<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 13, 1996
REGISTRATION NO. 333-07287
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------
AMENDMENT NO. 3
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------
CCC INFORMATION SERVICES GROUP INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------
<TABLE>
<S> <C> <C>
DELAWARE 7389 54-1242469
(State or other (Primary Standard (I.R.S.
jurisdiction of Industrial Employer
incorporation or Classification Code Identification
organization) Number) No.)
</TABLE>
WORLD TRADE CENTER CHICAGO
444 MERCHANDISE MART
CHICAGO, ILLINOIS 60654
(312) 222-4636
(Address, including zip code and telephone number,
including area code, of Registrant's principal executive offices)
------------------
GERALD P. KENNEY
SECRETARY AND GENERAL COUNSEL
CCC INFORMATION SERVICES GROUP INC.
WORLD TRADE CENTER CHICAGO
444 MERCHANDISE MART
CHICAGO, ILLINOIS 60654
(312) 222-4636
(Name, address, including zip code and telephone number, including area code, of
agent for service)
------------------
COPIES TO:
<TABLE>
<S> <C>
LELAND E. HUTCHINSON VICTOR A. HEBERT
TERRENCE R. BRADY TIMOTHY G. HOXIE
WINSTON & STRAWN HELLER EHRMAN
35 WEST WACKER DRIVE WHITE &
CHICAGO, ILLINOIS 60601 MCAULIFFE
(312) 558-5600 333 BUSH STREET
SAN FRANCISCO,
CALIFORNIA 94104
(415) 772-6000
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF THE PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC:
AS SOON AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.
If the securities being registered on this Form are being offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box: / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, please check the
following box and list the Securities Act registration number of the earlier
effective registration statement for the same offering: / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering: / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: / /
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
CCC INFORMATION SERVICES GROUP INC.
Cross Reference Sheet Pursuant to Rule 404(a) of the Securities Act of 1933
and Item 501(b) of Regulation S-K, Showing the Location or Heading in the
Prospectus of the Information Required by Part I of Form S-1.
<TABLE>
<CAPTION>
ITEM LOCATION OR HEADING IN PROSPECTUS
- -------------------------------------------------------------- ---------------------------------------------------
<S> <C> <C>
1. Forepart of Registration Statement and Outside
Front Cover Page of Prospectus..................... Registration Statement Cover Page; Outside Front
Cover Page of Prospectus
2. Inside Front and Outside Back Cover Pages of
Prospectus......................................... Inside Front Cover Page; Available Information;
Outside Back Cover Page
3. Summary Information, Risk Factors and Ratio of
Earnings to Fixed Charges.......................... Prospectus Summary; Risk Factors; Business
4. Use of Proceeds.................................... Prospectus Summary; Use of Proceeds
5. Determination of Offering Price.................... Underwriting
6. Dilution........................................... Dilution
7. Selling Security Holders........................... Not Applicable
8. Plan of Distribution............................... Outside Front Cover Page of Prospectus;
Underwriting
9. Description of Securities to Be Registered......... Description of Capital Stock
10. Interest of Named Experts and Counsel.............. Not Applicable
11. Information with Respect to the Registrant......... Prospectus Summary; Risk Factors; Dividend Policy;
Dilution; Use of Proceeds; Capitalization;
Selected Consolidated Financial Data; Unaudited
Pro Forma Consolidated Financial Data;
Management's Discussion and Analysis of Financial
Condition and Results of Operations; Business;
Management; Principal Stockholders; Certain
Transactions; Description of Capital Stock; Shares
Eligible for Future Sale; Experts; Available
Information; Consolidated Financial Statements
12. Disclosure of Commission Position on
Indemnification for Securities Act Liabilities..... Not Applicable
</TABLE>
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
SUBJECT TO COMPLETION, DATED AUGUST 13, 1996
PROSPECTUS
5,500,000 SHARES
[LOGO]
CCC INFORMATION SERVICES GROUP INC.
COMMON STOCK
All of the 5,500,000 shares of Common Stock offered hereby are being sold by
the Company. Prior to this Offering, there has been no public market for the
Common Stock of the Company. It is currently estimated that the initial public
offering price will be between $10.00 and $12.00 per share. See "Underwriting"
for a discussion of the factors to be considered in determining the initial
public offering price. The Common Stock of the Company has been approved for
quotation on the Nasdaq National Market under the symbol "CCCG".
--------------
THE SHARES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 7.
-------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT (1) COMPANY (2)
<S> <C> <C> <C>
Per Share................................. $ $ $
Total(3).................................. $ $ $
</TABLE>
(1) See "Underwriting" for indemnification arrangements with the several
Underwriters.
(2) Before deducting expenses payable by the Company estimated at $1,072,000.
(3) The Company has granted to the Underwriters a 30-day option to purchase up
to 825,000 additional shares of Common Stock solely to cover
over-allotments, if any. If all such shares are purchased, the total Price
to Public, Underwriting Discount and Proceeds to Company will be $ ,
$ and $ , respectively. See "Underwriting."
--------------
The shares of Common Stock are offered by the several Underwriters subject
to prior sale, receipt and acceptance by them and subject to the right of the
Underwriters to reject any order in whole or in part and certain other
conditions. It is expected that certificates for such shares will be available
for delivery on or about August , 1996 at the office of the agent of Hambrecht
& Quist LLC in New York, New York.
HAMBRECHT & QUIST
LAZARD FRERES & CO. LLC
RAYMOND JAMES & ASSOCIATES, INC.
August , 1996
<PAGE>
CLAIMS WORKFLOW MANAGEMENT
CCC INFORMATION SERVICES IS A LEADING SUPPLIER OF AUTO CLAIMS INFORMATION
AND PROCESSING, CLAIMS MANAGEMENT SOFTWARE AND VALUE-ADDED COMMUNICATIONS. CCC'S
PATHWAYS WORKFLOW MANAGEMENT SOFTWARE IS DESIGNED TO INTEGRATE CCC'S SOFTWARE
AND INFORMATION OFFERINGS IN A STANDARD ARCHITECTURE WITH A COMMON USER
INTERFACE. CCC'S SERVICES AND PRODUCTS IMPROVE THE EFFICIENCY OF THE AUTO CLAIMS
PROCESS.
THE INSIDE COVER CONSISTS OF A SCHEMATICS SHOWING THE GRAPHICAL USER
INTERFACE OF THE PATHWAYS SOFTWARE AND IDENTIFYING LABELS DEPICTING APPLICATION
OF THE SYSTEM WITH A FOLD-OUT PAGE BEHIND THE INSIDE FRONT COVER DEPICTING THE
AUTO CLAIMS PROCESS.
[INSIDE COVER PAGE]
--------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK OF
THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
2
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND CONSOLIDATED FINANCIAL STATEMENTS, INCLUDING NOTES THERETO,
APPEARING ELSEWHERE IN THIS PROSPECTUS. AS USED HEREIN, THE "COMPANY" MEANS CCC
INFORMATION SERVICES GROUP INC., TOGETHER WITH ITS CONSOLIDATED SUBSIDIARIES,
UNLESS THE CONTEXT OTHERWISE REQUIRES. "CCC" REFERS TO CCC INFORMATION SERVICES
INC. AND ITS CONSOLIDATED SUBSIDIARIES, WHICH CONSTITUTE THE OPERATING
SUBSIDIARIES OF THE COMPANY. "CCCDC" OR THE "JOINT VENTURE" REFERS TO CCC
DEVELOPMENT COMPANY. UNLESS OTHERWISE SPECIFIED, THE PROSPECTUS ASSUMES (I) THE
COMPLETION OF A 40 FOR 1 SPLIT OF COMMON STOCK OF THE COMPANY IMMEDIATELY PRIOR
TO THE TIME THE REGISTRATION STATEMENT OF WHICH THIS PROSPECTUS IS A PART
BECOMES EFFECTIVE, (II) THE REDEMPTION OF 3,350 SHARES OF THE OUTSTANDING SERIES
C CUMULATIVE REDEEMABLE PREFERRED STOCK (THE "SERIES C PREFERRED STOCK") AND
22,780 SHARES OF THE OUTSTANDING SERIES D CUMULATIVE REDEEMABLE PREFERRED STOCK
(THE "SERIES D PREFERRED STOCK") OF THE COMPANY (COLLECTIVELY, THE "REDEEMABLE
PREFERRED STOCK") WHICH WILL OCCUR SIMULTANEOUSLY WITH THE CONSUMMATION OF THE
OFFERING, AND (III) NO EXERCISE OF THE UNDERWRITERS' OVER-ALLOTMENT OPTION. A
GLOSSARY OF TECHNICAL TERMS BEGINS ON PAGE 41 OF THIS PROSPECTUS.
THE COMPANY
The Company is a leading supplier of automobile claims information and
processing, claims management software and value-added communication services.
The Company's customers include each of the 50 largest U.S. automobile insurance
companies, over 250 other automobile insurance companies and more than 8,500
collision repair facilities. The Company's technology-based services and
products improve efficiency, manage costs and increase consumer satisfaction in
the management of automobile claims and restoration. The Company believes that
its core competencies include the efficient collection and processing of claims
and automobile valuation and repair data, development of advanced client-server,
object-oriented claims software products, management of a value-added
communications network, understanding the workflow processes of automobile
claims and marketing through a customer-oriented field sales and service
organization.
The Company's services and products automate the process of evaluating and
settling both total loss and repairable automobile claims. The Company's TOTAL
LOSS services and products provide insurance companies the ability to effect
total loss settlements on the basis of market-specific vehicle values. The
Company's collision estimating services and products provide insurance
appraisers and collision repair facilities with up-to-date pricing, interactive
decision support and computer-assisted logic to produce accurate collision
repair estimates. Communication services offered by the Company connect
insurers, appraisers and collision repair facilities, providing the information
required to make appropriate and timely decisions. The Company also provides a
wide variety of related services and products intended to facilitate the overall
management of the automobile claims process. The Company's PATHWAYS workflow
management software is designed to integrate each of the Company's product
offerings on a common platform with a common graphical user interface,
facilitating the learning of new applications while providing the Company's
customers with a broader tool set for claims completion. The Company's services
and products are an integrated solution that combines reliable information,
advanced claims management software and value-added, secure communication
systems to improve the efficiency of the automobile claims process.
The Company markets its services and products to the key participants in the
automobile claims industry, including over 400 insurance companies and
approximately 20,000 to 25,000 collision repair facilities. The Company sells
its services and products to insurance companies through a 125 person direct
sales force. The Company contracts with 85 independent sales representatives to
sell its products to collision repair facilities. Over half of the Company's
revenue for 1995 was for services and products sold pursuant to contracts, which
generally have a two to three year term. A substantial portion of the Company's
remaining revenue represented sales to customers that have been doing business
with the Company for at least ten years. The Company's services and products are
sold either on a monthly subscription or a per transaction basis.
Insurance companies paid approximately $35 billion for automobile damage and
loss claims in 1994, of which the Company believes $19 billion was paid to
collision repair facilities and $13 billion was paid for total loss claims.
Competitive pressures and resistance by policy holders and regulators to premium
increases are causing insurance companies to focus on both customer satisfaction
and cost control. At the same time, the costs to operate a collision repair
facility have risen substantially over the past decade. Modern automobile
designs coupled with extensive environmental regulations are forcing collision
repair facilities to make significant capital
3
<PAGE>
investments in increasingly sophisticated equipment and better training.
Automobile insurance companies are seeking to reduce the costs of adjusting
claims through better and more timely flows of information and to increase
consumer satisfaction through faster, more efficient claims handling procedures.
Collision repair facilities are seeking to obtain a steady supply of customers
through greater connectivity with insurance companies and through improved
operating efficiency, business management and repair processing.
The Company's objective is to enhance its position as a leading provider of
business solutions to the automobile claims industry. The Company intends to
grow its installed user base and to offer new and enhanced services and
products. The Company focuses resources on leading insurance companies because
these customers drive new product innovation and influence the systems decisions
of other participants in the claims process. The Company has also committed
substantial resources to develop and program class libraries and claims workflow
objects and intends to leverage this technology asset to develop new services
and enhancements rapidly. The Company plans to expand its appraisal and
restoration outsourcing solution as an alternative to high cost independent
adjusters. The Company also plans to expand the scope of its service and product
offerings beyond automobile physical damage solutions to include claims
involving bodily injury and to offer selected insurance company customers a
total claims outsourcing solution.
Underlying each of the Company's principal services and products are
value-added databases which the Company's customers access using
workflow-oriented software and the Company's communications network. The
Company's proprietary database of valuation data used in connection with its
total loss services and products is built through the Company's own data
collection network. The Company offers its collision estimating services and
products through a personal computer-based, open systems approach utilizing an
object-oriented design which is readily integrated with customer legacy systems
and which enables rapid introduction of additional application modules. The
Company's product engineering activities focus on improving speed to market of
new products, services and enhancements, and reducing development costs.
CCC entered the vehicle total loss valuation market in 1980 when it
introduced the first computerized vehicle valuation system based on
market-specific conditions and physically inspected dealer inventories. The
Company was incorporated in Delaware in 1983. Its principal executive office is
located at 444 Merchandise Mart, Chicago, Illinois 60654. Its telephone number
is (312) 222-4636.
THE OFFERING
<TABLE>
<S> <C>
Common Stock offered by the Company............... 5,500,000 Shares
Common Stock to be outstanding after the
Offering.......................................... 22,026,800 Shares(1)
Use of Proceeds................................... To repay certain bank debt of CCC that
has been guaranteed by the Company and
to redeem a portion of the Redeemable
Preferred Stock. See "Use of Proceeds."
Nasdaq National Market Symbol..................... CCCG
</TABLE>
- ------------------------------
(1) Excludes 2,579,760 shares of Common Stock issuable upon the exercise of
stock options outstanding at June 30, 1996 at a weighted average exercise
price of $2.64 per share.
CCC-TM-, Pathways-TM-, EZEst-TM-, EZNet-TM-, ACCESS-TM-, ACCLAIM-TM-,
GuidePost-TM-, EZFocus-TM-, EZWorks-TM-, VINguard-TM- and AutoSearch-TM- are
trademarks of the Company. All other trademarks, service marks, or trade names
referred to in this Prospectus are the property of the respective owners.
4
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
The following summary consolidated statement of operations data, per share
data, pro forma data and balance sheet data should be read in connection with
the consolidated financial statements, the notes related thereto and the
unaudited pro forma consolidated financial data included elsewhere in this
Prospectus. The information as of and for the three years ended December 31,
1995 is derived from the audited consolidated financial statements of the
Company. The information presented as of and for the two years ended December
31, 1992 and the six months ended June 30, 1995 and 1996 and all pro forma data
is derived from the unaudited consolidated financial information of the Company.
With respect to the unaudited financial information, the Company is of the
opinion that all material adjustments, consisting only of normal recurring
adjustments necessary for a fair presentation of the Company's interim and pro
forma results of operations and financial condition, have been included. The
results of operations presented below should not be regarded as necessarily
indicative of results that may be expected in any future period.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
---------------------------------------------------------------- -------------------------------
PRO PRO
FORMA FORMA
1991 1992 1993 1994(1) 1995 1995(2) 1995 1995(2) 1996
--------- --------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues...................... $ 38,859 $ 45,805 $ 51,264 $ 91,917 $ 115,519 $ 115,519 $ 56,624 $ 56,624 $ 63,325
Expenses:
Operating expenses.......... 35,938 41,429 44,233 84,094 104,697 104,697 51,507 51,507 53,272
Purchased research and
development................ -- -- -- 13,791 -- -- -- -- --
Loss on lease termination... -- -- 3,802 -- -- -- -- -- --
Litigation settlements...... -- -- -- 1,750 4,500 4,500 4,500 4,500 --
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Operating income (loss)....... $ 2,921 $ 4,376 $ 3,229 $ (7,718) $ 6,322 $ 6,322 $ 617 $ 617 $ 10,053
--------- --------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Income (loss) from continuing
operations................... $ (5,946) $ (7,260) $ (5,774) $ (13,159) $ 1,286 $ 3,538 $ (1,107) $ (97) $ 6,691
Income (loss) from
discontinued operations, net
of income taxes.............. (194) 409 (4,357) 1,006 -- -- -- -- --
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Net income (loss)............. (6,140) (6,851) (10,131) (12,153) 1,286 3,538 (1,107) (97) 6,691
Dividends and accretion on
mandatorily redeemable
preferred stock.............. -- -- -- (1,518) (3,003) (991) (1,455) (480) (1,604)
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Net income (loss) applicable
to common stock.............. $ (6,140) $ (6,851) $ (10,131) $ (13,671) $ (1,717) $ 2,547 $ (2,562) $ (577) $ 5,087
--------- --------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- --------- ---------
PER SHARE DATA:
Income (loss) from:
Continuing operations....... $ (0.67) $ (0.78) $ (0.61) $ (0.99) $ 0.08 $ 0.16 $ (0.06) $ (0.01) $ 0.38
Dividends and accretion on
mandatorily redeemable
preferred stock............ -- -- -- (0.11) (0.18) (0.05) (0.09) (0.02) (0.09)
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Total continuing
operations................. (0.67) (0.78) (0.61) (1.10) (0.10) 0.11 (0.15) (0.03) 0.29
Discontinued operations..... (0.02) 0.04 (0.47) 0.07 -- -- -- -- --
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Net income (loss) applicable
to common stock.............. $ (0.69) $ (0.74) $ (1.08) $ (1.03) $ (0.10) $ 0.11 $ (0.15) $ (0.03) $ 0.29
--------- --------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Weighted average common and
common equivalent shares
outstanding.................. 8,819 9,228 9,392 13,237 17,025 22,525 16,617 22,117 17,593
<CAPTION>
PRO
FORMA
1996(2)
---------
<S> <C>
STATEMENT OF OPERATIONS DATA:
Revenues...................... $ 63,325
Expenses:
Operating expenses.......... 53,272
Purchased research and
development................ --
Loss on lease termination... --
Litigation settlements...... --
---------
Operating income (loss)....... $ 10,053
---------
---------
Income (loss) from continuing
operations................... $ 7,520
Income (loss) from
discontinued operations, net
of income taxes.............. --
---------
Net income (loss)............. 7,520
Dividends and accretion on
mandatorily redeemable
preferred stock.............. (529)
---------
Net income (loss) applicable
to common stock.............. $ 6,991
---------
---------
PER SHARE DATA:
Income (loss) from:
Continuing operations....... $ 0.32
Dividends and accretion on
mandatorily redeemable
preferred stock............ (0.02)
---------
Total continuing
operations................. 0.30
Discontinued operations..... --
---------
Net income (loss) applicable
to common stock.............. $ 0.30
---------
---------
Weighted average common and
common equivalent shares
outstanding.................. 23,093
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
JUNE 30, 1996
--------------------------
ACTUAL AS ADJUSTED (3)
--------- ---------------
<S> <C> <C>
BALANCE SHEET DATA:
Cash.................................................................................. $ 4,690 $ 4,774
Working capital....................................................................... (14,483) (6,631)
Total assets.......................................................................... 44,609 43,374
Current portion of long-term debt..................................................... 8,151 1,151
Long-term debt, excluding current maturities.......................................... 21,386 1,208
Mandatorily redeemable preferred stock................................................ 35,729 11,791
Stockholders' deficit................................................................. (51,125) (116)
</TABLE>
- ------------------------------
(1) The Company accounted for its interest in the Joint Venture under the equity
method of accounting prior to acquiring the remaining interest in the Joint
Venture, effective March 30, 1994.
(2) Pro forma data gives effect to the Offering (at an assumed initial offering
price of $11.00) as of January 1, 1995, including: (i) redemption of a
portion of the Redeemable Preferred Stock, (ii) elimination of interest
expense associated with repayment of a portion of the Company's existing
indebtedness under the 1994 bank credit facility, elimination of
amortization associated with the write-off of deferred debt issue costs as a
result of the early retirement of debt and (iii) the tax effects of the
interest-related adjustments described above. See "Unaudited Pro Forma
Consolidated Financial Data" presented elsewhere in this Prospectus.
(3) Adjusted to reflect (i) receipt by the Company of the net proceeds to be
received from the sale of Common Stock offered hereby at an assumed initial
public offering price of $11.00 per share and (ii) the application of the
net proceeds of the Offering to repay existing indebtedness under the
Company's 1994 bank credit facility in the principal amount of approximately
$27.2 million (or approximately 98% of the principal amount outstanding),
plus accrued interest of approximately $0.4 million and to redeem Redeemable
Preferred Stock with a stated value of approximately $26.1 million (or
approximately 67% of the stated value outstanding), plus accrued dividends
of approximately $1.5 million.
With regard to redemption of the Redeemable Preferred Stock, the adjustments
reflect acceleration of the unaccreted portion of the original preferred
stock discount as a charge to stockholders' equity (deficit). There is no
income tax benefit associated with the accelerated accretion. With regard to
repayment of a portion of the 1994 bank credit facility, the adjustments
reflect deferred debt issue costs, net of related income tax benefits, as a
charge to stockholders' equity (deficit). The deferred debt issue cost
write-off will be charged against earnings, as an extraordinary item, net of
tax, in the period in which a portion of the 1994 bank credit facility is
repaid. Based on an assumed public offering price of $11.00 per share, this
charge is estimated to be $0.9 million before income taxes.
6
<PAGE>
RISK FACTORS
THIS PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND
UNCERTAINTIES. ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE DISCUSSED IN
THE FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN FACTORS, INCLUDING THOSE
SET FORTH BELOW AND ELSEWHERE IN THIS PROSPECTUS. THE FOLLOWING FACTORS SHOULD
BE CONSIDERED CAREFULLY IN ADDITION TO THE OTHER INFORMATION CONTAINED IN THIS
PROSPECTUS BEFORE PURCHASING THE COMMON STOCK OFFERED HEREBY.
HISTORY OF OPERATING LOSSES; UNCERTAINTY OF FUTURE PROFITABILITY
The Company has an accumulated net deficit from inception of approximately
$65.0 million through June 30, 1996. Losses have resulted principally from costs
incurred in product acquisition and development, from servicing of debt and from
general and administrative costs. These costs have exceeded the Company's
revenues, which have been derived primarily from the sale of its TOTAL LOSS
product and its collision estimating product, EZEST. Most of the Company's other
products are relatively new and, with the exception of EZNET, the Company's
communications service, have not yet produced significant revenue. Although the
Company has recorded substantial revenue growth in each of the years ended
December 31, 1993, 1994 and 1995, and net income before dividends and accretion
on preferred stock of $1.3 million in the year ended December 31, 1995, there
can be no assurance that the Company will be able to sustain such growth or
achieve or maintain profitability in future periods. Despite its accumulated
deficit, as of December 31, 1995, the Company's net operating loss carryforwards
totaled only $0.3 million. This disparity is attributable to the lack of tax
basis for certain past operating charges. Since inception, the Company has
charged against earnings: (i) goodwill amortization related to acquired
businesses in the amount of approximately $37.5 million, (ii) purchased in-
process research and development software projects of approximately $13.8
million and (iii) purchased software amortization of approximately $4.6 million.
The Offering will not result in a change in control for income tax purposes that
would limit the use of the net operating loss carryforwards. In addition, as of
December 31, 1995, the Company had no research investment credit carryforwards.
The Company has established deferred income tax asset valuation allowances
because of its history of operating losses and an inability to project future
taxable income with certainty. Such valuation allowances have been and will
continue to be released to income if and to the extent the Company is able to
successfully achieve a recapitalization through the Offering and demonstrate a
predictable pattern of profitability. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations."
FINANCIAL POSITION; NEGATIVE WORKING CAPITAL; POTENTIAL FINANCING NEEDS
At June 30, 1996, the Company's stockholders' deficit was $51.1 million. The
net proceeds from the sale of Common Stock offered hereby will enable the
Company to improve substantially its financial position by repaying a portion of
the 1994 bank credit facility, under which CCC is the primary obligor and the
Company is guarantor, and redeeming a portion of the Redeemable Preferred Stock.
Historically, the Company's business has operated with a negative working
capital. At June 30, 1996, negative working capital was $14.5 million, and the
ratio of current assets to current liabilities was .57 to 1. The Company has the
ability to operate with a negative working capital because it receives
substantial payments from customers for services and products in advance of the
costs incurred to provide such services and products and the availability of
bank lines of credit. Assuming application of the net proceeds from the sale of
Common Stock offered hereby as described herein as of June 30, 1996, the Company
would have pro forma adjusted negative working capital as of June 30, 1996 of
$6.6 million. The Company believes that cash flows from operations and available
bank lines of credit will be sufficient to fund working capital needs for at
least one year. However, the continued availability of bank lines of credit will
require compliance with bank covenants. It is possible that circumstances could
arise in the operation of the Company's business that would reduce cash flows
substantially or would cause the Company not to be in compliance with bank
covenants. The Company is currently in compliance with the covenants of its
lending agreements. Failure to comply with bank covenants could cause
indebtedness to become due immediately or render lines of credit not to be
available when needed. In such event the Company may need to seek alternate
sources of financing, including the potential issuance of debt or equity
securities, at a time and on terms that may not be favorable to the Company.
Issuance of additional equity securities could result in substantial dilution to
7
<PAGE>
stockholders. There can be no assurance that such future financing will be
available on terms acceptable to the Company or at all. Due to the Company's
stockholders' deficit and negative working capital, new investors will
experience immediate and substantial dilution. See "Dilution."
RELIANCE ON MAJOR CUSTOMERS
The Company derives a substantial portion of its revenues from sales to
large insurance companies, including State Farm Mutual Automobile Insurance
Company ("State Farm"). State Farm accounted for approximately 12.4% of the
Company's revenue in 1995. Any loss of or material decrease in the business from
any large insurer, and in particular from State Farm, could have a material
adverse effect on the Company's business, financial condition and results of
operations. See "Business--Customers."
TECHNOLOGICAL CHANGE AND NEW PRODUCT DEVELOPMENT
The markets in which the Company competes are increasingly characterized by
technological change. The introduction of competing services or products
incorporating new technologies could render some or all of the Company's
services and products unmarketable. The Company believes that its future success
depends on its ability to enhance its current services and products and to
develop new services and products that address the increasingly sophisticated
needs of its customers. As a result, the Company has in the past and intends to
continue to commit substantial resources to product development and programming.
Over the two years ended December 31, 1995, the Company expended approximately
$24.9 million for product development and programming. The development of new
products may result in unanticipated expenditures and capital costs which may
not be recovered in the event of an unsuccessful product. Development projects
can be lengthy and are subject to changing market requirements and unforseen
factors which can result in delays. The failure of the Company to develop and
introduce new or enhanced services and products in a timely and cost-effective
manner in response to changing technologies or customer requirements would have
a material adverse effect on the Company's business, financial condition and
results of operations.
FLUCTUATIONS IN QUARTERLY OPERATING RESULTS
The Company has experienced, and in the future may continue to experience,
significant quarter to quarter fluctuations in its results of operations.
Quarterly results of operations may fluctuate as a result of a variety of
factors, including the introduction of new or upgraded services and products by
the Company or its competitors, customer acceptance of new services and
products, product development expenses, the timing of significant orders, the
volume of usage of the Company's services and products, competitive conditions
in the industry and general economic conditions. Many of these factors are
beyond the Company's control. Further, the Company's contracts generally involve
significant customer commitments (for each appraisal work station, customers are
required to invest approximately $4,000 in computers and related peripherals)
and may require time-consuming authorization procedures within the customer's
organization; the sales cycles for the Company's services and products to the
automobile insurance industry are therefore typically lengthy (generally between
6 and 18 months) and subject to a number of factors outside of the Company's
control. For these and other reasons the overall revenues of the Company are
difficult to forecast, and the Company believes that period-to-period
comparisons of results of operations are not necessarily meaningful or
indicative of the results that the Company may achieve for any subsequent
quarter or a full year. Such fluctuations may result in volatility in the price
of the Common Stock, and it is possible that in future quarters the Company's
operating results will be below the expectations of public market analysts and
investors. Such an event could have a material adverse effect on the price of
the Common Stock. In addition, the principal payment obligations and the
restrictive covenants of the Company's 1994 bank credit facility have continued
to constrain the Company's operating activities. During the first half of 1996,
the Company did not incur certain operating expenditures and make certain
investments that it would have made in the absence of the 1994 bank credit
facility covenants. As a result, the Company postponed until later in the year
its plans to enhance internal functions and capabilities (including improvements
to customer tracking software, additional staff hiring and training, and certain
sales and marketing activities). See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Selected Quarterly Financial
Results."
8
<PAGE>
COMPETITION
The markets for the Company's services and products are highly competitive.
Over the past few years, the Company has experienced competitive price pressure,
particularly in the collision estimating market, and expects such trend to
continue. The Company's principal competitors are divisions of two
well-capitalized, multinational firms, Automated Data Processing, Inc. ("ADP")
and Thomson Corporation ("Thomson"), both of which have greater financial,
marketing, technical and other resources than the Company. The Company intends
to address competitive price pressures by providing high quality, feature
enhanced products and services to its clients. The Company intends to continue
to develop user friendly claims products and services incorporating its
comprehensive proprietary inventory of data. The Company expects that the
PATHWAYS workflow manager will provide the necessary position with its insurance
customers to effectively compete against competitive price pressures.
At times, insurance companies have entered into agreements with service
providers (including ADP, Thomson and CCC) wherein the agreement provides, in
part, that the insurance company will either use the product or service of that
vendor on an exclusive basis or designate the vendor as a preferred provider of
that product or service. If it is an exclusive agreement, the insurance company
mandates that collision repair facilities, independent appraisers and regional
offices use the particular product or service. If the vendor is a preferred
provider, the collision repair facilities, appraisers and regional offices, are
encouraged to use the preferred product, but may still choose another vendor's
product or service. Additionally, some insurance companies mandate that all
products be tested and approved at the companies' national level before regional
levels can purchase such products. The benefits of being an endorsed product or
on the approved list of an insurance company include immediate customer
availability and a head start over competitors who may not be so approved. With
respect to those insurance companies that have endorsed ADP or Thomson, but not
CCC, the Company will be at a competitive disadvantage. In addition, in
connection with the Company's strategy to provide outsourced claims processing
services, the Company will compete with other third-party service providers,
some of whom may have more capital and greater resources than the Company. There
can be no assurance that the Company will be able to compete successfully
against current or future competitors or that competitive pressures will not
have a material adverse effect on the Company's business, financial condition
and results of operations. See "Business--Competition."
DEPENDENCE ON KEY PERSONNEL
The Company's continued success will depend largely on the efforts and
abilities of its executive officers and upon certain key technical, managerial
and sales employees. The loss of the services of any of the Company's key
employees could have a material adverse effect on the Company's business,
financial condition and results of operations. The Company believes that it will
need to hire additional technical personnel in order to enhance its existing
products and to develop new products. The Company's success also depends in
large part upon its ability to attract and retain highly-skilled managerial,
sales and marketing personnel. If the Company is unable to hire the necessary
personnel, the development and sale of product enhancements and new products
would likely be delayed or prevented. Competition for highly skilled technical,
managerial, sales and marketing personnel is intense. Certain of the Company's
senior management personnel have recently joined the Company. There can be no
assurance that the Company will be successful in retaining its key personnel and
in attracting the personnel it requires to continue its growth strategy. See
"Business--Competition," "--Employees" and "Management."
USE OF LICENSED INFORMATION
The Company's success depends to a substantial degree on its ability to
provide customers access to a breadth of data from many different sources. A
substantial portion of the data utilized in the Company's collision estimating
products is derived from the Motor Crash Estimating Guide, a publication of a
subsidiary of The Hearst Corporation. The Company has a license to use the Motor
Crash Estimating Guide data under an agreement which expires on April 30, 2002.
The license is automatically renewed on a year-to-year basis after April 30,
2002 unless either party furnishes the other with two years' prior notice of
nonrenewal. There can be no assurance that the Company will be able to renew the
Hearst license on economic terms that are beneficial to the Company or at all.
The Company does not believe that it has access to an alternative database that
would
9
<PAGE>
provide comparable information. Any interruption of the Company's access to the
Motor Crash Estimating Guide data could have a material adverse effect on the
Company's business, financial condition and results of operations. See
"Business--Technology."
DEPENDENCE ON PROPRIETARY RIGHTS; RISKS OF INFRINGEMENT
The Company regards the technology underlying its services and products as
proprietary. The Company relies primarily on a combination of intellectual
property laws, patents, trademarks, confidentiality agreements and contractual
provisions to protect its proprietary rights. The Company has registered certain
of its trademarks. The Company's TOTAL LOSS calculation process is not patented;
however, the underlying methodology and processes are trade secrets of the
Company and are essential to the Company's TOTAL LOSS business. Existing trade
secrets and copyright laws afford the Company limited protection. Despite the
Company's efforts to protect its proprietary rights, unauthorized parties may
attempt to copy aspects of the Company's software or to obtain and use
information that the Company regards as proprietary. Policing unauthorized use
of the Company's software is difficult. There can be no assurance that the
obligations to maintain the confidentiality of the Company's trade secrets and
proprietary information will effectively prevent disclosure of the Company's
confidential information or provide meaningful protection for the Company's
confidential information, or that the Company's trade secrets or proprietary
information will not be independently developed by the Company's competitors.
There can be no assurance that the Company's trade secrets or proprietary
information will provide competitive advantages or will not be challenged or
circumvented by its competitors. Litigation may be necessary for the Company to
defend against claims of infringement, to protect its intellectual property
rights and could result in substantial cost to, and diversion of efforts by, the
Company. There can be no assurance that the Company would prevail in any such
litigation. If the Company is unable to protect its proprietary rights in its
intellectual property, it could have a material adverse effect on the Company's
business, financial condition and results of operations.
The Company is not aware that any of its software, trademarks or other
proprietary rights infringe the proprietary rights of third parties. However,
the Company has been involved previously in intellectual property litigation the
resolution of which resulted in substantial payments by the Company. There can
be no assurance that third parties will not assert infringement claims against
the Company in the future. Any such claims, with or without merit, can be time
consuming and expensive to defend or can require the Company to enter into
royalty or licensing agreements or cease the infringing activities. The failure
to obtain such royalty agreements, if required, and the Company's involvement in
such litigation could have a material adverse effect on the Company's business,
financial condition and results of operations. See "Business--Intellectual
Property."
CONTROL BY EXISTING STOCKHOLDER
White River Ventures, Inc. ("White River") will continue to control the
Company after the Offering, subject to the terms of a stockholders agreement
(the "Stockholders Agreement") entered into by the Company, White River, and
certain other stockholders. See "Principal Stockholders--Stockholders
Agreement."
Upon consummation of the Offering, White River will beneficially own or
control an aggregate of 39.0% of the outstanding shares of Common Stock (or
approximately 37.6% if the Underwriters' over-allotment option is exercised in
full). In addition, White River and its affiliates will beneficially own or
control an aggregate of 1,589 shares of the Series C Preferred Stock and 10,794
shares of the Series D Preferred Stock, which will constitute approximately
96.2% of the outstanding shares of each such series.
Under the terms of the Series C Preferred Stock, for so long as White River
and its affiliates own at least 50% of the outstanding shares of Series C
Preferred Stock, the holders of a majority of such shares may elect a majority
of the board of directors of the Company in the event of a dividend default or a
redemption default, neither of which has occurred to date. See "Description of
Capital Stock--The Redeemable Preferred Stock." In connection with the
recapitalization of the Company in 1994 and to help ensure that White River
Corporation, the parent of White River, avoid registration as an investment
company under the Investment Company Act of 1940, White River and the Company
have also entered into an agreement (the "White River Agreement") whereby the
Company has agreed, upon receipt of notice from White River that it owns less
than 50% of the outstanding shares of Common Stock, to exchange 500 shares of
the outstanding Series D Preferred Stock for 500 shares of new Series E
Cumulative Redeemable Preferred Stock, par value $1.00 (the "Series E Preferred
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<PAGE>
Stock"), which carries certain voting rights if it is held by White River or any
of its affiliates. The Series E Preferred Stock votes according to a formula,
the effect of which is to cause White River and its affiliates, through their
ownership of shares of Series E Preferred Stock, to have 51% of the votes to be
cast on any matter to be voted upon by the holders of Common Stock, provided all
of the shares of such Series E Preferred Stock are issued, outstanding and held
by White River and its affiliates. To the extent White River also owns shares of
Common Stock, such Series E Preferred Stock will only provide an additional
voting percentage that, when added together with the vote from White River's
shares of Common Stock, will provide White River with a maximum of 51% of the
votes.
Pursuant to the terms of the Certificate of Designations for the Series E
Preferred Stock, the voting power of the outstanding shares of Series E
Preferred Stock is reduced according to a formula to the extent that outstanding
shares of Series E Preferred Stock are either redeemed by the Company or no
longer owned by White River and its affiliates. If White River and its
affiliates were to continue to hold 39.0% of the outstanding shares of Common
Stock, the Series E Preferred Stock voting power combined with the voting power
of the Common Stock held by White River would be less than a majority when 393
(or 78.6%) of the 500 shares of Series E Preferred Stock had been so redeemed or
are no longer so owned. The outstanding shares of Series E Preferred Stock are
redeemable pro rata with the outstanding shares of Series C and Series D
Preferred Stock and other parity stock, if any. White River has informed the
Company of its present intention to exchange 500 shares of Series D Preferred
Stock for 500 shares of Series E Preferred Stock sometime after the consummation
of the Offering. When properly notified in writing of such request, the Company
will issue, within three business days, such 500 shares of Series E Preferred
Stock to White River. See "Description of Capital Stock-- The Series E Preferred
Stock."
The Stockholders Agreement provides that certain stockholders affiliated
with management (the "Management Stockholders") may nominate three of seven
directors while the Stockholders Agreement remains in effect. In addition, the
directors designated by the Management Stockholders have been delegated the
authority of the board of directors, to the extent permitted by applicable law
and subject to the fiduciary duties of the other directors, to determine the
timing, price and terms of future offerings of Common Stock and of certain
business combinations. See "Principal Stockholders--Stockholders Agreement" for
a detailed description of the Stockholders Agreement.
Because of its ownership of shares of Common Stock and Series C Preferred
Stock, and its ability to acquire shares of Series E Preferred Stock, White
River will be able to elect a majority of the board of directors after the
Offering and will be in control of the Company. When shares of the Series E
Preferred Stock are issued to White River or its affiliates pursuant to the
White River Agreement, White River will have a majority of the votes on any
matter brought to a vote of the stockholders, regardless of the number of shares
of Common Stock owned by White River and its affiliates. White River and its
affiliates will retain the Series E Preferred Stock majority voting power until
sufficient shares of Series E Preferred Stock have been redeemed by the Company
or transferred to non-affiliates of White River to reduce the Series E Preferred
Stock voting power below a majority. This may render more difficult or tend to
discourage unsolicited mergers, acquisitions, tender offers, proxy contests or
assumptions of control and changes of incumbent management, even when
stockholders other than White River consider such a transaction to be in their
best interest. Accordingly, stockholders may be deprived of an opportunity to
sell their shares at a premium over the market price of the shares. See
"Principal Stockholders -- Stockholders Agreement" and "Certain Transactions."
BENEFITS TO EXISTING STOCKHOLDERS
Approximately $27.6 million of the net proceeds from the sale by the Company
of the Common Stock offered hereby will be used to redeem a portion of the
Redeemable Preferred Stock, of which 96.2% is owned by White River and 3.8% is
owned by affiliates of Hambrecht & Quist LLC, a representative of the
Underwriters. See "Certain Transactions", "Description of Capital Stock" and
"Underwriting."
DEPENDENCE ON TRANSMISSION SERVICES AND DATA OPERATIONS
The Company maintains its TOTAL LOSS database on a mainframe computer which
has been outsourced to a data center service provider for the past ten years.
The Company's operations are dependent on its ability to protect its computer
equipment and the information stored in the third party service bureau against
damage that
11
<PAGE>
may be caused by fire, power loss, telecommunications failures, unauthorized
intrusion and other events. The service bureau data center consists of an IBM
compatible mainframe processor, disk storage, a tape library, printer output
capability, communications facilities and mini-computers. The data center is
protected by an uninterruptible power supply system with short term battery
back-up and security and authorization procedures. Software and related data
files are backed-up regularly and stored off-site and the Company and service
bureau also have a contingency and disaster recovery plan that is designed to
reduce the risk of extended interruption of the Company's services in the event
of damage to, or other failure of, its data center. There can be no assurance
that these measures will be sufficient to eliminate the risk of extended
interruption in the Company's operations due to interference or disruptions to
the Company's access to the information maintained at the data center. Any such
interruption could have a material adverse effect on the Company's business,
financial condition and results of operations.
Certain of the Company's data services are transmitted using transmission
methods which are not within the control of the Company. The Company relies on
several companies to provide dial-up access to the Company's services. Any
damage or failure that causes interruption in these services could have a
material adverse effect on the Company's business, financial condition and
results of operations.
Although the Company has implemented a contingency plan for the interruption
of transmission service and data operations, the Company does not maintain any
business interruption insurance.
GOVERNMENT REGULATION
The insurance industry is subject to extensive state regulation. Because the
Company markets and sells its products and services to participants in the
insurance industry, particular aspects of the Company's business are affected by
such regulation, including the methodology implemented to calculate total loss
valuations, restrictions or prohibitions on the ability of an insurance company
to direct or suggest insureds to use selected repair facilities and the
monitoring and licensing of claim adjusters and appraisers. Due to the
state-by-state regulation of the insurance industry, the Company's services and
products may be affected by varying regulations which may increase costs to the
Company in complying with such regulations. Changes in regulations which
adversely affect the Company's existing and potential clients could have a
material adverse effect on the Company's business, financial condition and
results of operations.
SHARES ELIGIBLE FOR FUTURE SALE
Future sales of substantial amounts of the Company's Common Stock after this
Offering could adversely affect the market price of the Common Stock. Several of
the Company's principal stockholders hold a significant portion of the Company's
outstanding Common Stock, including White River which holds 8,584,564 shares
representing 39.0% of the outstanding shares of the Common Stock after the
Offering (37.6% if the Underwriters' over-allotment option is exercised in
full), and a decision by one or more of these stockholders to sell their shares
could adversely affect the market price of the Common Stock. Upon consummation
of the Offering, the Company will have 22,026,800 shares of Common Stock
outstanding (22,851,800 shares assuming exercise in full of the Underwriters'
over-allotment option). Of these shares, all shares sold in this Offering and
808,000 shares held by certain stockholders not affiliated with the Company will
be freely tradeable under the federal securities laws immediately following this
Offering. Of the remaining shares, 14,911,500 shares of Common Stock are subject
to lock-up agreements with representatives of the Underwriters. Such lock-up
agreements restrict transfers of such shares, without the written consent of
Hambrecht & Quist LLC, until 180 days after the date of this Prospectus. In
addition, a total of 5,962,885 shares are subject to right of first refusal
agreements with the Company. Beginning 180 days after the date of this
Prospectus, approximately 15,563,900 shares will be eligible for sale pursuant
to Rule 144 under the Securities Act of 1933, as amended (the "Securities Act"),
of which 13,050,800 shares are held by affiliates of the Company. As of June 30,
1996, options to purchase an aggregate of 2,579,800 shares of Common Stock were
outstanding under the Company's Stock Option Plan, and 1,577,700 of these shares
which are acquired upon exercise of options within 180 days of this Prospectus
are subject to the 180 day lock-up described above. See "Management--Stock
Option Plan." Following the closing of this Offering, the Company intends to
register on Form S-8 under the Securities Act shares of Common Stock issuable
under the Stock Option Plan. Such registration will be effective upon its
filing. See "Shares Eligible For Future Sale."
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<PAGE>
BLANK CHECK PREFERRED STOCK
Pursuant to the Certificate of Incorporation, additional shares of preferred
stock may be issued in the future by the Company without stockholder approval
and upon such terms and conditions, and having such rights, privileges and
preferences, as the Board may determine in the exercise of its business
judgment. The rights of the holders of Common Stock will be subject to, and may
be adversely affected by, any preferred stock that may be issued in the future.
The issuance of additional preferred stock, while providing desirable
flexibility in connection with possible acquisitions, financings and other
corporate transactions, could have the effect of discouraging, or making more
difficult, a third party's acquisition of a majority of the Company's
outstanding voting stock. The Company has no present plans to issue any
additional shares of preferred stock. See "Control by Existing Stockholder" and
"Description of Capital Stock--Preferred Stock."
NO PRIOR PUBLIC MARKET; DETERMINATION OF PUBLIC OFFERING PRICE; POSSIBLE
VOLATILITY OF STOCK PRICE
Prior to the Offering, there has been no public market for the Common Stock,
and there can be no assurance given as to (i) the liquidity of the trading
market for the Common Stock, (ii) whether an active public market will develop
for the Common Stock or (iii) whether the Common Stock will trade in the public
market subsequent to the Offering at or above the initial public offering price.
If an active public market for the Common Stock does not develop, the market
price and liquidity of the Common Stock may be materially and adversely
affected. The initial public offering price of the Common Stock offered hereby
was determined by negotiations among the Company and the Underwriters and may
not be indicative of the market price for the Common Stock after the Offering.
See "Underwriting." The trading price of the Common Stock could be subject to
wide fluctuations in response to variations in the Company's quarterly operating
results, changes in earnings estimates by securities analysts, conditions in the
Company's businesses or general market or economic conditions. In addition, in
recent years the stock market has experienced extreme price and volume
fluctuations. These fluctuations have had a substantial effect on the market
prices for many emerging growth companies, often unrelated to the operating
performance of the specific companies. Such market fluctuations could have a
material adverse effect on the market price of the Common Stock.
DILUTION TO NEW INVESTORS
Investors purchasing shares of Common Stock in the Offering will experience
immediate and substantial dilution in net tangible book value. Prior to this
Offering each outstanding share of Common Stock has a negative net tangible book
value of $3.81, and after the Offering will have a negative net tangible book
value of $0.35. The net tangible book value dilution to purchasers of Common
Stock in this Offering will be $11.35 per share. See "Dilution." To the extent
outstanding options to purchase the Company's Common Stock are exercised, there
will be further dilution. See "Management--Stock Option Plan."
HOLDING COMPANY STRUCTURE
The Company is a holding company with no business operations of its own. The
Company's only material asset is all of the outstanding capital stock of CCC,
which is pledged pursuant to a guaranty of the 1994 bank credit facility.
Accordingly, the Company will be dependent on dividends and distributions from
CCC to pay its expenses and to pay any cash dividends or distributions on the
Common Stock that may be authorized by the Board of Directors of the Company.
There can be no assurance that CCC will generate sufficient cash flow to pay
dividends or distribute funds to the Company or that applicable state law and
contractual restrictions, including negative covenants contained in the debt
instruments of CCC, will permit such dividends or distributions.
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<PAGE>
DIVIDEND POLICY
The Company has never declared or paid any cash dividends on its Common
Stock. The Company currently intends to retain any future earnings for funding
growth and, therefore, does not anticipate paying any cash dividends in the
foreseeable future. Furthermore, covenants in the 1994 bank credit facility
prohibit the payment of cash dividends on Common Stock.
As of June 30, 1996, dividends in the approximate amount of $2.2 million had
accrued at a rate of 2.75% per annum on the Redeemable Preferred Stock.
Redeemable Preferred Stock totalling $27.6 million, including accrued dividends
thereon of $1.5 million, is being redeemed with a portion of the proceeds of
this Offering. The yield-to-maturity on the Redeemable Preferred Stock
approximated 9%. So long as any shares of Redeemable Preferred Stock remain
outstanding, the Company cannot declare and pay dividends on the Common Stock.
On June 6, 1996 the Board of Directors of the Company approved a
distribution to stockholders of record of the Company of 40,000 shares and
options to purchase 50,000 additional shares of the common stock of Faneuil ISG,
Inc., which shares and options had been received by the Company in partial
consideration of the sale by the Company to Faneuil ISG, Inc. of certain
business assets in August 1994. The distributed shares and options were recorded
on the books of the Company at cost with a carrying value of $530,000.
Purchasers of Common Stock offered hereby will not participate in this
distribution.
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<PAGE>
DILUTION
The net tangible book value of the Company at June 30, 1996, was a negative
$63.0 million, or a negative $3.81 per share. "Net tangible book value per
share" represents the amount of total tangible assets less total liabilities
divided by the number of shares of Common Stock outstanding. Without taking into
account any other changes in the net tangible book value after June 30, 1996,
other than to give effect to the receipt by the Company of the net proceeds from
the sale of 5,500,000 shares of Common Stock offered hereby at an assumed
initial public offering price of $11.00 per share, the net tangible book value
of the Company at June 30, 1996 would have been negative $7.8 million or a
negative $0.35 per share. This represents an immediate increase of net tangible
book value of $3.46 per share to existing stockholders and an immediate dilution
of $11.35 per share to new investors. The following table illustrates this per
share dilution:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share............................. $ 11.00
Net negative tangible book value per share before the Offering............ $ 3.81
Less increase per share attributable to new investors..................... 3.46
---------
Net negative tangible book value per share after the Offering(1)............ 0.35
---------
Dilution per share to new investors......................................... $ 11.35
---------
---------
</TABLE>
- ------------------------------
(1) If the Underwriters' over-allotment option is exercised in full, the net
tangible book value per share would be approximately $0.03, resulting in
dilution to new investors in this Offering of $10.97 per share.
The following table summarizes, on a pro forma basis as of June 30, 1996,
the differences between existing stockholders and new investors purchasing
shares of Common Stock in the Offering (at an assumed initial public offering
price of $11.00 per share) with respect to the number of shares of Common Stock
purchased from the Company, the total consideration paid and the average price
per share paid:
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK TOTAL
ACQUIRED CONSIDERATION
------------------------ --------------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
------------ ---------- --------------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Existing stockholders.......................... 16,526,800 75.0% $ 10,097,000(1) 14.3% $ 0.61
New investors.................................. 5,500,000 25.0 60,500,000 85.7 11.00
------------ ----- --------------- -----
Total........................................ 22,026,800 100.0% $ 70,597,000 100.0% $ 3.21
------------ ----- --------------- -----
------------ ----- --------------- -----
</TABLE>
- ------------------------------
(1) Excludes certain transactions totalling $3,926,000 not involving stockholder
cash consideration.
The computations in the above table are determined before deducting the
underwriting discount and estimated offering expenses payable by the Company.
Both tables set forth in this section assume no exercise of outstanding stock
options. At June 30, 1996, options to purchase 2,579,760 shares of Common Stock
were outstanding with a weighted average exercise price of $2.64 per share. To
the extent outstanding options are exercised, there will be further dilution to
new investors. See "Management--Stock Option Plan."
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<PAGE>
USE OF PROCEEDS
The net proceeds from the sale by the Company of the Common Stock offered
hereby will be approximately $55.2 million (or approximately $63.6 million if
the Underwriters' over-allotment option is exercised in full) based on an
assumed initial public offering price of $11.00 per share and after deducting
underwriting discounts and commissions and estimated offering expenses. The
Company intends to use approximately $27.6 million of such net proceeds to repay
a portion of the outstanding indebtedness of CCC under the 1994 bank credit
facility of which the Company is the guarantor. The agent lender under the 1994
bank credit facility is Canadian Imperial Bank of Commerce. The Company also
intends to use the remaining net proceeds of approximately $27.6 million of such
net proceeds to redeem a portion of the Redeemable Preferred Stock.
At June 30, 1996 there was $27.8 million outstanding under the 1994 bank
credit facility (a $22.3 million term loan and a $5.5 million revolving loan).
Loans under the 1994 bank credit facility bear interest at either (i) a base
rate (set by the bank from time to time) plus 1.5%, or (ii) the Eurodollar rate
plus 3.0%, as chosen from time to time by CCC. The average interest rate in
effect during the year ended December 31, 1995 was 9.15% for the term loan and
9.03% for the revolving credit facility; at June 30, 1996, the rates in effect
for these facilities were 8.6% and 8.8%, respectively. The obligations under the
1994 bank credit facility mature in March 1999 (with respect to the term loan)
and in April 1999 (with respect to the revolving loan) and are guaranteed by the
Company.
The Company is considering the refinancing of that portion of the
indebtedness under the 1994 bank credit facility not repaid with the proceeds of
this Offering on or prior to the closing of the Offering by causing CCC to enter
into a new bank credit facility with Signet Bank. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources."
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Company as of June 30, 1996, and as adjusted to reflect (i) the net proceeds to
be received by the Company from the sale of Common Stock offered hereby at an
assumed initial public offering price of $11.00 per share and (ii) the
application of the net proceeds of the Offering to redeem a portion of the
Redeemable Preferred Stock (at stated value plus accrued dividends thereon) and
to repay a portion of the Company's existing indebtedness under the 1994 bank
credit facility (including accrued interest).
<TABLE>
<CAPTION>
AS OF JUNE 30, 1996
----------------------
ACTUAL AS ADJUSTED
--------- -----------
(IN THOUSANDS)
<S> <C> <C>
Current portion of long-term debt........................................................ $ 8,151 $ 1,151
--------- -----------
Long-term debt:
Term loan.............................................................................. 15,250 --
Revolving credit facility.............................................................. 5,500 572
Other.................................................................................. 636 636
--------- -----------
Total long-term debt................................................................. 21,386 1,208
--------- -----------
Mandatorily redeemable preferred stock................................................. 35,729 11,791
--------- -----------
Stockholders' deficit:
Common stock ($.10 par value, 30,000,000 shares authorized and, 16,526,800 shares
issued and outstanding as of June 30, 1996)(1)........................................ 1,653 2,203
Additional paid-in capital............................................................. 12,370 67,013
Accumulated deficit.................................................................... (64,962) (69,146)
Treasury stock, at cost................................................................ (186) (186)
--------- -----------
Total stockholders' deficit.......................................................... (51,125) (116)
--------- -----------
Total capitalization............................................................... $ 14,141 $ 14,034
--------- -----------
--------- -----------
</TABLE>
- ------------------------
(1) Excludes 2,777,920 shares reserved for issuance under the Stock Option Plan
pursuant to which options have been granted covering 2,579,760 shares and
198,160 shares are available for issuance at a weighted average exercise
price of $2.64 per share.
16
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
The selected consolidated financial data presented below as of and for each
of the three years ended December 31, 1995 are derived from the consolidated
financial statements of the Company, which have been audited by Price Waterhouse
LLP, independent certified public accountants. The consolidated financial
statements as of December 31, 1994 and 1995, and for each of the years in the
three years ended December 31, 1995, together with the Price Waterhouse LLP
report thereon, are included elsewhere in this Prospectus. The selected
consolidated financial data presented below as of and for the years ended
December 31, 1991 and 1992, and as of and for the six months ended June 30, 1995
and 1996 are unaudited but have been prepared on the same bases as the audited
financial statements and, in the opinion of management, contain all adjustments,
consisting only of normal recurring adjustments, necessary for a fair
presentation of the results of operations and financial condition for such
periods. The results of operations presented below are not necessarily
indicative of results to be expected for any future period. The selected
consolidated financial data should be read in conjunction with Management's
Discussion and Analysis of Financial Condition and Results of Operations, the
consolidated financial statements and notes thereto, and the unaudited pro forma
consolidated financial data included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
SIX
MONTHS
ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
----------------------------------------------------- ---------
1991 1992 1993 1994(1) 1995 1995
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues................................................ $ 38,859 $ 45,805 $ 51,264 $ 91,917 $ 115,519 $ 56,624
Expenses:
Operating expenses.................................... 35,938 41,429 44,233 84,094 104,697 51,507
Purchased research and development.................... -- -- -- 13,791 -- --
Loss on lease termination............................. -- -- 3,802 -- -- --
Litigation settlements................................ -- -- -- 1,750 4,500 4,500
--------- --------- --------- --------- --------- ---------
Operating income (loss)................................. 2,921 4,376 3,229 (7,718) 6,322 617
Equity in loss of Joint Venture......................... (2,057) (6,713) (3,564) (615) -- --
Interest expense........................................ (9,575) (9,606) (6,945) (7,830) (5,809) (3,110)
Other income (expense), net............................. 519 232 (311) 316 482 334
--------- --------- --------- --------- --------- ---------
Income (loss) from continuing operations before income
taxes.................................................. (8,192) (11,711) (7,591) (15,847) 995 (2,159)
Income tax (provision) benefit.......................... 2,246 4,451 1,817 2,688 291 1,052
--------- --------- --------- --------- --------- ---------
Income (loss) from continuing operations................ (5,946) (7,260) (5,774) (13,159) 1,286 (1,107)
Income (loss) from discontinued operations, net of
income taxes........................................... (194) 409 (4,357) 1,006 -- --
--------- --------- --------- --------- --------- ---------
Net income (loss)....................................... (6,140) (6,851) (10,131) (12,153) 1,286 (1,107)
Dividends and accretion on mandatorily redeemable
preferred stock........................................ -- -- -- (1,518) (3,003) (1,455)
--------- --------- --------- --------- --------- ---------
Net income (loss) applicable to common stock............ $ (6,140) $ (6,851) $ (10,131) $ (13,671) $ (1,717) $ (2,562)
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
PER SHARE DATA:
Income (loss) from:
Continuing operations................................. $ (0.67) $ (0.78) $ (0.61) $ (0.99) $ 0.08 $ (0.06)
Dividends and accretion on mandatorily redeemable
preferred stock...................................... -- -- -- (0.11) (0.18) (0.09)
--------- --------- --------- --------- --------- ---------
Total continuing operations........................... (0.67) (0.78) (0.61) (1.10) (0.10) (0.15)
Discontinued operations............................... (0.02) 0.04 (0.47) 0.07 -- --
--------- --------- --------- --------- --------- ---------
Net income (loss) applicable to common stock............ $ (0.69) $ (0.74) $ (1.08) $ (1.03) $ (0.10) $ (0.15)
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
Weighted average common and common equivalent shares
outstanding............................................ 8,819 9,228 9,392 13,237 17,025 16,617
<CAPTION>
1996
---------
<S> <C>
STATEMENT OF OPERATIONS DATA:
Revenues................................................ $ 63,325
Expenses:
Operating expenses.................................... 53,272
Purchased research and development.................... --
Loss on lease termination............................. --
Litigation settlements................................ --
---------
Operating income (loss)................................. 10,053
Equity in loss of Joint Venture......................... --
Interest expense........................................ (1,982)
Other income (expense), net............................. 293
---------
Income (loss) from continuing operations before income
taxes.................................................. 8,364
Income tax (provision) benefit.......................... (1,673)
---------
Income (loss) from continuing operations................ 6,691
Income (loss) from discontinued operations, net of
income taxes........................................... --
---------
Net income (loss)....................................... 6,691
Dividends and accretion on mandatorily redeemable
preferred stock........................................ (1,604)
---------
Net income (loss) applicable to common stock............ $ 5,087
---------
---------
PER SHARE DATA:
Income (loss) from:
Continuing operations................................. $ 0.38
Dividends and accretion on mandatorily redeemable
preferred stock...................................... (0.09)
---------
Total continuing operations........................... 0.29
Discontinued operations............................... --
---------
Net income (loss) applicable to common stock............ $ 0.29
---------
---------
Weighted average common and common equivalent shares
outstanding............................................ 17,593
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------------------------------
1991 1992 1993 1994 1995
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash.............................................................. $ 11,320 $ 3,756 $ 375 $ 5,702 $ 3,895
Working capital................................................... 7,692 969 (11,004) (15,549) (17,953)
Total assets...................................................... 61,380 40,423 40,058 52,232 44,093
Current portion of long-term debt................................. 7,887 4,522 7,857 5,340 7,660
Long-term debt, excluding current maturities...................... 60,187 61,585 56,624 35,753 27,220
Mandatorily redeemable preferred stock............................ -- -- -- 31,122 34,125
Stockholders' deficit............................................. (37,368) (43,291) (53,416) (54,729) (56,420)
<CAPTION>
JUNE 30, 1996
----------------------
AS
ACTUAL ADJUSTED(2)
--------- -----------
<S> <C> <C>
BALANCE SHEET DATA:
Cash.............................................................. $ 4,690 $ 4,774
Working capital................................................... (14,483) (6,631)
Total assets...................................................... 44,609 43,374
Current portion of long-term debt................................. 8,151 1,151
Long-term debt, excluding current maturities...................... 21,386 1,208
Mandatorily redeemable preferred stock............................ 35,729 11,791
Stockholders' deficit............................................. (51,125) (116)
</TABLE>
- ------------------------------
(1) The Company accounted for its interest in the Joint Venture under the equity
method of accounting prior to acquiring the remaining interest in the Joint
Venture, effective March 30, 1994.
