parties in Interest .
This Agreement may not be transferred, assigned, pledged or
hypothecated by any Party hereto, other than by operation of law,
except that FADV may assign any of its rights and benefits (but not
its obligations) hereunder to any of its wholly-owned Subsidiaries.
This Agreement shall be binding upon and shall inure to the benefit
of the Parties and their respective successors and permitted
assigns.
11. Counterparts . This
Agreement may be executed in one or more counterparts, all of which
taken together shall constitute one instrument.
12. Entire Agreement . This
Agreement contains the entire understanding of the Parties with
respect to the subject matter contained herein. This Agreement
supersedes all prior oral and written agreements and understandings
between the Parties with respect to such subject matter.
13. Severability . If any
term, provision, agreement, covenant or restriction of this
Agreement is held by a court of competent jurisdiction or other
competent authority to be invalid, void or unenforceable, the
remainder of the terms, provisions, agreements, covenants and
restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or
invalidat