(2) Adjusted to reflect (i) receipt by the Company of the net proceeds to be
received from the sale of Common Stock offered hereby at an assumed initial
public offering price of $11.00 per share and (ii) the application of the
net proceeds of the Offering to repay existing indebtedness under the
Company's 1994 bank credit facility in the principal amount of approximately
$27.2 million (or approximately 98% of the principal amount outstanding),
plus accrued interest of approximately $0.4 million and to redeem Redeemable
Preferred Stock with a stated value of approximately $26.1 million (or
approximately 67% of the stated value outstanding), plus accrued dividends
of approximately $1.5 million.
With regard to redemption of the Redeemable Preferred Stock, the adjustments
reflect acceleration of the unaccreted portion of the original preferred
stock discount as a charge to stockholders' equity (deficit). There is no
income tax benefit associated with the accelerated accretion. With regard to
repayment of a portion of the 1994 bank credit facility, the adjustments
reflect deferred debt issue costs, net of related income tax benefits, as a
charge to stockholders' equity (deficit). The deferred debt issue cost
write-off will be charged against earnings, as an extraordinary item, net of
tax, in the period in which a portion of the 1994 bank credit facility is
repaid. Based on an assumed public offering price of $11.00 per share, this
charge is estimated to be $0.9 million before income taxes.
18
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
The following table sets forth statement of operations data and per share
data of the Company for the year ended December 31, 1995 and for the six months
ended June 30, 1995 and 1996, and as adjusted to reflect, as if occurring on
January 1, 1995, (i) receipt by the Company of the net proceeds from the sale of
Common Stock offered hereby at an assumed initial public offering price of
$11.00 per share and (ii) the application of the net proceeds of the Offering to
repay a portion of the Company's existing indebtedness under the 1994 bank
credit facility and to redeem a portion of the Redeemable Preferred Stock.
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED SIX MONTHS ENDED
DECEMBER 31, 1995 JUNE 30, 1995 JUNE 30, 1996
---------------------- ---------------------- ----------------------
PRO PRO PRO
ACTUAL FORMA ACTUAL FORMA ACTUAL FORMA
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues......................................... $ 115,519 $ 115,519 $ 56,624 $ 56,624 $ 63,325 $ 63,325
Expenses:
Operating expenses............................. 104,697 104,697 51,507 51,507 53,272 53,272
Litigation settlement(1)....................... 4,500 4,500 4,500 4,500 -- --
---------- ---------- ---------- ---------- ---------- ----------
Operating income................................. 6,322 6,322 617 617 10,053 10,053
Interest expense(2).............................. (5,809) (2,914) (3,110) (1,665) (1,982) (578)
Other income, net................................ 482 482 334 334 293 293
---------- ---------- ---------- ---------- ---------- ----------
Income before income taxes....................... 995 3,890 (2,159) (714) 8,364 9,768
Income tax (provision) benefit(3)................ 291 (352) 1,052 617 (1,673) (2,248)
---------- ---------- ---------- ---------- ---------- ----------
Net income....................................... 1,286 3,538 (1,107) (97) 6,691 7,520
Dividends and accretion on mandatorily redeemable
preferred stock(4).............................. (3,003) (991) (1,455) (480) (1,604) (529)
---------- ---------- ---------- ---------- ---------- ----------
Net income (loss) applicable to common stock..... $ (1,717) $ 2,547 $ (2,562) $ (577) $ 5,087 $ 6,991
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
PER SHARE DATA:
Net income....................................... $ 0.08 $ 0.16 $ (0.06) $ (0.01) $ 0.38 $ 0.32
Dividends and accretion on mandatorily redeemable
preferred stock................................. (0.18) (0.05) (0.09) (0.02) (0.09) (0.02)
---------- ---------- ---------- ---------- ---------- ----------
Net income (loss) applicable to common stock..... $ (0.10) $ 0.11 $ (0.15) $ (0.03) $ 0.29 $ 0.30
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
Weighted average common and common equivalent
shares outstanding.............................. 17,025 22,525 16,617 22,117 17,593 23,093
</TABLE>
- ------------------------------
(1) The litigation settlement had an after tax value of $2.8 million.
(2) Pro forma interest expense gives effect to the Offering as of January 1,
1995 and the associated elimination of interest expense of $2.5 million,
$1.2 million and $1.2 million for the periods ending December 31, 1995, June
30, 1995 and June 30, 1996, respectively, resulting from the repayment of a
portion of the Company's existing indebtedness under the 1994 bank credit
facility of $27.6 million. Pro forma interest expense also reflects the
elimination of amortization associated with the write-off of deferred debt
issue costs as a result of the early retirement of debt amounting to $0.4
million, $0.2 million and $0.2 million respectively, for such periods.
(3) Pro forma income taxes gives effect to the tax effect of the interest rate
adjustments described in Note 2.
(4) Pro forma dividends and accretion on Redeemable Preferred Stock reflects the
pro rata elimination of such dividends and accretion.
19
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF CONTINUING OPERATIONS
The Company's results from continuing operations, for the periods indicated,
are set forth below:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
-------------------------------- --------------------
1993 1994 1995 1995 1996
--------- --------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C>
Revenues................................................. $ 51,264 $ 91,917 $ 115,519 $ 56,624 $ 63,325
Expenses:
Operating Expenses:
Production and customer support...................... 15,108 25,123 32,261 16,346 15,520
Commissions, royalties and license fees.............. 1,091 7,153 11,720 5,559 6,660
Selling, general and administrative.................. 22,908 33,426 36,279 17,730 19,043
Depreciation and amortization........................ 2,158 8,331 9,572 4,854 3,972
Product development and programming.................. 2,968 10,061 14,865 7,018 8,077
Purchased research and development..................... -- 13,791 -- -- --
Loss on lease termination.............................. 3,802 -- -- -- --
Litigation settlements................................. -- 1,750 4,500 4,500 --
--------- --------- ---------- --------- ---------
Operating income (loss).................................. 3,229 (7,718) 6,322 617 10,053
Equity in loss of Joint Venture.......................... (3,564) (615) -- -- --
Interest expense......................................... (6,945) (7,830) (5,809) (3,110) (1,982)
Other income (expense), net.............................. (311) 316 482 334 293
--------- --------- ---------- --------- ---------
Income (loss) from continuing operations before income
taxes................................................... (7,591) (15,847) 995 (2,159) 8,364
Income tax (provision) benefit........................... 1,817 2,688 291 1,052 (1,673)
--------- --------- ---------- --------- ---------
Income (loss) from continuing operations................. $ (5,774) $ (13,159) $ 1,286 $ (1,107) $ 6,691
--------- --------- ---------- --------- ---------
--------- --------- ---------- --------- ---------
</TABLE>
OVERVIEW
The Company is a leading supplier of automobile claims information and
processing, claims management software and value-added communication services.
The Company's customers include each of the 50 largest U.S. automobile insurance
companies, over 250 other automobile insurance companies and more than 8,500
collision repair facilities. The Company's technology-based services and
products improve efficiency, manage costs and increase consumer satisfaction in
the management of automobile claims and restoration.
The Company sells its products to two primary customer markets: insurance
companies (approximately 70% of revenue in 1995) and collision repair
facilities. In addition, certain Company products and services are aimed at
improving the efficiency of both markets by enabling the two groups to
communicate electronically. The Company's principal products for the insurance
market are its TOTAL LOSS vehicle valuation services, used to estimate the value
of unrepairable vehicles, and its EZEST collision estimating software, used to
estimate the cost of repairing vehicles. The Company also offers insurers access
to EZNET, its communications network. The Company has recently introduced its
PATHWAYS workflow management software, which integrates the Company's
information and software products into a total workflow management solution for
insurance field appraisal staffs. The Company offers insurers its ACCESS claims
service, an integrated appraisal and restoration management service. The
Company's principal product for collision repair facilities is its EZEST
collision estimating software.
TOTAL LOSS services, generally obtained through direct dial-up access to the
Company's host-based valuation system, are billed to insurance companies on a
per valuation basis or under contract terms that specify fixed fees for a
prescribed number of transactions. Volume discounts affect pricing. PATHWAYS
collision estimating and EZEST customer subscriptions are billed monthly in
advance. EZNET communication services are generally priced on a per transaction
basis. ACCESS services are billed monthly to insurance companies and collision
repair facilities on a per transaction basis. Monthly subscription and
transaction rates for all products and
20
<PAGE>
services are established under negotiated contracts or pricing agreements. In
general, customer account balances are settled monthly. Under the terms of
certain contracts involving quarterly or annual prepayments, deferred revenues
are recorded and subsequently recognized over the periods in which related
revenues are earned.
For the year ended December 31, 1995, approximately $59.8 million, or 52%,
of the Company's revenues were earned under contracts with customers that
specify minimum purchase requirements. Contracts are generally for two to three
years. A substantial portion of the Company's remaining revenue represented
sales to customers that have been doing business with the Company for more than
10 years. Use of multi-year contracts is common practice within the industry,
making it difficult to take customers from competitors during the contract term.
A substantial portion of the Company's production and customer support and
general and administrative expense is fixed in nature. Sales commissions,
royalties, license fees and certain selling expenses generally vary with
revenue.
As a result of debt incurred in connection with the Company's 1988
acquisition of CCC, the Company became highly leveraged. The Company's ability
to invest in new product development and conduct its business in accordance with
its business plan was constrained by the limitations imposed by its acquisition
borrowings. The Company formed CCCDC to develop the EZEST collision estimating
software. To finance EZEST development and marketing efforts, the Company relied
on the sale of revenue streams from certain end-user collision estimating
contracts. These contract funding transactions provided essential liquidity
until June 1994, when the Company completed a recapitalization. In connection
with this recapitalization, White River acquired $39 million of Redeemable
Preferred Stock, and 7,050,850 shares of Common Stock, and CCC entered into the
1994 bank credit facility which is guaranteed by the Company. White River
immediately resold $1,462,000 of the Redeemable Preferred Stock (3.8% of the
outstanding Redeemable Preferred Stock) and 264,407 shares of the Common Stock
(1.4% of the total outstanding Common Stock) to two investment partnerships
affiliated with Hambrecht & Quist LLC. See "Underwriting." Prior to April 1994
the Company accounted for its interest in CCCDC under the equity method. In
1994, the Company acquired the 50% of CCCDC that it did not previously own.
Since the acquisition, the Company has consolidated CCCDC.
The Redeemable Preferred Stock includes certain rights set forth in detail
in "Description of Capital Stock--The Redeemable Preferred Stock" and "--The
Series E Preferred Stock." In particular, the Series C Preferred Stock includes
the rights (i) to elect a majority of directors of the Company in the event of a
default in a redemption or dividend payment obligation, if White River and its
affiliates then own at least 50% of the outstanding Series C Preferred Stock
(neither of which has occurred to date) and (ii) in the event that the Company
or a subsidiary fails to pay when due or during any applicable grace period or
in the event that notice of acceleration of the maturity or required prepayment
and demand for payment is received by the Company or any subsidiary, in either
case with respect to indebtedness in the aggregate amount in excess of $500,000,
the right on the part of the holders of a majority of the then outstanding
Series C Preferred Stock to determine in their sole discretion the action to be
taken on behalf of the Company with respect to such indebtedness. The Series E
Preferred Stock, if and when issued to and held by White River and its
affiliates, will permit White River to cast 51% of the votes to be cast on any
matter to be voted on by the holders of Common Stock, subject to reductions in
the event that either the Company redeems part of the outstanding Series E
Preferred Stock or White River and its affiliates no longer hold all of such
stock.
The principal payment obligations and the restrictive covenants of the 1994
bank credit facility have continued to constrain the Company's operating
activities. During the first half of 1996, the Company did not incur certain
operating expenditures and make certain investments that it would have made in
the absence of the 1994 bank credit facility covenants. As a result of these
delayed expenditures, the Company believes that its operating income increased
during the first half of 1996 by between $0.8 million and $1.0 million. As a
result, the Company postponed until later in the year its plans to enhance
internal functions and capabilities (including improvements to customer tracking
software, additional staff hiring and training, and certain sales and marketing
activities).
21
<PAGE>
Depreciation expense includes depreciation attributable to certain software
acquired through the Company's acquisition of the joint venture interest in
CCCDC. In the purchase price allocation for the CCCDC acquisition, $5.2 million
was assigned to purchased software with a two year life, $13.8 million was
assigned to in-process research and development software projects, $6.6 million
was assigned to acquired tangible assets and the balance of $3.7 million was
assigned to goodwill. The amount assigned to in-process research and development
was charged against operating results at the time of the acquisition. As a
result of expiration of the purchased software's two year life as of March 31,
1996, purchased software depreciation of approximately $2.6 million in 1995 will
decline to approximately $0.7 million in 1996.
Research and development expense, which is principally the design and
development of new software and information products, is expensed as incurred.
Software development costs, if material, are capitalized when sufficient
evidence exists that technological feasibility has been established. There were
no significant software development costs subject to capitalization during the
three years ended December 31, 1995 or during the six months ended June 30,
1996. The Company believes that its future success depends on its ability to
enhance its current services and products and to develop new services and
products that address the needs of its customers. As a result, the Company has
in the past and intends to continue to commit substantial resources to product
development and programming. Over the past two years ended December 31, 1995 the
Company expended approximately $24.9 million for product development and
programming.
The Company has offset the income tax benefit attributable to a portion of
the Company's future income tax deductions with tax valuation allowances because
of the Company's recent history of operating losses and an inability to project
future taxable income with certainty. This treatment increased the Company's
overall effective income tax rate in the years the deferred income tax valuation
allowances were provided. Such valuation allowances, $5.0 million at December
31, 1995, have been and will continue to be released to income and therefore
reduce the effective tax rate if and to the extent the Company is able to
successfully achieve a recapitalization through the Offering and demonstrate a
predictable pattern of profitablity.
Despite its accumulated deficit, as of December 31, 1995, the Company's net
operating loss carryforwards totaled only $0.3 million. This disparity is
attributable to the lack of tax basis for certain past operating charges. Since
inception, the Company has charged against earnings: (i) goodwill amortization
related to acquired businesses in the amount of approximately $32.5 million,
(ii) purchased in-process research and development software projects of
approximately $13.8 million and (iii) purchased software amortization of
approximately $4.6 million. The Offering will not result in a change in control
for income tax purposes that would limit the use of the net operating loss
carryforwards. In addition, as of December 31, 1995, the Company had no research
investment credit carryforwards.
22
<PAGE>
RESULTS OF CONTINUING OPERATIONS AS A PERCENTAGE OF REVENUE
The Company's results from continuing operations, as a percentage of revenue
for the periods indicated, are set forth below:
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE
YEAR ENDED DECEMBER 31, 30,
---------------------------------- ----------------------
1993 1994 1995 1995 1996
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Revenues...................................................... 100.0% 100.0% 100.0% 100.0% 100.0%
----- ----- ----- ----- -----
Expenses:
Operating Expenses:
Production and customer support........................... 29.5 27.3 27.9 28.9 24.5
Commissions, royalties and license fees................... 2.1 7.8 10.1 9.8 10.5
Selling, general and administrative....................... 44.7 36.4 31.4 31.3 30.1
Depreciation and amortization............................. 4.2 9.1 8.3 8.6 6.3
Product development and programming....................... 5.8 10.9 12.9 12.4 12.7
Purchased research and development.......................... -- 15.0 -- -- --
Loss on lease termination................................... 7.4 -- -- -- --
Litigation settlements...................................... -- 1.9 3.9 7.9 --
----- ----- ----- ----- -----
Operating income (loss)....................................... 6.3 (8.4) 5.5 1.1 15.9
Equity in loss of Joint Venture............................... (7.0) (0.7) -- -- --
Interest expense.............................................. (13.5) (8.5) (5.0) (5.5) (3.1)
Other income (expense), net................................... (0.6) 0.3 0.4 0.6 0.4
----- ----- ----- ----- -----
Income (loss) from continuing operations before income
taxes........................................................ (14.8) (17.2) 0.9 (3.8) 13.2
Income tax (provision) benefit................................ 3.5 2.9 0.3 (1.8) (2.6)
----- ----- ----- ----- -----
Income (loss) from continuing operations...................... (11.3)% (14.3)% 1.1% (2.0)% 10.6%
----- ----- ----- ----- -----
----- ----- ----- ----- -----
</TABLE>
SIX MONTHS ENDED JUNE 30, 1996 COMPARED WITH SIX MONTHS ENDED JUNE 30, 1995
REVENUES. Total revenues increased by $6.7 million, or 11.8%, due primarily
to higher revenues from collision estimating software licensing, from EZNET and
from ACCESS claims services which offset lower revenues from the Company's TOTAL
LOSS services. Collision estimating software licensing revenue increased
primarily because of an increase in the number of software licenses principally
to collision repair facilities. This volume increase more than offset a
reduction in prices caused by competitive pressures. The increase in EZNET
revenue was due to additional EZNET network and recycled part locator
transactions, both at a slightly higher average price per transaction. The
increase in ACCESS claims services was due primarily to higher transaction
volume. The decrease in TOTAL LOSS revenue resulted from a reduction in
transaction volume offset in part by a higher average price per transaction.
PRODUCTION AND CUSTOMER SUPPORT. Production and customer support decreased
from $16.3 million, or 28.9% of revenues, to $15.5 million, or 24.5% of
revenues, due primarily to the Company's efforts to reduce production costs.
COMMISSIONS, ROYALTIES AND LICENSE FEES. Commissions, royalties and license
fees increased from $5.6 million, or 9.8% of revenues, to $6.7 million, or 10.5%
of revenues. The increase in such expenses as a percent of revenues was due
primarily to higher revenues from the licensing of collision estimating software
which generates both a sales commission and a data royalty.
SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative
increased from $17.7 million, or 31.3% of revenues, to $19.0 million, or 30.1%
of revenues. In the first half of 1996, the Company incurred a charge of
approximately $0.9 million related to the severance of a former senior
executive. During this same period, the Company did not incur certain operating
expenditures and make certain investments that it would have made in the absence
of the 1994 bank credit facility covenants. These actions substantially offset
the recorded severance charge.
23
<PAGE>
PRODUCT DEVELOPMENT AND PROGRAMMING. Product development and programming
increased from $7.0 million, or 12.4% of revenues, to $8.1 million, or 12.7% of
revenues. The increase was due primarily to greater investment in product
development and wage pressure associated with hiring and retaining software
engineers.
INTEREST EXPENSE AND INCOME TAXES. Interest expense declined from $3.1
million to $2.0 million, due primarily to lower average borrowings outstanding.
The effective income tax rate for the 1996 period was 20.0%, resulting primarily
from the release of certain deferred income tax valuation allowances. See Note 6
to the Consolidated Financial Statements.
1995 COMPARED WITH 1994
REVENUES. Total revenues increased by $23.6 million, or 25.7%. The total
revenue increase includes the effect of consolidating CCCDC for a full year in
1995, versus use of the equity method during the first quarter of 1994 when
CCCDC recorded revenues of $11.4 million. Had CCCDC been consolidated for all of
1994, the 1995 over 1994 revenue increase would have been $13.3 million, or
13.0%. This increase in revenue was primarily attributable to higher revenues
from collision estimating software licensing, from EZNET and from ACCESS claims
services. Collision estimating software licensing revenue increased primarily
because of an increase in the number of software licenses, particularly in the
collision repair facility market. TOTAL LOSS valuation service revenues were
down slightly, reflecting lower volume. In addition, sales of other products
increased, reflecting new product introductions. The increase in EZNET revenues
was due to additional EZNET network and recycled part locator transactions, with
EZNET at a slightly higher average price per transaction. The increase in
revenues for ACCESS claims services was due primarily to higher transaction
volume.
COMMISSIONS, ROYALTIES AND LICENSE FEES. Commissions, royalties and license
fees increased from $7.2 million, or 7.8% of revenues, to $11.7 million, or
10.1% of revenues. This increase in such expenses as a percent of revenues was
due primarily to a change in the mix of products sold, including higher revenues
from the licensing of collision estimating software, which generates both a
sales commission and a data royalty. The increase in revenue from licenses of
collision estimating software resulted from higher volume together with the
effect of consolidating CCCDC for all of 1995.
SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative
increased from $33.4 million, or 36.4% of revenues, to $36.3 million, or 31.4%
of revenues. This increase is attributable primarily to higher salaries and
travel expense associated with the Company's sales force. The decline in expense
as a percentage of revenue is due to the increase in revenues, including the
effect on revenues of consolidating CCCDC for all of 1995, and the fixed nature
of certain general and administrative expenses.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization increased from
$8.3 million, or 9.1% of revenues, to $9.6 million, or 8.3% of revenues, due
primarily to the acquisition of CCCDC, effective March 30, 1994. As a result of
the acquisition, purchased software amortization, goodwill amortization and
depreciation expense increased $0.7 million, $0.1 million and $1.1 million,
respectively.
PRODUCT DEVELOPMENT AND PROGRAMMING. Product development and programming
increased from $10.1 million, or 10.9% of revenues, to $14.9 million, or 12.9%
of revenues. The increase was due predominantly to greater investment in product
development, relating in large part to the Company's PATHWAYS software, and wage
pressure associated with hiring and retaining software engineers. The increase
in these expenses as a percent of revenues also reflects the effect of
consolidating CCCDC for all of 1995.
PURCHASED RESEARCH AND DEVELOPMENT. In the CCCDC purchase price allocation,
$13.8 million was assigned to in-process research and development projects. The
amount assigned to in-process research and development software projects was
charged against operating results at the time of the acquisition. See Note 4 to
the Consolidated Financial Statements.
INTEREST EXPENSE AND INCOME TAXES. Interest expense declined from $7.8
million to $5.8 million, due primarily to lower average borrowings outstanding,
reflecting the Company's June 1994 recapitalization, including the White River
transaction. The income tax benefit attributable to continuing operations
declined from $2.7 million to $0.3 million, due primarily to improvements in
results from continuing operations. See Note 6 to the Consolidated Financial
Statements.
24
<PAGE>
LITIGATION SETTLEMENT. The litigation settlement charge of $4.5 million was
recorded to provide for resolution of litigation involving a corporate publisher
of used car valuation books. This matter was settled in April 1996, however, the
original settlement charge was sufficient to provide for the ultimate
settlement. In June 1994 litigation involving an independent corporate provider
of guidebook data was settled. Under the settlement agreement the Company agreed
to pay the provider $1.75 million. See Note 15 to the Consolidated Financial
Statements.
1994 COMPARED WITH 1993
REVENUES. Total revenues increased by $40.7 million, or 79.3%, due
primarily to higher revenues from collision estimating software licensing and
the effect of consolidating CCCDC for the last three quarters of 1994. CCCDC
revenues for the last three quarters of 1994 totaled $39.3 million, of which
$31.3 million was attributable to collision estimating software licensing.
Increased volume in collision estimating software licensing was offset in part
by continuing competitive price pressures. In addition, revenues from total loss
valuation services increased, reflecting increased volume. Increased revenues
from sales of other products also contributed to growth in revenues.
PRODUCTION AND CUSTOMER SUPPORT. Production and customer support increased
from $15.1 million, or 29.5% of revenues, to $25.1 million, or 27.3% of
revenues. The increase in these expenses reflects principally the effect of
consolidating CCCDC for the last three quarters of 1994.
COMMISSIONS, ROYALTIES AND LICENSE FEES. Commissions, royalties and license
fees increased from $1.1 million, or 2.1% of revenues, to $7.2 million, or 7.8%
of revenues. This increase was due primarily to a change in the mix of products
sold, including higher revenues from the licensing of collision estimating
software and the effect of consolidating CCCDC. Collision estimating revenue
generates both a sales commission and a data royalty.
SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative
increased from $22.9 million, or 44.7% of revenues, to $33.4 million, or 36.4%
of revenues, reflecting primarily the growth in the Company's revenues,
including the effect of consolidating CCCDC revenues for the last three quarters
of 1994.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization increased from
$2.2 million, or 4.2% of revenues, to $8.3 million or 9.1% of revenues, due
primarily to the acquisition of CCCDC, effective March 30, 1994. As a result of
the acquisition, purchased software amortization, goodwill amortization and
depreciation expense increased $2.0 million, $0.4 million and $3.4 million,
respectively.
PRODUCT DEVELOPMENT AND PROGRAMMING. Product development and programming
increased from $3.0 million, or 5.8% of revenues, to $10.1 million, or 10.9% of
revenues. The increase was due primarily to expenditures related to the
Company's PATHWAYS product line, and wage pressure associated with retaining
software engineers. This increase also reflected the effect of consolidating
CCCDC during the last three quarters of 1994.
PURCHASED RESEARCH AND DEVELOPMENT. In the CCCDC purchase price allocation,
$13.8 million was assigned to in-process research and development projects. The
amount assigned to in-process research and development software projects was
charged against operating results at the time of the acquisition. See Note 4 to
the Consolidated Financial Statements.
LOSS ON LEASE TERMINATION. Loss on lease termination represents the present
value of future minimum lease payments under the Company's prior corporate
office lease and other related expenses.
LITIGATION SETTLEMENT. In June 1994 the litigation involving an independent
corporate provider of guidebook data was settled. Under the settlement agreement
the Company agreed to pay the provider $1.75 million. See Note 15 to the
Consolidated Financial Statements.
EQUITY IN LOSS OF CCCDC. Equity in loss of CCCDC declined from $3.6 million
to $0.6 million. This decrease reflects both the effect of consolidating CCCDC
for the last three quarters of 1994 and improvements in results of operations of
CCCDC.
25
<PAGE>
INTEREST EXPENSE AND INCOME TAXES. Interest expense increased from $6.9
million to $7.8 million, due primarily to higher average borrowings outstanding.
This increase results primarily from interest expense attributable to contract
funding operations by CCCDC which was consolidated for the last three quarters
of 1994, offset in part by lower average borrowings reflecting the Company's
June 1994 recapitalization, including the White River transaction. The income
tax benefit attributable to continuing operations increased from $1.8 million to
$2.7 million, due primarily to an increase in losses from continuing operations.
See Note 6 to the Consolidated Financial Statements.
SELECTED QUARTERLY FINANCIAL RESULTS
The following table sets forth unaudited consolidated statements of
operations for the ten quarters ended June 30, 1996, as well as such data
expressed as a percentage of the Company's total revenues for the periods
indicated. These quarterly statements of operations have been prepared on a
basis consistent with the audited financial statements contained elsewhere in
this Prospectus. They include all adjustments, consisting only of normal
recurring adjustments, necessary for a fair presentation of the quarterly
results of operations, when such results are read in conjunction with the
audited financial statements and notes thereto appearing elsewhere in this
Prospectus. The operating results for any quarter are not necessarily indicative
of results for any future period.
<TABLE>
<CAPTION>
1994 1995 1996
-------------------------------------- ----------------------------------- -------
FIRST (1) SECOND THIRD FOURTH FIRST SECOND THIRD FOURTH FIRST
--------- -------- ------- ------- ------- ------- ------- -------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues.................................... $13,344 $ 24,652 $26,712 $27,209 $28,012 $28,612 $28,817 $ 30,078 $31,369
Expenses:
Operating expenses........................ 13,056 23,148 24,036 23,854 25,106 26,401 26,394 26,796 27,031
Purchased research and development (2).... -- 13,791 -- -- -- -- -- -- --
Litigation settlements (3)................ 1,750 -- -- -- -- 4,500 -- -- --
--------- -------- ------- ------- ------- ------- ------- -------- -------
Operating income (loss)..................... (1,462) (12,287) 2,676 3,355 2,906 (2,289) 2,423 3,282 4,338
Equity in loss of Joint Venture............. (615) -- -- -- -- -- -- -- --
Interest expense (4)........................ (1,855) (2,499) (1,778) (1,698) (1,610) (1,500) (1,422) (1,277) (1,032)
Other income (expense), net................. 373 (248) 11 180 82 251 68 81 53
--------- -------- ------- ------- ------- ------- ------- -------- -------
Income (loss) from continuing operations
before income taxes........................ (3,559) (15,034) 909 1,837 1,378 (3,538) 1,069 2,086 3,359
Income tax (provision) benefit.............. 383 3,377 (318) (754) (511) 1,564 (243) (519) (775)
--------- -------- ------- ------- ------- ------- ------- -------- -------
Income (loss) from continuing operations.... (3,176) (11,657) 591 1,083 867 (1,974) 826 1,567 2,584
Income (loss) from discontinued operations,
net of income taxes........................ (1,427) (1,214) 3,647 -- -- -- -- -- --
--------- -------- ------- ------- ------- ------- ------- -------- -------
Net income (loss)........................... (4,603) (12,871) 4,238 1,083 867 (1,974) 826 1,567 2,584
Dividends and accretion on mandatorily
redeemable preferred stock................. -- (106) (698) (714) (715) (740) (765) (783) (793)
--------- -------- ------- ------- ------- ------- ------- -------- -------
Net income (loss) applicable to common
stock...................................... $(4,603) $(12,977) $ 3,540 $ 369 $ 152 $(2,714) $ 61 $ 784 $ 1,791
--------- -------- ------- ------- ------- ------- ------- -------- -------
--------- -------- ------- ------- ------- ------- ------- -------- -------
<CAPTION>
SECOND
-------
<S> <C>
Revenues.................................... $31,956
Expenses:
Operating expenses........................ 26,241
Purchased research and development (2).... --
Litigation settlements (3)................ --
-------
Operating income (loss)..................... 5,715
Equity in loss of Joint Venture............. --
Interest expense (4)........................ (950)
Other income (expense), net................. 240
-------
Income (loss) from continuing operations
before income taxes........................ 5,005
Income tax (provision) benefit.............. (898)
-------
Income (loss) from continuing operations.... 4,107
Income (loss) from discontinued operations,
net of income taxes........................ --
-------
Net income (loss)........................... 4,107
Dividends and accretion on mandatorily
redeemable preferred stock................. (811)
-------
Net income (loss) applicable to common
stock...................................... $ 3,296
-------
-------
</TABLE>
- ------------------------------
(1) The Company accounted for its interest in the Joint Venture under the equity
method of accounting prior to acquiring the remaining interest, effective
March 30, 1994.
(2) See Note 4 to the Consolidated Financial Statements.
(3) See Note 15 to the Consolidated Financial Statements.
(4) Interest expense in the second quarter of 1994 includes loan origination
points of $0.3 million related to the bridge loan used to acquire the Joint
Venture interest.
26
<PAGE>
<TABLE>
<CAPTION>
1994 1995
--------------------------------------------- ---------------------------------
FIRST(1) SECOND THIRD FOURTH FIRST SECOND THIRD
--------- --------- --------- --------- --------- --------- ---------
(IN PERCENTAGES)
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues............................... 100.0 % 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Expenses:
Operating expenses................... 97.8 93.9 90.0 87.7 89.6 92.3 91.6
Purchased research and development
(2)................................. -- 55.9 -- -- -- -- --
Litigation settlements (3)........... 13.1 -- -- -- -- 15.7 --
--------- --------- --------- --------- --------- --------- ---------
Operating income (loss)................ (11.0 ) (49.8) 10.0 12.3 10.4 (8.0) 8.4
Equity in loss of Joint Venture........ (4.6 ) -- -- -- -- -- --
Interest expense (4)................... (13.9 ) (10.1) (6.7) (6.2) (5.7) (5.2) (4.9)
Other income (expense), net............ 2.8 (1.0) 0.0 0.7 0.3 0.9 0.2
--------- --------- --------- --------- --------- --------- ---------
Income (loss) from continuing
operations before income taxes........ (26.7 ) (61.0) 3.4 6.8 4.9 (12.4) 3.7
Income tax (provision) benefit......... 2.9 13.7 (1.2) (2.8) (1.8) 5.5 (0.8)
--------- --------- --------- --------- --------- --------- ---------
Income (loss) from continuing
operations............................ (23.8 ) (47.3) 2.2 4.0 3.1 (6.9) 2.9
Income (loss) from discontinued
operations, net of income taxes....... (10.7 ) (4.9) 13.7 -- -- -- --
--------- --------- --------- --------- --------- --------- ---------
Net income (loss)...................... (34.5 ) (52.2) 15.9 4.0 3.1 (6.9) 2.9
Dividends and accretion on mandatorily
redeemable preferred stock............ -- (0.4) (2.6) (2.6) (2.6) (2.6) (2.7)
--------- --------- --------- --------- --------- --------- ---------
Net income (loss) applicable to common
stock................................. (34.5 )% (52.6)% 13.3% 1.4% 0.5% (9.5)% 0.2%
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
<CAPTION>
1996
---------------------
FOURTH FIRST SECOND
--------- --------- ---------
<S> <C> <C> <C>
Revenues............................... 100.0% 100.0% 100.0%
Expenses:
Operating expenses................... 89.1 86.2 82.1
Purchased research and development
(2)................................. -- -- --
Litigation settlements (3)........... -- -- --
--------- --------- ---------
Operating income (loss)................ 10.9 13.8 17.9
Equity in loss of Joint Venture........ -- -- --
Interest expense (4)................... (4.2) (3.3) (3.0)
Other income (expense), net............ 0.3 0.2 0.7
--------- --------- ---------
Income (loss) from continuing
operations before income taxes........ 6.9 10.7 15.6
Income tax (provision) benefit......... (1.7) (2.5) (2.8)
--------- --------- ---------
Income (loss) from continuing
operations............................ 5.2 8.2 12.8
Income (loss) from discontinued
operations, net of income taxes....... -- -- --
--------- --------- ---------
Net income (loss)...................... 5.2 8.2 12.8
Dividends and accretion on mandatorily
redeemable preferred stock............ (2.6) (2.5) (2.5)
--------- --------- ---------
Net income (loss) applicable to common
stock................................. 2.6% 5.7% 10.3%
--------- --------- ---------
--------- --------- ---------
</TABLE>
- ------------------------------
(1) The Company accounted for its interest in the Joint Venture under the equity
method of accounting prior to acquiring the remaining interest, effective
March 30, 1994.
(2) See Note 4 to the Consolidated Financial Statements.
(3) See Note 15 to the Consolidated Financial Statements.
(4) Interest expense in the second quarter of 1994 includes loan origination
points of $0.3 million related to the bridge loan used to acquire the Joint
Venture interest.
The increase in quarterly operating expenses as a percentage of revenues
over the last two quarters of 1995 versus the same quarters in 1994 is
attributable primarily to an increase in systems development and programming and
a change in mix of products sold. The decline in operating expenses as a
percentage of revenues in the first half of 1996 versus the first half of 1995
is attributable to higher revenues and deferral of certain planned operating
expenditures that the Company would have made in the absence of the 1994 bank
credit facility covenants.
The Company's revenues and operating results have fluctuated in the past and
are expected to continue to fluctuate in the future, on both an annual and
quarterly basis. This fluctuation is attributable to a number of factors,
including, but not limited to: demand for the Company's products and services,
including new and enhanced products and services, the mix of products and
services sold, the hiring and compensation of employees, the timing of
promotional expenditures and competitive conditions. Many of these factors are
beyond the Company's control.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal liquidity requirements are for working capital to
fund investments in equipment and software, and to repay indebtedness. For the
six months ended June 30, 1996, net cash provided by operating activities was
$8.7 million. This amount was net of $2.3 million of contract funding revenue
amortization. The Company applied $1.8 million to purchase equipment and
software and $6.4 million to reduce outstanding debt. For the year ended
December 31, 1995, net cash provided by operating activities was $7.7 million.
This amount was net of $10.1 million of net contract funding revenue
amortization. The Company applied $3.0 million to purchase equipment and
software and $7.1 million to reduce debt. For the year ended December 31, 1994,
net cash provided by continuing operations was nominal, net of $8.0 million of
net contract funding revenue amortization. Net cash proceeds from borrowing were
$15.0 million. The Company applied
27
<PAGE>
cash from these sources to purchase $5.2 million of equipment and software. The
Company's proceeds from the sale of discontinued operations, net of cash used by
discontinued operations, was $1.6 million. In connection with the acquisition of
the 50% joint venture interest in CCCDC that it did not previously own, the
Company used $4.5 million in cash, net of cash acquired, and assumed liabilities
in the amount of $22.4 million. For the year ended December 31, 1993, net cash
provided by continuing operations was $6.0 million. The Company applied cash
from continuing operations to principal payments of long-term debt of $4.5
million and the balance of $1.5 million to advances to the Joint Venture. The
remainder of the Joint Venture advances were funded from available cash
balances. The Company anticipates that its purchase of equipment and software
will be approximately $6.1 million in 1996.
CCC entered into a bank credit facility arrangement with Canadian Imperial
Bank of Commerce as agent in June 1994 in connection with a recapitalization of
the Company. The Company has guaranteed CCC's obligations under the 1994 credit
facility, which is secured by a lien on CCC's assets and stock. The 1994 bank
credit facility is structured as a $30 million term loan and a $10 million
revolving credit facility. The interest rate under the 1994 bank credit facility
is a base rate (approximating the prime rate) plus 1.5% or the Eurodollar rate
plus 3.0%, as selected by the borrower. The Company is negotiating a new credit
facility with Signet Bank to replace the 1994 bank credit facility. The new
credit facility would provide CCC with the ability to borrow under a $20 million
revolving line of credit and give CCC the option to borrow up to $15 million
under a term loan, provided that the gross proceeds of this Offering are not
less than $50 million nor greater than $70 million. The Company intends to use
the proceeds of this borrowing to repay a portion of the 1994 credit facility.
If the new credit facility is not consummated by CCC, the 1994 bank credit
facility will remain in place. The Company will guarantee CCC's obligations
under the new credit facility, which will be secured by a lien on CCC's assets
and stock. The interest rate under the new bank credit facility is the prime
rate from time to time in effect or the LIBOR rate plus 1.5%, as selected by
CCC.
In 1994 White River acquired $39.0 million of the Company's Redeemable
Preferred Stock in connection with the Company's recapitalization. A portion of
the Redeemable Preferred Stock will be redeemed from the proceeds of this
Offering at its stated value plus accrued dividends.
The Company continues to review various financing alternatives. The Company
believes that cash flows from operations and available bank lines of credit will
be sufficient to meet its liquidity needs in the next year. There can be no
assurance, however, that the Company will be able to satisfy its liquidity needs
in the future without engaging in financing activities beyond those described
above. See "Risk Factors -- Financial Position; Negative Working Capital;
Potential Financing Needs."
28
<PAGE>
BUSINESS
GENERAL
The Company is a leading supplier of automobile claims information and
processing, claims management software and value-added communication services.
The Company's customers include each of the 50 largest U.S. automobile insurance
companies, over 250 other automobile insurance companies and more than 8,500
collision repair facilities. The Company's technology-based services and
products improve efficiency, manage costs and increase consumer satisfaction in
the management of automobile claims and restoration. The Company believes that
its core competencies include the efficient collection and processing of claims
and automobile valuation and repair data, development of advanced client-server,
object-oriented claims software products, management of a value-added
communications network, understanding the workflow processes of automobile
claims and marketing through a customer-oriented field sales and service
organization.
The Company's services and products automate the process of evaluating and
settling both total loss and repairable automobile claims. The Company's TOTAL
LOSS services and products provide insurance companies the ability to effect
total loss settlements on the basis of market-specific vehicle values. The
Company's collision estimating services and products provide insurance
appraisers and collision repair facilities with up-to-date pricing, interactive
decision support and computer-assisted logic to produce accurate collision
repair estimates. Communication services offered by the Company connect
insurers, appraisers and collision repair facilities, providing the information
required to make appropriate and timely decisions. The Company also provides a
wide variety of related services and products intended to facilitate the overall
management of the automobile claims process. The Company's PATHWAYS workflow
management software is designed to integrate each of the Company's product
offerings on a common platform with a common graphical user interface,
facilitating the learning of new applications while providing the Company's
customers with a broader tool set for claims completion. The Company's services
and products are an integrated solution that combines reliable information,
advanced claims management software and value-added, secure communication
systems to improve the efficiency of the automobile claims process.
The Company markets its services and products to the key participants in the
automobile claims industry, including over 400 insurance companies and
approximately 20,000 to 25,000 collision repair facilities. The Company sells
its services and products to insurance companies through a 125 person direct
sales force. The Company contracts with 85 independent sales representatives to
sell its products to collision repair facilities. Over half of the Company's
revenue for 1995 was for services and products sold pursuant to contracts, which
generally have a two to three year term. A substantial portion of the Company's
remaining revenue represented sales to customers that have been doing business
with the Company for at least ten years. The Company's services and products are
sold either on a monthly subscription or a per transaction basis.
OVERVIEW OF THE AUTOMOBILE INSURANCE CLAIMS PROCESS
Insurance premiums for U.S. private passenger automobiles totalled
approximately $98 billion in 1994. The Company estimates that about 11 percent
of automobile and light truck policy holders file claims each year on a total of
approximately 20 million vehicles. In 1994 these claims resulted in payments
totalling approximately $75 billion. Of this amount, approximately $35 billion
was paid for automobile damage and loss claims, of which the Company estimates
that $19 billion was paid to collision repair facilities, $13 billion was paid
for total loss claims, and the remainder was paid for other comprehensive
losses, for damage to other property and for settlement costs. These claims also
resulted in payments for personal injuries of approximately $40 billion,
including medical costs, lost wages, compensation for pain and suffering,
attorney fees and settlement costs.
Automobile claims generally involve three types of participants: automobile
insurance companies, service providers such as collision repair facilities and
attorneys, and consumers. The interaction among these parties in the processing
of a claim is referred to in this Prospectus as the "automobile claims
industry." The Company believes that the claims process has historically been
inefficient and contentious for the participating parties due in part to the
lack of independently verifiable claims data and inefficient communications
networks.
29
<PAGE>
THE AUTOMOBILE INSURANCE INDUSTRY
Of the approximately 400 companies offering private passenger automobile
insurance in the United States, the twenty largest providers account for over
60% of all automobile insurance premiums. Insurance companies compete
principally on the basis of price, marketing, consumer satisfaction and claims
paying ability. State agencies closely regulate the product offerings, claims
processes and the premium structure of insurance companies. In addition, the
laws of many states require motorists to carry liability insurance at specified
minimum levels.
The automobile insurance industry is changing rapidly. The automobile
insurance marketplace is experiencing price constraints as a result of
increasing competition and regulatory activity. At the same time, policy holders
are demanding ever higher levels of customer service. The growing complexity and
sophistication of automobile design and engineering is increasing the actual
repair cost (referred to in the industry as "severity") of collision claims. In
addition, the personal injury component of automobile insurance claims is rising
in part as a result of the increasing frequency of, and magnitude of, claims
involving alleged bodily injury, including soft-tissue claims. Competitive
pressures and resistance by policy holders and regulators to premium increases
are causing insurance companies to focus on managing costs.
The Company believes that the insurance industry's focus on cost management
has been accompanied by an increasing recognition that it is easier and more
cost effective to retain an existing policy holder than to lure a new customer
away from a competitor. Dissatisfaction with the claims handling process is a
frequently cited cause of policy non-renewal.
THE COLLISION REPAIR INDUSTRY
The collision repair industry, which historically has been extremely
fragmented, is consolidating. Approximately 63,500 collision repair facilities
were listed in telephone book advertisements in 1995, down from 71,000 such
listings in 1992. Most collision repair facilities are owner-operated,
single-location businesses which focus on a local market. The Company estimates
that 20,000 to 25,000 collision repair facilities have annual revenues in excess
of $300,000. These facilities tend to be larger, better capitalized and
increasingly rely on professional and sophisticated management who are adopting
new technology and wholesale marketing techniques to compete.
The costs to operate a collision repair facility have risen substantially
over the past decade. Modern automobile designs coupled with extensive
environmental regulations are forcing repair facilities to make significant
capital investments in increasingly sophisticated equipment and better training.
At the same time, insurance companies are looking to collision repair facilities
to assist in cost containment.
Of the approximately $22 billion in total revenue earned by U.S. collision
repair facilities in 1995, $19 billion, or 86%, was paid by insurance companies.
Because so much of their revenue is derived from insurers, collision repair
facility owners are increasingly shifting their marketing efforts from
consumer-oriented advertising to wholesale marketing and insurance company
referrals. For example, many collision repair facilities are seeking to
capitalize on insurance industry-driven trends such as the growth in direct
repair programs. A direct repair program, or DRP, allows an insured whose
automobile is involved in a collision to have the repair performed within a
pre-screened network of approved repair facilities. In order to participate in
DRPs with major insurance companies, collision repair facilities must meet
minimum standards for equipment, training and facilities. To ensure continued
satisfaction at both the referring insurance company and consumer level,
collision repair facilities must seek ways to improve productivity and optimize
the workflow of the automobile repair process. In order to achieve these goals,
collision repair facilities are making substantial investments in capital
equipment and computer technology.
THE AUTOMOBILE CLAIMS PROCESS
Insurance companies generally handle automobile physical damage claims in
one of three ways: through in-house staff appraisals, through direct repair
programs and through independent adjustments.
STAFF APPRAISAL. The insurance industry employs staff appraisers and claims
representatives who, the Company estimates, handle 70% to 75% of all automobile
claims. The estimates are based on the Company's claims experience, as well as
interviews with its large insurance customers. Staff appraisers handle a broad
range
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of claims tasks, including appraisal, claims supplements, police reporting,
total loss files, salvage processing and settlement payments. Based on the
Company's internal estimates, staff appraisers typically handle twelve or more
claims per day when in a drive-in facility and three to five claims per day when
in the field. The Company believes that approximately 90% of insurance company
staff appraisers use collision estimating software to prepare collision repair
estimates. Based on the Company's experience with its insurance customers, the
Company estimates that the cost of a staff appraisal ranges from $50 to $65 and
that the average severity of a staff-appraised claim in 1995 was $1,990.
DIRECT REPAIR PROGRAMS. Sixteen of the top twenty automobile insurers,
including each of the five largest, offer a direct repair program. Based on the
Company's interviews with its insurance customers, the Company estimates that 8%
to 12% of all automobile claims are handled through a DRP, the fastest-growing
method for handling automobile claims. The Company believes that DRPs present
significant opportunities to both insurance companies and collision repair
facilities to increase the satisfaction of their customers. Surveys demonstrate
that DRPs result in higher consumer satisfaction than either of the other claims
handling methods. In addition, by eliminating several days from the claims
process, insurers utilizing DRPs reduce replacement rental car expense and
eliminate the costs associated with dispatching an adjuster to appraise each
vehicle. An automated DRP ensures accurate estimates, facilitates the use of
alternate replacement parts and increases the productivity of auditors and
reinspectors. The Company estimates that adjusters who formerly completed only
three to five estimates per day under a staff appraisal program can review 20 to
25 claims per day under a DRP. Participating collision repair facilities gain
volume and efficiency and reduce disputes with consumers and insurance
companies. Based on the Company's experience with its insurance customers, the
Company believes that the cost of a DRP appraisal ranges from $10 to $15 and
that the average severity of a DRP-appraised claim in 1995 was $2,030.
INDEPENDENT ADJUSTMENT. Based on the Company's interviews with its
insurance customers, the Company estimates that independent claims adjusters
handle 15% to 22% of all automobile claims. Independent adjusters offer their
appraisal skills to a variety of insurance companies in a specific geographic
location. Insurers typically outsource claims to independent adjusters where
their market coverage does not justify hiring local staff or when the volume of
work exceeds local capacity. The Company estimates that fewer than 10% of
independent adjusters use automated collision estimating systems. The absence of
automation, coupled with the lack of management reports and efficient inspection
processes among independent adjusters, typically results in both the highest
average severity per claim and the highest average claims handling expense.
Based on the Company's experience with its insurance customers, the Company
estimates that the cost of an independent appraisal ranges from $70 to $95 and
that the average severity of an independently-appraised claim in 1995 was
$2,320.
NEEDS AND OPPORTUNITIES IN THE AUTOMOBILE CLAIMS PROCESS
The Company believes trends in the automobile insurance industry create
several identifiable needs. First, automobile insurers need to increase consumer
satisfaction through faster, more efficient claims handling procedures. Second,
insurance companies need to improve working relationships with their primary
service providers through the exchange of auditable data and improved
communication. Third, insurers need to integrate emerging technologies into
their legacy mainframe hardware and software systems. Finally, smaller insurance
companies need to become cost competitive with the major insurers by adopting
solutions which provide benefits of economies of scale.
Trends in the collision repair industry also present collision repair
facilities with several needs and opportunities. First, repair facilities need
to secure a steady supply of customers through efficient marketing and greater
connectivity to insurance companies. Second, repair facilities need to improve
their operating efficiency, business management and repair processing through
affordable information and decision making tools.
The Company believes there is also a need and market opportunity for
improved management of bodily injury claims, the largest component of automobile
claims settlement. In 1994 the cost of the 8.3 million claims for personal
injuries totalled approximately $40 billion. These claims resulted in
approximately 1.6 million lawsuits, of which 640,000 involved claims for soft
tissue damage.
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The Company believes that improvements in the automobile claims process will
require that participants have ready access to data, decision making tools and
efficient communications. As a result, there is a need for integrated, efficient
solutions in the appraisal, repair and settlement processes which will speed
repairs, assure consumer satisfaction and save money.
THE CCC SOLUTION
The Company's services and products are an integrated solution that combines
proprietary information, advanced claims management software and value-added,
secure communication systems to improve the efficiency of the automobile claims
process. The Company's customers use its services and products to improve
efficiency, control costs and increase consumer satisfaction in the handling of
automobile claims. Connecting people, processes and information, the Company's
technology-based services and products facilitate decision making among more
than 300 insurance companies, more than 8,500 collision repair facilities and a
wide range of business partners in the claims settlement process, including
approximately 4,000 automobile dealers, 100 independent appraisal companies,
parts suppliers, rental car agencies, fraud prevention agencies, salvage pools
and recyclers. The Company's services and products aid claims industry
participants in satisfying the consumer wherever settlement takes place, however
the workflow is designed and whoever is managing the task. The Company provides
these benefits through:
- efficient collection and processing of proprietary claims data
- advanced client-server architecture and object-oriented software
applications
- value-added communications through its flexible network
- comprehensive knowledge of workflow processes in the automobile claims
industry
- an aggressive market-driven field sales and service organization
INSURANCE INDUSTRY SOLUTIONS
The Company offers innovative solutions that provide insurance companies
with decision control information and workflow tools to manage the process of
adjusting and settling total losses and repairable collision claims. These
solutions reduce claims costs, streamline claims processing and increase
consumer satisfaction. The Company believes it is the leading provider of
computerized claims-handling data and software to the insurance company total
loss valuation and automobile physical damage collision estimating markets.
The Company's solutions automate each of the three major claims handling
methods. To improve the staff appraisal process, the Company offers workflow
management software which allows the insurance company to integrate any or all
of the Company's specific claims management applications with the insurer's own
legacy applications. To improve the direct repair process, the Company offers a
suite of software and communication tools that automate the fastest-growing
claims handling methodology and provide insurers management control of their
DRPs. To improve the outsourced appraisal process, the Company offers an
alternative to independent adjusters which automates the assignment, collision
estimate and management of the entire claims and restoration process.
COLLISION REPAIR INDUSTRY SOLUTIONS
The Company offers the collision repair industry a value-added, secure
communications network which connects insurance companies and collision repair
facilities in a cooperative and efficient partnership to satisfy consumer needs.
The Company believes that its communication services and collision estimating
software permit its customers to increase business flow, improve decision
making, and increase operating efficiency. The process-control applications in
the Company's network, which processed more than $2 billion in repairable
automobile claims in 1995, improves and streamlines the automobile repair
process. The Company also offers modular collision repair facility management
software applications which enhance productivity and improve asset utilization.
THE CCC STRATEGY
The Company's objective is to enhance its position as a leading provider of
business solutions to the automobile claims industry by pursuing the following
business strategies:
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GROW AND LEVERAGE INSTALLED USER BASE. The Company intends to enhance its
leadership in the physical damage segment of the automobile insurance industry.
The Company plans to increase market share by integrating new and existing
applications into its workflow management software and by the continued emphasis
on proactive field service and customer support.
The Company also intends to grow its presence in the collision repair
industry by continuing to develop service and product offerings tailored to the
needs of collision repair facilities. Specifically, the Company plans to enhance
and expand its connectivity tools to facilitate the collision repair process and
to grow the volume of repairs settled through both insurance company DRPs and
through the Company's own claims management programs.
FOCUS ON LEADING INSURANCE COMPANIES. The Company believes that the leading
automobile insurance carriers drive new product innovation and influence the
buying decisions of participants in the claims process. Therefore the Company
focuses resources on twenty of the leading automobile insurance carriers, which
account for over 60% of total automobile insurance premiums and which have
different needs from those of smaller insurers. The Company believes that the
extent to which its services and products are widely accepted among the leading
insurance companies will grow the Company's network of collision repair facility
customers, which in turn will enhance the Company's relationships with other
insurance companies.
CAPITALIZE ON TECHNOLOGY LEADERSHIP. The Company has made a substantial
investment during the past two years in the development of an object-oriented
software framework which includes several hundred reusable business and system
objects. The PATHWAYS application suite is built on this framework. The Company
intends to maintain its technology leadership in the claims adjustment and
collision repair markets by continuing the evolution of its released
applications into object-oriented software modules and by maintaining the
quality and independence of its proprietary databases.
OFFER ALTERNATIVE TO INDEPENDENT ADJUSTER CLAIMS PROCESS. The Company
believes that independent claims adjustment, which carries the highest severity
and loss adjustment costs, presents a significant opportunity for an outsourced
claims management solution. The Company intends to offer its appraisal and
restoration management outsourcing solution as an alternative to independent
adjustment to insurers seeking higher levels of consumer satisfaction, together
with process and severity benefits.
BROADEN SCOPE OF CLAIMS MANAGEMENT SOLUTIONS. The Company intends to
capitalize on its strong network of insurance company relationships, proprietary
databases and technology tools by expanding the scope of its services to other
areas of the automotive claims industry, including the processing and management
of litigation alleging bodily injury arising from automobile collisions.
OFFER TOTAL OUTSOURCING SOLUTION. The Company intends to use its claims
process management tools, together with the Company's growing network of service
providers, to create an outsourced claims solution for insurance companies. The
Company intends to offer its total outsourcing solution to small insurers which
lack the size and scale to process claims efficiently.
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SERVICES AND PRODUCTS
The Company's services and products are organized into the following product
families: Insurance, Collision Repair and Other. The Company's services and
products are integrated for use with one another across multiple platforms. The
Company's services and products are designed for ease of use by the thousands of
people involved in the automobile claims process on a daily basis. Approximately
70% of the Company's consolidated revenue for 1995 was from the sale of services
and products to insurance companies with the remainder sold to collision repair
facilities and other customers. Sales of total loss and related services and
products accounted for 38.2%, and sales of collision estimating services and
products accounted for 43.0%, of the Company's consolidated 1995 revenue.
<TABLE>
<CAPTION>
SERVICES AND
PRODUCTS DESCRIPTION TARGET MARKET BENEFITS
<S> <C> <C> <C>
INSURANCE SERVICES AND PRODUCTS
TOTAL LOSS (1980) - Local market, passenger - Independent valuation with
and light truck valuation speed of automation, more
based on inspected local accurate values, fraud
market dealer inventory protection and regulatory
compliance
COMMERCIAL/ - Local market, vehicle -Physical damage claims
RECREATIONAL valuation of heavy departments
VEHICLE VALUATION equipment, small marine
(1985) craft, mobile homes and
motor cycles
COMPUTERIZED - Replacement rental car - Consolidates rental
AUTOMOBILE RENTAL reservation, management providers for volume contract
SYSTEM (1994) and billing system negotiation, controls
unauthorized rental
extension and
consolidates/audits billing
ACCESS (1995) - Outsourced appraisal and - Insurance companies - Fast, economical
vehicle restoration with heavy independent appraisal/repair process with
management services appraiser usage high customer satisfaction
utilizing a network of
Company-certified,
fully-equipped repair
facilities
PATHWAYS WORKFLOW - Integration software for - Rapid learning and
MANAGER (1996) a variety of claims introduction of new
applications, with a applications; more
workflow orientation to efficient claims processing
assist in managing all
aspects of a field
appraiser's duties
PATHWAYS - Windows-based collision - Insurance field - Accurate estimates based on
COLLISION estimating software appraisers better decisions
ESTIMATING (1996) using P-page logic which -Increases and eases the
Upgrade: provides up-to-date selection of more economical
RECYCLED PART pricing; interactive recycled/salvaged parts
VALUATION decision support;
automated forms
-Provides statistically
valid, local market
pricing of available
recycled parts that can
be automatically inserted
into an estimate
GUIDEPOST (1996) - Executive information - Physical damage claims - Management information
system departments
ACCLAIM (1996) - Outsourced soft-tissue - Bodily injury claims -Lower legal and indemnity
litigation defense departments costs
management
</TABLE>
34
<PAGE>
<TABLE>
<CAPTION>
SERVICES AND
PRODUCTS DESCRIPTION TARGET MARKET BENEFITS
<S> <C> <C> <C>
INSURANCE & COLLISION REPAIR SERVICES AND PRODUCTS
EZEST (1991) - Interactive PC-based - Insurance field - Provides a complete,
collision estimating appraisers and collision professional estimate.
software using P-page repair facilities Automatically defaults to
logic which provides agreed-upon estimating
Upgrade: up-to-date pricing, guidelines when used in
marketing letters and conjunction with EZNet
interactive decision
support
RECYCLED PART - Provides statistically - Insurance field - Increases and eases the
VALUATION (1993) valid, local market appraisers selection of more economical
pricing of available recycled/salvage parts
recycled parts that can
be automatically
inserted into an
estimate
EZFOCUS (1996) - Software based, digital - Insurance companies - Economical documentation of
imaging system and collision repair vehicle damage that speeds
facilities repair approval, increases
process control and reduces
reinspections
EZNET (1992) -A value-added -Insurance companies -Process control and
communications network to utilizing automated management information
send claim assignment staff appraisers and
Upgrades: information and retrieve DRPs and collision
completed file data repair facilities
ELECTRONIC -A file-by-file electronic -Insurance companies -Real-time exception
APPRAISAL REVIEW audit of DRP estimates utilizing DRP networks reporting to target
(1993) re-inspections and improve
management control of DRP
networks
RECYCLED PART -Location of all available -Insurance companies -Increases and eases the
LOCATION (1994) recycled parts for a utilizing DRP networks selection of more economical
particular vehicle in a recycled/salvaged parts
local market
COLLISION REPAIR SERVICES AND PRODUCTS
EZWORKS (1996) - Job costing, job - Improves workflow,
scheduling, accounting and increases financial control,
payroll software labor efficiency and asset
utilization
PATHWAYS WORK - Integration software for - Collision repair - Rapid learning and
FLOW MANAGER a variety of applications, facilities introduction of new
(expected late with a workflow applications; more
1996) orientation efficient management
process
PATHWAYS - Windows-based collision - Provides a complete,
COLLISION estimating software professional estimate.
ESTIMATING--COLLISION using P-page logic which Automatically defaults to
REPAIR (expected provides up-to-date agreed-upon estimating
late 1996) pricing marketing guidelines when used in
letters capability and conjunction with EZNet
interactive decision
support
OTHER SERVICES AND PRODUCTS
AUTOSEARCH (1981) - Used vehicle location - Consumers - Fast location of
and pricing service replacement vehicle
CONSUMER PRODUCTS - Local market passenger - Market data for use in
(1989) and light truck valuation buying or selling a new or
used car
DEALER - Advertising for car - New/used car dealers - Highly targeted advertising
SERVICES--TAIL dealers to consumers
(1990) recently involved in a
total loss
</TABLE>
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<PAGE>
TOTAL LOSS SERVICE. The Company's TOTAL LOSS service provides insurance
companies the ability to effect total loss settlements on the basis of
market-specific values based upon physically inspected used car inventories. The
Company believes that its up-to-date vehicle database, which contains detailed
information about millions of vehicles physically inventoried on over 4,000
dealer lots, or recently advertised, is the most comprehensive in North America.
The Company uses its proprietary database and valuation software to provide
insurance companies with independent, current, local, market-values and vehicle
identification data. Each total loss valuation includes a vehicle identification
search under VINGUARD, the Company's vehicle identification number fraud
protection program which matches current claims against the Company's database
of 15.5 million previously totaled or stolen vehicles. The Company processes
about 1.5 million TOTAL LOSS claims per year.
EZEST COLLISION ESTIMATING. EZEST was the first stand-alone, PC-based
collision estimating system utilizing P-page logic to automate the process of
eliminating repair activity overlaps and automating all included operations and
ancillary repair work in preparing an estimate. EZEST provides automobile
insurers with fast and reliable estimates at a low cost. EZEST runs on any
IBM-compatible laptop or desktop computer and contains all nine volumes of the
Motor Crash Estimating Guide and other data necessary to build a quality
estimate. The Company licenses the Motor Crash Estimating Guide data from a
subsidiary of The Hearst Corporation. A unique feature of EZEST is its recycled
part valuation upgrade which will display and can automatically insert into the
estimate a predicted price of those recycled or salvage automotive parts
statistically known to be available in the local market in which the estimate is
written. Approximately two-thirds of EZEST'S insurance users have purchased this
upgrade. The EZEST software, Motor Crash Estimating Guide database and other
associated databases are updated via a monthly CD-ROM. EZEST is sold on a
monthly subscription basis to both insurers and collision repair facilities
under multi-year contracts. The Company has approximately 13,000 units
installed.
EZNET COMMUNICATIONS NETWORK. EZNET connects insurers with their appraisers
and repair network partners. EZNET'S process management capabilities provide the
information required to make appropriate and timely decisions, regardless of
location or settlement process. EZNET is used principally for the complete
electronic communication of work files and estimates to staff appraisers or DRP
partners and for the receipt of auditable estimate data. EZNET is the only
secure communications network tailored to provide value-added automated
communication service to participants in the automobile physical damage claim
process, including: mailboxing, library, messaging, intelligent routing,
assignment tracking and third party gateways. A unique feature of EZNET is the
electronic appraisal review feature which provides real-time exception reporting
to target re-inspections and improves management control of DRP networks. EZNET
also facilitates the management of car rental and salvage disposition. EZNET
processes approximately 400,000 automobile physical damage claims each month.
EZNET is sold both on a per transaction basis and on a monthly subscription
basis.
PATHWAYS APPRAISER WORKSTATION SOFTWARE. In April 1996, the Company began
delivery of PATHWAYS, its Windows-based appraiser workstation software designed
to better serve the overall workflow needs of insurance field staffs. PATHWAYS
offers a common, graphical user interface across all applications which
organizes claims in tabbed, electronic workfiles and reduces the time required
to learn or develop new software functions or applications. PATHWAYS includes a
workflow manager which assists users in managing all aspects of their day-to-day
activities, including receipt of new assignments, communication of completed
activity, electronic file notes and reports as well as the automatic logging of
key events in the claims process. The Company intends to integrate all of its
existing field applications into this platform and develop all future field
applications on PATHWAYS. PATHWAYS is fully integrated with the Company's
value-added communications network, allowing adjusters to operate in the field,
and thereby reduce office and other expenses. The initial PATHWAYS application
is PATHWAYS COLLISION ESTIMATING which provides all of the functionality of the
EZEST product while adding the functionality of total loss and settlement
processing, claim payment, salvage disposal and custom electronic forms. The
Company believes that the PATHWAYS system can reduce the field handled
automobile claims process by about one day. The Company currently has 140
installations. PATHWAYS is sold on a monthly subscription basis under multi-year
contracts.
ACCESS CLAIMS SERVICES. ACCESS is an outsourced vehicle appraisal and
restoration management service. Insurance companies use ACCESS to appraise and
settle claims without hiring either additional staff or independent appraisers.
ACCESS uses a network of Company certified, fully equipped repair facilities and
the
36
<PAGE>
Company's claims management tools to provide fast, low cost claims settlement
with high customer satisfaction. In addition, the Company provides reinspection
and restoration management staff for quality assurance. ACCESS is sold on a per
claim basis under multi-year agreements. The Company is currently processing
5,000 ACCESS claims per month.
EZFOCUS DIGITAL IMAGING. The EZFOCUS computerized digital photo imaging
system allows automobile insurers and collision repairers to visually document
vehicle damage and electronically communicate the image. This reduces claims
cycle time while eliminating film cost and saving travel and overnight delivery
expense.
GUIDEPOST DECISION SUPPORT. The Company recently added GUIDEPOST, an
executive information and data navigation software package to its tool set.
GUIDEPOST allows managers to electronically evaluate results, format reports,
drill down for subject or personnel review and compare performance to industry
and regional indices. GUIDEPOST is offered on a monthly CD and development for
network delivery is underway. While introduced as an element of the Company's
suite of electronic DRP and collision estimating tools, GUIDEPOST will be made
available for all the Company's products, extending the integration of a
multi-channel claims process.
ACCLAIM LITIGATION MANAGEMENT. ACCLAIM is an outsourcing service offered to
insurance companies for the processing and management of defined soft-tissue
bodily injury claims. ACCLAIM uses the Company's licensed case management
software and information management tools in connection with a national network
of lawyers to defend and dispose of lawsuits filed against insureds. ACCLAIM
services are sold to insurance companies on a fixed fee, per claim basis.
ACCLAIM is currently in pilot program status.
CUSTOMERS
The Company's business is based on establishing close long-term
relationships with the two primary users of the Company's services: automobile
insurance companies and collision repair facilities. Over 300 automobile
insurance carriers, including each of the top 50 insurance companies in the
United States, are customers of the Company. Most of the Company's insurance
customers are large, well capitalized businesses. State Farm, the Company's
largest customer, accounted for 12.4%, 16.1% and 27.1% of the Company's total
revenues for the three years ended December 31, 1995, 1994 and 1993,
respectively.
Since first entering the collision repair market in 1992, the Company has
secured over 8,500 collision repair facility customers. The Company has
collision repair customers in all 50 states and in most major metropolitan
markets. Many of these customers use the Company's services and products as a
means to participate in insurance DRP programs, thereby making the use of the
Company's services and products important to the customer's business growth.
Over half of the Company's revenue for 1995 was for services and products
sold pursuant to contracts, which generally have a two to three year term. A
substantial portion of the Company's remaining revenue represented sales to
customers that have been doing business with the Company for at least ten years.
The Company's services and products are sold either on a monthly subscription or
a per transaction basis.
SALES AND MARKETING
The Company utilizes four different sales organizations to market and sell
its services and products.
STRATEGIC CLIENT DIVISION. The Strategic Client Division comprises 34
national account managers ("NAMs") and 31 client service managers ("CSMs") who
focus on the Company's overall relationships with the home and regional offices
of twenty leading insurance companies. NAMs are experienced sales professionals
charged with meeting customers' business needs with a consultative approach.
NAMs are responsible for home office relationships through which most major and
all company-wide contracts are signed and renewed. The CSMs were recruited from
a variety of major consulting firms with backgrounds in workflow/process
management and business systems analysis. The CSMs play a critical role in
reviewing customer business practices to benchmark current operations and to
identify opportunities for improvement. This serves the dual role of assisting
customers in the operation of their businesses, while concretely validating the
value of the Company's services and products when they are implemented. CSMs
often work closely with customer MIS staffs to assure smooth implementation of
more technically complicated and customized service offerings.
37
<PAGE>
NATIONAL SALES GROUP. The 26 national sales account managers in the
National Sales group market the Company's services and products to the home
offices of large and medium-sized insurance companies outside of the top 20
ranking. Managers in the National Sales group typically call on the president or
claims vice president and director of management information services of the
customer. The sales cycle for transactions in this division is normally shorter
than in the Strategic Client Division. Most ACCESS sales are made in the
National Sales division.
CLAIMS OFFICE ACCOUNT EXECUTIVES. A total of 78 claims office account
executives are deployed geographically with responsibility for individual claims
offices of all of the Company's insurance company clients. These employees are
charged with on-going field training and support for the Company's
transaction-based businesses. The Company believes that its field service
organization is a competitive strength as its account executives assist claim
managers with the training of high turnover personnel, program result analysis
and problem resolution.
COLLISION REPAIR REPRESENTATIVES. The Company contracts with 85 independent
sales representatives to sell its products to collision repair facilities across
the country. These representatives are assigned geographic territories and often
employ sub-reps to increase presence in particular areas. The Company's
representatives are charged with calling on the approximately 20,000 to 25,000
targeted repair facilities with annual revenue over $300,000. The
representatives are highly experienced within the collision repair industry and
typically assist customers in dealing with a variety of business issues. The
Company also employs 5 sales managers who manage the sales representatives.
The Company's marketing efforts for the automobile insurance market are
conducted through three principal means. The Company believes that most claims
executives and managers learn about new technologies and solutions through sales
personnel, so the majority of the Company's insurance marketing dollars is
devoted to developing professional collateral materials for use by the sales
force. The Company sponsors an annual industry conference for senior claims
industry executives. The Company's senior managers are frequent speakers at
industry gatherings and are frequent authors of articles published in industry
and national print media.
The Company's marketing efforts for the automobile repair market are
conducted through participation in national and regional trade shows, lead
generating direct marketing programs, collateral materials and trade
advertising.
TRAINING AND SUPPORT
Field appraisers, claim representatives and collision repair facility owners
are dependent upon the Company's tools and information to make proper decisions
at the right time for high consumer satisfaction and managed restoration costs.
The Company believes its customer support is a competitive advantage in the
marketplace. The Company addresses its customer service needs through a customer
support staff which provides centralized hotline telephone support and field
implementation and training. The Company's support staff consists of individuals
with technical knowledge and experience relating not only to application
software, operating systems and network communications but also to the new and
used car automobile markets and collision repair. As of May 31, 1996, the
Company had 165 employees engaged in field and central customer support.
In addition to its customer support staff, the Company maintains the
industry's largest staff of professional field trainers who implement every new
sale. The Company's collision estimating support staff can diagnose most
software issues over the telephone and has the ability to download an
appraiser's entire hard drive telephonically if the problem proves significant.
The Company's total loss support staff can make modifications to claims, provide
regulatory information or additional backup for a valuation to facilitate
settlement. The Company routinely analyzes call type to modify products or
training and, whenever necessary, will dispatch a field representative to
provide process assistance.
TECHNOLOGY
Underlying each of the Company's principal services and products are
value-added databases which customers access using workflow-oriented software
and the Company's value-added communications network.
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<PAGE>
TOTAL LOSS SERVICES AND PRODUCTS. The Company's proprietary database of
valuation data used in connection with its TOTAL LOSS services and products is
built through the Company's own data collection network. This network includes
detailed used car inventory and sales data from 4,000 automobile dealers in 192
metropolitan areas throughout the United States and Canada, as well as data from
local newspaper advertisements and prior transactions. The database includes
more than 15 million prior valuations, including theft data. The Company
maintains its total loss database on a mainframe computer which customers
directly access using the Company's proprietary communications network or by
telephone or facsimile.
PATHWAYS ENVIRONMENT. Over the past two years, the Company has built and
completed class libraries consisting of approximately 1,000 business and system
objects that serve as the foundation of its PATHWAYS product line. These objects
were designed with a work flow orientation and are used in a framework to manage
databases, maintain model persistence, create electronic workfiles, and
facilitate communications. These elements are used in conjunction with a common
graphical user interface for all applications. This approach is intended to
offer many advantages to the Company's customers, including ease of integration
of complementary systems and legacy applications. In addition, the graphical
user interface and object-oriented foundation of these services and products is
designed to enable faster introduction of additional application modules with
greater product quality assurance as well as easy integration with
customer-developed software applications. It is the Company's intent to build
all new products within this framework and to migrate existing products to it.
The Company believes this environment provides a competitive development
advantage.
COLLISION ESTIMATING SERVICES AND PRODUCTS. The Company offers its
collision estimating services and products through a personal computer-based,
open systems approach using its object-oriented design. The Company's principal
database for its collision estimating products is the Motor Crash Estimating
Guide published by a subsidiary of The Hearst Corporation. The Company licenses
this database under an agreement that grants to the Company a license to publish
the database electronically. This agreement includes the exclusive license for
P-page logic, the integral component of collision estimating software.
EZNET COMMUNICATIONS NETWORK. The Company's communications network, EZNET,
transmits and processes both staff and direct repair claims data. EZNET'S
Transport Layer provides reliable, secure data transmission. EZNET'S Workflow
Layer routes claims information and status updates to multiple recipients
according to insurance company preference and provides storage through network
mailboxes maintained by the Company. EZNET supports all major communications
protocols, including X25, SNA, ISDN and TCP/IP, as well as industry standards
such as CIECA.
PRODUCT DEVELOPMENT AND PROGRAMMING
The Company recognizes that its ability to maintain and grow its position in
the claims industry is dependent upon expansion of its products and services.
Investments in development are therefore critical to obtaining new customers and
renewals from existing customers. The Company's product development and
programming efforts principally consist of software development, development of
enhanced communication protocols and custom user interfaces, and database design
and enhancement. The Company employs approximately 160 people in its product
development organization. This group is comprised of database analysts, software
engineers, business systems analysts, product managers and quality assurance
employees responsible for client systems, server systems, data warehousing and
distribution systems. Product engineering activities focus on improving speed to
market of new products, services, and enhancements, adding new business
functions without affecting existing services and products, and reducing
development costs. The Company uses its class library of objects, knowledge of
its clients' workflows and its automated testing tools to deliver quality
workflow-oriented solutions to the marketplace quickly. These efforts provide a
significant competitive advantage to the Company in the development of new
services and products. The Company develops products in close collaboration with
its clients based on specific needs. The Company's total product development and
programming expense was $3.0 million, $10.1 million and $14.9 million for the
twelve months ended December 31, 1993, 1994 and 1995, respectively.
INTELLECTUAL PROPERTY
The Company relies primarily on a combination of contracts, intellectual
property laws, confidentiality agreements and software security measures to
protect its proprietary technology. The Company distributes its
39
<PAGE>
products under written license agreements, which grant end-users a license to
use the Company's services and products and which contain various provisions
intended to protect the Company's ownership and confidentiality of the
underlying technology. The Company also requires all of its employees and other
parties with access to its confidential information to execute agreements
prohibiting the unauthorized use or disclosure of the Company's technology.
The Company has trademarked virtually all of its services and products.
These marks are used by the Company in the advertising and marketing of the
Company's services and products. EZEST and CCC are well-known marks within the
automobile insurance and collision repair industries. The Company has patents
for its collision estimation product pertaining to the comparison and analysis
of the "repair or replace" and the "new or used" parts decisions. While the
total loss calculation process is not patented, the methodology and processes
are trade secrets of the Company and are essential to the Company's total loss
business. Despite these precautions, the Company believes that existing laws
provide only limited protection for the Company's technology and that it may be
possible for a third party to misappropriate the Company's technology or to
independently develop similar technology.
Certain data used in the Company's services and products is licensed from
third parties for which they receive royalties. The Company does not believe
that the Company's services and products are significantly dependent upon
licensed data, other than the Motor Crash Estimating Guide data, because the
Company believes it can find alternative sources for such data. The Company does
not believe that it has access to an alternative database that would provide
comparable information. Any interruption of the Company's access to the Motor
Crash Estimating Guide data could have a material adverse effect on the
Company's business, financial condition and results of operations.
The Company is not engaged in any material disputes with other parties with
respect to the ownership or use of the Company's proprietary technology.
However, the Company has been involved previously in intellectual property
litigation, the resolution of which resulted in substantial payments by the
Company. There can be no assurance that other parties will not assert technology
infringement claims against the Company in the future. The litigation of such a
claim may involve significant expense and management time. In addition, if any
such claim were successful, the Company could be required to pay monetary
damages and may also be required to either refrain from distributing the
infringing product or obtain a license from the party asserting the claim (which
license may not be available on commercially reasonable terms).
COMPETITION
The market for the Company's products is highly competitive. The Company
competes primarily on product differentiation, customer service and price. The
Company's principal competitors are small divisions of two well capitalized,
multinational firms, ADP and Thomson. ADP offers both a PC-based collision
estimating system and a total loss product to the insurance industry. It offers
a different collision estimating system and a hardware-based digital imaging
system to the collision repair industry. Thomson publishes crash guides for both
the insurance and automobile collision repair industries and markets collision
estimating, shop management and imaging products. In addition, there are several
very small, collision estimating programs sold into the market which do not use
P-page logic. The Company has experienced steady competitive price pressure,
particularly in the collision estimating market, over the past few years and
expects that trend to continue. The strength of this trend may cause the Company
to alter its mix of services, features and prices.
The Company intends to address competitive price pressures by providing high
quality, feature enhanced products and services to its clients. The Compay
intends to continue to develop user friendly claims products and services
incorporating its comprehensive proprietary inventory of data. The Company
expects that the PATHWAYS workflow manager will provide the necessary position
with its insurance customers to effectively compete against competitive price
pressures.
At times, insurance companies have entered into agreements with service
providers (including ADP, Thomson and CCC) wherein the agreement provides, in
part, that the insurance company will either use the product or service of that
vendor on an exclusive basis or designate the vendor as a preferred provider of
that product or service. If it is an exclusive agreement, the insurance company
mandates that collision repair
40
<PAGE>
facilities, independent appraisers and regional offices use the particular
product or service. If the vendor is a preferred provider, the collision repair
facilities, appraisers and regional offices, are encouraged to use the preferred
product, but may still choose another vendor's product or service. Additionally,
some insurance companies mandate that all products be tested and approved at the
companies' national level before regional levels can purchase such products. The
benefits of being an endorsed product or on the approved list of an insurance
company include immediate customer availability and a head start over
competitors who may not be so approved. With respect to those insurance
companies that have endorsed ADP or Thomson, but not CCC, the Company will be at
a competitive disadvantage.
In connection with the Company's strategy to provide outsourced claims
processing services, the Company will compete with other third-party service
providers, some of whom may have more capital and greater resources than the
Company.
The Company currently processes the vast majority of insurer-to-collision
repair facility repair assignment and estimate retrieval for DRPs through its
EZNET communications network. The Company believes there is a wide range of
prospective competitors in this service area, many of which have greater
resources than the Company.
EMPLOYEES
As of May 31, 1996, the Company had 878 full-time employees of whom 192 were
employed in sales and marketing functions, 164 were employed in customer support
functions, 165 in product development and quality assurance functions, 208 in
operations and 95 in finance and administration. The Company regularly seeks to
identify skilled software engineers and other potential employee candidates, and
has found that competition for personnel in the software industry is intense.
The Company believes its ability to recruit and retain highly skilled technical
and other management personnel will be critical to execute its business plans.
The Company's employees are not represented by any collective bargaining
agreement or organization. The Company believes that its relationships with its
employees are good.
FACILITIES
The Company's corporate headquarters are located in Chicago, Illinois where
the Company leases approximately 125,000 square feet of a multi-tenant facility
under a lease expiring in November, 2008. The Company also leases approximately
30,000 square feet in Glendora, California where a satellite development center
is housed, under a lease expiring in April, 1999. The Company believes that its
existing facilities and additional or alternative space available to it are
adequate to meet its requirements for the foreseeable future.
LEGAL PROCEEDINGS
There are no pending legal proceedings other than routine litigation arising
in the ordinary course of business. The Company does not believe that the
results of such litigation, even if the outcome were unfavorable to the Company,
would have a material adverse effect on its financial position.
GLOSSARY OF TERMS
BUSINESS AND SYSTEM OBJECT LIBRARIES -- Objects are reuseable pieces of
software that perform specific programming functions. Business objects perform
business tasks such as check writing, transfer of customer information, etc.
System objects perform computer tasks such as opening a file, adding data to a
particular field, etc. Objects are stored or housed in libraries.
CIECA -- The Collision Industry Electronic Commerce Association is a group
of information companies, repair facility owners and insurance company
management information systems professionals. CIECA's role is to promote data
communication standards for electronic commerce between collision repair
facilities and insurance companies.
DATA NAVIGATION SOFTWARE -- Software written to facilitate organizing,
selecting, viewing, finding or analyzing a portion of a larger volume of
electronic data or information.
DATA WAREHOUSING -- The function of storing vast amounts of electronic data
or information that can be accessed by software.
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<PAGE>
DIRECT REPAIR PROGRAM (DRP) -- An automobile insurance settlement process
whereby an insurer offers a consumer the option of bringing their vehicle
directly to a particular repair facility who will fix the car and bill the
insurer directly, without the involvement or need of an insurance adjuster.
GRAPHICAL USER INTERFACE -- The type of screen used for computer programs
that relies on pictures and images, in addition to character-based text.
LEGACY APPLICATIONS -- Pre-existing computer systems, dated in both
technology and functionality.
OBJECT ORIENTED SOFTWARE -- Software written with pieces of reuseable
software that perform specific programming functions. Business objects perform
business tasks such as check writing, transfer of customer information, etc.
System objects perform computer tasks such as opening a file, adding data to a
particular field, etc.
P-PAGE LOGIC -- Crash estimating guides contain procedure pages, known as
p-pages, that detail the steps involved in repairing various parts of a damaged
vehicle depending on where and how extensive the damage is. When automated in
software form, they are often referred to as computer assisted P-page logic.
SEVERITY -- An insurance term of art referring to actual cost of fixing a
vehicle, replacing a vehicle, medical bills or legal fees that do not include
the administrative expenses of settling the claim.
SOFT TISSUE CLAIM -- A claim arising from a non-verifiable injury to a
person's soft tissue (muscles, skin, nervous system).
SOFTWARE PLATFORM -- A term used to describe the underlying design of a
computer system that links together various processing applications.
TRANSPORT LAYER -- A term used to describe the collection of functions in a
data network that includes the movement of information as opposed to a workflow
layer, which refers to the management of information.
WORKFLOW MANAGEMENT SOFTWARE -- Computer programs written to facilitate the
defined steps of a particular process.
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MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The following table sets forth certain information with respect to the
executive officers and directors of the Company:
<TABLE>
<CAPTION>
NAME AGE POSITION
- --------------------------- --- -------------------------------------------------------------------------------
<S> <C> <C>
David M. Phillips 57 Chairman, President and Chief Executive Officer
J. Laurence Costin, Jr. 55 Vice Chairman
Githesh Ramamurthy 35 Chief Technology Officer and President--Strategic Client Division
John Buckner 50 President--Sales and Services Division
Blaine R. Ornburg 50 Executive Vice President--New Market Development
Leonard L. Ciarrocchi 43 Executive Vice President--Chief Financial Officer
Donald J. Hallagan 37 Vice President--Controller
Gerald P. Kenney 44 Vice President, Secretary and General Counsel
John J. Byrne(1) 64 Director
Morgan Davis(1) 45 Director
Thomas L. Kempner(1) 69 Director
Gordon S. Macklin(1) 68 Director
Robert T. Marto(1) 50 Director
Michael R. Stanfield(1) 46 Director
</TABLE>
- ------------------------
(1) Member of Audit Committee and Compensation Committee.
DAVID M. PHILLIPS has served as Chairman, President and Chief Executive
Officer since founding the Company in 1983. Prior to joining the Company, Mr.
Phillips served in a number of capacities at Citicorp including Senior Vice
President from 1975 to 1982. During his tenure he was controller of the
operating group; he was responsible for Citicard implementation; he led a team
that developed a national consumer strategy; and implemented the credit card
portion of the consumer strategy increasing the consumer card holders from
approximately 200,000 to over 10 million. Subsequently, he was responsible for
the Latin American Consumer Businesses that included banks; life insurance
companies; finance companies and credit cards. Mr. Phillips previously served as
Director of Special Markets and Division Controller at Polaroid Corporation.
J. LAURENCE COSTIN, JR. joined the Company in February 1983 as Executive
Vice President responsible for the Company's sales and client field service
organization. He currently serves as Vice Chairman, a position he has held since
May 1993. Prior to joining the Company, Mr. Costin was Senior Vice President and
General Manager for the Midwest region of Seligman & Latz, Inc., a Fortune 500
company which managed department store concessions.
GITHESH RAMAMURTHY joined the Company in July 1992 as Executive Vice
President-Product Engineering and Chief Technology Officer. In January 1996, he
assumed the position of President-Strategic Client Division while retaining the
position of Chief Technology Officer. Prior to joining the Company, Mr.
Ramamurthy was a founding member of Sales Technologies, Inc., a field sales
automation software company. Sales Technologies sold to a long list of Fortune
100 clients in the United States and Europe before it was acquired by Dun &
Bradstreet in 1989. Mr. Ramamurthy directed product development activities for
that company.
JOHN BUCKNER joined the Company in January 1994 as Senior Vice
President-AutoBody Division. Mr. Buckner was promoted to Executive Vice
President-Sales and Services Division and currently serves as President-Sales
and Services Division. Prior to joining the Company, Mr. Buckner was Vice
President and General Manager of U.S. Automotive Operations at Sun Electric
Corporation. Previously, Mr. Buckner held a variety of senior sales and new
market development positions at Reynolds & Reynolds.
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<PAGE>
BLAINE R. ORNBURG joined the Company in April 1995 as Executive Vice
President-New Market Development. In January 1996, he assumed the additional
responsibilities of Acting Chief Financial Officer, a position he held until
June, 1996. Prior to joining the Company, Mr. Ornburg served as Senior Vice
President of First Data Corporation. Mr. Ornburg joined First Data Corporation
upon its purchase of Anasazi, Inc., a software and networking company Mr.
Ornburg founded in 1987. Previously, Mr. Ornburg was Vice President-Point of
Transaction Systems for VISA International.
LEONARD L. CIARROCCHI joined the Company in June 1996 as Executive Vice
President and Chief Financial Officer. Prior to joining the Company, Mr.
Ciarrocchi was Vice President and Treasurer of White River Corporation from 1993
to 1996 and Manager of Finance of Fund American Enterprises, Inc. from 1991 to
1993. Mr. Ciarrocchi was Manager of Finance for Fund American Enterprises
Holdings, Inc. ("Fund American") from 1989 to 1991.
DONALD J. HALLAGAN joined the Company in August 1993 as Controller and was
promoted to Vice President--Controller in June 1996. Prior to joining the
Company he spent two years as Controller for Pollenex Corporation and two years
on the corporate staff of Santa Fe Pacific Corporation as Assistant Controller.
Previously, Mr. Hallagan served eight years on the professional staff of Price
Waterhouse LLP.
GERALD P. KENNEY joined the Company in March 1995 as Vice President,
Secretary and General Counsel. Prior to joining the Company, he served eleven
years as General Counsel for NEC Technologies Inc. Mr. Kenney's primary areas of
concentration are intellectual property law, sales and distribution and other
matters relating to the high-tech and information industries. He is the past
chair of the Electronic Industries Association (EIA), Government Affairs Counsel
and former member of the Board of Directors of the Consumer Electronics Group of
EIA.
JOHN J. BYRNE has served as a Director of the Company since 1994. Mr. Byrne
has been Chairman of the Board of Directors and Chief Executive Officer of Fund
American since 1985 and President of Fund American since 1990. Mr. Byrne has
also been Chairman of the Board of Directors and a director of Financial
Security Assurance Holdings Ltd. since May 1994. From 1989 through 1990, Mr.
Byrne was Chairman of the Board of Directors of Fireman's Fund Insurance
Company. Prior to joining Fireman's Fund Insurance Company, Mr. Byrne was
Chairman and Chief Executive Officer of GEICO Corporation from 1976 to 1985. Mr.
Byrne is an advisory director of Lehman Brothers Holdings, Inc.
MORGAN DAVIS has served as a Director of the Company since 1995. He has also
served since 1995 as the President and Chief Executive Officer of White
Mountains Insurance Company, a wholly owned subsidiary of Fund American. From
1992 to 1994, Mr. Davis was self-employed as a private investor in a number of
entrepreneurial enterprises. From 1987 to 1992, he served as President of
Fireman's Fund Commercial Insurance. Mr. Davis is currently a Director of White
Mountain Holdings and Valley Insurance Group.
THOMAS L. KEMPNER has served as a Director of the Company since 1983. Since
1979 he has served as Chairman and Chief Executive Officer of Loeb Holding
Corporation, an investment banking, registered broker/ dealer and registered
investment advisory firm. He also serves as a director of the following
companies: Alcide Corporation; The Arlen Corporation; Energy Research
Corporation; IGENE BioTechnology, Inc.; Intermagnetics General Corporation;
Northwest Airlines, Inc.; and Silent Radio, Inc.
GORDON S. MACKLIN has served as a Director of the Company since 1994. Mr.
Macklin has been Chairman of White River Corporation since 1993. From 1987 to
1992, he was Chairman of Hambrecht & Quist, LLC. Mr. Macklin served as President
of The National Association of Securities Dealers, Inc. from 1970 to 1987, and
was formerly a partner and Member of the Executive Committee of McDonald &
Company, an investment banking firm, from 1950 to 1970. Mr. Macklin is a
director, trustee, or managing general partner, as the case may be, of 53 of the
investment companies in the Franklin/Templeton Group, and a Director of Fund
American, MCI Communications Corporation, Fusion Systems Corp., MedImmune, Inc.,
Source One Mortgage Services Corp. and Shoppers Express Inc.
ROBERT T. MARTO has served as a Director of the Company since 1994. He
currently serves as President and Chief Executive Officer of White River
Corporation. From 1990 to 1993, he was President of Fund American Enterprises,
Inc., and an Executive Vice President and Chief Financial Officer of Fund
American. From 1977 to
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<PAGE>
1989, he held executive officer positions with Fireman's Fund Corporation and
Fireman's Fund Life Insurance Company. Mr. Marto is also a director of Vicorp
Restaurants, Inc., White River Corporation and Zurich Reinsurance Centre, Inc.
MICHAEL R. STANFIELD has served as a Director of the Company since 1995. He
has been Managing Director of Loeb Partners Corporation since 1993. From 1990 to
1993, Mr. Stanfield was self-employed as an independent consultant.
For their services as directors, the members of the Board of Directors who
are not employees of the Company, White River or affiliates of White River
(other than Mr. Byrne) are paid $5,000 per meeting. All directors are reimbursed
for reasonable expenses associated with their attendance at meetings of the
Board of Directors. All directors are elected by the stockholders at the annual
meeting and serve as directors until the next annual meeting.
All of the directors were elected pursuant to provisions of the Stockholders
Agreement. Pursuant to this agreement, Messrs. Phillips, Kempner and Stanfield
were designated directors by the Management Stockholders, Messrs. Marto and
Macklin were designated directors by White River and Messrs. Byrne and Davis
were nominated by White River subject to the approval of the Management
Stockholders. See "Principal Stockholders--Stockholders Agreement."
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with each of Mr. Buckner,
Mr. Ramamurthy, Mr. Ornburg, Mr. Ciarrocchi and Mr. Costin. Mr. Buckner's
employment agreement provides for an annual salary of $250,000 plus bonus, and
terminates April 30, 2001. Mr. Ramamurthy's employment agreement provides for an
annual salary of $275,000 plus bonus and terminates June 30, 2001. Mr. Ornburg's
employment agreement provides for an annual salary of $200,000 plus bonus and
terminates June 30, 2001. Mr. Ciarrocchi's employment agreement provides for an
annual salary of $200,000 plus bonus and terminates June 30, 2001. Mr. Costin's
employment agreement provides for an annual salary of $230,000 and terminates
April 30, 1999. Messrs. Buckner's, Ramamurthy's, Ciarrocchi's and Ornburg's
employment agreements each contain a non-compete and a change of control
provision and are subject to board of directors' ratification.
OTHER SIGNIFICANT MANAGEMENT PERSONNEL
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------ --- ----------------------------------------------------------------------------
<S> <C> <C>
Stephen E. Applebaum.......... 51 Senior Vice President--ACCLAIM Litigation Management
Samuel B. Barash.............. 58 Executive Vice President--New Product Development
Nancy T. Borghesi............. 48 Senior Vice President--Consulting Services
Michael J. D'Onofrio.......... 39 Vice President--Treasurer
William R. Geen............... 43 Senior Vice President--Total Loss Operations
T. Scott Leisher.............. 37 Senior Vice President--Strategic Accounts
Rick L. Mansel................ 43 Senior Vice President--Product Management
Martin G. McGrath............. 38 Senior Vice President--Marketing and Planning
Jack Rozint................... 41 Senior Vice President--ACCESS Claims Services
Richard L. Rumple............. 41 Senior Vice President--Product Engineering
</TABLE>
STEPHEN E. APPLEBAUM joined the Company in July 1987 as Vice
President-Business Development, was promoted to Senior Vice President-Business
Development, and currently serves as Senior Vice President-- ACCLAIM Litigation
Management, a position he has held since October 1994. Prior to joining the
Company, Mr. Applebaum was a management consultant and venture capitalist in
Toronto, Canada.
45
<PAGE>
SAMUEL B. BARASH joined the Company in August 1985 as Chief Operating
Officer and served in that capacity until 1987. Since that time, he has served
as Executive Vice President of New Product Development. Prior to joining the
Company, Mr. Barash was President of Diversified Food Services, a national food
service provider within the retail industry.
NANCY T. BORGHESI joined the Company in January 1986 as Vice
President-Systems. She became Vice President-Product Engineering and currently
serves as Senior Vice President-Consulting Services, a position she has held
since March 1995. Prior to joining the Company, Ms. Borghesi was a Systems and
Business Process Consultant for Arthur Young & Co.
MICHAEL J. D'ONOFRIO joined the Company in November 1992 as Treasurer and
was promoted to Vice President--Treasurer in June 1996. Prior to joining the
Company he spent six years as Group Manager of Claims Processing for Central
States Health and Welfare and Pension Funds. Mr. D'Onofrio previously served
four years on the professional staff of Arthur Young & Co.
WILLIAM R. GEEN joined the Company in March 1981 as Director of Operations.
He was promoted to Vice President--Dealer Services and currently serves as
Senior Vice President--Total Loss Operations, a position he has held since
August 1989. Prior to joining the Company, Mr. Geen worked seven years in the
retail auto industry.
T. SCOTT LEISHER began his career with the Company in January 1986 as an
Account Executive. He advanced through the sales ranks of the Company as a
Region Manager, Group Vice President-East Zone and Group Vice President-National
Accounts. Mr. Leisher currently serves as Senior Vice President-Strategic
Accounts, a position he has held since February 1995.
RICK L. MANSEL joined the Company in April 1995 as Senior Vice
President-Product Management. Prior to joining the Company he was Manager of
Worldwide Market Development for SSA, a financial and manufacturing systems
software company. Mr. Mansel previously served as Director of North American
Operations for Wang Laboratories.
MARTIN G. MCGRATH joined the Company in September 1992 as Director-New
Business Development. He was promoted to Vice President-Product Management and
currently serves as Senior Vice President-Marketing and Planning, a position he
has held since February 1995. Prior to joining the Company, Mr. McGrath was
General Manager of AT&T's Network Management Services Group.
JACK ROZINT joined the Company in April 1992 as Director-Product Planning
for the AutoBody Division. He was promoted to Vice President-AutoBody Sales and
Marketing and currently serves as Senior Vice President-ACCESS Claims Services,
a position he has held since October 1994. Prior to joining the Company, Mr.
Rozint was Director of Software Development at Akzo Systems Inc., a division of
Akzo Nobel.
RICHARD L. RUMPLE joined the Company in July 1990 as Manager-Product
Engineering. He was promoted to Vice President-Product Engineering and currently
serves as Senior Vice President-Product Engineering, a position he has held
since October 1995. Prior to joining the Company, Mr. Rumple served as Manager
of Distribution Systems at Baxter Healthcare.
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<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth certain information regarding the
compensation paid during 1995 to the Company's Chief Executive Officer and the
other four most highly compensated executive officers (collectively, the "Named
Executive Officers") whose total salary and bonus in 1995 exceeded $100,000:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
--------------------
COMMON STOCK
OTHER ANNUAL UNDERLYING
NAME AND PRINCIPAL POSITION(1) SALARY BONUS COMPENSATION OPTIONS(2)
- ----------------------------------------------------- ---------- --------- ------------- --------------------
<S> <C> <C> <C> <C>
David M. Phillips.................................... $ 448,008 -- -- --
Chairman, President and Chief
Executive Officer
J. Laurence Costin, Jr............................... 259,031 $ 75,000 -- --
Vice Chairman
Githesh Ramamurthy................................... 231,180 -- -- 133,600
Chief Technology Officer and President-- Strategic
Client Division
John Buckner......................................... 208,340 31,625 -- 104,000
President--Sales and Services Division
Blaine R. Ornburg.................................... 131,046 -- $ 50,000 80,000
Executive Vice President--New Market Development
</TABLE>
- ------------------------------
(1) This table excludes Edward J. Cheskis, former President--Claims Service
Division, whose 1995 salary, bonus and other compensation was $273,292,
$45,142 and $0, respectively.
(2) Represents the number of shares of Common Stock issuable upon exercise of
options granted pursuant to the Stock Option Plan.
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<PAGE>
The following tables set forth certain information regarding options/stock
appreciation rights granted to the Named Executive Officers:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
-------------------------------------------------------------- ANNUAL RATES OF
NUMBER OF PERCENT OF TOTAL STOCK PRICE
SECURITIES OPTIONS/ SARS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM (1)
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION --------------------
NAME GRANTED (#) FISCAL YEAR ($/SHARE) DATE 5%($) 10%($)
- ------------------------------------- --------------- ----------------- ------------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
David M. Phillips.................... -- -- -- -- -- --
Chairman, President and Chief
Executive Officer
J. Laurence Costin, Jr............... -- -- -- -- -- --
Vice Chairman
Githesh Ramamurthy................... 73,600 5.9 $ 1.75 2/1/00 $ 35,590 $ 78,630
Chief Technology Officer and
President-- 60,000 4.8 4.375 12/12/00 72,520 160,260
Strategic Client Division
John Buckner......................... 20,000 1.6 1.75 2/1/00 9,670 21,370
President--Sales and Services
Division 24,000 1.9 2.125 6/28/00 14,090 31,140
60,000 4.8 4.375 12/12/00 72,520 160,260
Blaine R. Ornburg.................... 80,000 6.4 1.75 4/17/00 38,680 85,470
Executive Vice President--New Market
Development
</TABLE>
- ------------------------------
(1) The potential realizable value is calculated based on the term of the option
at its time of grant (5 years) and is calculated by assuming that the stock
price on the date of grant as determined by the Board of Directors
appreciates at the indicated annual rate compounded annually for the entire
term of the option and that the option is exercised and sold on the last day
of its term for the appreciated price. The 5% and 10% assumed rates of
appreciation are derived from the rules of the Securities and Exchange
Commission and do not represent the Company's estimate or projection of the
future Common Stock price.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF SECURITIES IN-THE-MONEY OPTIONS
UNDERLYING UNEXERCISED AT FY-END ($)
SHARES ACQUIRED VALUE REALIZED OPTIONS AT FY-END (#) EXERCISABLE/UNEXERCISABLE
NAME ON EXERCISE (#) ($) EXERCISABLE/UNEXERCISABLE (1)
- ------------------------- --------------- ---------------- ----------------------- --------------------------
<S> <C> <C> <C> <C>
David M. Phillips........
Chairman, President and
Chief Executive Officer -- -- -- --
J. Laurence Costin,
Jr......................
Vice Chairman -- -- 134,176/57,584 $1,291,444/$554,246
Githesh Ramamurthy.......
Chief Technology Officer
and President--Strategic
Client Division -- -- 138,880/168,320 $1,295,200/$1,454,000
John Buckner.............
President--Sales and
Services Division -- -- 27,200/92,800 $220,700/$728,800
Blaine R. Ornburg........
Executive Vice
President-- New Market
Development -- -- 16,000/64,000 $148,000/$592,000
</TABLE>
- ------------------------------
(1) At an assumed offering price of the Common Stock of $11 per share, minus the
exercise price, multiplied by the number of shares underlying the option.
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<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Each member of the Board of Directors (except David M. Phillips) served as a
member of the Compensation Committee of the Company in 1995. The Company has
entered into certain transactions with the Loeb Entities, of which Thomas L.
Kempner is an affiliate, and with White River, of which Messrs. Byrne, Macklin
and Marto are affiliates. For further discussion of such transactions, see
"Certain Transactions."
The Compensation Committee has established salary and bonus levels for the
executive officers of the Company, including the Chief Executive Officer, based
on a combination of objective and subjective criteria. With respect to salary
levels, such levels are set subsequent to the Committee's determination of the
executive officer's contribution, progress and development. Bonuses, which may
be up to 50% of an officer's salary, are awarded based on profit growth of the
Company (calculated using an EBIT formula) and based on the subjective criteria
used in establishing salary levels.
STOCK OPTION PLAN
The Stock Option Plan was adopted by the Board of Directors in 1988 and was
most recently amended in November 1994 in order to advance the interests of the
Company by affording key executives and employees an opportunity to acquire a
proprietary interest in the Company and thus to stimulate increased personal
interest in such persons in the success and future growth of the Company. The
Stock Option Plan is administered by the Compensation Committee of the Board of
Directors. Pursuant to stock option agreements executed in connection with the
Stock Option Plan, Messrs. Ramamurthy, Buckner, Ornburg and Costin, were granted
stock options (the "Options") to purchase shares of Common Stock of the Company
pursuant to the terms set forth in the various stock option agreements. A total
of 2,777,920 shares of Common Stock have been reserved for issuance pursuant to
all options issued under the Stock Option Plan. The Options are exercisable at
per share prices ranging from $1.38 to $11.20. The Options are exercisable
annually in 20% increments beginning on the date of issuance. Messrs.
Ramamurthy, Buckner, Ornburg and Costin have been granted Options to purchase
307,200, 170,000, 130,000 and 191,760 shares of Common Stock, respectively. The
Options may be exercised solely by the grantees, or in the case of such
grantee's death or incapacity, by the grantee's executors, administrators,
guardians or other legal representatives and are not assignable or transferable
by such grantee.
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<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth the number and percentage (if more than 1%)
of the outstanding shares of Common Stock owned beneficially as of the date of
the Offering by (i) each director of the Company, (ii) each Named Executive
Officer, (iii) all directors and executive officers as a group, and (iv) each
person who, to the knowledge of the Company, beneficially owned more than 5% of
the Common Stock as of the date of this Prospectus.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP BENEFICIAL OWNERSHIP
OF COMMON STOCK OF COMMON STOCK
PRIOR TO THE OFFERING (1) AFTER THE OFFERING (1)
--------------------------- ---------------------------
NO. OF PERCENT NO. OF PERCENT
NAME OF BENEFICIAL OWNER SHARES OF CLASS SHARES OF CLASS
- --------------------------------------------------------------- ------------- ------------ ------------- ------------
<S> <C> <C> <C> <C>
David M. Phillips(2)........................................... 927,760 5.6 927,760 4.2
J. Laurence Costin, Jr.(3)..................................... 185,728 1.0 185,728 *
Blaine R. Ornburg(4)........................................... 54,000 * 54,000 *
Githesh Ramamurthy(5).......................................... 233,600 1.4 233,600 1.1
John Buckner(6)................................................ 60,920 * 60,920 *
John J. Byrne(7)............................................... -- -- -- --
Morgan Davis(8)................................................ -- -- -- --
Thomas L. Kempner(9)........................................... 3,724,674 22.6 3,724,674 17.0
Gordon S. Macklin(10).......................................... 8,584,564 51.9 8,584,564 39.0
Robert T. Marto(11)............................................ 8,584,564 51.9 8,584,564 39.0
Michael R. Stanfield(12)....................................... -- -- -- --
Loeb Entities(13).............................................. 3,457,315 21.0 3,457,315 15.7
61 Broadway
24th Floor
New York, New York 10006
White River Ventures, Inc...................................... 8,584,564 51.9 8,584,564 39.0
777 Westchester Ave.
Suite 201
White Plains, New York 10604
All directors and executive officers as a group (11 persons)... 13,088,558 80.1 13,088,558 59.5
</TABLE>
- ------------------------------
* Less than one percent of the outstanding Common Stock.
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities.
(2) Includes 400,000 shares of Common Stock held by Ruth Ann Phillips, Mr.
Phillips' wife. Mr. Phillips is a director of the Company and his address is
444 Merchandise Mart, Chicago, Illinois 60654.
(3) Includes 164,528 shares of Common Stock issuable upon exercise of
outstanding options which are exercisable within 60 days of August 1, 1996.
(4) Includes 26,000 shares of Common Stock issuable upon exercise of outstanding
options which are exercisable within 60 days of August 1, 1996.
(5) Includes 173,600 shares of Common Stock issuable upon exercise of
outstanding options which are exercisable within 60 days of August 1, 1996.
(6) Includes 49,200 shares of Common Stock issuable upon exercise of outstanding
options which are exercisable within 60 days of August 1, 1996.
(7) Mr. Byrne is a director of the Company.
(8) Mr. Davis is a director of the Company.
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(9) Includes 3,457,315 shares of Common Stock held by the Loeb Entities. Mr.
Kempner, a director of the Company, is the managing general partner or the
general partner of the general partner of each of the Loeb Entities. Mr.
Kempner disclaims beneficial ownership of the shares held by the Loeb
Entities, except to the extent of his pecuniary interests therein. Also
includes 267,360 shares of Common Stock issuable upon exercise of
outstanding options which are exercisable within 60 days of August 1, 1996.
(10) Includes 8,584,564 shares of Common Stock held by White River. Mr. Macklin,
a director of the Company, is Chairman of the Board of Directors of White
River and disclaims beneficial ownership of the shares held by White River,
except to the extent of his pecuniary interests therein.
(11) Includes 8,584,564 shares of Common Stock held by White River. Mr. Marto, a
director of the Company, is President and Chief Executive Officer of White
River and disclaims beneficial ownership of the shares held by White River,
except to the extent of his pecuniary interests therein.
(12) Mr. Stanfield is a director of the Company.
(13) Includes Loeb Investors Co. XV, Loeb Investors Co. XIII and Loeb Investors
Co. 108.
STOCKHOLDERS AGREEMENT
David M. Phillips and the Loeb Entities, of which Thomas L. Kempner is an
affiliate (collectively, the "Management Stockholders"), White River and the
Company have entered into a Stockholders Agreement dated June 16, 1994, pursuant
to which the Management Stockholders and White River have agreed to certain
provisions regarding the corporate governance of the Company, including the
election of directors. The Stockholders Agreement terminates upon the first to
occur of (i) the written agreement of the parties, (ii) the liquidation or
dissolution of the Company, (iii) the Redemption Date (as defined below) or (iv)
June 16, 1999.
After completion of the Offering, White River and its affiliates will hold
1,589 shares of Series C Preferred Stock and 10,794 shares of Series D Preferred
Stock. From the date of the closing of the Offering until the first day on which
there are no shares of Series C, or Series D, or Series E Preferred Stock
outstanding (the "Redemption Date"), the following provisions are in effect,
among others:
The Management Stockholders and White River shall take all actions necessary
to cause the nomination and election to the board of directors of (i) a number
of persons (which shall not be less than two) designated by White River which
the board of directors determines to be appropriate taking into account the
aggregate voting power and economic interest of White River and its affiliates
in the Company and (ii) three persons designated by a majority of shares of
Common Stock held by the Management Stockholders. The number of directors shall
be seven while the Stockholders Agreement is in effect. The Management
Stockholders and White River shall act to cause vacancies on the board of
directors to be filled by successors designated by the stockholder group that
designated the prior incumbent and shall not act to remove a director without
the consent of the stockholder group that designated such director except after
consultation with such stockholder group and after a determination that the
director to be removed has breached his fiduciary duties to the Company.
In addition, the Management Stockholders and White River have agreed that,
prior to the voluntary resignation from the board of directors, disability or
death of David M. Phillips, a majority of the directors designated by the
Management Stockholders shall be delegated, to the extent permitted by
applicable law, the authority of the board to determine the timing, price and
other terms of certain business combinations where the consideration to be
received is cash, cash equivalents or publicly traded securities, subject to the
fiduciary duties of the directors not designated by the Management Stockholders
and subject to the receipt of a fairness opinion from one of a list of specified
investment banks (which includes Hambrecht & Quist and Lazard Freres). Following
the voluntary resignation from the board of directors, death or disability of
David M. Phillips, the Management Stockholders and White River have agreed to
cause the directors respectively elected by them to approve certain business
combinations recommended by the other party, subject to receipt of a fairness
opinion and subject to the fiduciary duties of such directors.
The Management Stockholders and White River have also agreed that a majority
of the directors designated by the Management Stockholders shall be delegated,
to the extent permitted by applicable law and subject to the fiduciary duties of
the other directors, the authority of the board of directors with respect to the
timing, price, and other terms of each offering of Common Stock subsequent to
the Offering, provided, however, that the Company shall not consummate any such
subsequent offering (i) unless the Company can demonstrate to the reasonable
satisfaction of White River that after giving effect to such subsequent offering
the Company
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<PAGE>
would have funds legally available to redeem shares of the Redeemable Preferred
Stock in accordance with its terms and (ii) without the unanimous approval of
the members of the board of directors in the event that David M. Phillips shall
voluntarily resign from the board of directors, die, or become disabled.
Pursuant to the Stockholders Agreement, the directors elected by the
Management Stockholders have been delegated the authority of the board to
determine the timing, price and other terms of this Offering, subject to the
fiduciary duties of the other members of the board of directors not designated
by the Management Stockholders provided that the Company has been required to
demonstrate to the reasonable satisfaction of White River that after giving
effect to the Offering, the Company will have funds legally available to redeem
shares of the Redeemable Preferred Stock in accordance with its terms.
CERTAIN TRANSACTIONS
In connection with a reorganization agreement (the "Reorganization
Agreement") dated as of June 16, 1994, White River contributed to the Company
all of its right, title and interest in, to and under (i) the Company's 12%
Subordinated Notes due October 31, 1996, (ii) the Company's 12% Subordinated
Payment-in-Kind Notes due October 31, 1996, (iii) the Company's 12% Junior
Subordinated Payment-in-Kind Notes due October 31, 1996 and (iv) the Company's
Series A, Series B, and Series C Warrants. White River had previously acquired
all of such notes and warrants from the holders thereof for net cash
consideration of $39 million. Pursuant to the Reorganization Agreement, the
Company issued White River 5,000 shares of the Series C Preferred Stock, 34,000
shares of the Series D Preferred Stock, and 7,050,340 shares of the Common
Stock. The Company and White River also entered into certain other agreements,
including the Stockholders Agreement. See "Principal Stockholders" and
"Description of Capital Stock". White River also entered into a registration
rights agreement providing White River up to two demand registrations after June
16, 1999.
In July 1993, a subsidiary of the Company, Phone Base Systems, Inc. ("Phone
Base") repaid Mr. Phillips and the Loeb Entities (of which Mr. Kempner is an
affiliate) a total of $1.65 million that had been previously loaned to Phone
Base by them. Phone Base continued thereafter to experience liquidity problems,
and Mr. Phillips and the Loeb Entities advanced a further $1.5 million to Phone
Base, which has not been repaid. White River also advanced $150,000 to Phone
Base. All of these advances were secured by a royalty participation agreement
with Phone Base. White River also loaned Phone Base $200,000 represented by a
promissory note bearing interest at the rate of 9% per annum. In May 1994, White
River purchased for $550,000 from Sprint Communications L.P. ("Sprint") all of
Sprint's right, title and interest in a purchase agreement between Sprint and
Phone Base relating to certain telecommunications equipment supplied to Phone
Base by Sprint. In late 1994, White River transferred to the Company all of its
right, title and interest in the Sprint purchase agreement, the royalty
participation agreement, and the $200,000 promissory note for $900,000 in cash
plus interest at the rate of 9% per annum.
In November 1994, a subsidiary of the Company transferred for $500 all of
the stock of Phone Base to Loeb Investors Co. 119 ("Loeb 119") of which Mr.
Kempner is an affiliate. In addition, the Company transferred to Loeb 119 all of
its right, title and interest in certain obligations of Phone Base to the
Company. In consideration of these transfers, Loeb 119 paid the Company $124,500
in cash and a subsidiary of Phone Base issued an installment note in the
principal amount of $550,000. As of the date of this Prospectus, $222,000 in
principal amount remains outstanding with respect to the promissory note.
In March 1994, White River acquired from a third party a 50% joint venture
interest in CCCDC for a purchase price of $6.8 million. In connection therewith,
White River entered into a call agreement with the Company pursuant to which the
Company had the right to purchase the joint venture interest from White River at
its cost plus interest at the rate of 9% per annum. The Company exercised its
right to purchase in 1994 for an aggregate price of $6.9 million in cash.
During 1993 and 1994, the Loeb Entities, which own 21.0% of the shares of
Common Stock prior to the Offering and with which Mr. Kempner is affiliated,
purchased certain contracts from CCCDC at prices determined by discounting the
anticipated cash flow from these contracts. The gross proceeds and related
discount values for contracts purchased in 1993 were $5.2 million and $0.7
million, respectively, and for
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<PAGE>
contracts purchased in 1994 were $0.9 million and $0.2 million, respectively. In
addition, the Loeb Entities advanced $3.1 million of the bridge loan proceeds
used to acquire the remaining interest in CCCDC, effective March 30, 1994. See
Note 4 to the Consolidated Financial Statements.
DESCRIPTION OF CAPITAL STOCK
As of the date of this Prospectus, the authorized capital stock of the
Company consists of 30,000,000 shares of Common Stock, par value $.10 per share
of which 22,026,800 shares shall be outstanding following the Offering, and
100,000 shares of Preferred Stock, $1.00 par value per share (the "Preferred
Stock") of which 12,870 shares shall be outstanding immediately following the
Offering. Of the Preferred Stock, 5,000 shares have been designated as Series C
Cumulative Redeemable Preferred Stock, par value $1.00 per share (the "Series C
Preferred Stock"), 34,000 shares have been designated as Series D Cumulative
Redeemable Preferred Stock, par value $1.00 per share (the "Series D Preferred
Stock"), and 500 shares have been designated as Series E Cumulative Redeemable
Preferred Stock, par value $1.00 per share (the "Series E Preferred Stock"). The
following summary of the Company's capital stock is qualified in its entirety by
reference to the Company's Amended and Restated Certificate of Incorporation and
Bylaws, each of which is filed as an exhibit to the registration statement of
which this Prospectus is a part.
COMMON STOCK
The holders of Common Stock are entitled to one vote for each share on all
matters voted upon by stockholders, including the election of directors. The
holders of a majority of the outstanding Common Stock have agreed to certain
provisions regarding corporate governance, including the election of directors,
in the Stockholders Agreement, which will remain in effect after the completion
of the Offering. See "Principal Stockholders--Stockholders Agreement."
Subject to the rights of any then outstanding shares of Preferred Stock, the
holders of the Common Stock are entitled to such dividends as may be declared in
the discretion of the Board of Directors out of funds legally available
therefor. See "Dividend Policy." Holders of Common Stock are entitled to share
ratably in the net assets of the Company upon liquidation after payment or
provision for all liabilities and any preferential liquidation rights of the
Preferred Stock then outstanding. The holders of Common Stock have no preemptive
rights to purchase shares of stock in the Company. Shares of Common Stock are
not subject to any redemption provisions and are not convertible into any other
securities of the Company. All outstanding shares of Common Stock are, and the
shares of Common Stock to be issued by the Company pursuant to the Offering will
be, upon payment therefor, fully paid and non-assessable.
PREFERRED STOCK
The Preferred Stock may be issued from time to time by the Board of
Directors as shares of one or more classes or series. Subject to the provisions
of the Company's Amended and Restated Certificate of Incorporation and
limitations prescribed by law, the Board of Directors is expressly authorized to
adopt resolutions to issue the shares, to fix the number of shares and to change
the number of shares constituting any series, and to provide for or change the
voting powers, designations, preferences and relative, participating, optional
or other special rights, qualifications, limitations or restrictions thereof,
including dividend rights (including whether dividends are cumulative), dividend
rates, terms of redemption (including sinking fund provisions), redemption
prices, conversion rights and liquidation preferences of the shares constituting
any class or series of the Preferred Stock, in each case without any further
action or vote by the stockholders. The Company has no current plans to issue
any additional shares of Preferred Stock of any class or series.
One of the effects of undesignated Preferred Stock may be to enable the
Board of Directors to render more difficult or to discourage an attempt to
obtain control of the Company by means of a tender offer, proxy contest, merger
or otherwise, and thereby to protect the continuity of the Company's management.
The issuance of shares of the Preferred Stock pursuant to the Board of
Directors' authority described above may adversely affect the rights of the
holders of Common Stock. For example, Preferred Stock issued by the Company may
rank prior to the Common Stock as to dividend rights, liquidation preference or
both, may have full or limited voting rights
53
<PAGE>
and may be convertible into shares of Common Stock. Accordingly, the issuance of
shares of Preferred Stock may discourage bids for the Common Stock or may
otherwise adversely affect the market price of the Common Stock.
THE REDEEMABLE PREFERRED STOCK
In June 1994, the Company issued 5,000 shares of the Series C Preferred
Stock and 34,000 shares of the Series D Preferred Stock to White River. The
terms of the Series C Preferred Stock and the Series D Preferred Stock are
generally the same, except as provided below in "Redemption" and "Series C
Default Rights." Each share of the Redeemable Preferred Stock has a stated value
of $1,000.
DIVIDENDS. On the first dividend payment date (defined as November 30,
February 28, May 31, and August 31 of each year) following June 16, 1998 (the
fourth anniversary of the original issue date), the holders of shares of the
Redeemable Preferred Stock shall be entitled to receive cash dividends, when and
as declared, at the dividend rate applicable from time to time as set forth
below, PROVIDED, HOWEVER, in the event the Company fails to redeem shares of the
Redeemable Preferred Stock as required following the consummation of the
Company's initial public offering of Common Stock, dividends shall be payable
commencing on the first dividend payment date following the 90th day following
the consummation of such initial public offering. Dividends on parity stock must
be declared to be paid either in full or else PRO RATA among all shares of
parity stock issued and outstanding. While any shares of Redeemable Preferred
Stock are outstanding, no dividends or distributions may be declared or paid
with respect to any stock (including the Common Stock) junior to the Redeemable
Preferred Stock, nor may any junior stock or parity stock (other than the Series
E Preferred Stock) be redeemed, purchased, or otherwise acquired for
consideration by the Company.
Dividends accrue from June 16, 1994 (the original issue date). The dividend
rate is applicable to the stated value of each outstanding share of the
Redeemable Preferred Stock. The dividend rate is 2.75% per annum from the
original issue date to and including the earlier of the date of consummation of
this Offering or June 16, 1998, and shall be 8.0% per annum thereafter, subject
to the following adjustments: (i) if the Company makes the required redemptions
of the Redeemable Preferred Stock from the proceeds of this Offering, then the
dividend rate shall be 0% from the date of the consummation of this Offering to
June 16, 1998; and (ii) if prior to the date of mandatory redemption of the
Redeemable Preferred Stock, the Company makes a good faith offer to purchase all
or any of the Redeemable Preferred Stock at a price equal to the stated value
plus accrued but unpaid dividends to and including the date set for repurchase,
and the holders of shares of Redeemable Preferred Stock refuse such offer with
respect to any shares subject to such offer, then the applicable dividend rate
with respect to such shares of the Redeemable Preferred Stock shall, after the
date fixed for repurchase, be the lesser of 1% per annum and the rate applicable
to such shares pursuant to clause (i) above.
REDEMPTION. Unless earlier redeemed pursuant to the redemption provisions
described below, the Redeemable Preferred Stock shall be redeemed on June 16,
1999 at the stated value plus all accrued and unpaid dividends to (and
including) the redemption date. Redemptions are to be made PRO RATA between the
Series C, Series D and Series E Preferred Stock and any other parity stock.
Concurrently with the consummation of an initial public offering of Common
Stock having proceeds to the Company in excess of $40,000,000, the Company is
obligated to redeem the lesser of (i) the number of shares of Redeemable
Preferred Stock then outstanding or (ii) the number of shares of Redeemable
Preferred having an aggregate stated value plus accrued but unpaid dividends
equal to 50% of the net proceeds to the Company from the initial public offering
of Common Stock. Similar provisions apply if the Company is required to make
loan payments from the proceeds or if the Company fails to make the required
redemptions.
The Company also may be required to redeem the Redeemable Preferred Stock
(i) in the event that the Company or a subsidiary fails to pay any principal or
interest on indebtedness when due or during an applicable grace period or (ii)
in the event that notice of acceleration of the maturity or required prepayment
and demand for payment is received, in either case with respect to indebtedness
in an aggregate amount in excess of $500,000. In such event, the holders of a
majority of the then outstanding Series C Preferred Stock shall have the sole
discretion to determine the action to be taken on behalf of the Company with
respect to such indebtedness.
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For so long as White River or its affiliates own any shares of the Series C
Preferred Stock, the Company may not engage in certain business combinations
unless all of the shares of the Series C Preferred Stock have been redeemed.
VOTING. Except as described below in "Series C Default Rights" and except
as required by the Delaware General Corporation Law, none of the holders of
issued and outstanding Redeemable Preferred Stock shall have voting rights,
PROVIDED, HOWEVER, that the affirmative vote of the holders of at least 66 2/3%
of each series of the Redeemable Preferred Stock, voting separately as a class,
shall be necessary (i) to authorize, create or increase the authorized or issued
number of shares of, or issue any shares of any class or series of parity stock
or senior stock or (ii) amend, alter or repeal any of the provisions of the
Certificate of Incorporation of the Company or the applicable certificate of
designations that would materially and adversely affect any right, preference,
privilege or voting power of the respective series of Redeemable Preferred Stock
or the holders thereof. In the event of an issuance of shares of Series E
Preferred Stock in exchange for shares of Series D Preferred Stock as described
in "The Series E Preferred Stock" below, shares of the Series E Preferred Stock
would have the voting rights described below.
SERIES C DEFAULT RIGHTS. So long as White River or its affiliates
beneficially own at least 50% of the issued and outstanding Series C Preferred
Stock, if the Company shall fail (i) to discharge its obligation to redeem
shares of Series C Preferred Stock (a "Redemption Default") or (ii) to declare
and pay in full the dividends on the Series C Preferred Stock within 90 days
after the Company is required to do so (a "Dividend Default") the number of
directors shall be increased by the number of directors necessary to constitute
a majority of the directors of the Company, and the holders of the Series C
Preferred Stock, voting separately as a class, shall be entitled to elect
directors to fill such newly created directorships. In the case of a Redemption
Default, such directors and voting rights shall continue until White River and
its affiliates shall cease to own at least 50% of the shares of issued and
outstanding Series C Preferred Stock. In the case of a Dividend Default, such
additional directors and voting rights shall continue until such time as the
Dividend Default no longer exists. Neither a Redemption Default nor a Dividend
Default has occurred to date. If the number of directors cannot be increased as
provided above, the Company shall take all actions necessary to implement the
intent of these provisions, including causing the resignation of directors to
create vacancies to be filled by the action of the holders of the outstanding
Series C Preferred Stock.
THE SERIES E PREFERRED STOCK
The Company and White River have entered into the White River Agreement that
provides that the Company, within three days following receipt of written
notification from White River to the effect that the number of shares of Common
Stock owned by White River represents less than a majority of the issued and
outstanding shares of Common Stock, will issue to White River 500 shares of the
Series E Preferred Stock in exchange for 500 Shares of the Series D Preferred
Stock. The White River Agreement was entered into in connection with the
recapitalization of the Company in 1994 and to help ensure that White River
Corporation avoid registration as an investment company under the Investment
Company Act of 1940. White River has informed the Company of its present
intention to exchange 500 shares of Series D Preferred Stock for 500 shares of
Series E Preferred Stock sometime after the consummation of the Offering. When
properly notified in writing of such request, the Company will issue, within
three business days, such 500 shares of Series E Preferred Stock to White River.
The terms of the Series E Preferred Stock and the Series D Preferred Stock
are generally the same, except that outstanding shares of the Series E Preferred
Stock carry certain voting rights if they are beneficially owned by White River
or any of its affiliates. In such circumstances, White River and its affiliates
that own any shares of Series E Preferred Stock shall be entitled to vote
together with the holders of Common Stock and all other securities entitled to
vote on all matters voted on by holders of Common Stock. The number of votes
which each share of Series E Preferred Stock may cast is determined according to
a formula, the effect of which is to cause White River and its affiliates,
through their ownership of shares of Series E Preferred Stock, to have 51% of
the votes to be cast on any matter to be voted upon by the holders of the Common
Stock for so long as all of the shares of Series E Preferred Stock are issued,
outstanding and held by White River and its affiliates. Therefore, for so long
as all of the outstanding shares of the Series E Preferred Stock were held by
White River or its
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<PAGE>
affiliates, White River would be able to control 51% of the votes cast with
respect to any matter to be voted upon by holders of the Common Stock regardless
of the actual number of shares of Common Stock held by White River. To the
extent White River also owns shares of Common Stock, such Series E Preferred
Stock will only provide an additional voting percentage that, when added
together with the vote from White River's shares of Common Stock, will provide
White River with a maximum of 51% of the votes.
Pursuant to the terms of the Certificate of Designations for the Series E
Preferred Stock, the voting power of the outstanding shares of Series E
Preferred Stock is reduced according to a formula to the extent that outstanding
shares of Series E Preferred Stock are either redeemed by the Company or no
longer owned by White River and its affiliates. If White River and its
affiliates were to continue to hold 39.0% of the outstanding shares of Common
Stock, the Series E Preferred Stock voting power combined with the voting power
of the Common Stock held by White River would be less than a majority when 393
(or 78.6%) of the 500 shares of Series E Preferred Stock had been so redeemed or
are no longer so owned. The outstanding shares, if any, of Series E Preferred
Stock are redeemable pro rata with the outstanding shares of Series C and Series
D Preferred Stock and other parity stock, if any.
SPECIAL PROVISIONS OF THE CERTIFICATE OF INCORPORATION, BYLAWS AND DELAWARE LAW
The Certificate of Incorporation provides that no director of the Company
shall be personally liable to the Company or its stockholders for monetary
damages for breach of duty as a director, except for liability (i) for any
breach of the director's duty of loyalty to the Company or its stockholders,
(ii) for acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law, (iii) pursuant to Section 174 of the
Delaware Law or (iv) for any transaction from which the director derived an
improper personal benefit. The effect of these provisions is to eliminate the
rights of the Company and its stockholders (through stockholders' derivative
suits on behalf of the Company) to recover monetary damages against a director
for breach of fiduciary duty as a director (including breaches resulting from
grossly negligent behavior), except in the situations described above.
The Bylaws provide that the Company will indemnify its directors and
officers to the fullest extent permissible under the Delaware Law. These
indemnification provisions require the Company to indemnify such persons against
certain liabilities and expenses to which they may become subject by reason of
their service as a director or officer of the Company. The provision also set
forth certain procedures, including the advancement of expenses, that apply in
the event of a claim for indemnification.
DELAWARE ANTI-TAKEOVER LAW. The Company will not be subject to the
provisions of Section 203 of the Delaware Law ("Section 203"). Section 203
provides, with certain exceptions, that a Delaware corporation may not engage in
any of a broad range of business combinations with a person or an affiliate, or
associate of such person, who is an interested stockholder for a period of three
years from the date that such person became an interested stockholder.
A corporation may, at its option, exclude itself from the coverage of
Section 203 by amending its certificate of incorporation or bylaws, by action of
its stockholders to exempt itself from coverage, provided that such bylaw or
certificate of incorporation amendment shall not become effective until twelve
months after the date it is adopted. In its amended and restated Certificate of
Incorporation to be filed upon the completion of this Offering, the Company will
exclude itself from the coverage of Section 203.
TRANSFER AGENT AND REGISTRAR
The Company's transfer agent and registrar for the Common Stock is Harris
Trust and Savings Bank.
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<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
Prior to this Offering, there has been no market for the Common Stock of the
Company. Future sales of substantial amounts of Common Stock in the public
market could adversely affect market prices prevailing from time to time.
Several of the Company's principal stockholders hold a significant portion of
the Company's outstanding Common Stock, including White River which holds
8,584,564 shares representing 39.0% of the outstanding shares of the Common
Stock after the Offering (37.6% if the Underwriters' over-allotment option is
exercised in full) and a decision by one or more of these stockholders to sell
their shares could adversely affect the market price of the Common Stock. The
Stockholders Agreement provides that in connection with a public offering
subsequent to this Offering the Management Stockholders may not sell more than a
number of shares of Common Stock which exceeds either 10% of the then total
number of shares of Common Stock outstanding or 50% of the total shares of
Common Stock then being offered without the written consent of the White River
Stockholders.
Upon completion of this Offering, the Company will have outstanding
22,026,800 shares of Common Stock (22,851,800 shares if the Underwriters'
over-allotment option is exercised in full). Of these shares, the shares sold in
this offering will be freely tradeable without restriction under the Securities
Act, unless purchased by "affiliates" of the Company as that term is defined in
Rule 144 under the Securities Act. Of the remaining 16,526,800 shares, 808,000
shares which are not held by affiliates and not subject to the lock-up
agreements described below will also be freely tradeable under the federal
securities laws.
The remaining 15,718,800 shares held by existing stockholders will be
"restricted securities" as that term is defined in Rule 144 under the Securities
Act ("Restricted Shares"). Restricted Shares may be sold in the public market
only if registered under the Securities Act or if they qualify for an exemption
from registration under Rule 144 promulgated under the Securities Act, which is
summarized below. Sales of the Restricted Shares in the public market, or the
availability of such shares for sale, could adversely affect the market price of
the Common Stock.
Holders of 14,911,500 shares of Common Stock of the Company have entered
into contractual lock-up agreements providing that they will not sell, contract
to sell or grant any option to purchase or otherwise dispose of the shares of
Common Stock owned by them or that could be purchased by them through the
exercise of options to purchase Common Stock of the Company for 180 days after
the effective date of this Prospectus without the prior written consent of
Hambrecht & Quist LLC. As a result of these contractual restrictions,
notwithstanding possible earlier eligibility for sale under the provisions of
Rule 144, shares subject to lock-up agreements will not be saleable until the
agreements expire. In addition, a total of 5,962,885 shares are subject to right
of first refusal agreements with the Company.
In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated) who has beneficially owned Restricted Shares for at
least two years (including the holding period of any prior owner except an
affiliate) would be entitled to sell within any three-month period a number of
shares that does not exceed the greater of (i) one percent of the number of
shares of Common Stock then outstanding (approximately 220,300 shares
immediately after this Offering), or (ii) the average weekly trading volume of
the Common Stock during the four calendar weeks preceding the filing of a Form
144 with respect to such sale. Sales under Rule 144 are also subject to certain
manner of sale provisions and notice requirements and to the availability of
current public information about the Company. Under Rule 144(k), a person who is
not deemed to have been an affiliate of the Company at any time during the 90
days preceding a sale, and who has beneficially owned the shares proposed to be
sold for at least three years (including the holding period of any prior owner
except an affiliate), is entitled to sell such shares without complying with the
manner of sale, public information, volume limitation or notice provisions of
Rule 144.
Shortly after this Offering, the Company intends to file a registration
statement on Form S-8 under the Securities Act covering shares of Common Stock
reserved for issuance under the Company's Stock Option Plan. Based on the number
of shares reserved for issuance, such registration statement would cover
approximately 2,777,900 shares. Such registration statement will automatically
become effective upon filing. Accordingly,
57
<PAGE>
shares registered under such registration statement will, subject to Rule 144
volume limitations applicable to affiliates, be available for sale in the open
market, unless such shares are subject to vesting restrictions with the Company
or the lock-up agreements described above.
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement, the
Underwriters named below, through their Representatives, Hambrecht & Quist LLC,
Lazard Freres & Co. LLC, and Raymond James & Associates, Inc., have severally
agreed to purchase from the Company the following respective numbers of shares
of Common Stock:
<TABLE>
<CAPTION>
NUMBER
NAME OF SHARES
- ---------------------------------------------------------------------------------- ----------
<S> <C>
Hambrecht & Quist LLC.............................................................
Lazard Freres & Co. LLC ..........................................................
Raymond James & Associates, Inc...................................................
----------
Total.............................................................................
----------
----------
</TABLE>
The Underwriting Agreement provides that the obligations of the Underwriters
are subject to certain conditions precedent, including the absence of any
material adverse change in the Company's business and the receipt of certain
certificates, opinions and letters from the Company and its counsel and
independent auditors. The nature of the Underwriters' obligation is such that
they are committed to purchase all shares of Common Stock offered hereby if any
of such shares are purchased.
The Underwriters propose to offer the shares of Common Stock directly to the
public at the initial public offering price set forth on the cover page of this
Prospectus and to certain dealers at such price less a concession not in excess
of $ per share. The Underwriters may allow and such dealers may reallow a
concession not in excess of $ per share to certain other dealers. The
Underwriters have informed the Company that they do not intend to confirm sales
to any accounts over which they exercise discretionary authority. After the
initial public offering of the shares, the offering price and other selling
terms may be changed by the Representatives of the Underwriters.
The Company has granted to the Underwriters an option, exercisable no later
than 30 days after the date of this Prospectus, to purchase up to 825,000
additional shares of Common Stock at the initial public offering price, less the
underwriting discount, set forth on the cover page of this Prospectus. To the
extent the Underwriters exercise this option, each of the Underwriters will have
a firm commitment to purchase approximately the same percentage thereof which
the number of shares of Common Stock to be purchased by it shown in the above
table bears to the total number of shares of Common Stock offered hereby. The
Company will be obligated, pursuant to the option, to sell shares to the
Underwriters to the extent the option is exercised. The Underwriters may
exercise such option only to cover over-allotments made in connection with the
sale of Common Stock offered hereby.
The offering of the shares is made for delivery when, as and if accepted by
the Underwriters and subject to prior sale and to withdrawal, cancellation or
modification of the offering without notice. The Underwriters reserve the right
to reject an order for the purchase of shares in whole or in part.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act, and to contribute
to payments the Underwriters may be required to make in respect thereof.
58
<PAGE>
The Company and certain stockholders, including all of the Company's
executive officers and directors, who own in the aggregate 14,911,500 shares of
Common Stock, have agreed that they will not, without the prior written consent
of Hambrecht & Quist LLC, offer, sell or otherwise dispose of any shares of
Common Stock, options, rights or warrants to acquire shares of Common Stock, or
securities exchangeable for or convertible into shares of Common Stock during
the 180-day period commencing on the date of this Prospectus, except that the
Company may grant additional options under its Stock Option Plan, provided that,
without the prior written consent of Hambrecht & Quist LLC, such additional
options shall not be exercisable during such period.
Two entities affiliated with Hambrecht & Quist LLC, H&Q CCC Investors L.P.
("Investors L.P.") and H&Q London Ventures (together with Investors L.P., the
"Hambrecht & Quist Stockholders") are stockholders of the Company. The Hambrecht
& Quist Stockholders currently hold 1,462 shares of Redeemable Preferred Stock
(3.8% of the total outstanding Redeemable Preferred Stock) and 264,407 shares of
Common Stock (1.4% of the total outstanding Common Stock). The Hambrecht & Quist
Stockholders acquired these shares in June 1994 contemporaneously with the
investment in the Company by White River. The predecessor of Hambrecht & Quist
LLC acted as financial advisor to the Company in connection with that
transaction and received a fee of $1.8 million. A portion of the shares of
Redeemable Preferred Stock held by the Hambrecht & Quist Stockholders will be
redeemed from the proceeds of the Offering on the same terms as will those of
White River. Further, a Managing Director of Lazard Freres & Co. LLC, one of the
Representatives, is the son of a member of the Company's Board of Directors and
beneficially owns indirectly 45,778 shares of Common Stock of the Company.
Prior to this Offering, there has been no public market for the Common
Stock. The initial public offering price for the Common Stock will be determined
by negotiation among the Company and the Representatives. Pursuant to the terms
of the Stockholders Agreement Messrs. Kempner, Phillips and Stanfield have been
delegated authority of the board of directors of the Company to negotiate the
timing, price and other terms of this Offering. See "Principal Stockholders --
Stockholders Agreement." Among the factors to be considered in determining the
initial public offering price are prevailing market and economic conditions,
revenues and earnings of the Company, market valuations of other companies
engaged in activities similar to the Company, estimates of the business
potential and prospects of the Company, the present state of the Company's
business operations, the Company's management and other factors deemed relevant.
The estimated initial public offering price range set forth on the cover of this
Prospectus is subject to change as a result of market conditions and other
factors.
LEGAL MATTERS
The validity of the shares of securities offered hereby will be passed upon
for the Company by Winston & Strawn, Chicago, Illinois. Certain matters will be
passed upon for the Underwriters by Heller Ehrman White & McAuliffe, San
Francisco, California.
EXPERTS
The consolidated financial statements of the Company and its subsidiaries at
December 31, 1995 and 1994, and for each of the three years in the period ended
December 31, 1995 included in this Prospectus have been audited by Price
Waterhouse LLP, independent public accountants, and are included in reliance
upon the report of Price Waterhouse LLP given on their authority as experts in
accounting and auditing. The financial statements of CCCDC for the year in the
period ended December 31, 1993 included in this Prospectus have been audited by
Price Waterhouse LLP, independent public accountants, and are included in
reliance upon the report of Price Waterhouse LLP, given on their authority as
experts in accounting and auditing.
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission"), a Registration Statement on Form S-1 under the Securities Act
with respect to the shares of Common Stock offered hereby. This Prospectus does
not contain all the information set forth in the Registration Statement and the
exhibits and schedules thereto. For further information with respect to the
Company and such Common Stock, reference is made to the Registration Statement
and to the exhibits and schedules filed therewith. Statements contained in
59
<PAGE>
this Prospectus as to the contents of any contracts or other document referred
to are not necessarily complete, and in each instance reference is made to the
copy of such contract or other document filed as an exhibit to the Registration
Statement, each such statement being qualified in all respects by such
reference. A copy of the Registration Statement may be inspected by anyone
without charge at the Commission's principal office in Washington, D.C., and
copies of all or any part of the Registration Statement may be obtained from the
Public Reference Section of the Commission, 450 Fifth Street, N.W. Washington,
D.C. 20549, upon payment of certain fees prescribed by the Commission. The
Commission maintains an internet world wide web site that contains reports,
proxy and information reports and other materials that are filed through the
Commission's Electronic Data Gathering, Analysis and Retrieval System. The site
can be accessed at http:\\www.sec.gov.
The Company intends to distribute to the holders of its shares of Common
Stock annual reports containing consolidated financial statements audited by
independent accountants and quarterly reports containing unaudited consolidated
financial information for the first three quarters of each year.
60
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
CCC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
PAGE(S)
-----------------
<S> <C>
Report of Independent Accountants................................................................... F-2
Consolidated Financial Statements:
Consolidated Statement of Operations.............................................................. F-3
Consolidated Balance Sheet........................................................................ F-4
Consolidated Statement of Cash Flows.............................................................. F-5
Consolidated Statement of Stockholders' Deficit................................................... F-6
Notes to Consolidated Financial Statements........................................................ F-7 to F-19
</TABLE>
CCC DEVELOPMENT COMPANY
<TABLE>
<CAPTION>
PAGE(S)
-----------------
<S> <C>
Report of Independent Accountants................................................................. F-20
Financial Statements:
Statement of Operations......................................................................... F-21
Statement of Cash Flows......................................................................... F-22
Statement of Partners' Deficit.................................................................. F-23
Notes to Financial Statements................................................................... F-24-25
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
CCC Information Services Group Inc.
In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of operations and stockholders' deficit and of cash
flows present fairly, in all material respects, the financial position of CCC
Information Services Group Inc. (formerly known as InfoVest Corporation) (a
subsidiary of White River Ventures, Inc.) and its subsidiaries at December 31,
1995 and 1994, and the results of their operations and their cash flows for each
of the three years in the period ended December 31, 1995, in conformity with
generally accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
January 30, 1996, except for Note 17
which is as of August 13, 1996
Chicago, Illinois
F-2
<PAGE>
CCC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
-------------------------------- --------------------
1993 1994 1995 1995 1996
--------- --------- ---------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues................................................. $ 51,264 $ 91,917 $ 115,519 $ 56,624 $ 63,325
Expenses:
Production and customer support........................ 15,108 25,123 32,261 16,346 15,520
Commissions, royalties and license fees................ 1,091 7,153 11,720 5,559 6,660
Selling, general and administrative.................... 22,908 33,426 36,279 17,730 19,043
Depreciation and amortization.......................... 2,158 8,331 9,572 4,854 3,972
Product development and programming.................... 2,968 10,061 14,865 7,018 8,077
Purchased research and development..................... -- 13,791 -- -- --
Loss on lease termination.............................. 3,802 -- -- -- --
Litigation settlements................................. -- 1,750 4,500 4,500 --
--------- --------- ---------- --------- ---------
Operating income (loss).................................. 3,229 (7,718) 6,322 617 10,053
Equity in loss of Joint Venture.......................... (3,564) (615) -- -- --
Interest expense......................................... (6,945) (7,830) (5,809) (3,110) (1,982)
Other income (expense), net.............................. (311) 316 482 334 293
--------- --------- ---------- --------- ---------
Income (loss) from continuing operations before income
taxes................................................... (7,591) (15,847) 995 (2,159) 8,364
Income tax (provision) benefit........................... 1,817 2,688 291 1,052 (1,673)
--------- --------- ---------- --------- ---------
Income (loss) from continuing operations................. (5,774) (13,159) 1,286 (1,107) 6,691
Income (loss) from discontinued operations, net of income
taxes................................................... (4,357) 1,006 -- -- --
--------- --------- ---------- --------- ---------
Net income (loss)........................................ (10,131) (12,153) 1,286 (1,107) 6,691
Dividends and accretion on mandatorily redeemable
preferred stock......................................... -- (1,518) (3,003) (1,455) (1,604)
--------- --------- ---------- --------- ---------
Net income (loss) applicable to common stock............. $ (10,131) $ (13,671) $ (1,717) $ (2,562) $ 5,087
--------- --------- ---------- --------- ---------
--------- --------- ---------- --------- ---------
Income (loss) per common share from
Continuing operations.................................. $ (0.61) $ (0.99) $ 0.08 $ (0.06) $ 0.38
Dividends and accretion on mandatorily redeemable
preferred stock....................................... -- (0.11) (0.18) (0.09) (0.09)
--------- --------- ---------- --------- ---------
Total continuing operations............................ (0.61) (1.10) (0.10) (0.15) 0.29
Discontinued operations................................ (0.47) 0.07 -- -- --
--------- --------- ---------- --------- ---------
Net income (loss) applicable to common stock............. $ (1.08) $ (1.03) $ (0.10) $ (0.15) $ 0.29
--------- --------- ---------- --------- ---------
--------- --------- ---------- --------- ---------
Weighted average common and common equivalent shares
outstanding............................................. 9,392 13,237 17,025 16,617 17,593
--------- --------- ---------- --------- ---------
--------- --------- ---------- --------- ---------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-3
<PAGE>
CCC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1994 1995
--------- --------- JUNE 30,
1996
-----------
(UNAUDITED)
<S> <C> <C> <C>
Cash.......................................................................... $ 5,702 $ 3,895 $ 4,690
Accounts receivable, net...................................................... 8,627 9,899 11,210
Income taxes receivable....................................................... 118 1,079 --
Other current assets.......................................................... 3,686 2,877 3,288
--------- --------- -----------
Total current assets...................................................... 18,133 17,750 19,188
Equipment and purchased software, net of accumulated depreciation of $16,958,
$23,695 and $20,312 (unaudited) at December 31, 1994 and 1995 and June 30,
1996, respectively........................................................... 11,750 7,310 6,884
Goodwill, net of accumulated amortization of $7,331, $7,548 and $8,220
(unaudited) at December 31, 1994 and 1995 and June 30, 1996, respectively.... 13,921 12,575 11,902
Deferred income taxes......................................................... 5,468 3,810 4,556
Other assets.................................................................. 2,960 2,648 2,079
--------- --------- -----------
Total Assets.............................................................. $ 52,232 $ 44,093 $ 44,609
--------- --------- -----------
--------- --------- -----------
LIABILITIES, MANDATORILY REDEEMABLE PREFERRED STOCK
AND STOCKHOLDERS' DEFICIT
Accounts payable and accrued expenses......................................... $ 13,749 $ 18,656 $ 16,377
Accrued interest.............................................................. 709 996 879
Income taxes payable.......................................................... -- -- 2,577
Current portion of long-term debt............................................. 5,340 7,660 8,151
Deferred revenues............................................................. 3,751 5,063 4,482
Current portion of contract funding........................................... 10,133 3,328 1,205
--------- --------- -----------
Total current liabilities................................................. 33,682 35,703 33,671
Long-term debt................................................................ 35,753 27,220 21,386
Contract funding.............................................................. 3,430 135 --
Deferred revenue.............................................................. -- 597 1,813
Other liabilities............................................................. 2,974 2,733 3,135
Commitments and contingencies (Note 14)
--------- --------- -----------
Total liabilities......................................................... 75,839 66,388 60,005
--------- --------- -----------
Mandatorily redeemable preferred stock ($1.00 par value, 100,000 shares
authorized, 39,000 designated and outstanding for all periods presented)..... 31,122 34,125 35,729
--------- --------- -----------
Common stock ($0.10 par value, 30,000,000 shares authorized for all periods
presented, 16,297,200, 16,316,400 and 16,526,800 (unaudited) shares issued
and outstanding at December 31, 1994 and 1995 and June 30, 1996,
respectively)................................................................ 1,630 1,632 1,653
Additional paid-in capital.................................................... 11,655 11,679 12,370
Accumulated deficit........................................................... (67,802) (69,519) (64,962)
Treasury stock, at cost....................................................... (212) (212) (186)
--------- --------- -----------
Total stockholders' deficit............................................... (54,729) (56,420) (51,125)
--------- --------- -----------
Total Liabilities, Mandatorily Redeemable Preferred Stock and
Stockholders' Deficit.................................................. $ 52,232 $ 44,093 $ 44,609
--------- --------- -----------
--------- --------- -----------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
<PAGE>
CCC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------------- --------------------
1993 1994 1995 1995 1996
--------- --------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Operating Activities:
Net income (loss).......................................... $ (10,131) $ (12,153) $ 1,286 $ (1,107) $ 6,691
Adjustments to reconcile net income (loss) to net cash
provided by (used for) operating activities:
Loss (income) from discontinued operations, net of income
taxes................................................... 4,357 (1,006) -- -- --
Purchased research and development....................... -- 13,791 -- -- --
Equity in loss of Joint Venture.......................... 3,564 615 -- -- --
Depreciation and amortization of equipment and purchased
software................................................ 710 6,770 8,154 4,089 3,281
Amortization of goodwill................................. 1,165 1,380 1,346 673 672
Deferred income taxes.................................... 1,278 (2,885) 1,659 2,683 (746)
Contract funding proceeds................................ -- 4,995 149 157 --
Contract funding revenue amortization.................... -- (12,989) (10,249) (6,594) (2,258)
Other, net............................................... 118 560 559 240 264
Changes in:
Accounts receivable, net............................... (1,489) 185 (1,272) (906) (1,310)
Other current assets................................... 347 853 339 128 (411)
Other assets........................................... (67) (21) (149) 55 (191)
Accounts payable and accrued expenses.................. 3,792 (1,904) 4,907 4,065 (2,277)
Accrued interest....................................... 3,689 1,135 287 18 (117)
Current income taxes................................... (5,567) (827) (961) (3,264) 3,662
Deferred revenues...................................... (77) 971 1,312 875 635
Other liabilities...................................... 4,286 547 356 89 851
--------- --------- --------- --------- ---------
Net cash provided by (used for) operating activities:
Continuing operations...................................... 5,975 17 7,723 1,201 8,746
Discontinued operations, net............................... 488 (4,169) -- -- --
--------- --------- --------- --------- ---------
Net cash provided by (used for) operating activities......... 6,463 (4,152) 7,723 1,201 8,746
--------- --------- --------- --------- ---------
Investing Activities:
Purchases of equipment and software........................ (875) (5,220) (3,003) (1,245) (1,827)
Acquisition of Joint Venture, net of cash acquired......... -- (4,519) -- -- --
Purchase of Faneuil ISG stock.............................. -- (530) -- -- --
Proceeds from sale of discontinued operations, net of
expenses.................................................. -- 5,728 500 500 --
Other, net................................................. 198 (643) 48 176 24
--------- --------- --------- --------- ---------
Net cash used for investing activities....................... (677) (5,184) (2,455) (569) (1,803)
--------- --------- --------- --------- ---------
Financing Activities:
Principal payments on long-term debt....................... (4,539) (15,842) (11,101) (3,456) (16,181)
Proceeds from issuance of long-term debt................... -- 30,793 4,000 2,000 9,750
Proceeds from issuance of common stock..................... 2 1 26 1 283
Payment of equity and debt issue costs..................... -- (1,802) -- -- --
Advances (to) from Joint Venture, net...................... (4,635) 1,511 -- -- --
Other, net................................................. 5 2 -- (1) --
--------- --------- --------- --------- ---------
Net cash provided by (used for) financing activities......... (9,167) 14,663 (7,075) (1,456) (6,148)
--------- --------- --------- --------- ---------
Net increase (decrease) in cash.............................. (3,381) 5,327 (1,807) (824) 795
Cash:
Beginning of period........................................ 3,756 375 5,702 5,702 3,895
--------- --------- --------- --------- ---------
End of period.............................................. $ 375 $ 5,702 $ 3,895 $ 4,878 $ 4,690
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-5
<PAGE>
CCC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
(IN THOUSANDS, EXCEPT NUMBER OF SHARES)
<TABLE>
<CAPTION>
OUTSTANDING
COMMON STOCK TREASURY STOCK
----------------------- ADDITIONAL ---------------------- TOTAL
NUMBER OF PAID-IN ACCUMULATED NUMBER OF STOCKHOLDERS'
SHARES PAR VALUE CAPITAL DEFICIT SHARES COST DEFICIT
------------ --------- ----------- ------------ ----------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
December 31, 1992............ 9,244,640 $ 925 $ -- $ (44,000) 111,920 $ (212) $ (43,287)
Stock options exercised...... 1,080 -- 2 -- -- -- 2
Net loss..................... -- -- -- (10,131) -- -- (10,131)
------------ --------- ----------- ------------ ----------- --------- ------------
December 31, 1993............ 9,245,720 925 2 (54,131) 111,920 (212) (53,416)
Stock issuance............... 7,050,840 705 11,652 -- -- -- 12,357
Preferred stock accretion.... -- -- -- (936) -- -- (936)
Preferred stock dividends
accrued..................... -- -- -- (582) -- -- (582)
Stock options exercised...... 640 -- 1 -- -- -- 1
Net loss..................... -- -- -- (12,153) -- -- (12,153)
------------ --------- ----------- ------------ ----------- --------- ------------
December 31, 1994............ 16,297,200 1,630 11,655 (67,802) 111,920 (212) (54,729)
Preferred stock accretion.... -- -- -- (1,931) -- -- (1,931)
Preferred stock dividends
accrued..................... -- -- -- (1,072) -- -- (1,072)
Stock options exercised...... 19,200 2 24 -- -- -- 26
Net income................... -- -- -- 1,286 -- -- 1,286
------------ --------- ----------- ------------ ----------- --------- ------------
December 31, 1995............ 16,316,400 1,632 11,679 (69,519) 111,920 (212) (56,420)
Preferred stock accretion
(unaudited)................. -- -- -- (1,069) -- -- (1,069)
Preferred stock dividends
accrued (unaudited)......... -- -- -- (535) -- -- (535)
Stock options exercised
(unaudited)................. 196,800 20 263 -- -- -- 283
Treasury stock issuance
(unaudited)................. 13,600 1 21 -- (13,600) 26 48
Investment security
distribution (unaudited).... -- -- -- (530) -- -- (530)
Other (unaudited)............ -- -- 407 -- -- -- 407
Net income (unaudited)....... -- -- -- 6,691 -- -- 6,691
------------ --------- ----------- ------------ ----------- --------- ------------
June 30, 1996 (unaudited).... 16,526,800 $ 1,653 $ 12,370 $ (64,962) 98,320 $ (186) $ (51,125)
------------ --------- ----------- ------------ ----------- --------- ------------
------------ --------- ----------- ------------ ----------- --------- ------------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-6
<PAGE>
CCC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 -- DESCRIPTION OF BUSINESSES AND ORGANIZATION
CCC Information Services Group Inc. (Company) (formerly known as InfoVest
Corporation), through its wholly owned subsidiary CCC Information Services Inc.
(CCC), is a leading supplier of automobile claims information and processing,
claims management software and value-added communication services. The Company's
technology-based services and products enable more than 300 automobile insurance
company customers and more than 8,500 collision repair facility customers to
improve efficiency, manage costs and increase consumer satisfaction in the
management of automobile claims and restoration.
After the disposition of certain subsidiaries, as described in Note 5, and
through April 30, 1995, the Company consisted of two primary operating entities:
CCC and CCC Development Company (Joint Venture). The Company acquired its former
partner's 50% interest in the Joint Venture, through the acquisition of UCOP,
Inc. (UCOP), effective March 30, 1994. As a result of this acquisition, in
combination with its original 50% interest in the Joint Venture, the Company
acquired a 100% equity ownership interest in the Joint Venture. Prior to its
acquisition of UCOP, the Company accounted for its 50% interest in the Joint
Venture under the equity method. CCC also operates a subsidiary in Canada, CCC
of Canada, Ltd. (CCC Canada).
As of December 31, 1995, White River Ventures, Inc. (White River) held
approximately 52% of the total outstanding common stock of the Company. White
River is a wholly owned subsidiary of White River Corporation.
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES
BASIS OF CONSOLIDATION
The accompanying consolidated financial statements include the accounts of
the Company and its subsidiaries, all of which are currently wholly owned.
REVENUE RECOGNITION
Revenues are recognized as services are provided. Of total Company revenues
in the years 1993, 1994 and 1995, 88%, 79% and 70%, respectively, were
attributable to revenues from insurance companies. In addition, revenues
attributable to one national multi-line insurance company in the years 1993,
1994 and 1995 totaled $13.9, $14.8 and $14.3 million, respectively.
ACCOUNTS RECEIVABLE
Accounts receivable as presented in the accompanying consolidated balance
sheet are net of reserves for customer credits and doubtful accounts. As of
December 31, 1994 and 1995, and June 30, 1996, reserves of $0.9 million, $1.5
million, and $1.5 million (unaudited), respectively, have been applied as a
reduction of accounts receivable. Of total accounts receivable, net of reserves,
at December 31, 1994 and 1995, $6.9 million and $8.4 million, respectively, were
due from insurance companies.
INTERNAL SOFTWARE DEVELOPMENT COSTS
Research and development expenses, principally the design and development of
software products, are expensed as incurred. Software costs, if material, are
capitalized when sufficient evidence exists that technological feasibility has
been established. Technological feasibility is established upon completion of
both a product design and a working model, and confirmation of the model's
consistency with the design through detailed testing. For the years 1993, 1994
and 1995, research and development expenses of approximately $1.5 million, $2.8
million and $3.5 million, respectively, are reflected in the accompanying
consolidated statement of operations. There were no significant software
development costs subject to capitalization during the three years ended
December 31, 1995.
EQUIPMENT AND PURCHASED SOFTWARE
Equipment is stated at cost, net of accumulated depreciation. Depreciation
of equipment is provided on a straight-line basis over estimated useful lives
ranging from 2 to 15 years.
F-7
<PAGE>
CCC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Purchased software to be marketed is stated at cost and amortized in
proportion to anticipated future revenues or on a straight-line basis over the
estimated economic life of the purchased software, whichever provides the
greater rate of amortization. In 1994 and 1995, amortization of purchased
software to be marketed was $2.0 million and $2.6 million, respectively.
GOODWILL
The excess of purchase price paid over the estimated fair value of
identifiable tangible and intangible net assets of acquired businesses is
capitalized and amortized on a straight-line basis over periods of 7 or 20
years. Goodwill is periodically reviewed to determine recoverability by
comparing its carrying value to expected undiscounted future cash flows.
DEBT ISSUE COSTS
Debt issues costs are capitalized and amortized over the life of CCC's
commercial bank debt. As of December 31, 1994 and 1995, deferred debt issue
costs, net of accumulated amortization, of $1.7 million and $1.3 million,
respectively, were included in other assets.
CONTRACT FUNDING
Future revenue streams under certain end-user collision estimating contracts
(Contracts) have been discounted and sold to various investors. Cash proceeds
from a sold Contract equals the Contract's future revenue stream, discounted at
an annual rate of approximately 14%, less, for certain Contracts, investor
reserves for customer nonperformance under the Contracts. Sales proceeds, which
are remitted directly to the investors in these Contracts, and related interest
expense are recognized in the accompanying consolidated statement of operations
as revenue and interest expense, respectively, over the life of the Contract.
PER SHARE INFORMATION
Earnings per share are based on the weighted average number of shares of
common stock outstanding and common stock equivalents using the treasury stock
method for stock options in accordance with Staff Accounting Bulletin No. 83 of
the Securities and Exchange Commission.
FAIR VALUE OF FINANCIAL INSTRUMENTS
As of December 31, 1995, the carrying amount of the Company's financial
instruments approximates their estimated fair value based upon market prices for
the same or similar type of financial instruments.
PERVASIVENESS OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amount of assets and liabilities and
disclosure of contingent assets and liabilities as of the date of the
consolidated financial statements, and that affect the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from these estimates.
INTERIM FINANCIAL STATEMENTS (UNAUDITED)
The interim consolidated financial statements presented as of and for the
six months ended June 30, 1996 and 1995 are unaudited. With respect to the
unaudited interim consolidated financial statements, the Company is of the
opinion that all material adjustments, consisting only of normal recurring
adjustments necessary for a fair presentation of the Company's interim results
of operations and financial condition, have been included. The results of
operations for the six months ended June 30, 1996 and 1995 should not be
regarded as necessarily indicative of the results of operations for any future
period.
NEW ACCOUNTING PRONOUNCEMENTS
The Company adopted Statement of Financial Accounting Standard (SFAS) No.
121, "Accounting for Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed of" in the first quarter of 1996. This
F-8
<PAGE>
CCC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Statement establishes a new standard for accounting for the impairment of
long-lived assets and certain identifiable intangibles. The adoption of SFAS No.
121 was not material to the Company's financial position or results of
operations (unaudited).
The Financial Accounting Standards Board has also issued SFAS No. 123,
"Accounting for Stock-Based Compensation," which became effective January 1,
1996. This Statement establishes an alternative to the Company's current method
of accounting for compensation associated with stock issued to employees.
Management does not intend to adopt the alternative method allowed by SFAS No.
123. Accordingly, adoption of this Statement will only require additional
financial statement footnote disclosures to describe the Company's stock-based
compensation.
NOTE 3 -- NONCASH INVESTING AND FINANCING ACTIVITIES
The Company directly charges accumulated deficit for preferred stock
accretion and preferred stock dividends accrued. During 1993, 1994 and 1995,
these amounts totaled $0.0 million, $1.5 million and $3.0 million, respectively.
In addition to amounts reported as purchases of equipment in the
consolidated statement of cash flows, the Company has directly financed certain
noncash capital expenditures. During 1993, 1994 and 1995, these noncash capital
expenditures totaled $0.5 million, $0.4 million and $0.9 million, respectively.
In June 1994, as part of a reorganization and recapitalization of the
Company, debt and equity issue costs of $1.1 million and $0.5 million,
respectively, were paid on behalf of the Company by its commercial bank. See
Notes 11 and 12.
NOTE 4 -- ACQUISITION OF PARTNER'S INTEREST IN JOINT VENTURE
On March 30, 1994, White River acquired the stock of UCOP. Also on March 30,
1994, the Company entered into a Call Agreement with White River to purchase the
stock of UCOP from White River within 180 days. On May 31, 1994, using cash
generated through a commercial bank bridge loan, the Company completed the
acquisition of UCOP's interest in the Joint Venture by purchasing the stock of
UCOP from White River for $6.9 million.
As of the date of its acquisition, UCOP's only business was its 50%
investment in the Joint Venture. The purchase price of $6.9 million, plus
liabilities assumed of $22.4 million, have been allocated to the estimated fair
value of tangible and intangible assets acquired. In the purchase price
allocation, $5.2 million was assigned to purchased software, $13.8 million was
assigned to in-process research and development software projects, $6.6 million
was assigned to acquired tangible assets and the balance of $3.7 million was
assigned to goodwill. The amount assigned to in-process research and development
was charged against operating results at the time of the acquisition.
F-9
<PAGE>
CCC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 4 -- ACQUISITION OF PARTNER'S INTEREST IN JOINT VENTURE (CONTINUED)
Pro forma information, as if the acquisition of UCOP had occurred on January
1, 1994, is as follows:
<TABLE>
<CAPTION>
PRO
ACTUAL FORMA
1994 1994
---------- ----------
<S> <C> <C>
Revenues $ 91,917 $ 102,181
Operating expenses
Production and customer support......................................................... 25,123 27,062
Commissions, royalties and license fees................................................. 7,153 8,938
Selling, general and administrative..................................................... 33,426 37,638
Depreciation and amortization........................................................... 8,331 10,198
Product development and programming..................................................... 10,061 11,222
Purchased research and development...................................................... 13,791 --
Litigation settlements.................................................................. 1,750 1,750
---------- ----------
Operating income (loss)................................................................... (7,718) 5,373
Equity in loss of Joint Venture........................................................... (615) --
Interest expense.......................................................................... (7,830) (8,549)
Other income, net......................................................................... 316 16
---------- ----------
Loss from continuing operations before income taxes....................................... (15,847) (3,160)
Income tax (provision) benefit............................................................ 2,688 (823)
---------- ----------
Income (loss) from continuing operations.................................................. $ (13,159) $ (3,983)
---------- ----------
---------- ----------
</TABLE>
The pro forma statement of operations above reflects: (a) additional first
quarter 1994 depreciation and goodwill amortization of $0.8 million arising from
the acquisition, (b) elimination of the charge for purchased research and
development of $13.8 million, (c) elimination of interest expense of $0.3
million related to the bridge loan used to acquire UCOP and (d) adjustment of
income taxes attributable to the pro forma adjustments. The above pro forma
information is not necessarily indicative of what actual results would have been
had the acquisition, in fact, occurred on January 1, 1994.
NOTE 5 -- DISCONTINUED OPERATIONS
On August 25, 1994, the Company sold (a) the net operating assets of Credit
Card Service Corporation, which had previously been accounted for as a
discontinued operation and (b) all the capital stock of Original Research II
Corporation (ORC), GIS Information Systems, Inc. (GIS) and Equitel Corporation.
Net cash proceeds from the sale of these businesses totaled $6.2 million. In
conjunction with the sale, the Company acquired, for $530 thousand, a 4.5%
common equity interest in Faneuil ISG, a Canadian Corporation that will conduct
the future operations of these businesses. As of December 31, 1995, this
investment is carried at cost as a component of other assets. Final cash
proceeds from the sale of $500 thousand were received from escrow in March of
1995. On June 6, 1996, the Board of Directors of the Company approved a
distribution of the Faneuil ISG investment to stockholders. In November 1994,
the Company completed the planned sale of its investment in Phone Base Systems
Inc. Both the gain and cash proceeds from the sale were not material.
F-10
<PAGE>
CCC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 5 -- DISCONTINUED OPERATIONS (CONTINUED)
Revenues and income from discontinued operations were as follows:
<TABLE>
<CAPTION>
1993 1994
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Revenues......................................................................... $ 36,171 $ 25,137
--------- ---------
--------- ---------
Loss before income taxes......................................................... $ (5,115) $ (5,171)
Income tax benefit............................................................... 758 2,536
--------- ---------
Loss from operations............................................................. (4,357) (2,635)
--------- ---------
Gain on sale..................................................................... -- 4,650
Income tax provision............................................................. -- (1,009)
--------- ---------
Net gain on sale................................................................. -- 3,641
--------- ---------
Income (loss) from discontinued operations..................................... $ (4,357) $ 1,006
--------- ---------
--------- ---------
</TABLE>
NOTE 6 -- INCOME TAX BENEFIT
Income taxes applicable to continuing operations consisted of the following
(provision) benefit:
<TABLE>
<CAPTION>
1993 1994 1995
--------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Current:
Federal................................................................. $ 2,686 $ (193) $ 1,792
State................................................................... 435 73 134
International........................................................... (26) (77) 24
--------- --------- ---------
Total current......................................................... 3,095 (197) 1,950
--------- --------- ---------
Deferred:
Federal................................................................. (1,090) 1,910 (1,668)
State................................................................... (188) 975 9
--------- --------- ---------
Total deferred.......................................................... (1,278) 2,885 (1,659)
--------- --------- ---------
Total income tax benefit................................................ $ 1,817 $ 2,688 $ 291
--------- --------- ---------
--------- --------- ---------
</TABLE>
The Company's effective income tax rate applicable to continuing operations
differs from the federal statutory rate as follows:
<TABLE>
<CAPTION>
1993 1994 1995
---------------------- ---------------------- ----------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Federal income (tax) benefit at statutory rate... $ 2,581 34.0% $ 5,388 34.0% $ (338) (34.0)%
State and local taxes, net of federal benefit and
before deferred tax valuation allowances........ 216 2.8 960 6.1 60 6.0
International taxes.............................. (162) (2.1) (132) (0.8) 12 1.2
Goodwill amortization............................ (186) (2.5) (337) (2.1) (494) (49.6)
Change in valuation allowance.................... (471) (6.2) (2,630) (16.6) 1,260 126.6
Non deductible expenses.......................... (118) (1.6) (48) (--) (242) (24.3)
Other, net....................................... (43) (0.5) (513) (3.6) 33 3.3
--------- --- --------- ----- --------- -----------
Income tax benefit............................... $ 1,817 23.9% $ 2,688 17.0% $ 291 29.2%
--------- --- --------- ----- --------- -----------
--------- --- --------- ----- --------- -----------
</TABLE>
During 1993 and 1994, the Company made income tax payments, net of refunds,
of $2.5 million and $1.6 million, respectively. During 1995, the Company
received income tax refunds, net of payments, of $1.0 million.
F-11
<PAGE>
CCC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 6 -- INCOME TAX BENEFIT (CONTINUED)
The approximate income tax effect of each type of temporary difference
giving rise to deferred income tax assets and deferred income tax liabilities
were as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1994 1995
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Deferred income tax assets:
Deferred revenue................................................................. $ 6,563 $ 2,394
Litigation settlement............................................................ 439 1,145
Accrued compensation............................................................. 654 1,127
Depreciation and amortization.................................................... 487 990
Rent............................................................................. 385 980
Bad debt expense................................................................. 396 568
Lease termination................................................................ 960 440
Long-term receivable............................................................. 1,003 150
Net operating loss carryforward.................................................. 1,293 110
Other, net....................................................................... 1,652 1,121
--------- ---------
Subtotal......................................................................... 13,832 9,025
Valuation allowance.............................................................. (6,223) (4,963)
--------- ---------
Total deferred income tax asset.................................................... 7,609 4,062
--------- ---------
Deferred income tax liabilities:
Purchased software............................................................... (1,552) (252)
Other, net....................................................................... (589) --
--------- ---------
Total deferred income tax liability................................................ (2,141) (252)
--------- ---------
Net deferred income tax asset.................................................... $ 5,468 $ 3,810
--------- ---------
--------- ---------
</TABLE>
The Company has established deferred income tax asset valuation allowances
because of its history of operating losses and an inability to project future
taxable income with certainty. Such valuation allowances will be released to
income if and to the extent the Company is able to successfully achieve a
recapitalization and demonstrate a predictable pattern of profitability.
Net operating loss carryforwards totaled $322 thousand as of December 31,
1995. These net operating loss carryforwards expire in 2005.
Prior to the current calendar year, the Company's fiscal year-end was April
30. The Internal Revenue Service (IRS) is currently examining the Company's
income tax returns for fiscal years 1992 through 1994. All Company income tax
returns for fiscal years prior to 1992 are closed to further examination by the
IRS.
F-12
<PAGE>
CCC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 7 -- OTHER CURRENT ASSETS
Other current assets consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1994 1995
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Prepaid data royalties............................................................... $ 1,026 $ 1,138
Computer inventory................................................................... 456 522
Prepaid equipment maintenance........................................................ 748 444
Escrow receivable.................................................................... 500 --
Prepaid commissions.................................................................. 315 259
Unremitted contract funding proceeds................................................. 321 141
Other, net........................................................................... 320 373
--------- ---------
Total.............................................................................. $ 3,686 $ 2,877
--------- ---------
--------- ---------
</TABLE>
Unremitted contract funding proceeds represents investor reserves for
nonperformance under certain contracts that the Company believes will exceed
actual losses.
NOTE 8 -- EQUIPMENT AND PURCHASED SOFTWARE
Equipment and purchased software consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1994 1995
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Computer equipment............................................................... $ 16,674 $ 19,997
Purchased software, licenses and databases....................................... 9,377 8,007
Furniture and other equipment.................................................... 2,612 2,814
Leasehold improvements........................................................... 45 187
--------- ---------
Total, gross................................................................... 28,708 31,005
Less accumulated depreciation.................................................... (16,958) (23,695)
--------- ---------
Total, net..................................................................... $ 11,750 $ 7,310
--------- ---------
--------- ---------
</TABLE>
Purchased software, licenses and databases includes software of $5.2 million
acquired through the acquisition of its former partner's interest in the Joint
Venture. As of December 31, 1994 and 1995, this acquired software had a net
asset value of $3.3 million and $0.7 million, respectively.
As of December 31, 1994 and 1995, computer equipment, net of accumulated
depreciation, that is on lease to certain customers under operating leases of
$4.1 million and $2.5 million, respectively, is included in computer equipment.
Future minimum rentals under noncancelable customer leases aggregate
approximately $2.0 million and $0.6 million in years 1996 and 1997,
respectively.
Furniture and other equipment includes equipment under capital leases as
follows:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1994 1995
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Capital leases......................................................................... $ 588 $ 574
Less accumulated depreciation.......................................................... (137) (240)
--------- ---------
Total, net........................................................................... $ 451 $ 334
--------- ---------
--------- ---------
</TABLE>
F-13
<PAGE>
CCC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 9 -- GOODWILL
Goodwill consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
LIFE 1994 1995
--------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
CCC acquisition (1988)................................................. 20 years $ 16,458 $ 16,458
UCOP acquisition (1994)................................................ 7 years 3,665 3,665
CCC Canada acquisition (1991).......................................... 3 years 1,129 --
--------- ---------
Total, gross......................................................... 21,252 20,123
Less accumulated amortization.......................................... (7,331) (7,548)
--------- ---------
Total, net........................................................... $ 13,921 $ 12,575
--------- ---------
--------- ---------
</TABLE>
NOTE 10 -- ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1994 1995
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Accounts payable.................................................................. $ 3,757 $ 5,464
Litigation settlement............................................................. -- 2,956
Compensation...................................................................... 3,433 2,799
Professional fees................................................................. 1,369 2,586
Sales tax......................................................................... 1,910 1,501
Lease termination................................................................. 1,061 1,136
Commissions....................................................................... 704 1,015
Health insurance.................................................................. 752 957
Other, net........................................................................ 763 242
--------- ---------
Total........................................................................... $ 13,749 $ 18,656
--------- ---------
--------- ---------
</TABLE>
NOTE 11 -- LONG-TERM DEBT
Term loan and revolving credit facility interest is based on either of two
interest rates selected periodically by the Company: a base rate plus 1.5% or
the Eurodollar Rate plus 3.0%. The base rate must be the highest of three
alternative rates that all generally approximate prime rate. The average
interest rate in effect during the years ended December 31, 1994 and 1995 for
the term loan and revolving credit facility was 8.3% and 8.4%, and 9.15% and
9.03%, respectively. Through a separate transaction, interest on the term loan
has been capped at 12% through May 1996. The timing of interest payments on both
the term loan and revolving credit facility vary depending on the applicable
interest rate selected by the Company. Generally, however, interest payments are
made quarterly. In addition, the Company pays an annual bank agent's fee of $50
thousand and a commitment fee of 0.5% on any unused portion of the revolving
credit facility. The term loan is repayable in installments through 1999. The
revolving credit facility is reduced to $5 million in 1998 and terminates in
1999.
The loans are secured by the stock and assets of CCC. In addition, the
Company has guaranteed CCC's performance under the loan agreement. Effective
April 29, 1995, the loan agreement was amended to adjust certain restrictive
covenants. Under the amended agreement, CCC must, among other things, maintain
quarterly debt service and interest coverage ratios, limit its capital
expenditures. In addition, the Company is prohibited from: (a) declaring cash
dividends, (b) incurring nonpermitted indebtedness and (c) making nonpermitted
investments. In addition, CCC may not absorb more than $1.5 million of corporate
expenses allocated from its parent. Beginning in 1997, CCC would be permitted to
declare cash dividends in an amount
F-14
<PAGE>
CCC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 11 -- LONG-TERM DEBT (CONTINUED)
sufficient for the Company to pay the preferred stock dividends described in
Note 12 below. Under the term loan, a mandatory principal repayment is required
in an amount equal to: (a) 50% of net proceeds from an initial public offering
of Company common stock (IPO) or (b) excess cash as defined under the loan
agreement.
Long-term debt consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1994 1995
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Senior bank term loan................................................... $ 30,000 $ 25,500
Senior bank revolving credit facility................................... 9,500 8,000
Equipment financing obligations......................................... 1,137 985
Capital lease obligations............................................... 456 395
--------- ---------
Total debt............................................................ 41,093 34,880
Due within one year..................................................... (5,340) (7,660)
--------- ---------
Due after one year...................................................... $ 35,753 $ 27,220
--------- ---------
--------- ---------
</TABLE>
Aggregate minimum principal repayments of long-term debt in each of the five
years subsequent to December 31, 1995 are as follows:
<TABLE>
<S> <C>
(In thousands)
1996............................................................... $ 7,660
1997............................................................... 7,341
1998............................................................... 12,379
1999............................................................... 7,500
2000............................................................... --
---------
Total.............................................................. $ 34,880
---------
---------
</TABLE>
The Company made cash interest payments of $1.7 million, $3.3 million and
$4.1 million during the year ended December 31, 1993, 1994 and 1995.
NOTE 12 -- MANDATORILY REDEEMABLE PREFERRED STOCK
On June 16, 1994, pursuant to a reorganization and recapitalization, the
Company issued: (a) 5,000 shares of its preferred stock, par value $1.00,
designated as Series C Cumulative Redeemable Preferred Stock (Series C Preferred
Stock), (b) 34,000 shares of its preferred stock, par value $1.00, designated as
Series D Cumulative Redeemable Preferred Stock (Series D Preferred Stock) and
(c) 176,271 shares of its common stock, par value $0.10, to White River in
exchange for the Company's subordinated debt and Series A, B and C warrants
acquired from the original subordinated debtholders by White River on April 15,
1994. At the date of exchange, the subordinated debt consisted of a principal
balance of $41.7 million and accrued interest of $2.7 million. In recording the
exchange, $3.9 million and $25.7 million were assigned to the Series C and
Series D Preferred Stock, respectively. The balance of $14.8 million, less
certain transaction costs of $2.4 million, was assigned to common stock and
credited to paid-in capital. During the years ended December 31, 1994 and 1995
and the six months ended June 30, 1996, the original discount on the Series C
and Series D Preferred Stock accreted $0.9 million, $1.9 million and $1.1
million (unaudited), respectively, and dividends of $0.6 million, $1.1 million
and $0.5 million (unaudited), respectively, were accrued.
The Series C Preferred Stock and Series D Preferred Stock (collectively,
Preferred Stock) have a stated value of $1 thousand per share and accrue
cumulative dividends at a rate of 2.75% annually through the earlier of: (a) an
IPO of the Company's common stock or (b) June 16, 1998. If the Company completes
an IPO before June 16, 1998 and redeems Preferred Stock in accordance with its
terms, Preferred Stock dividends from the
F-15
<PAGE>
CCC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 12 -- MANDATORILY REDEEMABLE PREFERRED STOCK (CONTINUED)
IPO through June 16, 1998 would be eliminated. If the Company fails to redeem
Preferred Stock in accordance with its terms, the Preferred Stock dividend rate
would increase to 8%. No dividends are payable in cash until the earlier of (a)
June 16, 1998 or (b) the failure of the Company to meet the prescribed
redemption obligations following consummation of an IPO. The Preferred Stock is
mandatorily redeemable, at stated value plus accrued dividends, on June 16,
1999.
NOTE 13 -- STOCK OPTION PLAN
In May 1988, the Company's Board of Directors adopted a nonqualified stock
option plan. Under the plan, as amended in 1992, options may be granted at a per
share price of not less than the greater of $55 or the fair market value as of
the date of grant, as determined by the Compensation Committee of the Board of
Directors (Committee). Options are generally exercisable within 5 years from the
date of grant, subject to vesting schedules determined at the discretion of the
Committee. In general, however, option grants vest over 4 years. As a result of
the Company's June 1994 reorganization and recapitalization, under an agreement
with White River, the number of incremental options that may be granted under
the plan subsequent to June 16, 1994 has been limited to 3% of outstanding stock
on June 16, 1994 or 488,880 shares.
F-16
<PAGE>
CCC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 13 -- STOCK OPTION PLAN (CONTINUED)
Option activity during 1993, 1994, 1995 and six months ended June 30, 1996
is summarized below.
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
SHARES PRICE
---------- -----------
<S> <C> <C>
TOTAL OPTIONS:
Outstanding as of December 31, 1992..................................................... 1,455,320 $ 1.92
Granted................................................................................. 977,360 1.38
Exercised............................................................................... (1,080) 1.38
Surrendered or terminated............................................................... (119,147) 6.25
----------
Outstanding as of December 31, 1993..................................................... 2,312,453 1.46
Granted................................................................................. 269,680 1.38
Exercised............................................................................... (640) 1.38
Surrendered or terminated............................................................... (388,414) 1.75
----------
Outstanding as of December 31, 1994..................................................... 2,193,079 1.40
Granted................................................................................. 1,247,521 2.64
Exercised............................................................................... (19,200) 1.38
Surrendered or terminated............................................................... (465,360) 1.39
----------
Outstanding as of December 31, 1995..................................................... 2,956,040 1.93
----------
----------
Granted (unaudited)..................................................................... 210,800 11.20
Exercised (unaudited)................................................................... (196,800) 1.44
Surrendered or terminated (unaudited)................................................... (390,280) 2.44
----------
Outstanding as of June 30, 1996 (unaudited)............................................. 2,579,760 2.64
----------
----------
VESTED OPTIONS:
Outstanding as of December 31, 1992..................................................... 982,501 $ 1.94
Vested.................................................................................. 345,208 1.40
Exercised............................................................................... (1,080) 1.38
Surrendered or terminated............................................................... (100,027) 7.18
----------
Outstanding as of December 31, 1993..................................................... 1,226,602 1.46
Vested.................................................................................. 507,395 1.39
Exercised............................................................................... (640) 1.38
Surrendered or terminated............................................................... (90,054) 2.90
----------
Outstanding as of December 31, 1994..................................................... 1,643,303 1.43
Vested.................................................................................. 463,936 2.06
Exercised............................................................................... (19,200) 1.38
Surrendered or terminated............................................................... (393,040) 1.38
----------
Outstanding as of December 31, 1995..................................................... 1,694,999 1.60
Vested (unaudited)...................................................................... 173,768 4.02
Exercised (unaudited)................................................................... (196,800) 1.44
Surrendered or terminated (unaudited)................................................... (73,120) 2.47
----------
Outstanding as of June 30, 1996 (unaudited)............................................. 1,598,847 1.85
----------
----------
</TABLE>
F-17
<PAGE>
CCC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 14 -- COMMITMENTS AND CONTINGENCIES
The Company leases facilities, computers, telecommunications and office
equipment under the terms of noncancelable operating lease agreements which
expire at various dates through 2008. As of December 31, 1995, future minimum
cash lease payments were as follows:
<TABLE>
<CAPTION>
(In thousands)
<S> <C>
1996....................................................... $ 2,802
1997....................................................... 2,045
1998....................................................... 2,469
1999....................................................... 2,933
2000....................................................... 2,234
Thereafter................................................. 18,532
---------
Total.................................................. $ 31,015
---------
---------
</TABLE>
During 1993, 1994 and 1995, operating lease expense was $2.3 million, $3.2
million and $2.9 million, respectively.
In conjunction with the sale of the Faneuil Group, CCC entered into a
contract with GIS, under which GIS is to provide certain computer services to
CCC through June 1999 at approximately market rates. The contract prescribes
that CCC make minimum payments to GIS through June 1997 and provides an option
under which CCC can elect to extend the contract for certain services through
June 1999. As of December 31, 1995, future minimum payments due GIS under the
contract were as follows:
<TABLE>
<CAPTION>
(In thousands)
<S> <C>
1996........................................................ $ 2,546
1997........................................................ 1,073
---------
Total................................................... $ 3,619
---------
---------
</TABLE>
During 1994 and 1995, CCC incurred charges from GIS for computer services of
$3.7 million and $3.2 million, respectively.
CCC has guaranteed the payment of certain ORC lease obligations. As of
December 31, 1995, future ORC lease payments guaranteed by CCC total $448
thousand in 1996. The Company does not expect to sustain any loss as a result of
these guarantees.
NOTE 15 -- LEGAL PROCEEDINGS
On June 10, 1994, the litigation involving an independent corporate provider
of guidebook data was settled. In this matter, the plaintiff alleged copyright
infringement, among other things. Under the settlement agreement CCC has paid
the plaintiff $1.75 million. The parties also entered into a five year agreement
under which CCC is licensing the guidebook data at market rates. The settlement
charge is reported under litigation settlements in the accompanying consolidated
statement of operations for the year ended December 31, 1994.
In April 1995, the Company recorded a litigation settlement charge of $4.5
million in connection with the litigation involving an independent corporate
publisher of used car valuation books. In December 1995, substantive settlement
discussions were held. As a result of those discussions, the parties
conditionally agreed to a settlement structure that would resolve all
outstanding disputes.
All conditions precedent to the settlement agreement were satisfied in 1996.
As a result, all issues arising out of the litigation between the parties have
been fully and completely settled and each civil action had been dismissed with
prejudice. The settlement amount approximated the settlement charge previously
recorded. In conjunction with the settlement agreement, the Company received a
three year license to the publisher's used car valuation book data at market
rates (unaudited).
F-18
<PAGE>
CCC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 15 -- LEGAL PROCEEDINGS (CONTINUED)
The Company is a party to various other legal proceedings in the ordinary
course of business. The Company believes that the ultimate resolution of these
other matters will not have a material effect on the Company's financial
position.
NOTE 16 -- RELATED PARTY TRANSACTIONS
Prior to the June 1994 recapitalization, certain Joint Venture Contracts
were discounted and sold to a major stockholder of the Company. As of December
31, 1994 and 1995, $2.0 million and $0.6 million was payable by Company
customers to the stockholder. The discount rate applied to these Contracts was
approximately the same as the rate applied to Contracts purchased by unrelated
entities.
During May and June 1994, under two separate note agreements, a major
stockholder of the Company loaned Phone Base a total of $375 thousand. The notes
bear interest at 16% and are secured by Phone Base accounts receivable.
Subsequently, Phone Base repaid the stockholder $87 thousand in principal plus
accrued interest. On July 1, 1994, the Company purchased this stockholder's
rights under these notes for a purchase price of $288 thousand.
During June 1993, Phone Base entered into a royalty agreement with a
third-party computer system manufacturer under which Phone Base is to receive
royalties from sales of computer systems incorporating certain Phone Base
software technology. Subsequently, two Company directors, one of whom is also a
Company officer, and White River collectively purchased from Phone Base $1.6
million of participation interests in these royalties. The royalty participation
interests entitle the parties to 64% of all future royalties paid to Phone Base
under the agreement. To date, no royalties have been paid to Phone Base. On
August 26, 1994, the Company acquired the White River royalty participation
interest of $150 thousand at face value plus accrued interest at 9% through the
date of purchase.
On May 5, 1994, under an unsecured promissory note, White River loaned $200
thousand to Phone Base. The note is due upon demand and bears interest at 9%. On
August 26, 1994, the Company purchased the Phone Base indebtedness from White
River at face value plus accrued interest at 9% through the date of purchase.
On May 9, 1994, White River executed an assumption agreement under which it
purchased from a third-party creditor $6.5 million of Phone Base indebtedness
for a purchase price of $550 thousand. On August 26, 1994, the Company purchased
White River's interest under the assumption agreement for $550 thousand plus
accrued interest at 9% through the date of purchase.
In November 1994, Phone Base was sold to a major stockholder of the Company.
On August 25, 1994, the Faneuil Group was sold to an investor group that
included a former Company director and certain former Company employees. See
Note 5 -- Discontinued Operations.
NOTE 17 -- SUBSEQUENT EVENTS
On July 22, 1996, the Company's Board of Directors authorized the filing of
a registration statement with the Securities and Exchange Commission for an
initial public offering of the Company's common stock. In addition, on July 22,
1996, the Company's Board of Directors authorized a 40 for 1 split of the common
stock of the Company, which was effective August 13, 1996. All per share and
stock option information has been restated to reflect the split.
F-19
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Partners of
CCC Development Company
In our opinion, the accompanying statement of operations, of partners'
deficit and of cash flows present fairly, in all material respects, the
financial position of CCC Development Company for the year in the period ended
December 31, 1993, in conformity with generally accepted accounting principles.
These financial statements are the responsibility of the Company's management;
our responsibility is to express an opinion on these financial statements based
on our audit. We conducted our audit of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for the opinion expressed
above.
PRICE WATERHOUSE LLP
July 22, 1996
Chicago, Illinois
F-20
<PAGE>
CCC DEVELOPMENT COMPANY
STATEMENT OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR
ENDED
DECEMBER 31,
1993
------------- QUARTER
ENDED
MARCH 29,
1994
-----------
(UNAUDITED)
<S> <C> <C>
Revenues.............................................................................. $ 34,087 $ 11,358
Expenses:
Production and customer support..................................................... 7,723 1,939
Commissions, royalties and license fees............................................. 9,305 2,879
Selling, general and administrative................................................. 12,577 4,212
Depreciation and amortization....................................................... 4,738 1,084
Product development and programming................................................. 3,753 1,161
------------- -----------
Operating income (loss)............................................................... (4,009) 83
Interest expense...................................................................... (3,239) (1,013)
Other income (expense), net........................................................... 120 (300)
------------- -----------
Net loss.............................................................................. $ (7,128) $ (1,230)
------------- -----------
------------- -----------
</TABLE>
The accompanying notes are an integral part of these financial statemments
F-21
<PAGE>
CCC DEVELOPMENT COMPANY
STATEMENT OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1993
------------- QUARTER
ENDED MARCH
29, 1994
-----------
(UNAUDITED)
<S> <C> <C>
Operating Activities:
Net loss............................................................................ $ (7,128) $ (1,230)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization of equipment and purchased software................. 5,278 1,655
Contract funding proceeds......................................................... 19,543 6,197
Contract funding revenue amortization............................................. (15,034) (4,964)
Other, net........................................................................ (718) 337
Changes in:
Accounts receivable, net........................................................ 546 501
Other current assets............................................................ (2,280) 102
Other assets.................................................................... -- (31)
Accounts payable and accrued expenses........................................... 1,736 (638)
Accrued interest................................................................ (77) --
Deferred revenues............................................................... 1,134 1,233
------------- -----------
Net cash provided by operating activities............................................. 3,000 3,162
------------- -----------
Investing Activities:
Purchases of equipment and software................................................. (4,812) (1,544)
------------- -----------
Net cash used for investing activities................................................ (4,812) (1,544)
------------- -----------
Financing Activities:
Principal payments on long-term debt................................................ (1,070) (230)
Advances (to) from the Company...................................................... 4,268 (608)
------------- -----------
Net cash provided by (used for) financing activities.................................. 3,198 (838)
------------- -----------
Net increase in cash.................................................................. 1,386 780
Cash:
Beginning of period................................................................. 40 1,426
------------- -----------
End of period....................................................................... $ 1,426 $ 2,206
------------- -----------
------------- -----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-22
<PAGE>
CCC DEVELOPMENT COMPANY
STATEMENT OF PARTNERS' DEFICIT
(IN THOUSANDS)
<TABLE>
<CAPTION>
TOTAL
PARTNERS' ACCUMULATED PARTNERS'
CAPITAL DEFICIT DEFICIT
----------- ------------ ---------
<S> <C> <C> <C>
December 31, 1992............................................................. $ 2,000 $ (19,726) $ (17,726)
Net loss...................................................................... -- (7,128) (7,128)
----------- ------------ ---------
December 31, 1993............................................................. 2,000 (26,854) (24,854)
Net loss (unaudited).......................................................... -- (1,230) (1,230)
----------- ------------ ---------
March 29, 1994 (unaudited).................................................... $ 2,000 $ (28,084) $ (26,084)
----------- ------------ ---------
----------- ------------ ---------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-23
<PAGE>
CCC DEVELOPMENT COMPANY
(AN EQUITY INVESTEE OF CCC INFORMATION SERVICES GROUP INC.)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 -- ORGANIZATION AND DESCRIPTION OF BUSINESS
In September 1989, CCC Information Services Group Inc. (Company) (formerly
InfoVest Corporation), through a wholly owned subsidiary, and UCOP Inc. (UCOP),
an unrelated corporation, formed CCC Development Company (CCCDC or Joint
Venture), a partnership whose purpose was to develop a personal computer based
collision repair estimating system for automobiles. In November 1990, the
Company and UCOP executed a Joint Venture and Distribution Agreement, under
which both partners established their 50% interests in the Joint Venture.
As a result of a series of transactions involving White River Ventures, Inc.
(White River), the Company acquired its former partner's 50% interest in CCCDC,
through the acquisition of UCOP, Inc. (UCOP), effective March 30, 1994. These
transactions are more fully described in Note 4 below. As a result of this
acquisition, in combination with its original 50% interest in CCCDC, the Company
acquired a 100% equity ownership interest in CCCDC and succeeded to all of
CCCDC's former operations and directly assumed all of CCCDC's assets and
liabilities.
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES
REVENUE RECOGNITION
Revenues are recognized as services are provided. Of total Joint Venture
revenues in 1993, and the quarter ended March 29, 1994, 60% and 53% (unaudited),
respectively, were attributable to revenues from insurance companies.
INTERNAL SOFTWARE DEVELOPMENT COSTS
Research and development expenses, principally the design and development of
software products, are expensed as incurred. Software costs, if material, are
capitalized when sufficient evidence exists that technological feasibility has
been established. Technological feasibility is established upon completion of
both a product design and a working model, and confirmation of the model's
consistency with the design through detailed testing. For the year 1993 and the
quarter ended March 29, 1994, research and development expenses, of
approximately $1.0 million and $0.3 million (unaudited), respectively, are
reflected in the accompanying statement of operations. There were no significant
software development costs subject to capitalization during either of these
periods.
EQUIPMENT AND PURCHASED SOFTWARE
Equipment is stated at cost, net of accumulated depreciation. Depreciation
of equipment is provided on a straight-line basis over estimated useful lives
ranging from 2 to 15 years.
CONTRACT FUNDING
Future revenue streams under certain end-user collision estimating contracts
(Contracts) have been discontinued and sold to various investors. Cash proceeds
from a sold Contract equals the Contract's future revenue stream, discounted at
an annual rate of approximately 14%, less, for certain Contracts, investor
reserves for customer nonperformance under the Contracts. Sales proceeds, which
are remitted directly to the investors in these contracts, and related interest
expense are recognized as revenue and interest expense, respectively, over the
life of the Contract.
PERVASIVENESS OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amount of assets and liabilities and
disclosure of contingent assets and liabilities as of the date of the financial
statements, and that affect the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from these estimates.
F-24
<PAGE>
CCC DEVELOPMENT COMPANY
(AN EQUITY INVESTEE OF CCC INFORMATION SERVICES GROUP INC.)
NOTES TO FINANCIAL STATEMENTS
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INTERIM FINANCIAL INFORMATION (UNAUDITED)
The information presented for the quarter ended March 29, 1994 is unaudited.
With respect to the unaudited interim financial statements, management is of the
opinion that all material adjustments, consisting only of normal recurring
adjustments necessary for a fair presentation of the Joint Venture's interim
results of operations, have been included. The results of operations for the
quarter ended March 29, 1994 should not be regarded as necessarily indicative of
the results of operations for any future period.
NOTE 3 -- NONCASH INVESTING AND FINANCING ACTIVITIES
In addition to amounts reported as purchases of equipment in the
consolidated statement of cash flow, the Joint Venture has directly financed
certain noncash capital expenditures.
NOTE 4 -- ACQUISITION OF PARTNERS' INTEREST IN JOINT VENTURE
On March 30, 1994, White River acquired the stock of UCOP. Also on March 30,
1994, the Company entered into a call agreement with White River to purchase the
stock of UCOP from White River within 180 days. On May 31, 1994, using cash
generated through a commercial bank bridge loan, the Company completed the
acquisition of UCOP's interest in CCCDC by purchasing the stock of UCOP from
White River. The Company began consolidating Joint Venture operating results
effective March 30, 1994.
NOTE 5 -- INCOME TAXES
Because the Joint Venture was a partnership, taxable income passed through
to its partners. Accordingly, income taxes were not recorded on the books of
CCCDC.
NOTE 6 -- LEGAL PROCEEDINGS
The Joint Venture and the Company were involved in legal proceedings with
the lessor of certain personal computer equipment. When the lessor failed to
fulfill certain financial obligations to the equipment vendors, the Joint
Venture advanced funds to those vendors on the lessor's behalf. In 1993,
uncollectible advances of $1.1 million were charged against Joint Venture
operating results. In October 1993, the lessor filed a legal action against the
Company seeking payments due under certain master license agreements, including:
rents, sales and use tax and interest. In addition, the lessor asserted that it
was the sole owner of all right, title and interest in certain Contracts,
including renewals. This matter was settled in the first quarter of 1994. Under
the settlement agreement, the Company paid the lessor $400 thousand and in
exchange received clear title to certain personal computer equipment.
NOTE 7 -- RELATED PARTY TRANSACTIONS
During 1993 and the first quarter of 1994, Contracts with future sales
proceeds of $5.2 million and $0.3 million, respectively, were discounted and
sold to a major stockholder of the Company. The discount rate applied to these
Contracts was approximately the same as the rate applied to Contracts purchased
by unrelated entities.
F-25
<PAGE>
The inside back cover consists of a drawing depicting nine different
participants in the automobile claims industry with the following caption:
"CCC's Transaction Processing and Outsourcing Services Connect all Partners In
the Auto Claims Process."
<PAGE>
- ------------------------------------------------
------------------------------------------------
- ------------------------------------------------
------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITERS. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER TO BUY TO ANY
PERSON IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL
OR TO ANY PERSON TO WHOM IT IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS
NOR ANY OFFER OR SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY OR THAT
THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE
DATE HEREOF.
--------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Prospectus Summary................................... 3
Risk Factors......................................... 7
Dividend Policy...................................... 14
Dilution............................................. 14
Use of Proceeds...................................... 16
Capitalization....................................... 16
Selected Consolidated Financial Data................. 17
Unaudited Pro Forma Consolidated Financial Data...... 19
Management's Discussion and Analysis of Financial
Condition and Results of Operations................. 20
Business............................................. 29
Management........................................... 43
Principal Stockholders............................... 50
Certain Transactions................................. 52
Description of Capital Stock......................... 53
Shares Eligible for Future Sale...................... 57
Underwriting......................................... 58
Legal Matters........................................ 59
Experts.............................................. 59
Available Information................................ 59
Index to Consolidated Financial Statements........... F-1
</TABLE>
----------------
UNTIL , 1996 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS) ALL
DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK OFFERED HEREBY, WHETHER OR
NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
5,500,000 SHARES
[LOGO]
CCC INFORMATION
SERVICES GROUP INC.
COMMON STOCK
---------------
PROSPECTUS
---------------
HAMBRECHT & QUIST
LAZARD FRERES & CO. LLC
RAYMOND JAMES &
ASSOCIATES, INC.
AUGUST , 1996
- ------------------------------------------------
------------------------------------------------
- ------------------------------------------------
------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Set forth below is an itemized statement of all expenses in connection with
the sale and distribution of the securities being registered by this
Registration Statement, other than underwriting discounts and commissions. All
amounts are estimated except the SEC registration fee and the NASD filing fee.
All such expenses shall be paid by the Company:
<TABLE>
<S> <C>
SEC Registration Fee.......................................... $ 30,344.83
NASD Filing Fee............................................... 9,300.00
NASDAQ Listing Fee............................................ $ 50,000.00
Blue sky fees and expenses.................................... $ 20,000.00
Accounting fees and expenses.................................. $ 200,000.00
Legal fees and expenses....................................... $ 400,000.00
Printing and engraving........................................ $ 250,000.00
Transfer Agent and Registrar Fees............................. $ 15,000.00
Miscellaneous................................................. $ 97,355.17
------------
TOTAL....................................................... $1,072,000.00
------------
------------
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company is incorporated under the laws of the State of Delaware. Section
145 of the Delaware Law ("Section 145") provides that a Delaware corporation may
indemnify any persons who are, or are threatened to be made, parties to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of such corporation), by reason of the fact that such person was an
officer, director, employee or agent of another corporation or enterprise. The
indemnity may include expenses (including attorneys' fees), judgments, fines,
and amounts paid in settlement actually and reasonably incurred by such person
in connection with such action or proceeding, if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the corporation, and, with respect to any criminal action, had no reasonable
cause to believe that his conduct was illegal. A Delaware corporation may
indemnify any persons who are, or are threatened to be made, a party to any
threatened, pending or completed action or suit by or in the right of the
corporation by reason of the fact that such person was a director, officer,
employee or agent of another corporation or enterprise. The indemnity may
include expenses (including attorneys' fees) actually and reasonably incurred by
such person in connection with the defense or settlement of such action or suit,
provided such person acted in good faith and in a manner he reasonably believed
to be in or not opposed to the corporation's best interests except that no
indemnification is permitted without judicial approval if the officer or
director is adjudged to be liable to the corporation. Where an officer or
director is successful on the merits or otherwise in the defense of any action
referred to above, the corporation must indemnify him against the expenses which
such officer or director has actually and reasonably incurred.
The Company's Certificate of Incorporation and Bylaws provide for the
indemnification of directors and officers of the Company to the fullest extent
permitted by Section 145.
As permitted by Delaware Law, the Certificate of Incorporation provides that
directors of the Company shall have no personal liability to the Company or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except (i) for any breach of a director's duty of loyalty to the Company or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or knowing violations of law, (iii) under Section 174 of
the Delaware Law, or (iv) for any transaction from which a director derived an
improper personal benefit.
The Company maintains directors' and officers' liability insurance.
II-1
<PAGE>
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
Since January 1, 1993, the Company has issued the following securities that
were not registered under the Act:
<TABLE>
<CAPTION>
NUMBER OF
DATE PURCHASER SHARES PURCHASED
- --------------------- ------------------------------ ----------------
<C> <S> <C>
8/2/93 Steven L. Telaroli 800
10/30/93 Lewis Ballington 267
6/16/94 White River Ventures, Inc. 7,050,851
12/10/94 Daniel Chen 640
1/18/95 Daniel O'Hara 640
8/31/95 David Wu 160
9/7/95 Glen Tullman 2,000
11/9/95 Jeff Chen 8,400
12/15/95 Peter Urbain 8,000
2/23/96 Robert Millman 6,400
5/1/96 Edward Cheskis 190,400
</TABLE>
The Company believes that all of the foregoing transactions were exempt from
registration pursuant to Section 4(2) of the Act.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
<TABLE>
<S> <C>
1 *Form of Underwriting Agreement
3.1 *Form of Amended and Restated Certificate of Incorporation
3.2 *Form of Amended and Restated By-laws
4.1 Specimen Common Stock Certificate
4.2 *Stockholders' Agreement dated as of June 16, 1994 by and among the Company,
White River Ventures, Inc. and the other stockholders named therein
4.3 *Regulatory Contingency Agreement dated as of June 16, 1994 by and among the
Company and White River Ventures, Inc.
4.4 *Series C Preferred Stock Designation
4.5 *Series D Preferred Stock Designation
4.6 *Series E Preferred Stock Designation
5 *Opinion of Winston & Strawn re legality
10.1 *Stock Option Plan of the Company adopted May 1988 and amended in November
1994
10.2 *Lease between LaSalle National Trust, N.A., as trustee and CCC dated as of
May 7, 1993
10.3 *License between Motor Books Division, a unit of Hearst Business Publishing,
Inc. and the Company dated as of May 1, 1992
10.4 Form of Credit Facility Agreement between CCC and Signet Bank
10.5 Loan Agreement dated April 29, 1994 between CCC, CCC Development Company,
Canadian Imperial Bank of Commerce and the financial institutions party
thereto
10.6 First Amendment dated as of August 4, 1995 between the Company, CCC, Canadian
Imperial Bank of Commerce and the financial institutions party thereto
10.7 Guaranty dated as of April 29, 1994 by the Company in favor of Canadian
Imperial Bank of Commerce
11 Amended Statement re computation of per share earnings
21 *Subsidiaries of the registrant
23.1 Consent of Price Waterhouse LLP, independent accountants
23.2 *Consent of Winston & Strawn (contained in the opinion filed as Exhibit 5)
24 *Powers of attorney
27 *Financial Data Schedule
</TABLE>
- ------------------------
*Previously filed
II-2
<PAGE>
(b) Financial Statement Schedules
Schedule II Valuation and Qualifying Accounts (included as Page S-1)
All other schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required under the
related instructions, are inapplicable or not material, or the information
called for thereby is otherwise included in the consolidated financial
statements and therefore has been omitted.
ITEM 17. UNDERTAKINGS.
The Company hereby undertakes to provide the Underwriters at the closing
specified in the Underwriting Agreement certificates in such denominations and
registered in such names as required by the Underwriters to permit prompt
delivery to each purchaser.
The Company hereby undertakes that:
(1) For purpose of determining any liability under the Securities Act, the
information omitted from the form of prospectus files as part of this
registration statement in reliance upon Rule 430(A) and contained in a form of
prospectus filed by the Company pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered therein
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Company pursuant to the provisions set forth in Item 14 above, or otherwise, the
Company has been advised in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company expenses
incurred or paid by a director, officer or controlling person of the Company in
the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Company will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and the Company will be governed by
the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Amendment No. 3 to Registration Statement to be
signed on its behalf by the undersigned thereunto duly authorized, in the City
of Chicago, State of Illinois on August 13, 1996.
CCC INFORMATION SERVICES GROUP INC.
By: /s/ DAVID M. PHILLIPS
-------------------------------------
David M. Phillips
CHAIRMAN, PRESIDENT AND CHIEF
EXECUTIVE OFFICER
Pursuant to the requirements of the Securities Act, this Amendment No. 3 to
Registration Statement has been signed by the following persons in the
capacities indicated on August 13, 1996.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- -------------------------------------- ----------------------------------------
<C> <S>
/s/ DAVID M. PHILLIPS Chairman, President and Chief Executive
- -------------------------------------- Officer
David M. Phillips
* Executive Vice President -- Chief
- -------------------------------------- Financial Officer (Principal Financial
Leonard L. Ciarrocchi Officer)
* Vice President -- Controller (Principal
- -------------------------------------- Accounting Officer)
Donald J. Hallagan
*
- -------------------------------------- Director
John J. Byrne
*
- -------------------------------------- Director
Morgan Davis
*
- -------------------------------------- Director
Thomas L. Kempner
*
- -------------------------------------- Director
Gordon S. Macklin
*
- -------------------------------------- Director
Robert T. Marto
*
- -------------------------------------- Director
Michael R. Stanfield
*By: /s/ DAVID M.
PHILLIPS
- --------------------------------------
David M.
Phillips
ATTORNEY-IN-FACT
</TABLE>
II-4
<PAGE>
CCC INFORMATION SERVICES GROUP INC.
SUPPLEMENTAL FINANCIAL STATEMENT SCHEDULES
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
BALANCE AT CHARGED TO CHARGE TO BALANCE AT
BEGINNING OF COSTS AND OTHER END OF
DESCRIPTION PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD
- -------------------------------------------------- ------------- ----------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C>
1993 Allowance for Doubtful Accounts $ 253 $ 51 -- $ (44)(b) $ 260
1994 Allowance for Doubtful Accounts 260 727 $ 497(a) (541)(b) 943
1995 Allowance for Doubtful Accounts 943 2,257 -- (1,735)(b) 1,465
1993 Deferred Income Tax Valuation Allowances 1,254 2,296 -- -- 3,550
1994 Deferred Income Tax Valuation Allowances 3,550 1,701 972(a) -- 6,223
1995 Deferred Income Tax Valuation Allowances 6,223 -- -- (1,260)(c) 4,963
</TABLE>
- ------------------------------
(a) Purchase of remaining 50% interest in the Joint Venture, effective March
30, 1994.
(b) Accounts receivable write-offs, net of recoveries.
(c) Reversal of deferred tax valuation allowances.
S-1
<PAGE>
LIST OF EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE
- ----------- ------------------------------------------------------------------------------------------------- ---------
<C> <S> <C>
1 *Form of Underwriting Agreement
3.1 *Form of Amended and Restated Certificate of Incorporation
3.2 *Form of Amended and Restated By-laws
4.1 Specimen Common Stock Certificate
4.2 *Stockholders' Agreement dated as of June 16, 1994 by and among the Company, White River
Ventures, Inc. and the other stockholders named therein
4.3 *Regulatory Contingency Agreement dated as of June 16, 1994 by and among the Company and White
River Ventures, Inc.
4.4 *Series C Preferred Stock Designation
4.5 *Series D Preferred Stock Designation
4.6 *Series E Preferred Stock Designation
5 *Opinion of Winston & Strawn re legality
10.1 *Stock Option Plan of the Company adopted May 1988 and amended in November 1994
10.2 *Lease between LaSalle National Trust, N.A., as trustee and CCC dated as of May 7, 1993
10.3 *License between Motor Books Division, a unit of Hearst Business Publishing, Inc. and the Company
dated as of May 1, 1992
10.4 Form of Credit Facility Agreement between CCC and Signet Bank
10.5 Loan Agreement dated April 29, 1994 between CCC, CCC Development Company, Canadian Imperial Bank
of Commerce and the financial institutions party thereto
10.6 First Amendment dated as of August 4, 1995 between the Company, CCC, Canadian Imperial Bank of
Commerce and the financial institutions party thereto
10.7 Guaranty dated as of April 29, 1994 by the Company in favor of Canadian Imperial Bank of Commerce
11 Amended Statement re computation of per share earnings
21 *Subsidiaries of the registrant
23.1 Consent of Price Waterhouse LLP, independent accountants
23.2 *Consent of Winston & Strawn (contained in the opinion filed as Exhibit 5)
24 *Powers of attorney
27 *Financial Data Schedule
</TABLE>
- ------------------------
*Previously filed
<PAGE>
Exhibit 4.1 Specimen Common Stock Certificate of the Company
The specimen certificate contains the logo of the Company above the name of
the Company and the Company's CUSIP number (12487Q 10 9), as well as the name of
the Company. The specimen certificate is signed by Gerald P. Kenney, Secretary,
and David M. Phillips, Chairman of the Board, Chief Executive Officer and
President, of the Company. The specimen certificate contains the following
language:
This certifies that ______________________ is the owner
of ___________ fully paid and nonassessable shares of
the Common Stock, par value $.10 per share, of CCC
Information Services Group Inc. transferable on the books
of the Corporation by the holder hereof in person or by
duly authorized attorney upon surrender of this certificate
properly endorsed. This certificate is not valid unless
countersigned and registered by the Transfer Agent and
Registrar. Witness the facsimile seal of the Corporation
and the facsimile signature of its duly authorized officers.
In the lower right-hand corner of the specimen certificate, there is a
place for the signature of Harris Trust and Savings Bank, transfer agent
and registrar.
<PAGE>
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
FORM OF
CREDIT FACILITY AGREEMENT
BY AND AMONG
CCC INFORMATION SERVICES INC.
(AND CERTAIN OF ITS DIRECT AND INDIRECT SUBSIDIARIES)
AND
SIGNET BANK
Executed as of July ___, 1996
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
144911
<PAGE>
TABLE OF CONTENTS
ARTICLE 1: THE CREDIT FACILITIES........................................... 1
1.1. Line of Credit Facility............................................ 1
1.1.1. Establishment of Credit Facility......................... 1
1.1.2. Facility Maturity........................................ 1
1.1.3. Use of Proceeds.......................................... 2
1.1.4. Line of Credit Note...................................... 2
1.1.5. Interest................................................. 2
1.1.5.1. Establishment of Portions...................... 2
1.1.5.2. Interest Rate Determination.................... 3
1.1.5.3. Selection of Rate Index........................ 3
1.1.5.4. Applicable Rate Margins........................ 3
1.1.5.5. Calculation of Interest........................ 4
1.1.5.6. Special LIBO Rate Provisions................... 4
1.1.6. Repayment and Prepayment................................. 5
1.1.6.1. Periodic Interest Payments..................... 6
1.1.6.2. Principal Payments -- Commitment Reduction..... 6
1.1.6.3. Principal Payments -- Periodic Sweep of
Excess Cash Flow............................... 6
1.1.6.4. At Maturity or Termination..................... 6
1.1.6.5. Prepayments.................................... 6
1.1.6.6. Principal Repayment -- Automatic............... 7
1.1.6.7. Default Interest Payment....................... 7
1.1.6.8. Application of Payments........................ 7
1.1.6.9. Availability For Reborrowing................... 7
1.2. Term Loan Facility................................................. 7
1.2.1. Establishment of Credit Facility......................... 7
1.2.2. Facility Maturity........................................ 8
1.2.3. Use of Proceeds.......................................... 8
1.2.4. Term Loan Note........................................... 8
1.2.5. Interest................................................. 8
1.2.5.1. Intentionally Blank............................ 8
1.2.5.2. Establishment of Portions...................... 8
1.2.5.3. Interest Rate Determination.................... 9
1.2.5.4. Selection of Rate Index........................ 9
1.2.5.5. Applicable Rate Margins........................ 9
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<PAGE>
1.2.5.6. Calculation of Interest........................ 10
1.2.5.7. Special LIBO Rate Provisions................... 10
1.2.6. Repayment and Prepayment................................. 11
1.2.6.1. Periodic Interest Payments..................... 11
1.2.6.2. Principal Payments -- Amortization............. 12
1.2.6.3. Principal Payments -- Periodic Sweep of
Excess Cash Flow............................... 12
1.2.6.4. At Maturity or Termination..................... 12
1.2.6.5. Prepayments.................................... 12
1.2.6.6. Default Interest Payment....................... 13
1.2.6.7. Application of Payments........................ 13
1.2.6.8. Availability For Reborrowing................... 13
1.3. Determination of Commitment Amounts................................ 13
1.3.1. Initial Commitments...................................... 13
1.3.2. Mandatory Commitment Reductions for the Line of
Credit Facility.......................................... 14
1.3.3. Voluntary Reduction of Commitment........................ 14
1.4. Advances........................................................... 14
1.4.1. Requesting Advances...................................... 14
1.4.2. Funding Advances......................................... 15
1.4.3. Automatic Line of Credit Advances........................ 15
1.4.4. Obligation to Advance.................................... 15
1.4.5. Indemnification for Revocation or Failure to Satisfy
Conditions............................................... 15
1.5. Payments in General................................................ 16
1.5.1. Manner and Place......................................... 16
1.5.2. Special Payment Timing Issues............................ 16
1.5.3. Application of Payments.................................. 16
1.5.4. Debiting Accounts........................................ 16
1.5.5. Default Interest......................................... 16
1.5.6. Usury Savings Provision.................................. 16
1.6. Release of Security................................................ 16
1.7. Fees and Other Compensation........................................ 17
1.7.1. Commitment Fee........................................... 17
1.7.2. Periodic Facility Fee.................................... 17
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<PAGE>
1.8. Issuance of Letters of Credit...................................... 17
ARTICLE 2: CONDITIONS PRECEDENT............................................ 17
2.1. Closing Conditions................................................. 17
2.1.1. Compliance............................................... 17
2.1.1.1. Fees and Expenses.............................. 17
2.1.1.2. Representations................................ 18
2.1.1.3. No Default..................................... 18
2.1.1.4. No Violation................................... 18
2.1.1.5. No Material Change............................. 18
2.1.2. Documents................................................ 18
2.1.2.1. Credit Agreement............................... 18
2.1.2.2. Fee Agreement.................................. 18
2.1.2.3. Solvency Certificates.......................... 18
2.1.2.4. Compliance Certificates........................ 18
2.1.2.5. Opinions of Counsel............................ 18
2.1.2.6. Authorization Documents -- Each Borrower....... 19
2.1.2.7. Other Documents................................ 19
2.2. Conditions to Initial Advance...................................... 19
2.2.1. Compliance............................................... 19
2.2.1.1. Fees and Expenses.............................. 19
2.2.1.2. Representations................................ 19
2.2.1.3. No Default..................................... 19
2.2.1.4. No Violation................................... 19
2.2.1.5. No Material Change............................. 20
2.2.2. Documents................................................ 20
2.2.2.1. Amendment to Credit Agreement.................. 20
2.2.2.2. Update to Credit Agreement Schedules........... 20
2.2.2.3. Advance Request................................ 20
2.2.2.4. Promissory Notes............................... 20
2.2.2.5. Security Agreement and Related Documents....... 20
2.2.2.6. Intellectual Property Security Agreements...... 20
2.2.2.7. Assignment of Material Contracts............... 21
2.2.2.8. Pledge and Security Agreement.................. 21
2.2.2.9. Pledge and Security Agreement.................. 21
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<PAGE>
2.2.2.10. Guaranty Agreement............................. 21
2.2.2.11. Insurance...................................... 21
2.2.2.12. Solvency Certificates.......................... 21
2.2.2.13. Compliance Certificates........................ 22
2.2.2.14. Opinions of Counsel............................ 22
2.2.2.15. Payoff Instructions for Prior Indebtedness..... 22
2.2.2.16. Authorization Documents -- Each Borrower....... 22
2.2.2.17. Authorization Documents -- Guarantor........... 22
2.2.2.18. Officer's Certificates......................... 22
2.2.2.19. Other Documents................................ 24
2.2.3. Consummation of Guarantor's IPO.......................... 24
2.2.4. Satisfaction of Existing Indebtedness.................... 24
2.2.5. Cash Flow Leverage....................................... 24
2.3. Line of Credit Advances (After the Initial Advances).............. 24
2.3.1. Advance Request.......................................... 24
2.3.2. Cash Flow Leverage....................................... 24
2.3.3. Other Documents.......................................... 24
2.3.4. Compliance............................................... 24
2.3.4.1. Fees and Expenses.............................. 24
2.3.4.2. Representations................................ 25
2.3.4.3. No Default..................................... 25
2.3.4.4. No Violations.................................. 25
2.3.4.5. No Material Change............................. 25
ARTICLE 3: REPRESENTATIONS AND WARRANTIES.................................. 25
3.1. Organization and Good Standing.................................... 25
3.2. Power and Authority............................................... 25
3.3. Validity and Legal Effect......................................... 26
3.4. No Violation of Laws or Agreements................................ 26
3.5. Title to Assets; Existing Encumbrances; Intellectual and
Real Property..................................................... 26
3.6. Capital Structure and Equity Ownership............................ 27
3.7. Subsidiaries, Affiliates and Investments.......................... 27
3.8. Material Contracts................................................ 27
3.9. Licenses and Authorizations....................................... 27
3.10. Taxes and Assessments............................................. 28
3.11. Litigation and Legal Proceedings.................................. 28
3.12. Accuracy of Financial Information................................. 28
3.13. Accuracy of Other Information..................................... 28
3.14. Compliance with Laws Generally.................................... 28
3.15. ERISA Compliance.................................................. 28
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<PAGE>
3.16. Environmental Compliance.......................................... 29
3.17. Margin Rule Compliance............................................ 30
3.18. Fees and Commissions.............................................. 30
3.19. Solvency.......................................................... 30
ARTICLE 4: AFFIRMATIVE COVENANTS............................................31
4.1. Financial Covenants and Ratios.................................... 31
4.1.1. Total Charge Coverage Ratio.............................. 31
4.1.2. Cash Flow Leverage Ratio................................. 31
4.2. Periodic Financial Statements..................................... 32
4.2.1. Monthly Financial Statements............................. 32
4.2.2. Quarterly Financial Statements........................... 32
4.2.3. Annual Financial Statements.............................. 33
4.3. Other Financial and Specialized Reports........................... 33
4.4. Fiscal Year....................................................... 33
4.5. Books and Records................................................. 33
4.6. Existence and Good Standing....................................... 33
4.7. Deposit Accounts.................................................. 33
4.8. Insurance; Maintenance of Properties; Disaster Contingency........ 34
4.8.1. General Insurance Provisions............................. 34
4.8.2. Disaster Recovery and Contingency Program................ 34
4.9. Loan Purpose...................................................... 34
4.10. Litigation; Occurrence of Defaults................................ 34
4.11. Taxes............................................................. 34
4.12. Management Changes................................................ 35
4.13. Costs and Expenses................................................ 35
4.14. Compliance with Laws.............................................. 35
4.14.1. General.................................................. 35
4.14.2. ERISA.................................................... 35
4.14.3. Environmental............................................ 36
4.15. Further Actions................................................... 36
4.15.1. Additional Collateral.................................... 36
4.15.2. Further Assurances....................................... 36
4.15.3. Estoppel Certificate..................................... 36
4.15.4. Waivers and Consents..................................... 37
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<PAGE>
4.15.5. Additional Material Contracts, Licenses and
Authorizations........................................... 37
4.16. Other Information................................................. 37
ARTICLE 5: NEGATIVE COVENANTS.............................................. 37
5.1. Capital Expenditures.............................................. 37
5.2. Additional Indebtedness........................................... 38
5.3. Guaranties........................................................ 39
5.4. Loans............................................................. 39
5.5. Liens and Encumbrances; Negative Pledge........................... 39
5.6. Transfer of Assets................................................ 41
5.7. Acquisitions and Investments...................................... 41
5.8. New Ventures; Mergers............................................. 42
5.9. Transactions with Affiliates...................................... 42
5.10. Distributions or Dividends........................................ 42
5.11. Payment of Subordinated Indebtedness.............................. 43
5.12. Payment of Management Fees........................................ 43
5.13. Issuance of Additional Equity..................................... 43
5.14. Removal of Assets................................................. 43
5.15. Modifications to Organic Documents................................ 43
5.16. Modifications to Material Relationships and Agreements............ 44
5.17. Margin Stock Restrictions; Other Federal Statutes................. 44
ARTICLE 6: ADDITIONAL COLLATERAL AND RIGHT OF SET OFF...................... 44
6.1. Additional Collateral............................................. 44
6.2. Right of Set-Off.................................................. 44
6.3. Additional Rights................................................. 45
ARTICLE 7: DEFAULT AND REMEDIES............................................ 45
7.1. Events of Default................................................. 45
7.1.1. Payment Obligations...................................... 45
7.1.2. Representations and Warranties........................... 45
7.1.3. Financial Covenants...................................... 45
7.1.4. Other Covenants in Loan Documents........................ 45
7.1.5. Default Under Other Agreements with Lender............... 45
7.1.6. Default Under Material Agreements with Other Parties..... 45
7.1.7. Security Interest........................................ 46
7.1.8. Change of Control........................................ 46
7.1.9. Government Action........................................ 46
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<PAGE>
7.1.10. Insolvency............................................... 46
7.1.11. Loss or Revocation of Guaranty........................... 47
7.1.12. Additional Liabilities................................... 47
7.1.13. Material Adverse Change.................................. 47
7.2. Remedies.......................................................... 47
7.2.1. General; Acceleration.................................... 47
7.2.2. Other.................................................... 48
ARTICLE 8: DEFINITIONS..................................................... 48
8.1. Definitions....................................................... 48
8.2. Rules of Construction............................................. 59
8.2.1. Plural; Gender........................................... 59
8.2.2. Financial and Accounting Terms........................... 59
ARTICLE 9: MISCELLANEOUS................................................... 59
9.1. Indemnification, Reliance and Assumption of Risk Provisions....... 59
9.2. Assignment; Disclosure of Information to Third Parties............ 60
9.3. Binding Effect and Governing Law.................................. 61
9.4. No Waiver; Delay.................................................. 61
9.5. Modification...................................................... 62
9.6. Headings.......................................................... 62
9.7. Notices........................................................... 62
9.8. Time of Day....................................................... 63
9.9. Relationship with Prior Agreements................................ 63
9.10. Severability...................................................... 63
9.11. Termination and Survival.......................................... 63
9.12. Reinstatement..................................................... 64
9.13. Counterparts...................................................... 64
9.14. Conflict Provision................................................ 64
9.15. Waiver of Suretyship Defenses..................................... 64
9.16. Waiver of Liability............................................... 64
9.17. Forum Selection; Consent to Jurisdiction.......................... 65
9.18. Waiver of Jury Trial.............................................. 66
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<PAGE>
SCHEDULES AND EXHIBITS:
SCHEDULES:
Schedule A List of Borrowers
Schedule 3.1 Good Standing / Foreign Qualification Jurisdictions
Schedule 3.2 Missing Consents
Schedule 3.5 Existing Encumbrances
Schedule 3.5A Intellectual Property
Schedule 3.5B Real Property Interests
Schedule 3.5C Operating Names / Trade Names
Schedule 3.6 Capital Structure / Equity Ownership
Schedule 3.7 Subsidiaries, Affiliates & Investments
Schedule 3.8 Material Contracts
Schedule 3.9 Licenses and Authorizations
Schedule 3.10 Taxes and Assessments
Schedule 3.11 Material Litigation
Schedule 3.18 Fees and Commissions
Schedule 4.7 Existing Deposit Accounts
Schedule 5.2 Permitted Additional Indebtedness
Schedule 5.5 Permitted Additional Liens
EXHIBITS:
Exhibit 1.4.1 Form of Advance Request
Exhibit 4.2.1 Form of Monthly Financial Statements
Exhibit 4.2 Form of Periodic Compliance Certificate
-viii-
<PAGE>
CREDIT FACILITY AGREEMENT
THIS CREDIT FACILITY AGREEMENT (as defined in Article 8 hereof,
along with all other defined terms, this "Agreement") is made and effective as
of July ___, 1996, by and among CCC INFORMATION SERVICES INC. ("CCC"), AND EACH
DIRECT AND INDIRECT SUBSIDIARY OF CCC (IF ANY) THAT ARE LISTED ON SCHEDULE A
HERETO (as more fully defined in Article 8 hereof, CCC and each such Subsidiary
are sometimes referred to herein individually as a "Borrower" and collectively
as the "Borrowers"), AND SIGNET BANK (as more fully defined in Article 8 hereof,
"Lender" or "Agent").
R E C I T A L S
WHEREAS, Borrowers desire and have applied to Lender for a credit
facility consisting of (a) a line of credit arrangement pursuant to which up to
$20 million can be borrowed from time to time on a senior secured basis, AND (b)
(under certain circumstances and conditions described herein) a term loan credit
arrangement pursuant to which up to $15 million can be borrowed on a senior
secured basis; AND
WHEREAS, Lender is willing to accommodate the request for credit
upon and subject to the terms, conditions and provisions of the Loan Documents;
NOW, THEREFORE, in consideration of the covenants and agreements
contained in the Loan Documents, and other good and valuable consideration,
receipt and sufficiency of which are hereby acknowledged, and intending to be
legally bound hereby, each Borrower (jointly and severally) and Lender hereby
agree as follows:
ARTICLE 1: THE CREDIT FACILITIES
1.1. LINE OF CREDIT FACILITY.
1.1.1. ESTABLISHMENT OF CREDIT FACILITY. Subject to the terms and
conditions of and in reliance upon the representations and warranties contained
in the Loan Documents, if each of the conditions precedent under Section 2.2
hereof is satisfied (on or before October 31, 1996), THEN Lender will lend funds
to Borrowers on a senior secured basis from time to time prior to the Line of
Credit Maturity Date (as determined in accordance with Section 1.1.2 hereof) in
an aggregate amount at any time outstanding not to exceed the Available Credit
Portion (as determined in accordance with Section 1.3 hereof).
1.1.2. FACILITY MATURITY. The Line of Credit Facility will mature
on October 1, 2001 (as may be extended from time to time in Lender's sole and
absolute discretion, "Line of Credit Maturity Date").
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<PAGE>
1.1.3. USE OF PROCEEDS. The funds advanced under this Line of
Credit Facility may be used exclusively as follows (BUT ONLY to the extent not
otherwise advanced for such purpose under Section 1.2.3 hereof):
a. To satisfy and refinance the indebtedness owed by CCC to a group
of lenders the agent for which is Canadian Imperial Bank of
Commerce, AND
b. The balance of the Available Credit Portion (if any) to pay (i)
for closing costs and fees associated with consummating and
documenting the transactions contemplated by this Agreement, AND
(ii) for acquisitions of assets and Capital Expenditures
otherwise permitted for Borrower under the Loan Documents, AND
(iii) for general working capital and other legitimate corporate
expenditures, AND (iv) for such other purposes as specifically
authorized hereunder or in writing by Lender (in its sole and
absolute discretion).
1.1.4. LINE OF CREDIT NOTE. The indebtedness under the Line of
Credit Facility and the corresponding obligation of each Borrower (jointly and
severally) to repay Lender with interest in accordance with the terms hereof
will be evidenced by a Line of Credit Note (as amended, restated, replaced,
supplemented, extended or renewed hereafter, "Line of Credit Note") payable to
the order of Lender. The Line of Credit Note will be due and payable in full on
the Line of Credit Maturity Date. The stated principal amount of the Line of
Credit Note will be the Line of Credit Commitment established as of the Closing
Date pursuant to Section 1.3 hereof; PROVIDED, HOWEVER, that the maximum
liability under such Line of Credit Note will be limited at all times to the
actual amount of indebtedness (including principal, interest, fees and expenses)
then outstanding under the Line of Credit Facility. Lender is authorized to
note or endorse the date and amount of each Advance and payment under the Line
of Credit Facility on a schedule annexed to and constituting a part of the Line
of Credit Note. Such notations or endorsements, if made without manifest error,
will constitute PRIMA FACIE evidence of the information noted or endorsed on
such schedule, but the absence of any such notation or endorsement will not
limit or otherwise affect the obligations and liabilities of Borrowers
thereunder or hereunder.
1.1.5. INTEREST. Interest under the Line of Credit Facility (and
with respect to any other amounts advanced to or on behalf of Borrowers under
the Loan Documents) will be determined and imposed in accordance with the
following provisions (and, as applicable, Section 1.5.5 hereof and Section 1.5.6
hereof):
1.1.5.1. ESTABLISHMENT OF PORTIONS. For purposes of
determining interest, Borrowers may designate and subdivide the aggregate
outstanding balance under the Line of Credit Facility (including any other
amounts advanced to or on behalf of any Borrower under the Loan Documents) into
a maximum of eight (8) Portions (inclusive of the number of Portions permitted
under the Term Loan Facility). No Portion may be less than $500,000 (unless it
is designated as $0.00), AND all Portions collectively must total the aggregate
outstanding balance under the Line of Credit Facility. If there is less than
$1,000,000 outstanding under the Line of Credit Facility, then only one Portion
will be permitted.
-2-
<PAGE>
1.1.5.2. INTEREST RATE DETERMINATION. The aggregate
outstanding principal balance under each Portion will bear interest (computed
daily until paid, whether prior to or after the Line of Credit Maturity Date) at
the applicable Rate Index (as determined in accordance with Section 1.1.5.3
hereof) PLUS the applicable Rate Margin (as determined in accordance with
Section 1.1.5.4 hereof). If the Prime Rate is the applicable Rate Index for a
Portion, the interest rate on such Portion will change when and as the Prime
Rate or Rate Margin changes; AND if an Adjusted LIBO Rate is the applicable Rate
Index for a Portion, the interest rate on such Portion will be established on
the first day of each Interest Period for such Portion and will not change
during such Interest Period, except to the extent the Rate Margin changes during
the Interest Period or as otherwise permitted under Section 1.1.5.6 hereof.
NOTWITHSTANDING THE FOREGOING, the applicable interest rate for the entire
outstanding balance under the Line of Credit Facility from the Settlement Date
on which the initial Advance under the Line of Credit Facility is made until the
first date on which the Rate Index may be changed under Section 1.1.5.3 hereof
will be the Prime Rate as of such Settlement Date PLUS a Rate Margin determined
as of such Settlement Date in accordance with Section 1.1.5.4 hereof using an
amount for Funded Debt as of such Settlement Date (and inclusive of such
Advance).
1.1.5.3. SELECTION OF RATE INDEX. The applicable Rate
Index for each Portion will be either the Prime Rate or an Adjusted LIBO Rate.
The applicable Rate Index for each Portion may be changed (at the election of
Borrowers) as of the first calendar day after the end of the applicable Interest
Period for such Portion. At least two (2) Business Days but not more than ten
(10) Business Days before any day on which the Rate Index may be changed,
Borrowers (through an Authorized Officer) must notify Lender in writing of (a)
the dollar amount of each Portion (if more than one exists) AND (b) the selected
Rate Index for each Portion during the subsequent rate period (including, if
applicable, the selected length of the Interest Period for balances accruing
interest at the Adjusted LIBO Rate). If Lender does not timely receive such
written notification as to any Portion, the Prime Rate will be the applicable
Rate Index for the entire outstanding balance of such unspecified Portion during
the subsequent rate period. NOTWITHSTANDING THE FOREGOING, with respect to the
proceeds of each Advance under the Line of Credit Facility, unless Borrowers
otherwise request the Adjusted LIBO Rate at the time of such Advance (and an
otherwise unallocated Portion then exists), THEN the Prime Rate will be the
applicable Rate Index from the corresponding Settlement Date for such Advance
until the next date on which the Rate Index may be changed hereunder.
1.1.5.4. APPLICABLE RATE MARGINS. The Rate Margin
applicable to the Line of Credit Facility will be established as of the initial
Settlement Date and as of the first calendar day of the first calendar month of
each fiscal quarter and will be based upon the Leverage Ratio of (a) Funded Debt
as of the date of establishment of such Rate Margin TO (b) OCF (I.E., Operating
Cash Flow) for the four consecutive fiscal quarter period ended on the last day
of the most recent fiscal quarter reflected on the most recent quarterly
financial statements
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<PAGE>
delivered to Lender in accordance with Section 4.2 hereof, AND will be
determined according to the following schedule:
Adjusted
Prime Rate LIBO Rate
Leverage Ratio Margin Margin
-------------- ----------- ----------
Less than 2.0 0.00% 1.50%
Greater than 2.0
but Less than 3.0 1.00% 2.00%
Greater than 3.0 2.00% 3.00%
In determining the amount of Funded Debt as of the date of establishing such
Rate Margin, unless Borrowers otherwise provide Lender with evidence of such
amount in a form acceptable to Lender, THEN Lender may use and rely on the
amount of Funded Debt as reflected on the most recent quarterly financial
statements delivered to Lender in accordance with Section 4.2 hereof.
NOTWITHSTANDING THE FOREGOING, if Lender does not timely receive acceptable
quarterly financial statements in accordance with Section 4.2 hereof, THEN
Lender (in its sole and absolute discretion) may deem the applicable Rate Margin
to be the highest Rate Margin for the applicable Rate Index reflected in the
chart above, retroactive to the first calendar day of the then-current fiscal
quarter. FURTHER NOTWITHSTANDING THE FOREGOING (or any other provision hereof
regarding the timing of establishing the applicable Rate Margin), upon the
funding of any Advance after the Closing Date for a purpose set forth in Section
1.1.3 hereof that results in the outstanding balance under the Line of Credit
Facility exceeding the outstanding balance as of the most recent change in the
Rate Margin by $1,000,000 or more, THEN the applicable Rate Margin hereunder (at
the option of Lender) may be adjusted to reflect the additional amount of Funded
Debt thereby outstanding.
1.1.5.5. CALCULATION OF INTEREST. Interest under the Line
of Credit Facility will be calculated, accrued, imposed and payable on the basis
of a 360-day year for the actual number of days elapsed. Interest will begin to
accrue on the outstanding principal amount of the Line of Credit Facility (and
on any other amounts advanced to or on behalf of any Borrower under the Loan
Documents) on and as of the date such funds are advanced.
1.1.5.6. SPECIAL LIBO RATE PROVISIONS. The following
provisions will apply with respect to the Adjusted LIBO Rate, notwithstanding
any other provision hereof:
a. CHANGE IN ADJUSTED LIBO RATE. The Adjusted
LIBO Rate may be automatically adjusted by Lender from time to time on a
prospective basis to account for any additional or increased cost of maintaining
any necessary reserves for Eurodollar deposits (including, without limitation,
any increase in the Reserve Percentage) or increased costs due to changes in the
applicable law occurring subsequent to the commencement of the then-applicable
Adjusted LIBO Rate Interest Period. Lender will give Borrowers notice of any
such determination and adjustment within a reasonable period of time thereafter,
and (upon Borrowers' written request) Lender will furnish a statement setting
forth the basis for adjusting such Adjusted LIBO Rate and the method for
determining the amount of such adjustment. A determination by Lender hereunder
will be conclusive absent manifest error. If Lender provides
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any such notice of adjustment under this Subsection, Borrowers may elect to
change the then-applicable Rate Index (using the same Rate Margin category) to
the Prime Rate for any Portion then subject to an Adjusted LIBO Rate. Such
election to change the Rate Index may be made by providing Lender written notice
thereof at any time within the first 10 Business Days after receipt of the
notice of adjustment from Lender (notwithstanding the restriction hereunder
limiting such Rate Index changes to certain dates, BUT subject to the
requirement to pay actual costs incurred by Lender as described in Section
1.1.6.5.e hereof). Upon Lender's receipt of such a written election, the
identified Portion will thereupon begin to accrue interest at the Prime Rate
plus the Rate Margin (as applicable for the same Leverage Ratio level as was
previously applicable for the Adjusted LIBO Rate) for the remainder of the then-
current Interest Period for such Portion. NOTWITHSTANDING THE FOREGOING, Lender
shall not be entitled to adjust the Adjusted LIBO Rate under this Clause "a" to
account for such additional or increased costs to the extent that Lender has
already been compensated for such additional or increased cost pursuant to
Section 4.13 hereof.
b. UNAVAILABILITY OF EURODOLLAR FUNDS. An
Adjusted LIBO Rate will not be available for Portions under the Line of Credit
Facility if Lender at any time prior to the commencement of the relevant
Interest Period determines or reasonably believes that (1) Eurodollar deposits
equal to the principal amount of such Portion for the applicable Interest Period
are unavailable, OR (2) an Adjusted LIBO Rate will not adequately and fairly
reflect the cost of maintaining balances under the Line of Credit Facility, OR
(3) by reason of circumstances affecting Eurodollar markets, adequate and
reasonable means do not then exist for ascertaining an Adjusted LIBO Rate.
Lender will give Borrowers notice of any such event within a reasonable time
thereafter, and (upon Borrowers' written request) Lender will furnish a
statement setting forth the basis for such determination or reasonable belief.
A determination or belief by Lender hereunder will be conclusive absent manifest
error.
c. ILLEGALITY. An Adjusted LIBO Rate will also
not be available for the Line of Credit Facility if Lender at any time
determines or reasonably believes that it is unlawful or impossible to fund or
maintain sufficient Eurodollar liabilities for the Line of Credit Facility under
an Adjusted LIBO Rate. Lender will give Borrowers notice of any such event
within a reasonable time thereafter, and (upon Borrowers' written request)
Lender will furnish a statement setting forth the basis for such determination
or reasonable belief. A determination or belief by Lender hereunder will be
conclusive absent manifest error.
d. ALTERNATIVE RATE. During the occurrence of
an event contemplated by either Clause "b" of this Subsection or Clause "c" of
this Subsection, Lender's obligation hereunder to fund or maintain balances
under an Adjusted LIBO Rate will be suspended, and during such period, the
outstanding balance under the Line of Credit Facility will bear interest at the
Prime Rate plus the appropriate Rate Margin (determined in accordance with
Section 1.1.5.4 hereof).
1.1.6. REPAYMENT AND PREPAYMENT. Each Borrower (jointly and
severally) hereby promise to pay Lender the aggregate indebtedness under the
Line of Credit Facility (and other Loan Documents) in accordance with the
following provisions:
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<PAGE>
1.1.6.1. PERIODIC INTEREST PAYMENTS. Interest accrued
under the Line of Credit Facility will be due and payable monthly in arrears on
the first calendar day following the end of each such month and on the first
calendar day following the end of each Interest Period for any Portion accruing
interest at an Adjusted LIBO Rate, commencing on the first such date after the
Closing Date.
1.1.6.2. PRINCIPAL PAYMENTS -- COMMITMENT REDUCTION.
Intentionally Blank.
1.1.6.3. PRINCIPAL PAYMENTS -- PERIODIC SWEEP OF EXCESS
CASH FLOW. Intentionally Blank.
1.1.6.4. AT MATURITY OR TERMINATION. The entire aggregate
outstanding indebtedness under the Line of Credit Facility (including principal,
interest, fees and expenses) is due and payable in its entirety in immediately
available funds on the Line of Credit Maturity Date. NOTWITHSTANDING THE
FOREGOING, the entire aggregate outstanding indebtedness under the Line of
Credit Facility (INCLUDING all principal, interest, fees and expenses) will be
due and payable in its entirety in immediately available funds upon any earlier
termination of either the Line of Credit Commitment, the Line of Credit Facility
or this Agreement, in each instance, in accordance with the terms hereof.
1.1.6.5. PREPAYMENTS.
a. VOLUNTARY PREPAYMENTS. The outstanding
principal balance under the Line of Credit Facility may be prepaid in whole or
in part at any time without premium or penalty, EXCEPT as provided in Clause "e"
of this Subsection.
b. MANDATORY PREPAYMENTS -- EXCESSIVE BALANCE.
If the aggregate outstanding indebtedness under the Line of Credit Facility at
any time exceeds the Available Credit Portion (as determined in accordance with
Section 1.3 hereof), THEN such excess amount outstanding must be prepaid
immediately (without necessity of notice or demand by Lender).
c. MANDATORY PREPAYMENTS -- EQUITY OFFERINGS AND
ASSET SALES. If any Borrower engages in an offering of its equity securities or
if any Borrower sells, transfers or otherwise disposes of any assets (other than
inventory or other assets sold in the ordinary course of business with the
proceeds thereof promptly reinvested in similar assets at similar locations)
exceeding an aggregate fair market value of $1,000,000 in any transaction or
series of related transactions, THEN (unless Lender otherwise consents) a
prepayment must be immediately made on the outstanding indebtedness under the
Line of Credit Facility (UNLESS a balance then exists under the Term Loan
Facility and such prepayment is made under Section 1.2.6.5.c hereof). The
amount of any such mandatory prepayment will be the higher of the cash proceeds
or the cash equivalent of the fair market value of any such equity offering or
asset dispositions NET OF (1) reasonable commissions and expenses actually
incurred to unrelated third parties in connection with such transactions AND (2)
taxes actually due as a direct result of such
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<PAGE>
transactions (as such taxes are estimated and certified to Lender by a certified
public accountant or financial officer of such Borrower, in either instance,
acceptable to Lender).
d. IN GENERAL. Any prepayment under the Line of
Credit Facility must include all accrued but unpaid interest under the Line of
Credit Facility allocable to the amount prepaid through the date of such
prepayment.
e. ADJUSTED LIBO RATE PREPAYMENTS. In
connection with any prepayment of all or any portion of the outstanding balance
under the Line of Credit Facility upon which an Adjusted LIBO Rate is then
applicable on any day other than the last day of an Interest Period -- whether
such prepayment is voluntary, mandatory, by demand, acceleration or otherwise --
Borrowers must pay Lender all costs, losses and expenses (including funding
costs) that may arise or be incurred as a result of or in connection with such
prepayment, as such costs, losses and expenses may be calculated by Lender.
Upon written request, Lender will furnish a statement setting forth the basis
for such calculation. A determination or calculation by Lender hereunder will
be conclusive absent manifest error.
1.1.6.6. PRINCIPAL REPAYMENT -- AUTOMATIC. [Intentionally
Blank]
1.1.6.7. DEFAULT INTEREST PAYMENT. Any payment hereunder
or under the Line of Credit Note during the existence of a Default or an Event
of Default hereunder must include the payment of any default interest due
pursuant to Section 1.5.5 hereof.
1.1.6.8. APPLICATION OF PAYMENTS. Payments hereunder
(including prepayments) will be applied in accordance with Section 1.5.3 hereof.
NOTWITHSTANDING THE FOREGOING, payments and prepayments allocable to principal
under the Line of Credit Facility will be applied to repay Portions accruing
interest at the Prime Rate first and then to repay Portions accruing interest at
the Adjusted LIBO Rate (applying first to Portions having an Interest Period
with the longest remaining time to maturity).
1.1.6.9. AVAILABILITY FOR REBORROWING. Principal amounts
repaid or prepaid under the Line of Credit Facility prior to the Line of Credit
Maturity Date will be available for reborrowing pursuant to and in accordance
with the terms hereof up to the Available Credit Portion.
1.2. TERM LOAN FACILITY.
1.2.1. ESTABLISHMENT OF CREDIT FACILITY. Subject to the terms and
conditions of and in reliance upon the representations and warranties contained
in the Loan Documents, if each of the conditions precedent under Section 2.2
hereof is satisfied (on or before October 31, 1996), THEN Lender will lend funds
to Borrowers on a senior secured basis through a single set of Advances on the
Closing Date in an aggregate principal amount advanced not to exceed the Term
Loan Commitment (as determined in accordance with Section 1.3 hereof).
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<PAGE>
1.2.2. FACILITY MATURITY. The Term Loan Facility will mature on
October 1, 2001 (as may be extended from time to time in Lender's sole and
absolute discretion, "Term Loan Maturity Date").
1.2.3. USE OF PROCEEDS. The funds advanced under this Term Loan
Facility may be used exclusively as follows (BUT ONLY to the extent not
otherwise advanced for such purpose under Section 1.1.3 hereof):
a. To satisfy and refinance the indebtedness owed by CCC to a group
of lenders the agent for which is Canadian Imperial Bank of
Commerce, AND
b. The balance of the Term Loan Commitment (if any) to pay (i) for
closing costs and fees associated with consummating and
documenting the transactions contemplated by this Agreement, AND
(ii) for such other purposes as specifically authorized hereunder
or in writing by Lender (in its sole and absolute discretion).
1.2.4. TERM LOAN NOTE. The indebtedness under the Term Loan
Facility and the corresponding obligation of each Borrower (jointly and
severally) to repay Lender with interest in accordance with the terms hereof
will be evidenced by a Term Loan Note (as amended, restated, replaced,
supplemented, extended or renewed hereafter, "Term Loan Note") payable to the
order of Lender. The Term Loan Note will be due and payable in full on the Term
Loan Maturity Date. The stated principal amount of the Term Loan Note will be
the Term Loan Commitment established as of the Closing Date pursuant to Section
1.3 hereof; PROVIDED, HOWEVER, that the maximum liability under such Term Loan
Note will be limited at all times to the actual amount of indebtedness
(including principal, interest, fees and expenses) then outstanding under the
Term Loan Facility. Lender is authorized to note or endorse the date and amount
of each Advance and each payment under the Term Loan Facility on a schedule
annexed to and constituting a part of the Term Loan Note. Such notations or
endorsements, if made without manifest error, will constitute PRIMA FACIE
evidence of the information noted or endorsed on such schedule, but the absence
of any such notation or endorsement will not limit or otherwise affect the
obligations or liabilities of Borrowers thereunder and hereunder.
1.2.5. INTEREST. Interest under the Term Loan Facility (and with
respect to any other amounts advanced to or on behalf of Borrowers under the
Loan Documents) will be determined and imposed in accordance with the following
provisions (and, as applicable, Section 1.5.5 hereof and Section 1.5.6 hereof):
1.2.5.1. INTENTIONALLY BLANK.
1.2.5.2. ESTABLISHMENT OF PORTIONS. For purposes of
determining interest, Borrowers may designate and subdivide the aggregate
outstanding balance under the Term Loan Facility (including any other amounts
advanced to or on behalf of any Borrower under the Loan Documents) into a
maximum of eight (8) Portions (inclusive of the number of Portions permitted
under the Line of Credit Facility). No Portion may be less than $500,000
(unless it is designated as $0.00), AND all Portions collectively must total the
aggregate outstanding balance
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<PAGE>
under the Term Loan Facility. If there is less than $1,000,000 outstanding
under the Term Loan Facility, then only one Portion will be permitted.
1.2.5.3. INTEREST RATE DETERMINATION. The aggregate
outstanding principal balance under each Portion will bear interest (computed
daily until paid, whether prior to or after the Term Loan Maturity Date) at the
applicable Rate Index (as determined in accordance with Section 1.2.5.4 hereof)
PLUS the applicable Rate Margin (as determined in accordance with Section
1.2.5.5 hereof). If the Prime Rate is the applicable Rate Index for a Portion,
the interest rate on such Portion will change when and as the Prime Rate or Rate
Margin changes; AND if an Adjusted LIBO Rate is the applicable Rate Index for a
Portion, the interest rate on such Portion will be established on the first day
of each Interest Period for such Portion and will not change during such
Interest Period, except to the extent the Rate Margin changes during the
Interest Period or as otherwise permitted under Section 1.2.5.7 hereof.
NOTWITHSTANDING THE FOREGOING, the applicable interest rate for the entire
outstanding balance under the Term Loan Facility from the Settlement Date on
which the Advance under the Term Loan Facility is made until the first date on
which the Rate Index may be changed under Section 1.2.5.4 hereof will be the
Prime Rate as of such Settlement Date PLUS a Rate Margin determined as of such
Settlement Date in accordance with Section 1.2.5.5 hereof using an amount for
Funded Debt as of such Settlement Date (and inclusive of such Advance).
1.2.5.4. SELECTION OF RATE INDEX. The applicable Rate
Index for each Portion will be either the Prime Rate or an Adjusted LIBO Rate.
The applicable Rate Index for each Portion may be changed (at the election of
Borrowers) as of the first calendar day after the end of the applicable Interest
Period for such Portion. At least two (2) Business Days but not more than ten
(10) Business Days before any day on which the Rate Index may be changed,
Borrowers (through an Authorized Officer) must notify Lender in writing of (a)
the dollar amount of each Portion (if more than one exists) AND (b) the selected
Rate Index for each Portion during the subsequent rate period (including, if
applicable, the selected length of the Interest Period for balances accruing
interest at the Adjusted LIBO Rate). If Lender does not timely receive such
written notification as to any Portion, the Prime Rate will be the applicable
Rate Index for the entire outstanding balance of such unspecified Portion during
the subsequent rate period. NOTWITHSTANDING THE FOREGOING, with respect to the
proceeds of each Advance under the Term Loan Facility, (unless Borrowers
otherwise request the Adjusted LIBO Rate at the time of such Advance and an
otherwise unallocated Portion then exists) the Prime Rate will be the applicable
Rate Index from the corresponding Settlement Date for such Advance until the
next date on which the Rate Index may be changed hereunder.
1.2.5.5. APPLICABLE RATE MARGINS. The Rate Margin
applicable to the Term Loan Facility will be established as of the initial
Settlement Date and as of the first calendar day of each fiscal quarter and will
be based upon the Leverage Ratio of (a) Funded Debt as of the date of
establishment of such Rate Margin TO (b) OCF (I.E., Operating Cash Flow) for the
four consecutive fiscal quarter period ending on the last day of the most recent
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fiscal quarter reflected on the most recent quarterly financial statements
delivered to Lender in accordance with Section 4.2 hereof, AND will be
determined according to the following schedule:
Adjusted
Prime Rate LIBO Rate
Leverage Ratio Margin Margin
-------------- ---------- ---------
Less than 2.0 0.00% 1.50%
Greater than 2.0
but Less than 3.0 1.00% 2.00%
Greater than 3.0 2.00% 3.00%
In determining the amount of Funded Debt as of the date of establishing such
Rate Margin, unless Borrowers otherwise provide Lender with evidence of such
amount in a form acceptable to Lender, THEN Lender may use and rely on the
amount of Funded Debt as reflected on the most recent quarterly financial
statements delivered to Lender in accordance with Section 4.2 hereof.
NOTWITHSTANDING THE FOREGOING, if Lender does not timely receive acceptable
quarterly financial statements in accordance with Section 4.2 hereof, THEN
Lender (in its sole and absolute discretion) may deem the applicable Rate Margin
to be the highest Rate Margin for the applicable Rate Index reflected in the
chart above, retroactive to the first calendar day of the then-current fiscal
quarter.
1.2.5.6. CALCULATION OF INTEREST. Interest under the Term
Loan Facility will be calculated, accrued, imposed and payable on the basis of a
360-day year for the actual number of days elapsed. Interest will begin to
accrue on the outstanding principal amount of the Term Loan Facility (and on any
other amounts advanced to or on behalf of any Borrower under the Loan Documents)
on and as of the date such funds are advanced.
1.2.5.7. SPECIAL LIBO RATE PROVISIONS. The following
provisions will apply with respect to the Adjusted LIBO Rate, notwithstanding
any other provision hereof:
a. CHANGE IN ADJUSTED LIBO RATE. The Adjusted
LIBO Rate may be automatically adjusted by Lender from time to time on a
prospective basis to account for any additional or increased cost of maintaining
any necessary reserves for Eurodollar deposits (including, without limitation,
any increase in the Reserve Percentage) or increased costs due to changes in the
applicable law occurring subsequent to the commencement of the then-applicable
Adjusted LIBO Rate Interest Period. Lender will give Borrowers notice of any
such determination and adjustment within a reasonable period of time thereafter,
and (upon Borrowers' written request) Lender will furnish a statement setting
forth the basis for adjusting such Adjusted LIBO Rate and the method for
determining the amount of such adjustment. A determination by Lender hereunder
will be conclusive absent manifest error. If Lender provides any such notice of
adjustment under this Subsection, Borrowers may elect to change the then-
applicable Rate Index (using the same Rate Margin category) to the Prime Rate
for any Portion then subject to an Adjusted LIBO Rate. Such election to change
the Rate Index may be made by providing Lender written notice thereof at any
time within the first 10 Business Days after receipt of the notice of adjustment
from Lender (notwithstanding the restriction hereunder limiting such Rate Index
changes to certain dates, BUT subject to the requirement to pay actual
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costs incurred by Lender as described in Section 1.2.6.5.e hereof). Upon
Lender's receipt of such a written election, the identified Portion will
thereupon begin to accrue interest at the Prime Rate plus the Rate Margin (as
applicable for the same Leverage Ratio level as was previously applicable for
the Adjusted LIBO Rate) for the remainder of the then-current Interest Period
for such Portion. NOTWITHSTANDING THE FOREGOING, Lender shall not be entitled
to adjust the Adjusted LIBO Rate under this Clause "a" to account for such
additional or increased costs to the extent that Lender has already been
compensated for such additional or increased cost pursuant to Section 4.13
hereof.
b. UNAVAILABILITY OF EURODOLLAR FUNDS. An
Adjusted LIBO Rate will not be available for Portions under the Term Loan
Facility if Lender at any time prior to the commencement of the relevant
Interest Period determines or reasonably believes that (1) Eurodollar deposits
equal to the principal amount of such Portion for the applicable Interest Period
are unavailable, OR (2) an Adjusted LIBO Rate will not adequately and fairly
reflect the cost of maintaining balances under the Term Loan Facility, OR (3) by
reason of circumstances affecting Eurodollar markets, adequate and reasonable
means do not then exist for ascertaining an Adjusted LIBO Rate. Lender will
give Borrowers notice of any such event within a reasonable time thereafter, and
(upon Borrowers' written request) Lender will furnish a statement setting forth
the basis for such determination or reasonable belief. A determination or
belief by Lender hereunder will be conclusive absent manifest error.
c. ILLEGALITY. An Adjusted LIBO Rate will also
not be available for the Term Loan Facility if Lender at any time determines or
reasonably believes that it is unlawful or impossible to fund or maintain
sufficient Eurodollar liabilities for the Term Loan Facility under an Adjusted
LIBO Rate. Lender will give Borrowers notice of any such event within a
reasonable time thereafter, and (upon Borrowers' written request) Lender will
furnish a statement setting forth the basis for such determination or reasonable
belief. A determination or belief by Lender hereunder will be conclusive absent
manifest error.
d. ALTERNATIVE RATE. During the occurrence of
an event contemplated by either Clause "b" of this Subsection or Clause "c" of
this Subsection, Lender's obligation hereunder to fund or maintain balances
under an Adjusted LIBO Rate will be suspended, and during such period, the
outstanding balance under the Term Loan Facility will bear interest at the Prime
Rate plus the appropriate Rate Margin (determined in accordance with Section
1.2.5.5 hereof).
1.2.6. REPAYMENT AND PREPAYMENT. Each Borrower (jointly and
severally) hereby promises to pay Lender the aggregate indebtedness under the
Term Loan Facility (and other Loan Documents) in accordance with the following
provisions:
1.2.6.1. PERIODIC INTEREST PAYMENTS. Interest accrued
under the Term Loan Facility will be due and payable monthly in arrears on the
first calendar day following the end of each such month and on the first
calendar day following the end of each Interest Period for any Portion accruing
interest at an Adjusted LIBO Rate, commencing on the first such date after the
Closing Date.
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1.2.6.2. PRINCIPAL PAYMENTS -- AMORTIZATION. On the first
calendar day of the first calendar month of each quarter, a payment of principal
under the Term Loan Facility will be due and payable in its entirety in
immediately available funds in accordance with the following schedule:
PERCENTAGE OF OUTSTANDING
YEAR BALANCE DUE
---- --------------------------------
Closing Date to December 31, 1997 0.0% per quarter (0% per year)
January 1, 1998 to December 31, 1998 5.0% per quarter (20% per year)
January 1, 1999 to December 31, 1999 5.0% per quarter (20% per year)
January 1, 2000 to December 31, 2000 7.5% per quarter (30% per year)
January 1, 2001 until Term Loan
Maturity Date 7.5% per quarter (30% per year)
1.2.6.3. PRINCIPAL PAYMENTS -- PERIODIC SWEEP OF EXCESS
CASH FLOW. [Intentionally Blank]
1.2.6.4. AT MATURITY OR TERMINATION. The entire aggregate
outstanding indebtedness under the Term Loan Facility (including principal,
interest, fees and expenses) is due and payable in its entirety in immediately
available funds on the Term Loan Maturity Date. NOTWITHSTANDING THE FOREGOING,
the entire aggregate outstanding indebtedness under the Term Loan Facility
(INCLUDING all principal, interest, fees and expenses) will be due and payable
in its entirety in immediately available funds upon any earlier termination of
either the Term Loan Commitment, the Term Loan Facility or this Agreement, in
each instance, in accordance with the terms hereof.
1.2.6.5. PREPAYMENTS.
a. VOLUNTARY PREPAYMENTS. At any time, upon
prior written notice to Lender of at least two (2) Business Days, the
outstanding principal balance under the Term Loan Facility may be prepaid in
whole or in part without premium or penalty, except as provided in Clause "e" of
this Subsection. Any voluntary partial prepayment must be in an amount of not
less than $100,000 or in an integral multiple thereof.
b. MANDATORY PREPAYMENTS -- EXCESSIVE BALANCE.
If the aggregate outstanding indebtedness under the Term Loan Facility at any
time exceeds the Term Loan Commitment, THEN such excess amount outstanding must
be prepaid immediately (without necessity of notice or demand by Lender).
c. MANDATORY PREPAYMENTS -- EQUITY OFFERINGS AND
ASSET SALES. If any Borrower engages in an offering of its equity securities or
if any Borrower sells, transfers or otherwise disposes of any assets (other than
inventory or other assets sold in the ordinary course of business with the
proceeds thereof promptly reinvested in similar assets at similar locations)
exceeding an aggregate fair market value of $1,000,000 in any transaction or
series of related transactions, THEN (unless Lender otherwise consents) a
prepayment must be immediately made on the outstanding indebtedness under the
Term Loan Facility. The amount
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of any such mandatory prepayment will be the higher of the cash proceeds or the
cash equivalent of the fair market value of any such equity offering or asset
dispositions NET OF (1) reasonable commissions and expenses actually incurred to
unrelated third parties in connection with such transactions AND (2) taxes
actually due as a direct result of such transactions (as such taxes are
estimated and certified to Lender by a certified public accountant or financial
officer of such Borrower, in either instance, acceptable to Lender).
d. IN GENERAL. Any prepayments under the Term
Loan Facility must include all accrued but unpaid interest under the Term Loan
Facility allocable to the amount prepaid through the date of such prepayment.
e. ADJUSTED LIBO RATE PREPAYMENTS. In
connection with any prepayment of all or any portion of the outstanding balance
under the Term Loan Facility upon which an Adjusted LIBO Rate is then applicable
on any day other than the last day of an Interest Period -- whether such
prepayment is voluntary, mandatory, by demand, acceleration or otherwise --
Borrowers must pay Lender all costs, losses and expenses (including funding
costs) that may arise or be incurred as a result of or in connection with such
prepayment, as such costs, losses and expenses may be calculated by Lender.
Upon written request, Lender will furnish a statement setting forth the basis
for such calculation. A determination or calculation by Lender hereunder will
be conclusive absent manifest error.
1.2.6.6. DEFAULT INTEREST PAYMENT. Any payment hereunder
or under the Term Loan Note during the existence of a Default or an Event of
Default hereunder must include the payment of any default interest due pursuant
to Section 1.5.5 hereof.
1.2.6.7. APPLICATION OF PAYMENTS. Payments hereunder
(including prepayments) will be applied in accordance with Section 1.5.3 hereof.
NOTWITHSTANDING THE FOREGOING, (a) payments and prepayments allocable to
principal under the Term Loan Facility (other than payments pursuant to Section
1.2.6.2 hereunder) will be applied to installments of principal payable under
the Term Loan Facility in the inverse order of maturity, AND (b) payments and
prepayments allocable to principal under the Term Loan Facility will be applied
to repay Portions accruing interest at the Prime Rate first and then to repay
Portions accruing interest at the Adjusted LIBO Rate (applying first to Portions
having the Interest Period with the longest remaining time to maturity).
1.2.6.8. AVAILABILITY FOR REBORROWING. Principal amounts
repaid or prepaid under the Term Loan Facility prior to the Term Loan Maturity
Date WILL NOT be available for reborrowing hereunder.
1.3. DETERMINATION OF COMMITMENT AMOUNTS.
1.3.1. INITIAL COMMITMENTS. Upon the execution of this Agreement
and satisfaction of each condition precedent set forth in Section 2.2 hereof (on
or before October 31, 1996), the Line of Credit Commitment established hereunder
will be $20 million ("Line of Credit Commitment"). Upon the execution of this
Agreement and satisfaction of each condition precedent set forth in Section 2.2
hereof (on or before October 31, 1996), the Term Loan
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Commitment established hereunder will be determined in accordance with the
following schedule ("Term Loan Commitment"):
GROSS PROCEEDS TERM LOAN
OF CCCISG IPO COMMITMENT
-------------- ----------
< $50 million $0.00
> $50 million but < $70 million Up to $15 million
(at Borrowers' election)
> $70 million $0.00
1.3.2. MANDATORY COMMITMENT REDUCTIONS FOR THE LINE OF CREDIT
FACILITY. NOTWITHSTANDING THE FOREGOING, the maximum amount of credit available
at any time under the Line of Credit Facility may not exceed the amount
resulting from the following formula:
a. The Line of Credit Commitment,
b. MINUS the then-aggregate amount of all prepayments relating
to equity offerings and asset sales required to have been
paid to Lender since the Closing Date under Section
1.1.6.5.c hereof, AND
c. MINUS the aggregate amount of all voluntary commitment
reductions requested under Section 1.3.3 hereof, AND
d. MINUS the aggregate outstanding amount (at face value) of
all letters of credit issued by Lender on behalf or for the
account of any Borrower under Section 1.8 hereof or
otherwise.
(COLLECTIVELY, the amount resulting from the equation under categories "a"
through "d" above is sometimes referred to herein as the "Available Credit
Portion".) On the effective date of any such reduction in the amount of
available credit, a prepayment must be made to the extent required under Section
1.1.6.5.b hereof.
1.3.3. VOLUNTARY REDUCTION OF COMMITMENT. Upon giving Lender prior
written notice of at least ten (10) Business Days, Borrowers at any time and
from time to time may reduce the Line of Credit Commitment in multiples of
$100,000. On the effective date of any such reduction, a prepayment must be
made to the extent required under Section 1.1.6.5.b hereof. Any such reduction
in the Line of Credit Commitment will be permanent, and such Commitment cannot
thereafter be increased without the written consent of Lender.
1.4. ADVANCES.
1.4.1. REQUESTING ADVANCES. To request an Advance (except with
respect to the initial Advances on the Closing Date or as otherwise provided in
Section 1.4.3 hereof), Borrowers (through an Authorized Officer) must give
Lender written notice of such request (such notice, an "Advance Request"). Each
Advance Request, together with certain
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certifications, must be substantially in the form of Exhibit 1.4.1 hereto or
such other form as Lender from time to time may reasonably request. Each
Advance Request (or verbal notice by telephone with immediate written
confirmation in the form of an Advance Request to follow) must be received by
Lender before 11:00 a.m. Eastern Time (a) on the requested Settlement Date with
respect to any Advance of funds that will accrue interest at the Prime Rate AND
(b) at least two (2) Business Days prior to the requested Settlement Date with
respect to any Advance of funds that will accrue interest at an Adjusted LIBO
Rate. Unless Lender otherwise consents, an Advance Request will not be
effective if it is delivered to Lender more than ten (10) Business Days prior to
the requested Settlement Date. Each Advance under the Line of Credit Facility
pursuant to an Advance Request must be in multiples of $500,000 and not greater
than the un-borrowed balance of the Available Credit Portion under Section 1.3
hereof.
1.4.2. FUNDING ADVANCES. Subject to the satisfaction of and
compliance with the terms and conditions hereof (including, as applicable, the
conditions precedent specified in Section 2.2 hereof), Lender will make each
requested Advance available (in immediately available funds) by crediting such
amount to the Account with Lender (or by such other means as Lender may consider
reasonable). At the written request and expense of Borrowers, Lender will wire
transfer all or any portion of an Advance in accordance with such written
instructions therefor.
1.4.3. AUTOMATIC LINE OF CREDIT ADVANCES. [Intentionally Blank]
1.4.4. OBLIGATION TO ADVANCE. Lender will not be obligated to make
any Advance under the following circumstances: (a) if the principal amount of
such Advance plus the aggregate amount outstanding under the Line of Credit
Facility or Term Loan Facility would exceed the Available Credit Portion or Term
Loan Commitment (as applicable), OR (b) during the existence of a Default or an
Event of Default hereunder, OR (c) if such Advance would cause a Default or
Event of Default hereunder, OR (d) after the Line of Credit Maturity Dates, OR
(e) prior to satisfaction of each condition precedent under Section 2.2 hereof.
1.4.5. INDEMNIFICATION FOR REVOCATION OR FAILURE TO SATISFY
CONDITIONS. Borrowers (jointly and severally) will indemnify Lender against any
loss, cost or expense incurred by Lender as a result of any revocation of any
requested Advance or any failure to fulfill the applicable conditions precedent
to such Advance on or before the requested Settlement Date specified in an
Advance Request. Such indemnification will include, without limitation, any
loss, cost or expense incurred by reason of the liquidation or reemployment of
funds required by Lender to fund the Advance when such Advance, as a result of
such failure, is not made on the requested Settlement Date. Lender's
calculation of such losses, costs and expenses will be conclusive absent
manifest error. NOTWITHSTANDING THE FOREGOING, Lender shall not be entitled to
indemnification under this Section with respect to a loss, cost or expense to
the extent that Lender has already been compensated for such loss, cost or
expense pursuant to Section 4.13 hereof.
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1.5. PAYMENTS IN GENERAL.
1.5.1. MANNER AND PLACE. All payments of principal, interest, fees
and other amounts due under the Loan Documents must be received by Lender in
immediately available funds in U.S. dollars on or before Two O'Clock (2:00) p.m.
Eastern Time ("ET") on the due date therefor at the principal office of Lender
set forth in Section 9.7 hereof or at such other place as Lender may designate
from time to time.
1.5.2. SPECIAL PAYMENT TIMING ISSUES. Whenever any payment to be
made under any Loan Document is due on a day that is not a Business Day, such
payment may be made on the next succeeding Business Day, and such extension of
time will be included in the computation of interest under such Loan Document.
Any funds received by Lender after 2:00 p.m. ET on any day will be deemed to be
received on the next succeeding Business Day.
1.5.3. APPLICATION OF PAYMENTS. All payments and other funds
received by Lender hereunder will be applied by Lender in the following order:
(a) first to the payment of any fees and charges due under the Loan Documents,
AND (b) then to any obligations for the payment of expenses due under the Loan
Documents, AND (c) then to the payment of interest due and owing hereunder, AND
(d) then to the principal indebtedness due and owing under the Term Loan
Facility and then to principal outstanding under the Line of Credit Facility,
AND (e) then to any other interest accrued but not yet owing hereunder, AND (f)
then to principal outstanding but not yet due and owing under the Term Loan
Facility, AND (g) then to any other indebtedness of any Borrower or other
Obligor then due and owing to Lender.
1.5.4. DEBITING ACCOUNTS. [Intentionally Blank]
1.5.5. DEFAULT INTEREST. During the existence of a Default or an
Event of Default hereunder, each Borrower (jointly and severally) hereby agrees
(to the maximum extent not prohibited by applicable law) to pay to Lender (upon
Lender's request) interest on any indebtedness outstanding hereunder at the rate
of TWO PERCENT (2%) per annum in excess of the rate then otherwise applicable to
such indebtedness. NOTWITHSTANDING THE FOREGOING, if the relevant Default is
under Section 7.1.10 hereof, THEN such rate increase (to the maximum extent not
prohibited by applicable law) will occur automatically without any request by
Lender.
1.5.6. USURY SAVINGS PROVISION. Notwithstanding any provision of
any Loan Document to the contrary, no Borrower is or will be required to pay
interest at a rate or any fee in an amount prohibited by applicable law. If
interest or any fee payable to Lender on any date would be in a prohibited
amount, such interest or fee will be automatically reduced to the maximum amount
that is not prohibited, and any interest or fee for subsequent periods, to the
extent not prohibited, will be increased accordingly until Lender receives
payment of the full amount of each such reduction. To the extent that any
prohibited amount is actually received by Lender, such amount will be
automatically deemed to constitute a repayment of principal indebtedness
hereunder.
1.6. RELEASE OF SECURITY. Upon (a) repayment to Lender in full
(unconditionally and indefeasibly) of the entire indebtedness hereunder and of
all other amounts then due and owing
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to Lender under the Loan Documents, AND (b) the termination of the Loan
Documents (and all Facilities thereunder), AND (c) return and cancellation of
any effective letters of credit issued by Lender for the account of any Borrower
(or delivery to Lender of cash or readily marketable collateral in an amount and
subject to a pledge agreement that are acceptable to Lender in its sole
discretion), THEN Lender (at the written request and expense of Borrowers) will
release the Obligors and the property serving as Collateral hereunder from all
the Loan Documents.
1.7. FEES AND OTHER COMPENSATION.
1.7.1. COMMITMENT FEE. On the initial Settlement Date, Borrowers
must pay Signet Bank in immediately available funds a Credit Commitment Fee in
the amount provided for pursuant to a separate Fee Agreement with Signet Bank
dated as of the Closing Date.
1.7.2. PERIODIC FACILITY FEE. Borrowers will also pay Lender in
immediately available funds a Periodic Facility Fee at the rate of ONE QUARTER
OF ONE PERCENT (0.25%) per annum on the average daily unborrowed portion of the
Available Credit Portion (adjusted by adding, for purpose of this calculation,
any amounts subtracted under Section 1.3.2.d hereof). Such fee will be
calculated by Lender and will be due and payable in immediately available funds
quarterly in arrears on the first calendar day of each January, April, July and
October.
1.8. ISSUANCE OF LETTERS OF CREDIT. If Lender (or any Affiliate of Lender)
issues one or more letters of credit on behalf of or for the account of any
Borrower, THEN the obligations of such Borrower (or its Affiliate) to Lender (or
its Affiliate) relating thereto will be deemed Obligations under this Agreement
secured by the Collateral herefor pursuant to the terms of the Loan Documents.
So long as any such letter of credit is effective and outstanding, the face
amount thereof will be deducted from the Line of Credit Commitment in
determining the Available Credit Portion (under Section 1.3 hereof) at any time,
BUT such amounts will be considered "unborrowed" for purposes of calculating the
Facility Fee under Section 1.7.2 hereof. If the beneficiary under any such
letter of credit makes a draw thereunder, for purposes of this Agreement and the
other Loan Documents, the amount thereof as of the date of such draw will be
treated as an Advance to Borrowers under the Line of Credit Facility.
ARTICLE 2: CONDITIONS PRECEDENT
2.1. CLOSING CONDITIONS. The obligation of Lender to execute and perform
under this Agreement are subject to the following conditions precedent (unless
and except to the extent expressly waived by Lender in its sole and absolute
discretion):
2.1.1. COMPLIANCE.
2.1.1.1. FEES AND EXPENSES. Borrowers must have paid (or
made acceptable arrangements with Lender to pay) all reasonable fees, costs,
expenses and taxes due and payable hereunder, including without limitation, any
fees due and payable pursuant to
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Section 1.7 hereof and the reasonable fees, costs and expenses of the law firm
of Bryan Cave LLP with respect to the preparation, negotiation and execution of
the Loan Documents.
2.1.1.2. REPRESENTATIONS. Each, and all, representations
and warranties contained in this Agreement (including those in Article 3 hereof)
and in each certificate or other writing delivered to Lender pursuant hereto or
thereto on or prior to the Closing Date must be true, correct and complete in
all material respects on and as of the Closing Date, EXCEPT for such deviations
disclosed in writing and acceptable to Lender.
2.1.1.3. NO DEFAULT. There must not be any Default or
Event of Default hereunder on the Closing Date, AND there must not be any such
Default or Event of Default occurring as a result of executing this Agreement,
EXCEPT for such defaults disclosed in writing and acceptable to Lender.
2.1.1.4. NO VIOLATION. The execution of this Agreement
must not contravene any law, rule or regulation applicable to any Borrower or to
Lender on the Closing Date.
2.1.1.5. NO MATERIAL CHANGE. There must not have been (in
Lender's reasonable opinion) any Material Adverse Change between December 31,
1995 (I.E., the "as of" date for the most recent audited financial statements
delivered to Lender) and the Closing Date.
2.1.2. DOCUMENTS. Lender must have received the following
documents, agreements and certificates (together with all exhibits and schedules
thereto), each duly executed, in form, substance and amount satisfactory to
Lender and, when applicable, recorded or filed in the appropriate public office:
2.1.2.1. CREDIT AGREEMENT. This Agreement.
2.1.2.2. FEE AGREEMENT. The Fee Agreement referenced in
Section 1.7.1 hereof.
2.1.2.3. SOLVENCY CERTIFICATES. A certificate from a
financial officer of EACH BORROWER (acceptable to Lender) to Lender dated as of
the Closing Date and certifying as to the solvency of each Borrower immediately
prior to and after giving effect to the execution and delivery of this
Agreement.
2.1.2.4. COMPLIANCE CERTIFICATES. A certificate from an
Authorized Officer of EACH BORROWER to Lender dated as of the Closing Date and
certifying as to compliance with the matters described under Section 2.1.1
hereof.
2.1.2.5. OPINIONS OF COUNSEL. One or more written opinions
from legal counsel to Borrowers addressed to Lender and its counsel and dated as
of the Closing Date opining as to such matters under Delaware, Illinois and
Virginia law as Lender may request.
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2.1.2.6. AUTHORIZATION DOCUMENTS -- EACH BORROWER. A
certificate of an Authorized Officer of EACH BORROWER delivering true, accurate
and complete versions of (a) its Articles of Incorporation and all amendments
thereto, AND (b) its Bylaws and all amendments thereto, AND (c) the resolutions
authorizing its execution, delivery and full performance of the Loan Documents
and all other documents, certificates and actions required hereunder or in
connection herewith, AND (d) an incumbency certificate setting forth its
officers (together with the corresponding signatures), AND (e) a long-form good
standing and qualification certificate with respect to each jurisdiction listed
on Schedule 3.1 hereto.
2.1.2.7. OTHER DOCUMENTS. Lender must have received any
additional agreements, documents and certificates as Lender or its counsel may
reasonably request.
2.2. CONDITIONS TO INITIAL ADVANCE. The obligation of Lender to execute
and perform the Loan Documents (other than this Agreement), AND to establish the
Facilities hereunder, AND to fund the initial Advances hereunder are subject to
the following conditions precedent that must be satisfied on or prior to October
31, 1996 (unless and except to the extent expressly waived by Lender in its sole
and absolute discretion):
2.2.1. COMPLIANCE.
2.2.1.1. FEES AND EXPENSES. Each Borrower must have paid
(or made acceptable arrangements with Lender to pay) all reasonable fees, costs,
expenses and taxes due and payable hereunder, including without limitation, any
fees due and payable pursuant to Section 1.7 hereof and the reasonable fees,
costs and expenses of the law firm of Bryan Cave LLP with respect to the
preparation, negotiation and execution of the Loan Documents.
2.2.1.2. REPRESENTATIONS. Each, and all, representations
and warranties contained in this Agreement (including those in Article 3 hereof)
and in each other Loan Document, certificate or other writing delivered to
Lender pursuant hereto or thereto on or prior to such Settlement Date must be
true, correct and complete in all material respects on and as of such Settlement
Date, EXCEPT such deviations disclosed in writing and in good faith reasonably
acceptable to Lender (which disclosure will not constitute Lender's waiver or
acceptance thereof).
2.2.1.3. NO DEFAULT. There must not be any Default or
Event of Default hereunder or any default under any other Loan Document on such
Settlement Date, AND there must not be any such Default or Event of Default
occurring as a result of executing or advancing funds under the Loan Documents,
EXCEPT for such defaults disclosed in writing and in good faith reasonably
acceptable to Lender (which disclosure will not constitute Lender's waiver or
acceptance thereof).
2.2.1.4. NO VIOLATION. The execution of the Loan Documents
must not contravene any law, rule or regulation applicable to any Borrower or to
Lender on such Settlement Date.
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2.2.1.5. NO MATERIAL CHANGE. There must not have been (in
Lender's reasonable opinion) any Material Adverse Change between the Closing
Date and such Settlement Date.
2.2.2. DOCUMENTS. Lender must have received the following
documents, agreements and certificates (together with all exhibits and schedules
thereto), each duly executed, in form, substance and amount mutually
satisfactory to Lender and Borrowers and, when applicable, recorded or filed in
the appropriate public office:
2.2.2.1. AMENDMENT TO CREDIT AGREEMENT. If Lender
requests, THEN an amendment to this Agreement (or an amendment and restatement
hereof) in order to accommodate the inclusion of an additional Lender hereunder
(which amendments will focus on incorporating terms and conditions reasonably
believed by Lender to be customary in a multi-lender facility with an agent, and
without limitation, will make the obligations of the lenders to advance
hereunder several (rather than joint) among such lenders). This Agreement will
also be modified to accommodate necessary changes as a result of negotiations of
the other Loan Documents described under this Section 2.2 hereof.
2.2.2.2. UPDATE TO CREDIT AGREEMENT SCHEDULES. Unless
otherwise updated in connection with an amendment hereto (or an amendment and
restatement hereof), THEN a certificate from an appropriate Authorized Officer
of EACH BORROWER to Lender dated as of such Settlement Date that updates the
Schedules hereto as of such Settlement Date.
2.2.2.3. ADVANCE REQUEST. Lender must have received an
Advance Request under and in accordance with Section 1.4.1 hereof that includes
(a) amounts and wiring instructions for each payment requested on such
Settlement Date, AND (b) a statement (if applicable) of the requested amount of
the Term Loan Commitment (in accordance with Section 1.3.1 hereof).
2.2.2.4. PROMISSORY NOTES. The Line of Credit Note as
described in Section 1.1.4 hereof, AND the Term Loan Note as described in
Section 1.2.4 hereof.
2.2.2.5. SECURITY AGREEMENT AND RELATED DOCUMENTS. A
security agreement by EACH BORROWER in favor of Lender granting Lender a
security interest in all of such grantor's tangible and intangible personal
property assets and fixtures (whether now owned or hereafter acquired) and the
proceeds and products thereof (other than the Excluded Assets), as collateral
security for the indebtedness and obligations hereunder, TOGETHER WITH all
necessary financing statements and termination statements (each as filed),
waivers and consents, and evidence of any other recordations required by
applicable law or by Lender to perfect such first lien security interests.
2.2.2.6. INTELLECTUAL PROPERTY SECURITY AGREEMENTS. One or
more separate intellectual property security agreements by EACH BORROWER in
favor of Lender covering all of such grantor's copyrights, patents, trade names,
trademarks, service names, service marks and other intellectual property
(including any and all applications and licenses therefor), all as now owned or
hereafter acquired and the proceeds and goodwill thereof, TOGETHER WITH all
appropriate
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financing statements and termination statements (each as filed), waivers and
consents, and any other documents or recordations required by applicable law or
by Lender to perfect such interests.
2.2.2.7. ASSIGNMENT OF MATERIAL CONTRACTS. One or more
separate assignments in favor of Lender of the Material Contracts of EACH
BORROWER (as such contracts are defined in Section 3.8 hereof), TOGETHER WITH
all necessary financing statements and termination statements, estoppel
certificates, waivers and consents, and any other documents required by
applicable law or by Lender to perfect such interests. With respect to
obtaining waivers and consents of third parties requested by Lender in
connection with any such assignment, such Borrower's obligation under this
Subsection will be limited to using its best efforts.
2.2.2.8. PLEDGE AND SECURITY AGREEMENT. A pledge and
security agreement executed by CCC in favor of Lender pledging a first priority
interest in (among other things) all of the outstanding capital stock (common
and preferred stock; including options and warrants therefor) of each other
Borrower owned by CCC, as collateral security for the indebtedness and
obligations hereunder and under such pledgor's guaranty in favor of Lender,
TOGETHER WITH the certificates therefor, powers executed in blank, and all
necessary financing statements.
2.2.2.9. PLEDGE AND SECURITY AGREEMENT. A pledge and
security agreement executed by CCC INFORMATION SERVICES GROUP INC. in favor of
Lender pledging a first priority interest in (among other things) all of the
outstanding capital stock (common and preferred stock; including options and
warrants therefor) of CCC, as collateral security for the indebtedness and
obligations hereunder and under such pledgor's guaranty in favor of Lender,
TOGETHER WITH the certificates therefor, powers executed in blank, and all
necessary financing statements.
2.2.2.10. GUARANTY AGREEMENT. A guaranty agreement by CCC
INFORMATION SERVICES GROUP INC. in favor of Lender absolutely and
unconditionally guaranteeing (a) the payment of all indebtedness hereunder and
under the other Loan Documents AND (b) the performance of all other obligations
hereunder and under the other Loan Documents.
2.2.2.11. INSURANCE. Current proof of insurance with an
indication of loss payee and additional insured endorsements in favor of Lender
with respect to all of the insurance coverages required under Section 4.8
hereof. Such proof of insurance (unless Lender otherwise agrees) must be
indicated pursuant to one or more certificates on (a) an ACORD 27 form (3/93)
for property-related insurance coverages AND (b) a modified version of an ACORD
25-S form (3/93) permitting Lender reliance and requiring cancellation
notification for general liability and all other types of insurance coverages.
2.2.2.12. SOLVENCY CERTIFICATES. A certificate from a
financial officer of EACH BORROWER (acceptable to Lender) to Lender dated as of
such Settlement Date and certifying as to the solvency of each Borrower
immediately prior to and after giving effect both (a) to the
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execution and delivery of the Loan Documents AND (b) to the disbursement of the
Advances scheduled to be funded on such Settlement Date.
2.2.2.13. COMPLIANCE CERTIFICATES. A certificate from an
Authorized Officer of EACH BORROWER to Lender dated as of such Settlement Date
and certifying as to compliance with the matters described under Section 2.2.1
hereof (with specific reconciled calculations demonstrating compliance with the
financial covenants under Section 4.1 hereof as of such Settlement Date).
2.2.2.14. OPINIONS OF COUNSEL. One or more written opinions
(or supplements thereto) from legal counsel to Borrower addressed to Lender and
its counsel and dated as of such Settlement Date opining as to such matters
(under the laws of the jurisdictions in which any Borrower is organized and the
laws of the jurisdictions in which any Borrower has Collateral) as Lender may
reasonably request.
2.2.2.15. PAYOFF INSTRUCTIONS FOR PRIOR INDEBTEDNESS. A
letter from Borrowers to Lender, consistent with the requirements of Section
1.1.3 hereof, Section 1.4 hereof and Section 2.2.1 hereof, instructing Lender
how to disburse the proceeds of the initial Advance, TOGETHER WITH appropriate
payoff and release letters.
2.2.2.16. AUTHORIZATION DOCUMENTS -- EACH BORROWER. A
certificate of an Authorized Officer of EACH BORROWER delivering true, accurate
and complete versions of (a) its Articles of Incorporation and all amendments
thereto (but only to the extent not previously delivered in connection with the
execution of this Agreement), AND (b) its Bylaws and all amendments thereto (but
only to the extent not previously delivered in connection with the execution of
this Agreement), AND (c) the resolutions authorizing its execution, delivery and
full performance of the Loan Documents and all other documents, certificates and
actions required hereunder or in connection herewith, AND (d) an incumbency
certificate setting forth its officers (together with the corresponding
signatures), AND (e) a long-form good standing and qualification certificate
with respect to each jurisdiction listed on Schedule 3.1 hereto.
2.2.2.17. AUTHORIZATION DOCUMENTS -- GUARANTOR. A
certificate of an Authorized Officer of GUARANTOR delivering true, accurate and
complete versions of (a) its Articles of Incorporation and all amendments
thereto, AND (b) its Bylaws and all amendments thereto, AND (c) the resolutions
authorizing its execution, delivery and full performance of the Loan Documents
and all other documents, certificates and actions required hereunder or in
connection herewith, AND (d) an incumbency certificate setting forth its
officers (together with the corresponding signatures), AND (e) a long-form good
standing and qualification certificate with respect to each jurisdiction listed
on Schedule 3.1 hereto.
2.2.2.18. OFFICER'S CERTIFICATES. One or more certificates
of an Authorized Officer of EACH BORROWER delivering true, accurate and complete
copies of the following documents and agreements (together with all amendments,
exhibits and schedules thereto):
a. LIEN SEARCHES -- Searches satisfactory to Lender with
respect to consensual liens, tax liens, judgments and
bankruptcy, listing respectively (a)
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all effective UCC financing statements that name each
Borrower or Guarantor (including any predecessor thereto and
any operating or tradenames thereof) as "debtor" that are
filed in the States of Illinois, Texas, California, or any
other U.S. jurisdiction in which such debtor currently
operates or has had assets at any time within the
immediately preceding 12 calendar months (TOGETHER WITH
copies of such financing statements), AND (b) all tax liens
against any Obligor (or the assets thereof), AND (c) all
outstanding judgments against any Obligor (or the assets
thereof), AND (d) whether any Obligor has filed bankruptcy
within the preceding 5 years.
b. FINANCIAL STATEMENTS -- A set of (a) the quarterly financial
statements covering Borrowers for fiscal quarter ending
March 31, 1996 (or, if prepared, June 30, 1996) (and
otherwise consistent with the requirements of Section 4.2
hereof) AND (b) the audited financial statements covering
Borrowers for fiscal year ending December 31, 1995 (as
otherwise consistent with the requirements of Section 4.2
hereto).
c. EQUITYHOLDER AGREEMENTS -- Each shareholder agreement,
voting agreement, buy-sell agreement, option, warrant, put,
call, right of first refusal, and any other agreement or
instrument with conversion rights into equity of any
Borrower either (a) between any Borrower AND any holder or
prospective holder of any equity interest of any Borrower
(including interests convertible into such equity) OR (b)
otherwise between any two or more such holders of equity
interests.
d. EMPLOYMENT AND NON-COMPETE AGREEMENTS -- Each employment
agreement between any Borrower AND any director or executive
officer of any Borrower, AND each non-compete agreement
between any Borrower AND any former owner of any Borrower.
e. INTER-AFFILIATE AGREEMENTS. Each written agreement (not
otherwise delivered under this Section) between any Borrower
AND any Affiliate of any Borrower (other than officers or
directors of such Borrower).
f. DISASTER RECOVERY AND CONTINGENCY PROGRAM. A description of
the currently effective disaster recovery and contingency
program of each Borrower, as required to be delivered under
Section 4.8 hereof.
g. LEASES AS LESSEE -- Each lease between any Borrower AND any
owner or landlord of real or personal property used in
connection with any Borrower's business for which it has an
annual rent obligation in excess of $36,000.
h. LEASES AS LESSOR -- Each lease (other than with respect to
Customer Equipment) between any Borrower AND any lessee of
real or personal
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property owned or leased by any Borrower, BUT ONLY TO THE
EXTENT the lessee thereunder has an annual rent obligation
in excess of $12,000.
2.2.2.19. OTHER DOCUMENTS. Lender must have received any
additional agreements, documents and certificates as Lender or its counsel may
reasonably request.
2.2.3. CONSUMMATION OF GUARANTOR'S IPO. Guarantor simultaneously
(or prior to such Settlement Date) must consummate and complete an initial
public offering of its stock raising at least $50 million in gross proceeds (and
having a consolidated market capitalization of at least $200 million).
2.2.4. SATISFACTION OF EXISTING INDEBTEDNESS. CCC simultaneously
(or prior hereto) must satisfy its entire indebtedness owed to (and terminate
all related rights of and agreements with) a group of lenders the agent for
which is Canadian Imperial Bank of Commerce.
2.2.5. CASH FLOW LEVERAGE. As of such Settlement Date, Borrowers
must be in compliance with the Leverage Ratio requirement under Section 4.1
hereof using an amount for Funded Debt that is as of such Settlement Date and
inclusive of the proposed Advance.
2.3. LINE OF CREDIT ADVANCES (AFTER THE INITIAL ADVANCES). The obligation
of Lender to fund any request for an Advance under the Line of Credit Facility
is subject to the following conditions precedent (unless and except to the
extent expressly waived by Lender in its sole and absolute discretion):
2.3.1. ADVANCE REQUEST. Lender must have received an Advance
Request under and in accordance with Section 1.4.1 hereof.
2.3.2. CASH FLOW LEVERAGE. As of the Settlement Date for such
Advance (and in addition to any other requirements and covenants hereunder),
Borrowers must be in compliance with the Leverage Ratio requirement under
Section 4.1 hereof using an amount for Funded Debt that is as of such Settlement
Date and inclusive of the proposed Advance.
2.3.3. OTHER DOCUMENTS. Lender must have received any additional
documents, certificates and opinions as Lender or its counsel may reasonably
request, including without limitation, UCC-1 financing statements, fixture
filings and leasehold mortgages regarding new locations for other assets of any
Borrower.
2.3.4. COMPLIANCE.
2.3.4.1. FEES AND EXPENSES. Borrowers must have paid (or
made acceptable arrangements with Lender to pay) all reasonable fees, costs,
expenses and taxes due and payable hereunder, including, without limitation, all
reasonable costs and expenses incurred in connection with or as a result of
reviewing and funding such Advance Request.
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2.3.4.2. REPRESENTATIONS. Each, and all, representations
and warranties contained in the Loan Documents (including those in Article 3
hereof) and in each other certificate or other writing delivered to Lender
pursuant hereto or thereto on or prior to the Settlement Date must be true,
correct and complete in all material respects on and as of the Settlement Date,
EXCEPT for such deviations disclosed in writing and in good faith reasonably
acceptable to Lender (which disclosure will not constitute Lender's waiver or
acceptance thereof).
2.3.4.3. NO DEFAULT. There must not be any Default or
Event of Default hereunder or any default under any other Loan Document on the
Settlement Date, AND there must not be any such Default or Event of Default
occurring as a result of funding such Advance, EXCEPT for such defaults
disclosed in writing and in good faith reasonably acceptable to Lender (which
disclosure will not constitute Lender's waiver or acceptance thereof).
2.3.4.4. NO VIOLATIONS. The funding of such Advance must
not contravene any law, rule or regulation applicable to any Borrower or to
Lender on the Settlement Date.
2.3.4.5. NO MATERIAL CHANGE. There must not have been (in
Lender's reasonable opinion) any Material Adverse Change between the Closing
Date and the Settlement Date.
ARTICLE 3: REPRESENTATIONS AND WARRANTIES
Each Borrower, as of the Closing Date and the Settlement Date for each
Advance hereunder, hereby represents and warrants as follows:
3.1. ORGANIZATION AND GOOD STANDING. Each Borrower (a) is duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization, AND (b) has all requisite power and authority (corporate and
otherwise) to own its properties and to conduct its business as now conducted
and as currently proposed to be conducted, AND (c) is duly qualified to conduct
business as a foreign organization and is currently in good standing in each
state and jurisdiction in which it conducts business (except where the failure
to be so qualified and in good standing could not reasonably be expected to have
or cause a Material Adverse Effect). Guarantor is duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization. Each state and jurisdiction in which any Borrower and/or
Guarantor is organized or is (or should be) qualified to conduct business is
listed on Schedule 3.1 hereto (except where the failure to be so qualified and
in good standing could not reasonably be expected to have or cause a Material
Adverse Effect).
3.2. POWER AND AUTHORITY. Each Borrower has all requisite power and
authority under applicable law and under its Organic Documents, Authorizations
and Licenses to execute, deliver and perform the obligations under the Loan
Documents to which it is a party. Guarantor has all requisite power and
authority under applicable law to execute, deliver and perform the obligations
under the Loan Documents to which it is a party. Except as disclosed on
Schedule
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3.2 hereto, all actions, waivers and consents (corporate, regulatory and
otherwise) necessary or appropriate for each Borrower and Guarantor to execute,
deliver and perform the Loan Documents to which it is a party have been taken
and/or received.
3.3. VALIDITY AND LEGAL EFFECT. This Agreement constitutes, and the other
Loan Documents to which any Borrower or Guarantor is a party constitute (or will
constitute when executed and delivered), the legal, valid and binding
obligations of Borrowers and Guarantor (jointly and severally) enforceable
against each in accordance with the terms thereof, except to the extent
enforceability thereof is limited by applicable bankruptcy, insolvency or
similar laws affecting creditors' rights generally.
3.4. NO VIOLATION OF LAWS OR AGREEMENTS. The execution, delivery and
performance of the Loan Documents (a) will not violate or contravene any
material provision of any material law, rule, regulation, administrative order
or judicial decree (federal, state or local), AND (b) will not violate or
contravene any provision of the Organic Documents of any Borrower or Guarantor,
AND (c) will not result in any material breach or violation of (or constitute a
material default under) any agreement or instrument by which any Borrower or
Guarantor or any of its property are bound the breach or violation of which
could reasonably be expected to have or cause a Material Adverse Effect, AND (d)
will not result in or require the creation of any Lien (other than pursuant to
or as permitted by the Loan Documents) upon or with respect to any properties of
any Borrower, whether such properties are now owned or hereafter acquired.
3.5. TITLE TO ASSETS; EXISTING ENCUMBRANCES; INTELLECTUAL AND REAL
PROPERTY. Each Borrower (a) has good and marketable title to all of its owned
real and personal property assets that are essential and required in conducting
its operations or that otherwise have a fair market value in excess of $25,000,
AND (b) has the right to possess and use all of its leased or licensed real and
personal property assets that are essential and required in conducting its
operations or that otherwise have a fair market value in excess of $25,000.
Guarantor has good and marketable title to all of the equity of CCC, AND CCC has
good and marketable title to all of the equity of each other Borrower (EXCEPT as
disclosed on Schedule 3.6 hereto). All such property interests are free and
clear of any Liens, EXCEPT for Permitted Liens (as defined in Section 5.5
hereof) and Liens described on Schedule 3.5 hereto. Schedule 3.5A hereto lists
each trademark, service mark, copyright, patent, database, customized
application software and systems integration software, trade secret and other
intellectual property owned, licensed, leased, controlled or applied for by any
Borrower, TOGETHER WITH relevant identifying information with respect to such
intellectual property describing, among other things, the date of creation and
the method of protection against adverse claims. Schedule 3.5B hereto lists
each real property interest owned, leased or otherwise used by any Borrower,
TOGETHER WITH relevant identifying information describing, among other things,
the location and use of each such real property interest, whether such interest
is owned or leased, and the estimated appraised value thereof. Each such
property and asset that is used or useful in connection with any Borrower's
business or operations is in good order and repair (ordinary wear and tear
excepted) and is fully covered by the insurance required under Section 4.8
hereof. Each such property and asset owned by any Borrower that is used or
useful in connection with any Borrower's business or operations is titled in the
current legal name of such Borrower. Schedule 3.5C hereto identifies each
legal, operating and trade name that any Borrower has used (or permitted the
filing of a UCC
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financing statement under) at any time during the twelve (12) consecutive
calendar years immediately preceding the Closing Date.
3.6. CAPITAL STRUCTURE AND EQUITY OWNERSHIP. Schedule 3.6 hereto
accurately and completely discloses (a) the number of shares and classes of
equity ownership rights and interests of each Borrower (whether existing as
common or preferred stock, or warrants, options or other instruments convertible
into such equity), AND (b) the ownership thereof. Schedule 3.6 hereto also
accurately and completely discloses (a) the number of shares and classes of
equity ownership rights and interests of Guarantor (whether existing as common
or preferred stock, or warrants, options or other instruments convertible into
such equity), AND (b) the ownership thereof (except with respect to the new
shares of Guarantor issued in connection with its IPO). All such shares and
interests are validly existing, fully paid and non-assessable.
3.7. SUBSIDIARIES, AFFILIATES AND INVESTMENTS. Schedule 3.7 hereto
accurately and completely discloses (a) each Subsidiary and Affiliate of each
Borrower (other than its officers and directors) AND (b) each investment in or
loan to any other Person by any Borrower (to the extent that such investment or
loan exceeds $50,000).
3.8. MATERIAL CONTRACTS. Schedule 3.8 hereto accurately and completely
discloses each material contract (as defined below) of each Borrower and
indicates (or as of and after the initial Settlement Date will indicate) any
stated restrictions on assignments thereof. Subsection "a" of Schedule 3.8
hereto lists those material contracts of each Borrower that Lender and such
Borrower have mutually agreed in good faith to be required and essential in the
operation of such Borrower, AND Subsection "b" of Schedule 3.8 hereto lists all
other material contracts. No Borrower has committed any unwaived breach or
default under any material contract (whether or not listed on Schedule 3.8
hereto), AND after due inquiry and investigation, no Borrower has any knowledge
or reason to believe that any other party to any such material contract (whether
or not listed on Schedule 3.8 hereto) has or might have committed any unwaived
breach or default thereof. For purposes of this Section 3.8 hereof, a "material
contract" of a Borrower includes the following types of agreements to which such
Borrower is a party: (1) any contract (other than customer contracts) either
with annual compensation, consideration or payments in excess of $400,000 OR
with aggregate compensation, consideration or payments in excess of $800,000,
AND (2) any lease of real estate or office space from which CCC conducts its
primary business operations, AND (3) any other agreement or contract the loss or
breach of which could reasonably be expected to have or cause a Material Adverse
Effect.
3.9. LICENSES AND AUTHORIZATIONS. Each Borrower possesses all Licenses and
other Authorizations necessary or required in the conduct of its businesses
and/or the operation of its properties. Each material Authorization is valid,
binding and enforceable on, against and by such Borrower. Each material
Authorization is subsisting without any defaults thereunder or enforceable
adverse limitations thereon, AND (to the best of each Borrower's knowledge,
after reasonable inquiry) no material Authorization is subject to any
proceedings or claims opposing the issuance, renewal, development or use thereof
or contesting the validity thereof. Schedule 3.9 hereto accurately and
completely lists each material Authorization of each Borrower, TOGETHER WITH
relevant identifying information describing such Authorizations.
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3.10. TAXES AND ASSESSMENTS. Except as disclosed on Schedule 3.10
hereto, each Borrower has timely filed all required tax returns and reports
(federal, state and local) or has properly and timely filed for extensions of
the time for the filing thereof, EXCEPT to the extent that the failure to so
timely file could not reasonably be expected to have or cause a Material Adverse
Effect. No Borrower has knowledge of any deficiency, penalty or additional
assessment due or appropriate in connection with any such returns or reports.
All taxes (federal, state and local) imposed upon any Borrower or any of its
properties, operations or income have been paid and discharged prior to the date
when any interest or penalty would accrue for the nonpayment thereof, EXCEPT for
those taxes (a) being contested in good faith by appropriate proceedings
diligently prosecuted and with adequate reserves reflected on the financial
statements in accordance with GAAP (all as also disclosed on Schedule 3.10
hereto) OR (b) as to which the failure to pay could not reasonably be expected
to have or cause a Material Adverse Effect.
3.11. LITIGATION AND LEGAL PROCEEDINGS. Except as disclosed on
Schedule 3.11 hereto, there is no litigation, claim, investigation,
administrative proceeding, labor controversy or similar action that is pending
or, to the best of each Borrower's knowledge and information after due inquiry,
threatened against any Borrower or its properties that in each instance, if
adversely resolved, could reasonably be expected to have or cause a Material
Adverse Effect.
3.12. ACCURACY OF FINANCIAL INFORMATION. All financial statements
previously furnished to Lender concerning the financial condition and operations
of any Borrower for periods as of and after January 1, 1995 (a) have been
prepared in accordance with GAAP consistently applied, AND (b) fairly present
the financial condition of the organization covered thereby as of the dates and
for the periods covered thereby. In addition, all written information
previously furnished to Lender concerning the then-current financial condition
and past operations of any Borrower are true, accurate and complete in all
material respects.
3.13. ACCURACY OF OTHER INFORMATION. All written information contained
in any application, schedule, report, certificate, or any other document
furnished to Lender by any Borrower or Guarantor in connection with the Loan
Documents is in all material respects true, accurate and complete, AND no such
Person has omitted to state therein (or failed to include in any such document)
any material fact or any fact necessary to make such information not misleading.
All written projections furnished to Lender by any Borrower or any other Person
on behalf of any Borrower have been prepared in good faith based upon estimates
and assumptions believed by such Borrower to be reasonable at the time made,
making use of such information as was available at the date such projection was
made.
3.14. COMPLIANCE WITH LAWS GENERALLY. Each Borrower is in compliance
in all material respects with all laws, rules, regulations, administrative
orders and judicial decrees (federal, state, local and otherwise) applicable to
it, its operations and its properties the breach or violation of which could
reasonably be expected to have or cause a Material Adverse Effect.
3.15. ERISA COMPLIANCE. Each Borrower is in compliance in all respects
with all applicable provisions of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), and all rules, regulations and orders implementing
ERISA, EXCEPT to the extent that
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the failure to be in such compliance could not reasonably be expected to have or
cause a Material Adverse Effect.
3.15.1. Neither any Borrower nor any ERISA Affiliate thereof
maintains or contributes to (or has maintained or contributed to) any
multiemployer plan (as defined in Section 4001 of ERISA) under which any
Borrower or any ERISA Affiliate thereof could reasonably be expected to have any
withdrawal liability.
3.15.2. Neither any Borrower nor any ERISA Affiliate thereof
sponsors or maintains any defined benefit pension plan under which there is an
accumulated funding deficiency within the meaning of Section 412 of the Code,
whether or not waived.
3.15.3. The liability for accrued benefits under each defined
benefit pension plan that is sponsored or maintained by any Borrower or any
ERISA Affiliate thereof (determined on the basis of the actuarial assumptions
utilized by the PBGC) does not exceed the aggregate fair market value of the
assets under each such defined benefit pension plan.
3.15.4. The aggregate liability of each Borrower and each ERISA
Affiliate thereof arising out of or relating to a failure of any employee
benefit plan within the meaning of Section 3(2) of ERISA to comply with
provisions of ERISA or the Code will not have a Material Adverse Effect.
3.15.5. There does not exist any unfunded liability (determined on
the basis of actuarial assumptions utilized by the actuary for the plan in
preparing the most recent annual report) of any Borrower or any ERISA Affiliate
thereof under any plan, program or arrangement providing post-retirement, life
or health benefits.
3.15.6. No Reportable Event and no Prohibited Transaction (as
defined in ERISA) has occurred or is occurring with respect to any plan with
which any Borrower is associated to the extent that such event could reasonably
be expected to have or cause a Material Adverse Effect.
3.16. ENVIRONMENTAL COMPLIANCE.
3.16.1. Each Borrower has received all permits and filed all
notifications necessary under and is otherwise in compliance in all respects
(EXCEPT to the extent that the failure to obtain such permit, file such
notification or be in such compliance could not reasonably be expected to have
or cause a Material Adverse Effect) with all applicable federal, state and local
laws, rules, ordinances and regulations governing the control, removal, storage,
transportation, spill, release or discharge of hazardous or toxic wastes,
substances and petroleum products, INCLUDING, WITHOUT LIMITATION, as provided in
the provisions of (a) the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended by the Superfund Amendment and Reauthorization
Act of 1986, AND (b) the Solid Waste Disposal Act, AND (c) the Clean Water Act,
AND (d) the Clean Air Act, AND (e) the Hazardous Materials Transportation Act,
AND (f) the Resource Conservation and Recovery Act of 1976, AND (g) the Federal
Water Pollution Control Act Amendments of 1972 (all of the foregoing enumerated
and nonenumerated
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statutes, regulations, rules and ordinances, all as amended from time to time,
collectively, the "Environmental Control Statutes").
3.16.2. No Borrower has given any written or oral notice to the
Environmental Protection Agency ("EPA") or any state or local agency with regard
to any actual or imminently threatened removal, storage, transportation, spill,
release or discharge of hazardous or toxic wastes, substances or petroleum
products either (a) on properties owned or leased by such Borrower OR (b)
otherwise in connection with the conduct of its business and operations.
3.16.3. No Borrower has received notice that it is potentially
responsible for costs of clean-up of any actual or imminently threatened spill,
release or discharge of hazardous or toxic wastes or substances or petroleum
products pursuant to any Environmental Control Statute.
3.17. MARGIN RULE COMPLIANCE. No Borrower owns or has any present
intention of acquiring any "Margin Stock" within the meaning of the following
Margin Regulations of the FRB: Regulation G at 12 C.F.R. Pt. 207, AND
Regulation T at 12 C.F.R. Pt. 220, AND Regulation U at 12 C.F.R. Pt. 221, AND
Regulation X at 12 C.F.R. Pt. 224. The credit extended under this Agreement
does not constitute "Purpose Credit" within the meaning of the FRB's Margin
Regulations.
3.18. FEES AND COMMISSIONS. Except as disclosed on Schedule 3.18
hereto or as required by Section 1.7 hereof, no Borrower owes any fees or
commissions of any kind in connection with this Agreement, AND no Borrower knows
of any claim (or any basis for any claim) for any fees or commissions in
connection with this Agreement.
3.19. SOLVENCY. Immediately prior to and upon the execution of this
Agreement and the funding of each Advance hereunder, CCC (independently) and all
Borrowers (as a whole, including CCC) was, is and will be solvent such that:
3.19.1. The fair saleable value of its or their assets (including,
without limitation, the fair saleable value of its or their goodwill and other
intangible property) is greater than the total amount of its or their
liabilities, including without limitation, all contingent liabilities; and
3.19.2. The present fair saleable value of its or their assets
(including, without limitation, the fair saleable value of its or their goodwill
and other intangible property) is not less than the amount that will be required
to pay the probable liability on its or their debts as such debts become
absolute and matured; and
3.19.3. It or they will be able to realize upon its or their assets
and will have sufficient cash flow from operations to enable it or them to pay
its or their debts and other liabilities, contingent obligations and other
commitments as such debts, obligations, liabilities and commitments mature in
the normal and ordinary course of business; and
3.19.4. The sum of its or their debts is not greater than all of its
or their property at a fair valuation (including, without limitation, the fair
valuation of its goodwill and other intangible property).
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Neither CCC nor Borrowers (as a whole, including CCC) intends to (or believes
that it or they will) incur debts or liabilities beyond its or their ability to
pay such debts and liabilities as such debts and liabilities become due and
mature. No Borrower is engaged in a business or transaction, or about to engage
in a business or transaction, for which the property of CCC or of all Borrowers
would constitute unreasonably small capital or assets after giving due
consideration to the prevailing practice and industry in which it or they are
engaged. No Borrower has incurred any obligations under the Loan Documents or
has made any conveyance pursuant hereto or in connection herewith with the
actual intent to hinder, delay or defraud present or future creditors of it or
any of its Affiliates. For purposes of this Section, in computing the amount of
contingent liabilities at any time, it is intended that such liabilities will be
computed at the amount which, in light of all the facts and circumstances
existing at such time, represents the amount that can reasonably be expected to
become an actual mature liability.
ARTICLE 4: AFFIRMATIVE COVENANTS
Each Borrower hereby covenants and agrees that, so long as any
indebtedness remains outstanding hereunder, each Borrower will comply with the
following affirmative covenants:
4.1. FINANCIAL COVENANTS AND RATIOS. As of the end of each fiscal quarter,
Borrowers (on a consolidated basis, including consolidated joint ventures) will
satisfy and comply with each of the following financial ratios and
characteristics, each of which will be determined using GAAP consistently
applied, except as otherwise expressly provided:
4.1.1. TOTAL CHARGE COVERAGE RATIO. A ratio of OCF TO Total
Charges of NOT LESS THAN the following:
a. 1.10-to-1.0, from the Closing Date through September
30, 1996; and
b. 1.15-to-1.0, from October 1, 1996 through December 31,
1996; and
c. 1.20-to-1.0, from January 1, 1997 through June 30,
1997; and
d. 1.25-to-1.0, after June 30, 1997.
4.1.2. CASH FLOW LEVERAGE RATIO. A ratio of Funded Debt TO OCF of
NOT MORE THAN the following:
a. If the Term Loan Commitment determined pursuant to
Section 1.3.1 hereof as of the first Settlement Date hereunder (and the initial
Advance of funds hereunder) is $0.00, THEN:
(1) 3.50-to-1.0, from the Closing Date through
December 31, 1996; and
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(2) 3.00-to-1.0, from January 1, 1997 through December
31, 1997; and
(3) 2.50-to-1.0, from January 1, 1998 through December
31, 1999; and
(4) 2.00-to-1.0, after December 31, 1999; OR
b. If the Term Loan Commitment determined pursuant to
Section 1.3.1 hereof as of the first Settlement Date hereunder (and the initial
Advance of funds hereunder) is greater than $0.00, THEN:
(1) 2.50-to-1.0, from the Closing Date through
December 31, 1997; and
(2) 2.00-to-1.0, after December 31, 1997.
4.2. PERIODIC FINANCIAL STATEMENTS.
4.2.1. MONTHLY FINANCIAL STATEMENTS. Within forty-five (45)
calendar days of the end of each calendar month (or, if finalized sooner, then
within 5 Business Days of finalizing such financial statements), Borrowers must
prepare and deliver to Lender a complete set of unaudited consolidated internal
monthly financial statements substantially similar in form and content with the
form of monthly financial statements attached as Exhibit 4.2.1 hereto. TOGETHER
WITH the monthly financial statements, Lender must also receive a certificate
executed by a financial officer of CCC as is acceptable to Lender stating that
the financial statements fairly present the financial condition of each Borrower
as of the date thereof and for the periods covered thereby.
4.2.2. QUARTERLY FINANCIAL STATEMENTS. Within forty-five (45)
calendar days of the end of each fiscal quarter, Borrowers must prepare and
deliver to Lender unaudited quarterly consolidating financial statements. Such
financial statements must include, without limitation, a balance sheet and an
income statement (with appropriate external notes and schedules, if prepared).
Such financial statements must be prepared in accordance with GAAP consistently
applied (except as approved by Lender in its sole and absolute discretion).
TOGETHER WITH the quarterly financial statements, Lender must also receive a
certificate executed by the President, the Chief Financial Officer, the
Treasurer or such other senior executive officer of CCC as is acceptable to
Lender (a) stating that the financial statements fairly present the financial
condition of each Borrower as of the date thereof and for the periods covered
thereby, AND (b) providing a reconciled calculation demonstrating compliance
with each financial covenant and ratio under Section 4.1 hereof (using the form
attached as Exhibit 4.2 hereto), AND (c) calculating, as of the end of such
fiscal period, the then-current amount for the Available Credit Portion and the
year-to-date amounts under Sections 5.7(e) and 5.10(a) hereof, AND (d)
certifying that as of the date of such certificate there is not any existing
Default or Event of Default.
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4.2.3. ANNUAL FINANCIAL STATEMENTS. Within one hundred and twenty
(120) calendar days after the close of each fiscal year, Borrowers must prepare
and deliver to Lender a complete set of audited annual consolidated financial
statements of Guarantor (with accompanying notes and consolidating schedules).
Such financial statements (a) must include the types of financial statements and
information required on a quarterly basis under this Section 4.2 hereof as well
as a cash flow statement and a reconciliation of consolidated net worth and
capital accounts, AND (b) must be prepared in accordance with GAAP consistently
applied, AND (c) must be certified without qualification by an independent
certified public accounting firm satisfactory to Lender. TOGETHER WITH the
annual financial statements, Lender must also receive all related management
letters prepared by such accountants and an audit report or opinion signed by
such accountants stating that the financial statements fairly present the
consolidated financial condition of Guarantor as of the date thereof and for the
periods covered thereby.
4.3. OTHER FINANCIAL AND SPECIALIZED REPORTS.
4.3.1. FINANCIAL FORECASTS. Within 15 Business Days of completing
or materially revising any periodic budgets or financial forecasts, Borrowers
must deliver a complete copy thereof to Lender.
4.4. FISCAL YEAR. CCC will maintain a fiscal year that has a December 31st
year end.
4.5. BOOKS AND RECORDS. Each Borrower (a) will keep and maintain
satisfactory and adequate books and records of account in which entries are made
in accordance with GAAP AND (b) will make or cause the same to be made available
to Lender or its agents or nominees at any reasonable time upon reasonable
notice for inspection and to make extracts therefrom.
4.6. EXISTENCE AND GOOD STANDING. Each Borrower will preserve and maintain
(a) its existence as a corporation under the laws of its jurisdiction of
organization, AND (b) its good standing in all jurisdictions where it conducts
business, AND (c) the validity of all its Authorizations and Licenses required
in the conduct of its businesses (EXCEPT, with respect to Clause "c", to the
extent that the failure to preserve and maintain could not reasonably be
expected to have or cause a Material Adverse Effect).
4.7. DEPOSIT ACCOUNTS. Each Borrower will maintain all of its operating
and deposit accounts at financial institutions THAT are federally insured
depository institutions rated as "well capitalized" by their primary federal
regulators. All such accounts (and the balances therein) shall reside in the
United States of America, OTHER THAN accounts established in the ordinary course
of business for collection purposes in foreign countries and operating accounts
established in the ordinary course of business used for foreign operations as to
which the balances therein in the aggregate among all such collection and
operating accounts does not at any time exceed $500,000 for any five (5)
consecutive Business Days. Within twenty (20) calendar days of opening or
acquiring any new such account, Borrowers must provide Lender with written
notice of the institution's name and location and the account name and number
with respect to each such account. The institution's name and location and the
account name and number for each such account currently in existence, as well as
an approximate current balance (I.E., a current
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balance at any time within the preceding thirty (30) calendar days), are listed
on Schedule 4.7 hereto.
4.8. INSURANCE; MAINTENANCE OF PROPERTIES; DISASTER CONTINGENCY.
4.8.1. GENERAL INSURANCE PROVISIONS. Each Borrower will keep,
maintain and preserve all of its property and assets in good order and repair
(ordinary wear and tear excepted). Such property must be fully covered by
insurance with reputable and financially sound insurance companies (reasonably
acceptable to Lender). Such insurance must insure against such hazards in such
amounts and with such deductibles as is customary in the relevant industry (and
as reasonably acceptable to Lender). Each such policy must name Lender as loss
payee and as additional insured. Each such policy must also require the insurer
to furnish Lender with written notice at least 25 calendar days prior to any
termination of coverage and must provide Lender with the right (but not the
obligation) to cure any non-payment of premium. Upon Lender's request, each
Borrower will furnish Lender with proof of such insurance (in form and substance
acceptable to Lender) and will cause Lender to be reflected thereon as
additional insured and the loss payee thereof.
4.8.2. DISASTER RECOVERY AND CONTINGENCY PROGRAM. Each Borrower
will maintain (and at least annually review the sufficiency of) a disaster
recovery and contingency plan that addresses such Borrower's plans for
continuing operations upon the occurrence of a natural disaster or other event
that destroys or prevents the use of such Borrower's primary mainframe computer
systems. Within 180 calendar days after the Closing Date (and at all times
thereafter), such plan must also address events that destroy or prevent the use
of such Borrower's other material computer systems and primary operations
facility. Such contingency plan must be in form and substance reasonably
acceptable to Lender. Upon request, each Borrower will provide Lender with a
current copy of such plan.
4.9. LOAN PURPOSE. Borrowers will use the proceeds of each Advance
under the Facilities exclusively as set forth in Section 1.1.3 hereof or Section
1.2.3 hereof.
4.10. LITIGATION; OCCURRENCE OF DEFAULTS. Each Borrower will notify
Lender in writing immediately upon (a) the institution or commencement of any
litigation, legal or administrative proceeding, or labor controversy that could
reasonably be expected to have or cause a Material Adverse Effect, OR (b) the
happening of any event or the assertion or threat of any claim that could
reasonably be expected to have or cause a Material Adverse Effect, OR (c) the
occurrence of any Default or Event of Default hereunder, OR (d) the occurrence
of any default under any other Loan Document.
4.11. TAXES. Each Borrower will pay and discharge all taxes, assessments
or other governmental charges or levies imposed on it or any of its property or
assets prior to the date upon which any penalty for non-payment or late payment
is incurred, UNLESS (a) the same are then being contested in good faith by
appropriate proceedings diligently prosecuted, AND (b) adequate reserves
therefor in accordance with GAAP have been established, AND (c) Lender has been
notified thereof in writing if such non-paid or non-discharged item exceeds
$50,000, AND (d) the consequences of such non-payment could not reasonably be
expected to have or cause a
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Material Adverse Effect (the determination of which, to the extent that such
non-paid or non-discharged item exceeds $50,000, will be subject to Lender's
reasonable judgment).
4.12. MANAGEMENT CHANGES. Borrowers will notify Lender in writing within
thirty (30) calendar days after any change (including, without limitation, any
dismissal or change in title or status) in the executive personnel of any
Borrower.
4.13. COSTS AND EXPENSES. Borrowers (jointly and severally) will pay or
reimburse Lender for all protective advances made by Lender under the Loan
Documents. Borrower (jointly and severally) will also pay or reimburse Lender
for all other out-of-pocket costs and expenses (including, without limitation,
all reasonable attorneys' fees and disbursements) that Lender may pay or incur
in connection with (a) the preparation, negotiation and review of any waivers,
consents and amendments in connection herewith and all other documentation
related thereto, AND (b) the funding of the indebtedness hereunder, AND (c) the
collection or enforcement of any of the Loan Documents, AND (d) the periodic
examination of the books and records of any Borrower at any time during the
occurrence of a Default, AND (e) Lender's release of its interests in the
Collateral in accordance with the terms of the Loan Documents. Borrowers
(jointly and severally) will pay any and all recordation taxes or other fees due
upon the filing of the financing statements or documents of similar effect
required to be filed under the Loan Documents, and will provide Lender with a
copy of any receipt or other evidence reflecting such payments if so requested
in writing by Lender. All obligations provided for in this Section shall
survive the termination of this Agreement and/or the repayment of indebtedness
hereunder.
4.14. COMPLIANCE WITH LAWS.
4.14.1. GENERAL. Each Borrower will comply in all material
respects (a) with all material laws, rules, regulations and orders (federal,
state, local and otherwise) applicable to its business, AND (b) with the
provisions and requirements of all Authorizations. Each Borrower will notify
Lender immediately in detail (upon obtaining knowledge thereof) of (a) any
actual or alleged material failure to comply with or violation of any such laws,
rules, regulations or orders, or under the terms of any of such Authorizations,
OR (b) the occurrence or existence of any facts or circumstances that with the
passage of time, the giving of notice or otherwise could create such a failure
to comply or violation or could reasonably be expected to occasion the
termination of any of such Authorization.
4.14.2. ERISA. Each Borrower will comply in all respects with the
provisions of ERISA to the extent applicable to any Plan maintained by it or for
the benefit of its employees, EXCEPT to the extent that the failure to be in
such compliance could not reasonably be expected to have or cause a Material
Adverse Effect. No Borrower will (a) incur any material accumulated funding
deficiency (within the meaning of ERISA and the regulations thereunder), or any
material liability to the PBGC established by ERISA OR (b) permit any reportable
event (as defined in ERISA) to occur or the occurrence of any other event which
could reasonably be expected to be the basis for PBGC to assert a material
liability against it or which could reasonably be expected to result in the
imposition of a Lien on its properties or assets. Each Borrower will notify
Lender in writing promptly after any assertion or threat of any of the
following: the occurrence of any reportable event or the occurrence of any
other event which
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indicates that a Plan may not be financially sound or which could reasonably be
expected to be the basis for PBGC to assert a material liability against it or
impose a Lien on any of its properties or assets.
4.14.3. ENVIRONMENTAL. Each Borrower will comply in all respects
with the Environmental Control Statutes, EXCEPT to the extent that the failure
to be in such compliance could not reasonably be expected to have or cause a
Material Adverse Effect. Each Borrower (a) will notify Lender when the EPA, any
state or local agency or any other Person provides oral or written notification
to it with regard to an actual or imminently threatened removal, spill, release
or discharge of hazardous or toxic wastes, hazardous or toxic substances or
petroleum products in violation of any Environmental Control Statute, AND (b)
will notify Lender in detail immediately upon the receipt by it of an assertion
of liability under the Environmental Control Statutes, or any actual or alleged
failure to comply with or perform, breach or violation under any such laws or
regulations.
4.15. FURTHER ACTIONS.
4.15.1. ADDITIONAL COLLATERAL. Each Borrower will execute,
deliver and record (or, as appropriate, cause the execution, delivery and
recordation) at any time upon Lender's request and in form and substance
reasonably satisfactory to Lender, any of the following instruments in favor of
Lender as additional Collateral hereunder (other than with respect to Excluded
Assets): (a) mortgages, deeds of trust and/or assignments on or of any real or
personal property owned, leased or licensed by it, AND (b) certificates of title
encumbrances against any of its titled vehicles, AND (c) any other like
assignments or agreements specifically covering any of its properties or assets
(including, without limitation, assignments of any patents, trademarks,
copyrights, databases, trade secrets and other forms of intellectual property),
AND (f) any financing or continuation statements requested by Lender.
4.15.2. FURTHER ASSURANCES. From time to time, each Borrower will
execute and deliver (or will cause to be executed and delivered) such
supplements and amendments to the Loan Documents and such further instruments as
may be reasonably required to effectuate the intention of the parties to (or to
otherwise facilitate the performance of) the Loan Documents.
4.15.3. ESTOPPEL CERTIFICATE. Upon Lender's reasonable request,
CCC will consent (which consent will not be unreasonably withheld) to execute,
acknowledge and deliver (or, as appropriate, to cause the execution,
acknowledgement and delivery) to such Person as Lender may request a statement
in writing certifying as follows (to the best of its knowledge, after due
inquiry): (a) that the Loan Documents (as amended, if applicable) are
unmodified and in full force and effect, AND (b) that the payments under the
Loan Documents required to be paid by Borrowers have been paid, AND (c) the then
unpaid principal balance of Facilities hereunder, AND (d) whether or not any
Default is then occurring under any of the Loan Documents and, if so, specifying
each such Default of which the signer may have knowledge. Unless CCC otherwise
consents (which consent will not be unreasonably withheld, delayed or
conditioned), Lender must give CCC at least ten (10) Business Days to complete
and deliver any such certificate. Each Borrower understands and agrees that any
such certificate delivered pursuant to this Section may be relied upon by Lender
and, if different, by the recipient thereof.
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4.15.4. WAIVERS AND CONSENTS. Upon Lender's request, each
Borrower will use its best efforts to obtain and deliver (in form and substance
reasonably satisfactory to Lender) a waiver or consent to the assignment to
Lender of any contract, lease, Authorization or other agreement to which it is a
party (other than with respect to Customer Equipment).
4.15.5. ADDITIONAL MATERIAL CONTRACTS, LICENSES AND
AUTHORIZATIONS. Each Borrower (a) will notify Lender in writing within 90
calendar days after executing or becoming bound by any contract, agreement,
License or other Authorization that should have been listed on Schedule 3.5A
hereto, Schedule 3.8 hereto or Schedule 3.9 hereto if it had existed as of the
Closing Date, AND (b) will concurrently update Schedule 3.5A hereto, Schedule
3.8 hereto or Schedule 3.9 hereto (as appropriate). To the extent that any
Borrower at any time updates the material contracts listed on Schedule 3.8
hereto, THEN such Borrower and Lender will concurrently agree in good faith as
to whether such contract should appropriately be listed under Subsection "a" or
Subsection "b" of such Schedule.
4.16. OTHER INFORMATION. Each Borrower will provide Lender with any
other documents and information (financial or otherwise) reasonably requested by
Lender or its counsel from time to time.
ARTICLE 5: NEGATIVE COVENANTS
Each Borrower hereby covenants and agrees that, so long as any
indebtedness remains outstanding hereunder, each Borrower will comply with the
following negative covenants (unless Lender otherwise consents in writing, which
consent will not be unreasonably withheld while no Default is occurring):
5.1. CAPITAL EXPENDITURES. Borrowers (on a consolidated basis) will not
incur Capital Expenditures in any fiscal year in excess of the following
designated amounts:
Permitted
Fiscal Year Capital
Ending Expenditures
----------- ------------
12/31/96 $4 million
Thereafter $4 million plus the
Cashflow Adjustment
For purposes of this Section, Capital Expenditures (a) will include all
capitalized software costs, BUT (b) will exclude Customer Equipment purchases
and up to $900,000 in leasehold improvements to be incurred prior to December
31, 1997. For purposes of this Section, the "Cashflow Adjustment" for any
fiscal year will be an amount equal to the result of multiplying $4 million by
the following ratio:
OCF for fiscal year in question Divided by 100
-------------------------------
OCF for fiscal year 1996
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If the result of the foregoing ratio is a negative number, THEN the Cashflow
Adjustment for the applicable period will equal $0.00.
NOTWITHSTANDING THE FOREGOING, to the extent that the permitted Capital
Expenditures (referenced above) exceed the actual Capital Expenditures for any
fiscal year, THEN the excess may be carried over and used during the immediately
succeeding fiscal year as additional permitted amounts of Capital Expenditures
in such subsequent fiscal year after Borrowers have first exhausted the
otherwise permitted amounts of Capital Expenditures for such fiscal year
determined in accordance with the above schedule. FURTHER NOTWITHSTANDING THE
FOREGOING, no Borrower may make any such Capital Expenditure that otherwise
violates any covenant under the Loan Documents or otherwise causes a Default
hereunder.
5.2. ADDITIONAL INDEBTEDNESS. No Borrower will borrow any monies or
create, incur or assume any additional indebtedness, or any other monetary
obligations or liabilities (including, without limitation, monetary obligations
under non-compete arrangements) EXCEPT AS FOLLOWS (collectively, the "Permitted
Indebtedness"):
a. Borrowings from Lender hereunder; AND
b. Trade indebtedness and indebtedness in respect of
endorsements of negotiable instruments for collection, each in the normal and
ordinary course of business for value received; AND
c. Indebtedness and obligations incurred TO PURCHASE FIXED
OR CAPITAL ASSETS (other than Customer Equipment), consistent with the
restrictions in Section 5.1 hereof and Section 5.5 hereof, PROVIDED, HOWEVER,
that (1) the aggregate amount of such asset acquisition indebtedness outstanding
at any time may not exceed $2,000,000, AND (2) no such transaction otherwise
causes a Default hereunder, AND (3) such indebtedness is immediately included in
the calculation of Funded Debt, AND (4) such fixed or capital assets being
purchased do not constitute customized application software or systems
integration software or any asset the loss of which could reasonably be expected
to have or cause a Material Adverse Effect; AND
d. Indebtedness and obligations incurred UNDER CAPITAL
LEASES, consistent with the restrictions in Section 5.1 hereof and Section 5.5
hereof, PROVIDED, HOWEVER, that (1) no such transaction otherwise causes a
Default hereunder, AND (2) such indebtedness (including leases of Customer
Equipment) is immediately included in the calculation of Funded Debt, AND (3)
such fixed or capital assets being leased do not constitute customized
application software or systems integration software or any asset the loss of
which could reasonably be expected to have or cause a Material Adverse Effect;
AND
e. Indebtedness TO PURCHASE OR LEASE CUSTOMER EQUIPMENT,
consistent with the restrictions in Section 5.5 hereof, PROVIDED, HOWEVER, that
(1) no such transaction otherwise causes a Default hereunder, AND (2) such
indebtedness is immediately included in the calculation of Funded Debt; AND
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f. Indebtedness in favor of another Borrower if and to the
extent permitted under Section 5.4(b) hereof; AND
g. Such indebtedness listed on Schedule 5.2 hereto with
the prior written consent of Lender (which consent will not be unreasonably
withheld by Lender while no Default is occurring). Unless Lender otherwise
expressly consents in writing (or unless otherwise specified on Schedule 5.2
hereto), all indebtedness listed on Schedule 5.2 hereto must be included in the
calculation of Funded Debt.
NOTWITHSTANDING THE FOREGOING EXCEPTIONS, no Borrower may incur any such
indebtedness that otherwise violates any covenant hereunder or that otherwise
causes a Default hereunder.
5.3. GUARANTIES. No Borrower will guarantee, assume or otherwise agree
to become liable in any way, either directly or indirectly, for any additional
indebtedness or liability of any other Person, EXCEPT AS FOLLOWS (collectively,
the "Permitted Guaranties"): (a) in favor of Lender, OR (b) to endorse checks
or drafts in the ordinary course of business, OR (c) guarantees or other
contingent obligations to secure on behalf of a Borrower performance or payment
bonds, bids, tenders, contracts, leases, franchises or public and statutory
obligations in the ordinary course of such Borrower's business, OR (d) to the
extent that Lender otherwise consents in writing. NOTWITHSTANDING THE FOREGOING
EXCEPTIONS, no Borrower may become so liable in a manner that otherwise violates
any covenant hereunder or that otherwise causes a Default hereunder.
5.4. LOANS. No Borrower will make any loans or advances to any other
Person, EXCEPT as follows: (a) loans to employees and sales representative that
do not at any time in the aggregate outstanding exceed $300,000 among all such
loans to all such employees and sales representatives, AND (b) loans to other
Borrowers that are appropriately reflected on each Borrower's financial records
and evidenced by a written promissory note assigned to Lender as additional
Collateral, AND (c) security deposits and advance payments or prepayments for
products, services and expenses, in each instance described in this Clause "c",
in the ordinary course of such Borrower's business. NOTWITHSTANDING THE
FOREGOING EXCEPTIONS, no Borrower may make any such loan or advance that
otherwise violates any covenant hereunder or that otherwise causes a Default
hereunder.
5.5. LIENS AND ENCUMBRANCES; NEGATIVE PLEDGE. No Borrower will create,
permit or suffer the creation or existence of any Liens on any of its property
or assets (real or personal, tangible or intangible), EXCEPT in favor of Lender
as security for the Obligations hereunder, and EXCEPT AS FOLLOWS (collectively,
the "Permitted Liens"):
a. Liens arising in favor of sellers or lessors for
indebtedness and obligations incurred to purchase or lease fixed or capital
assets as permitted under Subsection 5.2.c hereof or Subsection 5.2.d hereof or
Subsection 5.2.e, PROVIDED, THAT (1) such Liens secure only the indebtedness and
obligations created thereunder (but not any related monetary obligations under
non-compete arrangements) and are limited to the assets purchased or leased
pursuant thereto, AND (2) such fixed or capital assets do not constitute
customized application software or systems
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integration software or any asset the loss of which could reasonably be expected
to have or cause a Material Adverse Effect; AND
b. Liens for taxes, assessments or other governmental
charges (federal, state or local) that are not yet delinquent or that are then
being currently contested in good faith by appropriate proceedings diligently
prosecuted, PROVIDED, HOWEVER, that (1) the existence of such Liens and
challenge of such charges must have been fully disclosed to Lender if the
related taxes, assessments or charges exceed $50,000, AND (2) adequate reserves
therefor in accordance with GAAP must have been established, AND (3) such Liens
could not reasonably be expected to have or cause a Material Adverse Effect (the
determination of which, to the extent that such related taxes, assessments or
charges exceed $50,000, will be subject to Lender's reasonable judgment); AND
c. Pledges or deposits in the ordinary course of business
to secure obligations under workmen's compensation, unemployment insurance or
social security laws or similar legislation; AND
d. Deposits to secure performance or payment bonds, bids,
tenders, contracts, leases, franchises or public and statutory obligations
required in the ordinary course of business; AND
e. Deposits to secure surety, appeal or custom bonds
required in the ordinary course of business; AND
f. Liens of carriers, warehousemen, mechanics, materialmen
and landlords incurred in the ordinary course of business for sums not past due
or for sums being currently contested in good faith by appropriate proceedings
diligently prosecuted, PROVIDED, HOWEVER, that (1) the existence of such Liens
and challenge of such sums allegedly due must have been fully disclosed to
Lender if such sums allegedly due exceed $50,000, AND (2) adequate reserves
therefor in accordance with GAAP must have been established, AND (3) such Liens
could not reasonably be expected to have or cause a Material Adverse Effect (the
determination of which, to the extent that such related taxes, assessments or
charges exceed $50,000, will be subject to Lender's reasonable judgment); AND
g. Easements, rights-of-way, restrictions and other
similar encumbrances on real property of a Borrower that, independently and in
the aggregate, do not (1) materially interfere with the occupation, use or
enjoyment by such Borrower of the property or assets encumbered thereby in the
normal course of business OR (2) materially impair the value of the property
subject thereto; AND
h. Liens listed on Schedule 5.5 hereof with the consent of
Lender (which consent will not be unreasonably withheld by Lender while no
Default is occurring).
No Borrower will similarly covenant to or in favor of any other Person that it
will not create, permit or suffer the creation or existence of any Liens on any
of its property or assets. In addition, no Borrower will purchase or otherwise
acquire any additional assets (including,
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without limitation, any leasehold interest therefor, BUT excluding Customer
Equipment) UNLESS Lender's interest in such property EITHER (a) is already
covered and perfected pursuant to an existing and effective UCC-1 financing
statement, fixture filing, mortgage and/or leasehold mortgage (as appropriate)
in favor of Lender OR (b) otherwise becomes properly perfected within 5 calendar
days after any such acquisition by such Borrower's filing (at its expense) all
necessary UCC-1 financing statements, fixture filings, mortgages and/or
leasehold mortgages (as appropriate, and in form and substance reasonably
acceptable to Lender). Moreover, no Borrower will establish or maintain any
"securities account" with any "securities intermediary" (as such terms are
defined in Article 8 of the UCC) except as permitted under Section 5.7 hereof.
5.6. TRANSFER OF ASSETS. No Borrower will sell, lease, transfer or
otherwise dispose of all or substantially all of its assets. In addition, no
Borrower will sell, lease, transfer or otherwise dispose of ANY of its assets
OTHER THAN as follows: (a) obsolete equipment that is no longer useful in
Borrower's operations, AND (b) transfers of assets pursuant to a transaction
with an unrelated third party in the normal and ordinary course of business for
value received, with a fair market value of less than $1 million per transaction
or series of related transactions, and otherwise in accordance with the terms
hereof (including, without limitation, Section 1.1.6.5.c and 1.2.6.5.c hereof),
AND (c) transfers of assets pursuant to a reasonable and customary transaction
with another Borrower that is appropriately reflected on each Borrower's
financial records, AND (d) Customer Equipment. NOTWITHSTANDING THE FOREGOING
EXCEPTIONS, no Borrower may dispose of any such asset in a manner that otherwise
violates any covenant hereunder or that otherwise causes a Default hereunder.
5.7. ACQUISITIONS AND INVESTMENTS. No Borrower will purchase or
otherwise acquire (including, without limitation, by way of share exchange) any
part or amount of the equity ownership of or make any investments in any other
corporation, partnership, limited liability company or other venture or
enterprise. NOTWITHSTANDING THE FOREGOING, each Borrower may acquire or invest
in the following (collectively, the "Permitted Investments"):
(a) government and agency securities backed by the full faith and credit of
the U.S. federal government, AND
(b) commercial paper rated A-1+ or A-1 by Standard & Poor's Ratings Group
or P-1 by Moody's Investor Services, Inc., AND
(c) certificates of deposit, time deposits, other deposits and bankers'
acceptances issued by or established with federally insured commercial
banks rated as "well capitalized" by their primary federal regulators, and
having unimpaired capital and unimpaired surplus (collectively) of at least
$250 million, and whose commercial paper (or commercial paper that is
supported by such bank's letter of credit or commitment to lend) is rated
as A-1+ or A-1 by Standard & Poor's Ratings Group or P-1 by Moody's
Investor Services, Inc., AND
(d) assets (other than equity interests) acquired pursuant to transactions
that are otherwise consistent with the terms hereof (including, without
limitation, Section 5.1
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hereof, Section 5.2 hereof, and the requirement that a first priority
security interest be perfected in favor of Lender in all such assets except
as otherwise permitted under Section 5.5 hereof), AND
(e) investments in joint ventures that (together with permitted dividends
under Section 5.10 hereof) do not exceed $5 million during calendar year
1997 or $10 million during any calendar year thereafter, AND
(f) other Borrowers.
In addition, no Borrower will establish or maintain any "securities account"
with any "securities intermediary" (as such terms are defined in Article 8 of
the UCC), UNLESS a control agreement acceptable in form and substance to Lender
is first executed by such "securities intermediary" securing Lender's first
priority interest and rights in and to all "financial assets" and "security
entitlements" associated with such "securities account". FURTHER
NOTWITHSTANDING THE FOREGOING, no Borrower may make any such investment or
acquisition during the occurrence of a Default hereunder or if such transaction
would otherwise cause a Default hereunder.
5.8. NEW VENTURES; MERGERS. No Borrower will (a) enter into any new
business activities or ventures not directly related to its current business, OR
(b) merge or consolidate with or into any other corporation, partnership,
limited liability company or other organization (UNLESS such Borrower is the
surviving entity AND such transaction does not otherwise violate any covenant or
cause a Default under the Loan Documents), OR (c) create or acquire (or cause or
permit the creation or acquisition of) any Subsidiary or Affiliate (except the
hiring of officers and directors). NOTWITHSTANDING THE FOREGOING, each Borrower
may create or acquire (or cause or permit the creation or acquisition of) one or
more wholly-owned Subsidiaries PROVIDED THAT (1) each such Subsidiary (at
Lender's reasonable discretion) becomes a "Borrower" and "Obligor" under the
Loan Documents, AND (2) a first priority security interest and pledge of 100% of
the assets and equity of each such Subsidiary is perfected in favor of Lender as
additional Collateral under the Loan Documents (except as otherwise permitted
under Section 5.5 hereof), AND (3) the creation or acquisition thereof does not
otherwise violate any covenant hereunder or otherwise cause a Default hereunder
(including, without limitation, under Section 5.7 hereof).
5.9. TRANSACTIONS WITH AFFILIATES. No Borrower will enter into any
transaction or agreement with any Subsidiary, Affiliate or other related
enterprise EXCEPT AS FOLLOWS: (a) compensation arrangements in the ordinary
course of business with its officers and directors, AND (b) guaranties (if any)
to the extent permitted by Sections 5.3 hereof, AND (c) employee loans (if any)
to the extent permitted under Section 5.4 hereof, AND (d) reasonable and
customary asset transfers among Borrowers (if any) to the extent permitted under
Section 5.6 hereof, AND (e) reasonable dividends and distributions (if any) to
the extent permitted by Section 5.10 hereof, AND (f) reasonable and customary
management or service fees and expenses (if any) to the extent permitted under
Section 5.12 hereof.
5.10. DISTRIBUTIONS OR DIVIDENDS. No Borrower will declare or make
(directly or indirectly) any payment or distribution with respect to, or incur
any liability for the purchase,
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acquisition, redemption or retirement of, any of its equity interests (including
warrants therefor) or as a dividend, return of capital or other payment or
distribution of any kind to any holder of any such equity interest.
NOTWITHSTANDING THE FOREGOING, each Borrower may declare and make lawful
dividends on its common stock that is owned by another Borrower, AND CCC may
declare and make lawful dividends on its common stock PROVIDED THAT (a) such
dividends (together with permitted investments under Section 5.7(e) hereof) do
not exceed $5 million during calendar year 1997 or $10 million during any
calendar year thereafter, AND (b) no Default hereunder is occurring at the time
of such dividend and no such Default would otherwise be caused thereby
(including, without limitation, under Section 4.1 hereof, after accounting for
the payment of such dividend).
5.11. PAYMENT OF SUBORDINATED INDEBTEDNESS. No Borrower will incur or
make any payments on Subordinated Indebtedness.
5.12. PAYMENT OF MANAGEMENT FEES. No Borrower will pay any funds or
otherwise incur or accrue any liabilities for any management or related services
EXCEPT (a) reasonable and customary compensation to bona fide employees of such
Borrower, AND (b) pursuant to a written management or services agreement with
another Borrower, AND (c) pursuant to a written management, services, expense-
sharing, and/or tax-sharing agreement with CCC INFORMATION SERVICES GROUP INC.
("Manager") that is in form and substance reasonably acceptable to Lender
("Management Agreement").
5.13. ISSUANCE OF ADDITIONAL EQUITY. No Borrower will permit the
issuance (or reissuance) of any equity interests (common stock, preferred stock,
partnership interests, member interests or otherwise) or any options, warrants,
convertible securities or other rights to purchase such beneficial or equity
interest.
5.14. REMOVAL OF ASSETS. No Borrower will remove or permit the removal
of any asset or group of assets (with a collective fair market value exceeding
$25,000) other than Excluded Assets to a jurisdiction or a county in which no
financing statement on Form UCC-1 has been filed naming Lender as "secured
party" with respect to such assets. NOTWITHSTANDING THE FOREGOING, each
Borrower may remove the following types of assets under the following
conditions: (a) temporary removal of equipment for repair or replacement
PROVIDED THAT Lender has received prior written notice thereof indicating the
type of equipment, its approximate fair market value, the destination location
and an estimate of the length of time that such equipment will be removed from
the relevant jurisdiction, AND (b) booths, displays and related accompanying
equipment of such Borrower being used temporarily in connection with marketing
any Borrower's business at trade shows or otherwise (provided that the aggregate
fair market value thereof does not exceed $1 million), AND (c) portable
computers and related accompanying equipment being used by the officers,
employees and independent representatives of a Borrower in connection with
accomplishing any Borrower's business activities at home offices or otherwise
(provided that the aggregate fair market value thereof does not exceed $1
million).
5.15. MODIFICATIONS TO ORGANIC DOCUMENTS. No Borrower will (a) amend or
otherwise modify any of its Organic Documents, OR (b) change its official name,
its operating names or the names under which it executes contracts and conducts
business.
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5.16. MODIFICATIONS TO MATERIAL RELATIONSHIPS AND AGREEMENTS. No
Borrower will (or will permit any other party to) amend, modify, cancel,
terminate or otherwise alter (a) any Subordinated Indebtedness (if and when any
such indebtedness exists), OR (b) any agreement regarding the provision of
management services to a Borrower by a Person who is not a Borrower (including,
without limitation, the Management Agreement, once executed). No Borrower will
(or will permit any other party to) cancel, terminate or permit the expiration
of any material contract listed (or contract that should be listed) under
Subsection "a" of Schedule 3.8 hereto UNLESS the services or products provided
under such material contract are replaced by such Borrower with comparable
services or products under a new contract with another Person. In addition,
Borrowers will notify Lender in writing within 30 calendar days after any
cancellation, termination, expiration, amendment, modification or other
alteration of or to any material contract listed (or contract that should be
listed) on Schedule 3.8 hereto (OTHER THAN with respect to immaterial or non-
substantive modifications).
5.17. MARGIN STOCK RESTRICTIONS; OTHER FEDERAL STATUTES. No Borrower
will use any of the proceeds hereunder, directly or indirectly, to purchase or
carry, or to reduce or retire any indebtedness that was originally incurred to
purchase or carry, any Margin Stock or for any other purpose that might
constitute the transactions contemplated hereby as a "Purpose Credit" within the
meaning of the FRB's Margin Regulations. In addition, no Borrower will engage
as its principal business in the extension of credit for purchasing or carrying
Margin Stock. No Borrower will cause or permit any Loan Document to violate any
other regulation of the FRB or the SEC or any provision of the Securities Act of
1933, the Securities Exchange Act of 1934, the Investment Company Act of 1940 or
the Small Business Investment Act of 1958, each as amended, or any rules or
regulations promulgated under any of such statutes.
ARTICLE 6: ADDITIONAL COLLATERAL AND RIGHT OF SET OFF
6.1. ADDITIONAL COLLATERAL. As additional collateral for the payment of
any and all indebtedness and obligations of each Borrower to Lender (whether
matured or unmatured, and whether now existing or hereafter incurred or created
hereunder or otherwise), each Borrower hereby grants Lender a security interest
in and a lien upon all funds, balances and other property of any kind of such
Borrower, or in which such Borrower has any interest (limited to the interest of
such Borrower therein), now or hereafter in the possession, custody or control
of Lender or any Affiliate of Lender, OTHER THAN Excluded Assets.
6.2. RIGHT OF SET-OFF. Lender is hereby authorized at any time and from
time to time during the occurrence and continuance of an Event of Default
hereunder (unless expressly prohibited by applicable law) to set-off and apply
any and all deposits (general or special, time or demand, provisional or final)
and other indebtedness at any time held or owing by Lender (or any of its
Affiliates) to or for the credit or the account of any Borrower against any and
all of the indebtedness and monetary obligations of any Borrower now or
hereafter existing under the Loan Documents or any other evidence of
indebtedness originated, acquired or otherwise held by Lender, irrespective of
whether Lender shall have made any demand under the Loan Documents or other
indebtedness and although such obligations may be unmatured. Lender agrees to
notify Borrowers within a commercially reasonable time after any such set-off
and application made by
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Lender; PROVIDED, HOWEVER, that the failure to give such notice shall not in any
way affect the validity of such set-off and application.
6.3. ADDITIONAL RIGHTS. The rights of Lender under this Article 6 are
in addition to the other rights and remedies (including, without limitation,
other rights of set-off) that Lender may have by contract, at law, or otherwise.
ARTICLE 7: DEFAULT AND REMEDIES
7.1. EVENTS OF DEFAULT. Each of the following events separately
constitutes an independent Event of Default hereunder:
7.1.1. PAYMENT OBLIGATIONS. If any payment of principal,
interest or other sum payable to Lender under any Loan Document (including any
Note) is not received by Lender on the date such payment is due and payable AND
such failure continues for five (5) Business Days after the due date therefor.
7.1.2. REPRESENTATIONS AND WARRANTIES. If any representation,
warranty or other statement made in any Loan Document, or in any written report,
schedule, exhibit, certificate, agreement, or other document given by or on
behalf of any Borrower or any other Obligor (or otherwise furnished in
connection herewith) when made was misleading or incorrect in any material
respect.
7.1.3. FINANCIAL COVENANTS. If Borrowers default in or fail to
observe at any time any of the covenants set forth in Section 4.1 hereof.
7.1.4. OTHER COVENANTS IN LOAN DOCUMENTS. If any Borrower or any
other Obligor defaults in the full and timely performance when due of any other
covenant or agreement contained in any Loan Document (or in any other document
or agreement now or hereafter executed or delivered in connection herewith), AND
such default remains uncured for a period of ten (10) Business Days after the
earlier of the date that Lender notifies any Borrower thereof or the date that
any Borrower otherwise acquires knowledge or should have acquired knowledge
thereof.
7.1.5. DEFAULT UNDER OTHER AGREEMENTS WITH LENDER. If any event
of default (as described or defined therein, which term shall include any notice
and cure periods provided therein) occurs or exists under the provisions of any
other credit agreement, security agreement, mortgage, deed of trust, indenture,
debenture, account agreement, contract, lease or other agreement between any
Borrower, any Affiliate of any Borrower or any other Obligor AND Lender (or any
Affiliate of Lender), UNLESS such default is waived by Lender or cured to
Lender's satisfaction.
7.1.6. DEFAULT UNDER MATERIAL AGREEMENTS WITH OTHER PARTIES. If
any event of default (as described or defined therein, which term shall include
any notice and cure periods provided therein) occurs or exists under the
provisions of any material contract listed under
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Subsection "a" of Schedule 3.8 hereto (or a contract that should be listed under
Subsection "a" of Schedule 3.8 hereto under the terms hereof). NOTWITHSTANDING
THE FOREGOING, the occurrence of such an event of default thereunder will not
constitute an Event of Default hereunder IF AND SO LONG AS either:
(a) (1) Lender was notified of the occurrence of such event of default
in writing within 10 Business Days after the occurrence thereof,
AND (2) the other Person to such agreement has not formally
declared an event of default thereunder, has not accelerated any
related indebtedness and is not then otherwise pursuing any
remedies thereunder, AND (3) such Borrower continues to diligently
pursue resolving such dispute with such other Person, AND (4) such
default is ultimately cured (without incurring any material
liability) to Lender's satisfaction within a reasonable period of
time after such 10 Business Day period (but in any event within 60
calendar days after the occurrence of such default), OR
(b) Within 60 calendar days after the occurrence of such event of
default, the services or products provided under such material
contract are replaced by such Borrower with comparable services or
products under a new contract with another Person (without
incurring any material liability) in form and substance acceptable
to Lender.
7.1.7. SECURITY INTEREST. If the security interest or lien in
any of the Collateral (with a fair market value exceeding collectively $50,000),
other than Collateral consisting of equity ownership interest in subsidiaries or
other securities (for which there is no permissible threshold for non-
compliance), at any time does not constitute a legal, valid and enforceable
security interest or lien in favor of Lender.
7.1.8. CHANGE OF CONTROL.
a. If CCC Information Services Group Inc. ceases to own
and control 100% of each class of equity securities of CCC.
b. If any Borrower other than CCC ceases to be owned and
controlled 100% by CCC and/or other Borrowers.
7.1.9. GOVERNMENT ACTION.
a. If custody or control of any substantial part of
the property of any Borrower is assumed by any governmental agency or any court
of competent jurisdiction at the instance of any governmental agency.
b. If any governmental regulatory authority or
judicial body makes any other final nonappealable determination that could
reasonably be expected to have or cause a Material Adverse Effect.
7.1.10. INSOLVENCY. If CCC, or Borrowers (as a whole, including
CCC), or any holder of equity interests of any Borrower (other than another
Borrower), or any other Obligor
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that pledges Collateral under the Loan Documents (other than another Borrower)
becomes insolvent, bankrupt or generally fails to pay its, his or her debts as
such debts become due; OR if any Borrower, or any holder of equity interests of
any Borrower, or any other Obligor that pledges Collateral under the Loan
Documents (a) is adjudicated insolvent or bankrupt in any proceeding, OR (b)
admits in writing an inability to pay its, his or her debts, OR (c) comes under
the authority of a custodian, receiver or trustee (or one is appointed for
substantially all of its, his or her property), OR (d) makes an assignment for
the benefit of creditors, OR (e) has commenced against it, him or her any
proceedings under any law related to bankruptcy, insolvency, liquidation,
dissolution or the reorganization, readjustment or release of debtors that is
either not contested or if contested is not dismissed or stayed within ninety
(90) calendar days after the commencement thereof, OR (f) commences or
institutes any proceedings under any law related to bankruptcy, insolvency,
liquidation, dissolution or the reorganization, readjustment or release of
debtors, OR (g) calls a meeting of creditors with a view to arranging a
composition or adjustment of debt (other than a meeting solely with Lender), OR
(h) by any act or failure to act indicates consent to, approval of or
acquiescence in any of the foregoing.
7.1.11. LOSS OR REVOCATION OF GUARANTY. If Guarantor at any time
revokes (or attempts to revoke) the Guaranty or its continuing obligations
thereunder, OR if the Guaranty at any time does not constitute a legal, valid,
binding and enforceable obligation of Guarantor.
7.1.12. ADDITIONAL LIABILITIES. If any judgment, writ, warrant,
attachment or execution or similar process that calls for payment or presents
liability in excess of $250,000 is rendered, issued or levied against any
Borrower or any of its properties or assets AND such liability is not paid,
waived, stayed, vacated, discharged, settled, satisfied or fully bonded within
sixty (60) calendar days after it is rendered, issued or levied.
7.1.13. MATERIAL ADVERSE CHANGE. If a Material Adverse Change has
occurred with respect to CCC or Borrowers (as a whole, including CCC) from the
condition set forth in the financial statements furnished to Lender for the
fiscal year ended immediately prior to the Closing Date, or from the condition
of Borrowers most recently disclosed to Lender in any other manner.
7.2. REMEDIES.
7.2.1. GENERAL; ACCELERATION. Upon the occurrence of any Event
of Default and at any time thereafter during the continuance of such Event of
Default, at the election of Lender, and by notice to any Borrower (except if an
Event of Default described in Section 7.1.10 hereof has occurred, in which case
acceleration shall occur automatically with respect to the entire indebtedness
and without notice), Lender may accelerate the Line of Credit Maturity Date
and/or the Term Loan Maturity Date and may declare all or any portion of the
indebtedness of any or all Borrowers to Lender (hereunder or otherwise, but
including the unpaid balance of principal, interest and fees hereunder) to be
immediately due and payable. Upon any such declaration, Lender will have the
immediate right to enforce and realize upon any collateral security granted
hereunder or in connection herewith in any manner or order that Lender deems
expedient without regard to any equitable principles of marshalling or
otherwise.
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7.2.2. OTHER. In addition to any rights granted hereunder or in
any other Loan Document, Lender will have all other rights and remedies granted
by any applicable law (including the rights of a secured party under the Uniform
Commercial Code), and all rights and remedies will be cumulative in nature.
ARTICLE 8: DEFINITIONS
8.1. DEFINITIONS. When used in this Agreement, the following terms
shall have the respective meanings set forth below:
8.1.1. "ACCOUNT" means, at any relevant time, the designated or
principal deposit account of Borrowers at Lender for purposes of effecting
transactions hereunder.
8.1.2. "ADJUSTED LIBO RATE" means the rate per annum (rounded
upwards, if necessary, to the next 1/16 of 1%) determined pursuant to the
following formula:
Adjusted LIBO Rate = LIBO Rate
----------------------
1 - Reserve Percentage
For purposes of this calculation, "LIBO RATE" means the London Interbank Offered
Rate per annum displayed at approximately 10:00 a.m. (local time in Richmond,
Virginia) two Business Days before the first day of any Interest Period for
which the Adjusted LIBO Rate is applicable on the Reuters Screen designated as
the "Libo Rate" (or its equivalent or replacement) for the offering of dollar
deposits by leading banks in the London interbank market for a period of
approximately 3 months or 6 months (corresponding to the length of the
applicable Interest Period selected by Borrowers) and an amount approximately
equal to the amount outstanding hereunder to which such LIBO Rate will be
applicable. For purposes of this calculation, "RESERVE PERCENTAGE" means that
percentage (expressed as a decimal) prescribed by the FRB (or any other
governmental or administrative agency to which Lender is subject) for
determining the reserve requirements (including, without limitation, any basic,
supplemental, marginal or emergency reserves) for (a) Lender's negotiable, non-
personal time deposits in U.S. Dollars with maturities of comparable duration,
OR (b) deposits of U.S. Dollars in a non-U.S. or an international banking office
of Lender used to fund loans.
8.1.3. "ADVANCE" means any advance of funds under any Facility.
8.1.4. "ADVANCE REQUEST" has the meaning set forth in Section
1.4.1 hereof.
8.1.5. "AFFILIATE" of any Person means (a) any Person directly or
indirectly owning, controlling or holding 5% or more of the outstanding
beneficial interest in such Person, OR (b) any Person as to which such other
Person directly or indirectly owns, controls or holds 5% or more of the
outstanding beneficial interest, OR (c) any Person directly or indirectly under
common control with such other Person, OR (d) any executive officer, director,
partner or member of such Person.
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8.1.6. "AGENT" means Signet Bank, or any successor thereof, or
any assignee, or other transferee of Agent hereunder.
8.1.7. "AGREEMENT" means this Credit Facility Agreement and all
the exhibits and schedules hereto, all as may be amended and otherwise modified
from time to time hereafter.
8.1.8. "AUTHORIZED OFFICER" means any officer, employee or
representative of such organization who is expressly designated as such or is
otherwise authorized to borrow funds hereunder or, as appropriate, to sign loan
documents and/or deliver certificates on behalf of such organization pursuant to
the provisions of such organization's most recent resolution on file with
Lender.
8.1.9. "AUTHORIZATION" means any License or other governmental
permit, certificate and/or approval issued by an Official Body that is necessary
or required in connection with the conduct of any Borrower's business or
operations.
8.1.10. "AVAILABLE CREDIT PORTION" means that portion of the
Current Line of Credit Commitment that is generally available in the ordinary
course for borrowing at any time under the Line of Credit Facility, as such
amount is determined in accordance with Section 1.3 hereof.
8.1.11. "BORROWER" means, individually and collectively, the
following:
a. CCC Information Services Inc., a Delaware corporation,
having its principal and chief executive office at the
address specified in Section 9.7 hereof, or any
successor or authorized assignee thereof, AND
b. Any other entity subsequently added hereto as a
Borrower hereunder, or any successor or authorized
assignee thereof.
8.1.12. "BUSINESS DAY" means any day that is not a Saturday, a
Sunday or a day on which banks under the laws of the Commonwealth of Virginia
(or, with respect to certain LIBO Rate matters, banks in London, England) are
authorized or required to be closed.
8.1.13. "CAPITAL EXPENDITURES" means expenditures (a) for any
fixed assets or improvements, replacements, substitutions or additions thereto
that have a useful life of more than one (1) year and an individual cost in
excess of $1,000 per item, including direct or indirect acquisition of such
assets, OR (b) for any Capital Leases. NOTWITHSTANDING THE FOREGOING, the term
Capital Expenditures does not include (1) purchases of Customer Equipment, OR
(2) Permitted Investments (as defined in Section 5.7 hereof) other than as
described in Section 5.7(d) hereof unless such Borrower is acquiring 100% of the
assets of another Person as a going concern, OR (3) permitted transactions under
Section 5.8 hereof.
8.1.14. "CAPITAL LEASES" means capital leases and subleases as
defined in the Financial Accounting Standards Board Statement of Financial
Accounting Standards No. 13 dated November 1976 (as amended and updated from
time to time).
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8.1.15. "CLOSING DATE" means the date on which all conditions
precedent to the effectiveness of this Agreement under Section 2.1 hereof have
been satisfied or waived by Lender.
8.1.16. "CODE" means the Internal Revenue Code of 1986, as
amended.
8.1.17. "COLLATERAL" means the collateral security committed to
Lender under the Collateral Security Documents executed by any Borrower or any
other Obligor in favor of Lender pursuant to this Agreement from time to time
and/or pursuant to all similar or related documents and agreements from time to
time, all as amended from time to time.
8.1.18. "COLLATERAL SECURITY DOCUMENTS" means, individually and
collectively, (a) the Security Agreements and the financing statements filed
pursuant thereto, AND (b) the Pledge and Security Agreements, AND (c) any
additional documents guaranteeing indebtedness, assuring performance of
obligations, subordinating indebtedness, or granting security or Collateral to
Lender hereunder, all as amended from time to time.
8.1.19. "COMMITMENT" means any commitment for credit pursuant to a
Facility established hereunder.
8.1.20. "CREDIT COMMITMENT FEE" means the fee due and payable to
Lender in accordance with Section 1.7.1 hereof.
8.1.21. "CUSTOMER EQUIPMENT" means computers and related
peripheral equipment that either are purchased or leased by a Borrower for use
by its customers or are leased directly to such Borrower's customers.
8.1.22. "DEFAULT" means any event or circumstance that with the
giving of notice or the passage of time would constitute an Event of Default.
8.1.23. "DOLLAR" or "$" means U.S. dollars.
8.1.24. "EBITDA" means, at the time of any determination, the sum
of the following items for Borrowers during the relevant four consecutive fiscal
quarter period:
a. Net income from continuing operations during such
period -- I.E., excluding extraordinary items and the
cumulative effect of accounting changes -- determined
in accordance with GAAP, AND
b. PLUS Interest Expense during such period, BUT SUBTRACT
interest income accrued during such period, AND
c. PLUS all charges in accordance with GAAP for federal
and state income taxes during such period, AND
d. PLUS depreciation permitted under GAAP during such
period, AND
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e. PLUS amortization expense permitted under GAAP during
such period.
For purposes of this calculation, interest shall include interest accrued under
Capital Leases, determined in accordance with GAAP.
8.1.25. "ENVIRONMENTAL CONTROL STATUTES" has the meaning set forth
in Section 3.16 hereof.
8.1.26. "EPA" means the United States Environmental Protection
Agency or any other entity that succeeds to its responsibilities and powers.
8.1.27. "ERISA" means the Employee Retirement Income Security Act
of 1974, as amended, and as implemented and interpreted.
8.1.28. "ERISA AFFILIATE" means any company, whether or not
incorporated, which is considered a single employer with any Borrower under
Titles I, II and IV of ERISA.
8.1.29. "EVENT OF DEFAULT" means each of the events described in
Section 7.1 hereof.
8.1.30. "EXCLUDED ASSETS" means Customer Equipment and permissible
Capital Leases.
8.1.31. "FACILITY" means any credit facility established under
Article 1 hereof.
8.1.32. "FIXED CHARGES" means, at the time of any determination,
the sum of the following items for Borrowers during the relevant four
consecutive fiscal quarter period:
a. The amount of payments of principal required under this
Agreement during such period, AND
b. PLUS the amount of principal required to be paid and
mandatory commitment reductions on other Funded Debt
(I.E., Funded Debt other than under this Agreement)
during such period (BUT excluding payments on
indebtedness being refinanced hereunder as of the
Closing Date), AND
c. PLUS Interest Expense during such period, AND
d. PLUS the amount of Capital Expenditures during such
period.
For purposes of this calculation, interest includes interest accrued under
Capital Leases, and principal includes principal obligations under Capital
Leases. For purposes of this calculation, Capital Expenditures (a) will include
all capitalized software costs, but (b) will exclude Customer Equipment and
$900,000 in leasehold improvements to be incurred prior to December 31, 1997.
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8.1.33. "FRB" means the Board of Governors of the Federal Reserve
System or any other entity or agency that succeeds to its responsibilities and
powers.
8.1.34. "FUNDED DEBT" means, at the time of any determination, the
aggregate principal amount of indebtedness of all Borrowers for the following:
a. Borrowed money (including the indebtedness under the
Loan Documents, but not including trade indebtedness
incurred in the normal and ordinary course of business
for value received), AND
b. Installment purchases of real or personal property, AND
c. Capital Leases, AND
d. Deferred purchase price in connection with
acquisitions, AND
e. Guaranties, AND
f. Indebtedness otherwise required to be included as part
of "Funded Debt" under Section 5.2 hereof (including,
without limitation, monetary obligations under non-
compete arrangements).
NOTWITHSTANDING THE FOREGOING, the term "Funded Debt" includes the Subordinated
Indebtedness. For purposes of this calculation, Funded Debt shall also include
the Funded Debt of joint ventures that are consolidated with Borrowers for
financial reporting purposes in accordance with GAAP.
8.1.35. "GAAP" means generally accepted accounting principles
applied on a consistent basis set forth in the Opinions of the Accounting
Principles Board of the American Institute of Certified Public Accountants
and/or in statements of the Financial Accounting Standards Board and/or in such
other statements by such other entity as Lender may reasonably approve, which
are applicable in the circumstances as of the date in question, and the
requirement that such principles be applied on a consistent basis shall mean
that the accounting principles observed in a current period are comparable in
all material respects to those applied in a preceding period.
8.1.36. "GUARANTOR" means CCC Information Services Group Inc., and
its successors and assigns (including, with respect to natural persons, such
Guarantor's heirs, personal representatives, administrators and executors).
8.1.37. "HAZARDOUS MATERIALS" includes (a) any "hazardous waste"
as defined by the Resource Conservation and Recovery Act of 1976 (42 U.S.C.
Section 6901 ET SEQ.), as amended from time to time, and regulations promulgated
thereunder; OR (b) any "hazardous substance" as defined by the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C.
Section 9601 ET SEQ.), as amended from time to time, and regulations promulgated
thereunder; OR (c) any other substance the use or presence of which on, in,
under or above any
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real property ever owned, controlled or used by any Borrower is similarly
regulated or prohibited by any federal, state or local law, rule, ordinance,
regulation or decree of any court or governmental authority as a hazardous
material.
8.1.38. "INTEREST EXPENSE" means, at the time of any
determination, the amount of interest and other finance charges of Borrowers
required to be charged as an expense under GAAP during the relevant four
consecutive fiscal quarter period. For purposes of this calculation, interest
(a) includes interest accrued under Capital Leases, BUT (b) excludes the
amortization of the fees under Section 1.7.1 hereof, AND any other such charges
with respect to any Funded Debt that are associated with capitalized debt, AND
bank service charges.
8.1.39. "INTEREST PERIOD" means (a) with respect to the Prime
Rate, a period of one (1) Business Day, AND (b) with respect to the Adjusted
LIBO Rate, a period (at the election of Borrowers) of 3 or 6 calendar months
duration; PROVIDED, HOWEVER, that with respect to the Adjusted LIBO Rate, (1) if
any Interest Period would otherwise end on a day that is not a Business Day or
Business Day in London, such Interest Period will be extended to the next
succeeding Business Day or Business Day in London, subject to clauses (2) and
(3) below; AND (2) any Interest Period that would otherwise end on a day that is
not a Business Day and a Business Day in London will be extended to the next
succeeding day that is a Business Day and a Business Day in London unless such
Business Day falls in another calendar month, in which case such Interest Period
will end on the next preceding Business Day in London; AND (3) with respect to
an Interest Period that begins on the last Business Day in London of a calendar
month (or on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period), subject to clause "(2)"
above, the Interest Period will end on the last Business Day in London of a
calendar month. With respect to the Adjusted LIBO Rate and the Prime Rate,
interest will accrue from and including the first day of each Interest Period
to, but excluding, the day on which any Interest Period expires.
8.1.40. "LENDER" means Signet Bank, or any successor thereof, or
any assignee, participant or other transferee of Lender hereunder.
8.1.41. "LEVERAGE RATIO" means, at any time such ratio is being
computed, the ratio of "Funded Debt" TO "OCF (I.E., Operating Cash Flow)" (for
the immediately preceding four fiscal quarters).
8.1.42. "LIBO RATE" has the meaning set forth in the definition of
"Adjusted LIBO Rate".
8.1.43. "LICENSE" means any authorization, construction or other
permit, consent, franchise, ordinance, registration, certificate, license, call
sign, frequency designation, agreement or other right filed with, granted by,
issued by or entered into with any Official Body.
8.1.44. "LIEN" means any security interest, mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
otherwise), reversionary or reclamation interest, charge against or interest in
property to secure payment of a debt or
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performance of an obligation or other priority or preferential arrangement of
any kind or nature whatsoever.
8.1.45. "LINE OF CREDIT COMMITMENT" means the Commitment
established pursuant to Section 1.1 hereof and Section 1.3 hereof.
8.1.46. "LINE OF CREDIT FACILITY" means the line of credit
Facility as described in Article 1 hereof.
8.1.47. "LINE OF CREDIT MATURITY DATE" has the meaning set forth
in Section 1.1.2 hereof, as may be extended from time to time in Lender's sole
and absolute discretion.
8.1.48. "LINE OF CREDIT NOTE" means that certain Note payable to
the order of Lender prepared in accordance with Section 1.1.4 hereof, as may be
amended, modified, restated, replaced, supplemented, extended or renewed from
time to time hereafter.
8.1.49. "LOAN" means any loan or Advance of funds under any
Facility as well as any other credit extended by Lender to any Borrower under
this Agreement.
8.1.50. "LOAN DOCUMENTS" means this Agreement, any Notes, the
Collateral Security Documents and any other documents, agreements and
certificates entered into or delivered in connection herewith or therewith or
pursuant hereto or thereto, all as may be amended, modified and supplemented
from time to time.
8.1.51. "LOCAL AUTHORITIES" means, individually and collectively,
the state and local governmental authorities that govern the activities of any
Borrower.
8.1.52. "MARGIN REGULATION" has the meaning set forth in Section
3.17 hereof.
8.1.53. "MARGIN STOCK" has the meaning set forth in Section 3.17
hereof.
8.1.54. "MATERIAL ADVERSE CHANGE" means any change that has or
causes a Material Adverse Effect.
8.1.55. "MATERIAL ADVERSE EFFECT" means, relative to any
occurrence of whatever nature (including, without limitation, any adverse
determination in any litigation, arbitration, or governmental investigation or
proceeding), a material adverse change to, or, as the case may be, a materially
adverse effect on:
a. The business, assets, revenues, financial condition,
operations, or Collateral of CCC or of Borrowers (as a
whole, including CCC) or of any other Obligor (other
than a Borrower); or
b. The ability of Borrowers to perform any of their
payment obligations under the Loan Documents when due
or the ability of any Borrower to perform any other
material obligations under any Loan Document; or
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c. Any right, remedy or benefit of Lender under any Loan
Document in any way relating to (i) Lender's ability to
collect or entitlement to receive (or be reimbursed
for) payments of principal, interest, fees, costs or
expenses under the Loan Documents or (ii) Lender's
protection of, realization upon or other rights or
interest in any Collateral.
8.1.56. "NOTES" means, individually and collectively, each
promissory note delivered to Lender pursuant to any Loan Document and evidencing
any indebtedness to Lender under the Loan Documents (each as may be amended,
modified, supplemented, restated, extended, renewed or replaced from time to
time).
8.1.57. "OBLIGATIONS" means all of the indebtedness and
obligations (monetary or otherwise) of each Borrower and any other Obligor
arising under or in connection with any Loan Document as well as all
indebtedness and obligations (monetary or otherwise) of any Affiliate of any
Borrower or other Obligor arising under or in connection with any agreement
between any such Affiliate and Lender (or any Affiliate of Lender).
8.1.58. "OBLIGOR" means any Borrower or any other Person (other
than Lender) obligated under any Loan Document.
8.1.59. "OCF" (or "Operating Cash Flow") means, at the time of any
determination, the sum of the following items for Borrowers during the relevant
four consecutive fiscal quarter period:
a. EBITDA during such period, AND
b. PLUS reasonable non-recurring acquisition expenses
acceptable to or approved by Lender during such period
(which acceptance or approval by Lender may not be
unreasonably withheld), AND
c. WITH RESPECT TO deferred revenues reflected on
Borrowers' balance sheet in accordance with GAAP (BUT
only to the extent that such deferred revenues exceeded
$10 million during the immediately preceding reporting
period): ADD the total amount by which deferred
revenues increased over the immediately preceding
reporting period, OR SUBTRACT the total amount by which
deferred revenues decreased from the immediately
preceding reporting period, AND
d. WITH RESPECT TO investments by Borrowers in non-
consolidated joint ventures that are reflected on
Borrowers' financial statements in accordance with
GAAP: ADD the amount of actual cash distributions
received by each Borrower as a return on its investment
in any such non-consolidated joint venture, AND
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e. WITH RESPECT TO other non-recurring non-cash items:
ADD the total amount of other non-cash expenses
recognized during such period (to the extent not
already accounted for in one of the above categories),
BUT SUBTRACT the total amount of other non-cash revenue
(other than deferred revenue, which category is
addressed under Clause "c" above and other than revenue
resulting from normal trade receivables) recognized
during such period (to the extent not already accounted
for in one of the above categories).
For purposes of this calculation, interest shall include interest accrued under
Capital Leases, determined in accordance with GAAP. For purposes of this
calculation, OCF shall also include the OCF of joint ventures that are
consolidated with Borrowers for financial reporting purposes in accordance with
GAAP.
8.1.60. "OFFICIAL BODY" means any federal, state, local, or other
government or political subdivision (and any agency, authority, bureau, central
bank, commission, department or instrumentality of either) and any court,
tribunal, grand jury or arbitrator, in each case whether foreign or domestic.
8.1.61. "OPERATING AGREEMENT" means any consulting agreement,
management agreement, employment agreement, cost allocation agreement, or other
similar agreement relating to the operations of any Borrower.
8.1.62. "ORGANIC DOCUMENT" means, relative to any entity, its
certificate and articles of incorporation or organization, its by-laws or
operating agreements, and all equityholder agreements, voting agreements and
similar arrangements applicable to any of its authorized shares of capital
stock, its partnership interests or its member interests, and any other
arrangements relating to the control or management of any such entity (whether
existing as a corporation, a partnership, an LLC or otherwise).
8.1.63. "PBGC" means the Pension Benefits Guaranty Corporation or
any other entity that succeeds to its responsibilities and powers under ERISA.
8.1.64. "PERIODIC FACILITY FEE" means the fee due and payable to
Lender in accordance with Section 1.7.2 hereof.
8.1.65. "PERMITTED INDEBTEDNESS" has the meaning set forth in
Section 5.2 hereof.
8.1.66. "PERMITTED INVESTMENTS" has the meaning set forth in
Section 5.7 hereof.
8.1.67. "PERMITTED LIENS" has the meaning set forth in Section 5.5
hereof.
8.1.68. "PERMITTED LOANS" has the meaning set forth in Section 5.4
hereof.
8.1.69. "PERMITTED TRANSFERS" has the meaning set forth in Section
5.6 hereof.
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8.1.70. "PERSON" means any natural person, corporation, LLC,
partnership, firm, association, trust, government, governmental agency or any
other entity, whether acting in an individual, fiduciary or other capacity.
8.1.71. "PLAN" means any pension benefit or welfare benefit plan
as defined in Sections 3(1), (2) or (3) of ERISA covering employees of any
Borrower or any ERISA Affiliate of any Borrower.
8.1.72. "PLEDGE AND SECURITY AGREEMENTS" means, individually and
collectively, each pledge and security agreement relating to a pledge of an
equity interest in an enterprise (all as may be amended, modified and
supplemented from time to time) required to be executed and delivered in favor
of Lender pursuant to the Loan Documents.
8.1.73. "PORTION" means a designated portion of the indebtedness
hereunder as to which a specified Rate Index (and a corresponding Rate Margin)
has been selected or deemed to be applicable.
8.1.74. "PRIME RATE" means the rate of interest per annum publicly
announced by Lender from time to time as its prime rate of interest on direct,
short-term borrowings to its large business customers with high credit
standings; such term, however, does not necessarily mean Lender's best or lowest
rate available.
8.1.75. "RATE INDEX" has the meaning set forth in Section 1.1.5
hereof (for purposes of the Line of Credit Facility) AND Section 1.2.5 hereof
(for purposes of the Term Loan Facility).
8.1.76. "RATE MARGIN" has the meaning set forth in Section 1.1.5
hereof (for purposes of the Line of Credit Facility) AND Section 1.2.5 hereof
(for purposes of the Term Loan Facility).
8.1.77. "RESERVE PERCENTAGE" has the meaning set forth in the
definition of "Adjusted LIBO Rate".
8.1.78. "SEC" means the Securities and Exchange Commission or any
other entity that succeeds to its responsibilities and powers.
8.1.79. "SECURITIES ACTS" means, collectively, the Securities Act
of 1933 and the Securities Exchange Act of 1934, each as amended, and as
implemented by the SEC and interpreted by the SEC or any court of competent
jurisdiction.
8.1.80. "SECURITY AGREEMENTS" means, collectively, each security
agreement (as may be amended, modified and supplemented from time to time)
required to be executed and delivered in favor of Lender pursuant to Article 2
hereof, and any other security agreement required or delivered in connection
with the Loan Documents, including, without limitation, any intellectual
property assignments or security agreements required to be delivered pursuant to
Article 2 hereof.
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8.1.81. "SETTLEMENT DATE" means, with respect to any Advance
hereunder, the date on which funds are advanced by Lender.
8.1.82. "SIGNET BANK" means Signet Bank, a Virginia-chartered,
federally insured commercial bank, or any successor thereof, having an office at
the address specified in Section 9.7 hereof, and which is Lender hereunder at
the time of execution hereof.
8.1.83. "SUBORDINATED INDEBTEDNESS" means all indebtedness and
monetary obligations of Borrowers (other than indebtedness in favor of Lender or
indebtedness and obligations expressly excluded therefrom by Lender), including,
without limitation, all indebtedness treated or defined as "Subordinated
Indebtedness" under any separate Subordination Agreement by and among any
Borrower, Lender and another Person. NOTWITHSTANDING THE FOREGOING, the term
"Subordinated Indebtedness" (unless Lender otherwise requires) does not include
indebtedness permitted under Section 5.2(a or b) hereof or (to the extent
consistent with Section 5.5.a hereof) under Section 5.2(c, d or e) hereof. The
term "Subordinated Indebtedness" also does not include CCC's contract funding or
indebtedness to Canadian Imperial Bank of Commerce as listed on Schedule 5.2
hereto that existed as of the Closing Date.
8.1.84. "SUBSIDIARY" of any Person or entity means any Person as
to which such other Person or entity (a) directly or indirectly owns, controls
or holds 25% or more of the outstanding beneficial interest OR (b) is otherwise
required in accordance with GAAP to be considered as part of a consolidated
organization.
8.1.85. "TERM LOAN COMMITMENT" means the Commitment established
pursuant to Section 1.2 hereof and Section 1.3 hereof.
8.1.86. "TERM LOAN FACILITY" means the term loan Facility as
described in Article 1 hereof.
8.1.87. "TERM LOAN MATURITY DATE" has the meaning set forth in
Section 1.2.2 hereof, as may be extended from time to time in Lender's sole and
absolute discretion.
8.1.88. "TERM LOAN NOTE" means that certain promissory note
payable to the order of Lender prepared in accordance with Section 1.2.4 hereof,
as may be amended, modified, restated, replaced, supplemented, extended or
renewed from time to time hereafter.
8.1.89. "TOTAL CHARGES" means, at the time of any determination,
the sum of the following items for Borrowers during the relevant four
consecutive fiscal quarter period:
a. The amount of Fixed Charges during such period, AND
b. PLUS the net amount of federal and state income taxes
paid during such period, AND
c. PLUS investments under Section 5.7(e) hereof and
dividends under Section 5.10 hereof during such period.
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For purposes of this calculation, interest includes interest accrued under
Capital Leases, and principal includes principal obligations under Capital
Leases. For purposes of this calculation, Total Charges shall also include the
Total Charges of joint ventures that are consolidated with Borrowers for
financial reporting purposes in accordance with GAAP.
8.1.90. "TOTAL CHARGE COVERAGE RATIO" means, at any time such
ratio is being computed, the ratio of "OCF" (for the immediately preceding four
fiscal quarters) TO "Total Charges" (for the immediately preceding four fiscal
quarters).
8.1.91. "UCC" means the Uniform Commercial Code as in effect in
the applicable jurisdiction.
8.2. RULES OF CONSTRUCTION.
8.2.1. PLURAL; GENDER. Whenever used herein, (a) a singular
number includes the plural, and the plural includes the singular, AND (b) use of
the masculine, feminine or neuter gender includes all genders.
8.2.2. FINANCIAL AND ACCOUNTING TERMS. Except as otherwise
provided herein, financial and accounting terms used in the foregoing
definitions or elsewhere in this Agreement shall be defined in accordance with
GAAP.
ARTICLE 9: MISCELLANEOUS
9.1. INDEMNIFICATION, RELIANCE AND ASSUMPTION OF RISK PROVISIONS.
Without limiting any other indemnification in any Loan Document, each Borrower
(jointly and severally) hereby agrees to defend Lender (and its directors,
officers, employees, agents and Affiliates) from, and hold each of them harmless
against, any and all losses, liabilities, claims, damages, interests, judgments,
costs, or expenses (including without limitation, reasonable fees and
disbursements of counsel) incurred by any of them arising out of or in any way
connected with any Loan Document, EXCEPT for losses resulting directly and
exclusively from such Person's own gross negligence, willful misconduct or
fraud. In addition, each Borrower (jointly and severally) will reimburse and
indemnify Lender for all reasonable costs, expenses and losses resulting from
the following: (1) any failure or refusal by any Borrower or by any Affiliate
of any Borrower to provide any requested assistance or cooperation in connection
with any attempt by Lender to liquidate any Collateral in the event of any Event
of Default and/or any attempt by Lender to otherwise exercise its rights
hereunder, AND (2) any misrepresentation, gross negligence, fraud or willful
misconduct by any Borrower (or any of its employees or officers), or any other
person or entity pledging Collateral hereunder. Moreover, with respect to any
Advance Request or other communication between any Borrower and Lender hereunder
and all other matters and transactions in connection therewith, each Borrower
(jointly and severally) hereby irrevocably authorizes Lender to accept, rely
upon, act upon and comply with any verbal or written instructions, requests,
confirmations and orders of any Authorized Officer of any Borrower. Each
Borrower and Lender each acknowledges that the transmissions of any such
instruction, request, confirmation, order or other communication involves the
possibility of errors,
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omissions, mistakes and discrepancies, and each Borrower and Lender each agrees
to adopt such internal measures and operational procedures to protect its
interest. By reason thereof, each Borrower hereby assumes all risk of loss and
responsibility for -- and hereby releases and discharges Lender from any and all
risk of loss and responsibility for, and agrees to indemnify, reimburse on
demand and hold Lender harmless from -- any and all claims, actions, damages,
losses, liability and expenses by reason of or in any way related to (a)
Lender's accepting, relying and acting upon, complying with or observing any
such instructions, requests, confirmations or orders from or on behalf of any
such Authorized Officer, and (b) any such errors, omissions, mistakes and
discrepancies by (or otherwise resulting from or attributable to the actions or
inactions of) any Authorized Officer or any Borrower; PROVIDED, HOWEVER, no
Borrower has assumed hereby the risk of any foreseeable actual loss resulting
directly and exclusively from Lender's own gross negligence, fraud or willful
misconduct. Each Borrower's obligations provided for in this Section 9.1 will
survive any termination of this Agreement, and the repayment of the outstanding
balances hereunder.
9.2. ASSIGNMENT; DISCLOSURE OF INFORMATION TO THIRD PARTIES.
9.2.1. ASSIGNMENTS. No Loan Document may be assigned (in whole
or in part) by any Borrower without the prior written consent of Lender.
Notwithstanding any other provision of any Loan Document, without receiving any
consent of any Borrower, Lender at any time and from time to time may syndicate,
participate or otherwise transfer or assign its rights and obligations under the
Loan Documents (or the indebtedness evidenced thereby) as follows: (a) up to 75%
of its rights and obligations under any of the Loan Documents (or any of the
indebtedness evidenced thereby) to any Person provided that the number of
Lenders hereunder does not exceed three, AND (b) all (or any proportionate part
of) its rights and obligations under any of the Loan Documents (or any of the
indebtedness evidenced thereby) to any Affiliate of Lender, AND (c) all (or any
proportionate part of) its rights and obligations under any of the Loan
Documents (or any of the indebtedness evidenced thereby) to any Person during
the occurrence of any Event of Default under the Loan Documents. In addition,
no Borrower will unreasonably withhold its consent to any request by Lender to
syndicate, participate or otherwise transfer or assign all or any portion of its
interest in excess of 75%. Lender will make reasonable efforts to notify
Borrowers of any such participation, transfer or assignment within twenty (20)
Business Days thereafter; however, a failure to so notify will in no way impair
any rights of Lender or any participant, transferee or assignee. Upon execution
and delivery of an appropriate instrument between any such participant,
transferee or assignee and Lender, at Lender's request, such participant,
transferee or assignee will become a Lender party to this Agreement and will
have all the rights and obligations of a Lender as set forth in such instrument.
At Lender's request, each Borrower will execute or re-execute and deliver any
documents necessary to reflect or implement any such participation, transfer or
assignment and will otherwise fully cooperate in any such syndication process.
9.2.2. DISCLOSURE OF INFORMATION. Lender will employ reasonable
procedures to treat as confidential all written, non-public information
delivered to Lender pursuant to this Agreement concerning the property,
operations and performance of Borrowers that is conspicuously designated by
Borrowers as confidential information. With respect to any employee of Lender,
such procedures will be at least as protective of such confidential
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information of Borrowers as those established procedures of Lender applicable to
and known by such employee for protecting Lender's own confidential information.
NOTWITHSTANDING THE FOREGOING, Lender may furnish or disclose any information
concerning any Borrower (or any of its properties or operations) in Lender's
possession from time to time (1) to permitted participants, transferees and
assignees (including prospective participants, transferees and assignees), but
subject to a reasonable confidentiality agreement regarding any non-public
confidential information thereby disclosed, AND (2) in response to credit
inquiries consistent with general banking practices. In addition, Lender may
also furnish or disclose any such information (a) to any federal or state
regulator of Lender, AND (b) to Lender's Affiliates, employees, legal counsel,
appraisers, accountants and agents, AND (c) to any Person pursuant to compulsory
judicial process, AND (d) to any judicial or arbitration forum in connection
with enforcing the Loan Documents or defending an action based upon the Loan
Documents, AND (e) to any other Person with respect to the public or non-
confidential information. Lender may also include operational and performance
information and data relating to any Borrower in compilations, reports and data
bases assembled by Lender (or its Affiliates) and used to conduct, support,
assist in and validate portfolio, industry and credit analysis; PROVIDED,
HOWEVER, that Lender may not thereby disclose to other Persons any information
relating to any Borrower in a manner that is attributable to such Borrower
UNLESS (1) such disclosure is permitted under the standards outlined above in
this Section OR (2) such Borrower otherwise consents thereto (which consent may
not be unreasonably withheld).
9.3. BINDING EFFECT AND GOVERNING LAW. This Agreement and all documents
executed hereunder are binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns. This Agreement and all
documents executed hereunder are governed as to their validity, interpretation,
construction and effect by the laws of the Commonwealth of Virginia (without
giving effect to the conflicts of law rules of Virginia).
9.4. NO WAIVER; DELAY. To be effective, any waiver by Lender must be
expressed in a writing executed by Lender. Once an Event of Default occurs
hereunder, such Event of Default will continue to exist until expressly waived
by Lender (in its sole and absolute discretion). If Lender waives any power,
right or remedy arising hereunder or under any applicable law, such waiver will
not be deemed to be a waiver (a) upon the later occurrence or recurrence of any
events giving rise to the earlier waiver OR (b) as to any other Obligor. No
failure or delay by Lender to insist upon the strict performance of any term,
condition, covenant or agreement of any of the Loan Documents, or to exercise
any right, power or remedy hereunder, will constitute a waiver of compliance
with any such term, condition, covenant or agreement, or preclude Lender from
exercising any such right, power, or remedy at any later time or times. By
accepting payment after the due date of any amount payable under this Agreement
or any other Loan Document, Lender will not be deemed to waive the right either
to require prompt payment when due of all other amounts payable under this
Agreement or any other Loan Document or to declare an Event of Default for
failure to effect such prompt payment of any such other amount. The remedies
provided herein are cumulative and not exclusive of each other, the remedies
provided by law, and the remedies provided by the other Loan Documents.
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9.5. MODIFICATION. Except as otherwise expressly provided in this
Agreement, no modification or amendment hereof will be effective unless made in
a writing signed by appropriate officers of the parties hereto.
9.6. HEADINGS. The various headings in this Agreement are inserted for
convenience only and shall not affect the meaning or interpretation of this
Agreement or any provision hereof.
9.7. NOTICES. Any notice, request, consent, waiver or other
communication required or permitted under or in connection with the Loan
Documents will be deemed satisfactorily given if it is in writing and is
delivered either personally to the addressee thereof, OR by prepaid registered
or certified U.S. mail (return receipt requested), OR by a nationally recognized
commercial courier service with next-day delivery charges prepaid, OR by
telegraph, OR by facsimile (voice confirmed), OR by any other reasonable means
of personal delivery to the party entitled thereto at its respective address set
forth below:
IF TO ANY BORROWER [Party Entitled to Notice]
OR ITS AFFILIATES: c/o CCC Information Services Inc.
World Trade Center Chicago
444 Merchandise Mart
Chicago, IL 60654
Attention: Michael J. D'Onofrio
Facsimile: (312) 527-2298
With a Copy To (which shall not constitute notice
to Borrowers):
Winston & Strawn
35 W. Wacker Drive
Chicago, IL 60601
Attention: Oscar A. David, Esquire
Facsimile: (312) 558-5700
and
CCC Information Services Inc.
World Trade Center Chicago
444 Merchandise Mart
Chicago, IL 60654
Attention: Legal Department
Facsimile: (312) 527-2298
IF TO LENDER: Signet Bank
7799 Leesburg Pike, Suite 500
Falls Church, VA 22043
Attention: Bryan J. Mitchell, Senior Vice
President
Facsimile: (703) 506-9712
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With a Copy To (which shall not constitute notice
to Lender):
Samuel G. Rubenstein, Esquire
Bryan Cave LLP
700 13th Street, N.W., Suite 700
Washington, D.C. 20005
Facsimile: (202) 508-6200
Any party to a Loan Document may change its address or facsimile number for
notice purposes by giving notice thereof to the other parties to such Loan
Document in accordance with this Section, provided that such change shall not be
effective until 2 calendar days after notice of such change. All such notices
and other communications will be deemed given and effective (a) if by mail, then
upon actual receipt or 5 calendar days after mailing as provided above
(whichever is earlier), OR (b) if by facsimile, then upon successful transmittal
to such party's designated number, OR (c) if by telegraph, then upon actual
receipt or 2 Business Days after delivery to the telegraph company (whichever is
earlier), OR (d) if by nationally recognized commercial courier service, then
upon actual receipt or 2 Business Days after delivery to the courier service
(whichever is earlier), OR if otherwise delivered, then upon actual receipt.
For any and all purposes related to giving and receiving notices and
communications between any Borrower and Lender under any Loan Document, each
Borrower hereby irrevocably appoints CCC's President as its agent to whom Lender
may give and from whom Lender may receive all such notices and communications.
9.8. TIME OF DAY. All time of day restrictions imposed herein shall be
calculated using Eastern Time.
9.9. RELATIONSHIP WITH PRIOR AGREEMENTS. This Agreement completely and
fully supersedes all oral agreements and all other and prior written agreements
by and between any Borrower and Lender concerning the terms and conditions of
this credit arrangement (other than the Fee Agreement).
9.10. SEVERABILITY. If fulfillment of any provision of or any
transaction related to any Loan Document at the time performance is due involves
transcending the limit of validity prescribed by applicable law, then IPSO
FACTO, the obligation to be fulfilled shall be reduced to the limit of such
validity. If any clause or provision of this Agreement operates or would
prospectively operate to invalidate this Agreement in whole or in part, THEN
such clause or provision only shall be void (as though not contained herein),
and the remainder of this Agreement shall remain operative and in full force and
effect; PROVIDED, HOWEVER, if any such clause or provision pertains to the
repayment of any indebtedness hereunder, THEN the occurrence of any such
invalidity shall constitute an immediate Event of Default hereunder.
9.11. TERMINATION AND SURVIVAL. All agreements, representations,
warranties and covenants of any Borrower contained herein or in any
documentation required hereunder will survive the execution and delivery of this
Agreement and the other Loan Documents and the funding of the Advances hereunder
and will continue in full force and effect until terminated in accordance with
this Section. Except as otherwise provided in Section 4.13 hereof and Section
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9.1 hereof, this Agreement will terminate upon satisfaction of each of the
following events: (i) payment to Lender in full (unconditionally and
indefeasibly) of the entire indebtedness and monetary obligations due hereunder
and under the other Loan Documents, AND (ii) the termination of the Facilities
hereunder, AND (iii) return and cancellation of any effective letters of credit
issued by Lender for the account of any Borrower (or delivery to Lender of cash
or readily marketable collateral in an amount and subject to a pledge agreement
that are acceptable to Lender in its sole and absolute discretion). This
Agreement (and Lender's obligations hereunder) will also terminate if the
conditions precedent under Section 2.2 hereof are not satisfied or waived by
Lender on or before October 31, 1996.
9.12. REINSTATEMENT. To the maximum extent not prohibited by applicable
law, this Agreement (and the indebtedness hereunder and Collateral therefor)
will be reinstated and correspondingly increased if at any time any amount
received by Lender in respect of any Loan Document is rescinded or must
otherwise be restored or returned by Lender to any Person upon the insolvency,
bankruptcy, dissolution, liquidation or reorganization of any Borrower or any
other Person or upon the appointment of any receiver, intervenor, conservator,
trustee or similar official for any Borrower or other Person or for any
substantial part of the assets of any Borrower or any other Person, or
otherwise, all as though such payments had not been made.
9.13. COUNTERPARTS. This Agreement may be executed in any number of
counterparts with the same effect as if all the signatures on such counterparts
appeared on one document. Each such counterpart will be deemed to be an
original but all counterparts together will constitute one and the same
instrument.
9.14. CONFLICT PROVISION. In the event of an irreconcilable conflict
between the terms and conditions of this Agreement and the terms and conditions
of any other Loan Document (other than a Note or any warrant issued to Lender),
the terms and conditions of this Agreement shall govern.
9.15. WAIVER OF SURETYSHIP DEFENSES. Each Borrower hereby waives any and
all defenses and rights of discharge based upon suretyship or impairment of
collateral (including, without limitation, lack of attachment or perfection with
respect thereto) that it may now have or may hereafter acquire with respect to
Lender or any of its obligations hereunder, under any Loan Document or under any
other agreement that it may have or may hereafter enter into with Lender.
9.16. WAIVER OF LIABILITY. EACH BORROWER (A) AGREES THAT LENDER (AND ITS
DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS) SHALL HAVE NO LIABILITY TO ANY
BORROWER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) FOR LOSSES OR COSTS
SUFFERED OR INCURRED BY ANY BORROWER IN CONNECTION WITH OR IN ANY WAY RELATED TO
THE TRANSACTIONS CONTEMPLATED OR THE RELATIONSHIP ESTABLISHED BY ANY LOAN
DOCUMENT, OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION HEREWITH OR
THEREWITH, EXCEPT FOR FORESEEABLE ACTUAL LOSSES RESULTING DIRECTLY AND
EXCLUSIVELY FROM LENDER'S OWN GROSS NEGLIGENCE, WILLFUL MISCONDUCT OR FRAUD AND
(B) WAIVES, RELEASES AND AGREES NOT TO SUE UPON ANY CLAIM AGAINST LENDER (OR ITS
DIRECTORS, OFFICERS, EMPLOYEES OR AGENTS) WHETHER SOUNDING IN TORT, CONTRACT OR
OTHERWISE, EXCEPT FOR CLAIMS FOR FORESEEABLE ACTUAL LOSSES RESULTING DIRECTLY
AND EXCLUSIVELY FROM LENDER'S OWN GROSS NEGLIGENCE, WILLFUL
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MISCONDUCT OR FRAUD. MOREOVER, WHETHER OR NOT SUCH DAMAGES ARE RELATED TO A
CLAIM THAT IS SUBJECT TO THE WAIVER EFFECTED ABOVE AND WHETHER OR NOT SUCH
WAIVER IS EFFECTIVE, UNLESS LENDER IS ADJUDGED TO BE GUILTY OF CRIMINAL CONDUCT
THAT CAUSED SUCH DAMAGES, THEN LENDER (AND ITS DIRECTORS, OFFICERS, EMPLOYEES
AND AGENTS) SHALL HAVE NO LIABILITY WITH RESPECT TO (AND EACH BORROWER HEREBY
WAIVES, RELEASES AND AGREES NOT TO SUE UPON ANY CLAIM FOR) ANY SPECIAL,
INDIRECT, CONSEQUENTIAL, PUNITIVE OR NON-FORESEEABLE DAMAGES SUFFERED BY ANY
BORROWER IN CONNECTION WITH OR IN ANY WAY RELATED TO THE TRANSACTIONS
CONTEMPLATED OR THE RELATIONSHIP ESTABLISHED BY ANY LOAN DOCUMENT, OR ANY ACT,
OMISSION OR EVENT OCCURRING IN CONNECTION HEREWITH OR THEREWITH; AND IF LENDER
IS ADJUDGED TO BE GUILTY OF SUCH CRIMINAL CONDUCT, THEN EACH BORROWER WILL BE
ENTITLED TO THE TYPES OF COMPENSATION (INCLUDING, AS APPLICABLE AND APPROPRIATE,
SPECIAL, INDIRECT, CONSEQUENTIAL, PUNITIVE OR NON-FORESEEABLE DAMAGES) AS AND TO
THE EXTENT AVAILABLE UNDER APPLICABLE LAW.
9.17. FORUM SELECTION; CONSENT TO JURISDICTION. ANY LITIGATION IN
CONNECTION WITH OR IN ANY WAY RELATED TO ANY LOAN DOCUMENT, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), ACTIONS OR
INACTIONS OF LENDER OR ANY BORROWER WILL BE BROUGHT AND MAINTAINED EXCLUSIVELY
IN THE COURTS OF THE COMMONWEALTH OF VIRGINIA OR IN THE UNITED STATES DISTRICT
COURT FOR THE EASTERN DISTRICT OF VIRGINIA; PROVIDED, HOWEVER, THAT ANY SUIT
SEEKING ENFORCEMENT AGAINST ANY BORROWER, ANY COLLATERAL OR ANY OTHER PROPERTY
MAY ALSO BE BROUGHT (AT LENDER'S OPTION) IN THE COURTS OF ANY OTHER JURISDICTION
WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND OR WHERE LENDER MAY
OTHERWISE OBTAIN PERSONAL JURISDICTION OVER ANY BORROWER. EACH BORROWER HEREBY
EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE
COMMONWEALTH OF VIRGINIA AND OF THE UNITED STATES DISTRICT COURT FOR THE EASTERN
DISTRICT OF VIRGINIA FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE
AND IRREVOCABLY AGREES TO BE BOUND BY ANY FINAL AND NON-APPEALABLE JUDGMENT
RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION. EACH BORROWER FURTHER
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR OUTSIDE THE COMMONWEALTH OF
VIRGINIA. EACH BORROWER HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE
TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED
TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. TO THE EXTENT THAT ANY BORROWER HAS OR HEREAFTER MAY
ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS
(WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN
AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, THEN EACH
BORROWER HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS
UNDER THIS AGREEMENT. NOTWITHSTANDING THE FOREGOING, IF LENDER AT ANY TIME
COMMENCES LITIGATION AGAINST BORROWERS IN A STATE COURT OF THE COMMONWEALTH OF
VIRGINIA AT A TIME WHEN AND WITH RESPECT TO A CAUSE OF ACTION THAT AT THE TIME
MAY ALSO BE PROPERLY MAINTAINED IN THE UNITED STATES DISTRICT COURT FOR THE
EASTERN DISTRICT OF VIRGINIA (INCLUDING, WITHOUT LIMITATION, SATISFACTION OF
PERSONAL AND SUBJECT MATTER JURISDICTION AND OTHER PROCEDURAL PREREQUISITES TO
MAINTAINING SUCH ACTION), THEN LENDER WILL NOT CONTEST OR OBJECT TO A TIMELY
MOTION BY BORROWERS TO TRANSFER SUCH ACTION TO SUCH FEDERAL COURT PROVIDED THAT
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SUCH ACTION CAN AT THE TIME OF SUCH TRANSFER BE MAINTAINED WITH RESPECT TO ALL
PARTIES AND ALL CAUSES OF ACTION IDENTIFIED BY LENDER.
9.18. WAIVER OF JURY TRIAL. LENDER AND EACH BORROWER EACH HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION (WHETHER AS CLAIM, COUNTER-CLAIM,
AFFIRMATIVE DEFENSE OR OTHERWISE) IN CONNECTION WITH OR IN ANY WAY RELATED TO
ANY OF THE LOAN DOCUMENTS, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER VERBAL OR WRITTEN), ACTIONS OR INACTIONS OF LENDER OR ANY
BORROWER. EACH BORROWER ACKNOWLEDGES AND AGREES (A) THAT IT HAS RECEIVED FULL
AND SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF
EACH OTHER LOAN DOCUMENT TO WHICH IT IS A PARTY), AND (B) THAT IT HAS BEEN
ADVISED BY LEGAL COUNSEL IN CONNECTION HEREWITH, AND (C) THAT THIS PROVISION IS
A MATERIAL INDUCEMENT FOR LENDER ENTERING INTO THE LOAN DOCUMENTS AND FUNDING
ADVANCES THEREUNDER.
[BALANCE OF PAGE INTENTIONALLY BLANK]
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IN WITNESS WHEREOF, the undersigned, by their duly authorized
officers, have executed this Credit Facility Agreement, as an instrument under
seal (whether or not any such seals are physically attached hereto), as of the
day and year first above written.
ATTEST: CCC INFORMATION SERVICES INC.
By: ___________________________ By: _______________________________
Name: _________________ Name: _____________________
Title: Secretary Title: President
[CORPORATE SEAL]
WITNESS: SIGNET BANK
By: __________________________ By: _______________________________
Bryan J. Mitchell, Sr. Vice
President
<PAGE>
LOAN AGREEMENT
LOAN AGREEMENT dated as of April 29, 1994 among CCC INFORMATION
SERVICES, INC., a Delaware corporation ("CCCIS"), and CCC DEVELOPMENT COMPANY
("CCCDC"), a Delaware general partnership, jointly and severally (each of CCCIS
and CCCDC, individually, a "Borrower" and collectively, the "Borrowers"), the
financial institutions party hereto as lenders (each such institution, together
with any assignee thereof, a "Lender", and such institutions, together with any
assignees thereof, collectively, the "Lenders") and CANADIAN IMPERIAL BANK OF
COMMERCE, as agent for the Lenders (together with its successors in such
capacity, the "Agent").
SECTION 1. DEFINITIONS
The capitalized terms used in this Agreement shall have the following
meanings, unless otherwise defined herein.
ADDITIONAL COSTS: has the meaning assigned to that term in Section
6.1 of this Agreement.
AGGREGATE REVOLVING CREDIT LOAN COMMITMENT: from the date of this
Agreement to and including April 29, 1998, $10,000,000; and after April 29,
1998, $5,000,000.
AGGREGATE TERM LOAN COMMITMENT: $30,000,000.
AGREEMENT: this Loan Agreement, as the same from time to time may be
extended, amended, supplemented, waived or modified and in effect.
ALTERNATE BASE RATE: a fluctuating rate of interest per annum equal
to the highest of
(a) the rate of interest most recently announced by the Agent at its
Booking Office as its base rate;
(b) the CD Published Moving Rate most recently determined by the
Agent, PLUS 1/2 of 1% per annum; and
(c) the Overnight Funds Rate, PLUS 1% per annum.
The Alternate Base Rate is not necessarily intended to be the lowest rate of
interest determined by the Agent in connection with extensions of credit.
Changes in the rate
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of interest on any Loan maintained as an Alternate Base Rate Loan shall take
effect simultaneously with each change in the Alternate Base Rate. The Agent
shall give notice promptly to the Borrowers of changes in the Alternate Base
Rate.
ALTERNATE BASE RATE LOAN: a Loan bearing interest based on the
Alternate Base Rate.
ALTERNATE LAWS and APPLICABLE LAW: respectively, (i) all applicable
laws and treaties, judgments, decrees, injunctions, writs and orders of any
court, arbitrator or governmental agency or authority and rules, regulations,
orders, licenses and permits of any governmental body, instrumentality, agency
or authority, and (ii) any of the foregoing.
ASSIGNED COLLATERAL: has the meaning assigned to that term in Section
4.1 of the Security Agreements.
ASSIGNEE: a bank or financial institution which purchases from a
Lender party hereto an Assignment pursuant to an Assignment Agreement.
ASSIGNMENT: with respect to a Lender, an assignment of a portion of
such Lender's obligation to make Loans hereunder and of such Lender's rights
hereunder, by such Lender to an Assignee pursuant to an Assignment Agreement.
ASSIGNMENT AGREEMENT: an assignment agreement between a Lender and an
Assignee, in substantially the form attached as Exhibit H to this Agreement, as
the same from time to time may be extended, amended, supplemented, modified or
waived and in effect.
BOOKING OFFICE: with respect to any Eurodollar Loans or Alternate
Base Rate Loans, the respective office of each Lender or an affiliate
designated as its "Eurodollar Lending Office" or "Alternate Base Rate Lending
Office," respectively, in Schedule 1-B to this agreement, PROVIDED, that a
Lender may designate a different Booking Office with respect to its
Eurodollar Loans or Alternate Base Rate Loans from time to time upon notice
to the Borrowers; PROVIDED, FURTHER, that the Alternate Base Rate Lending
Office of such Lender shall be located in the United States.
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BORROWER and BORROWERS: have the meanings assigned to such terms in
the introduction to this Agreement.
BUSINESS DAY: any day other than a Saturday, Sunday or a day when
banks are authorized or required by law to close in New York, New York and,
if such day relates to a borrowing of, a payment or prepayment or principal
of, or interest on, or a conversion of or into, or an Interest Period for, a
Eurodollar Loan or a notice by the Borrowers with respect to any such
borrowship, payment, prepayment, conversion or Interest Period, any day which
is also a London Banking Day.
CAPITAL EXPENDITURES: for any period, the aggregate of all
expenditures (whether payable in cash or accrued as a liability (but without
duplication) during such period and including that portion of Capital Leases
which are capitalized on the consolidated balance sheet of CCCIs and its
subsidiaries (excluding the capitalization of the costs of software
development, PROVIDED, that such capitalization is in accordance with GAAP))
during such period that, in conformity with GAAP, are required to be included
in or are reflected by CCCIS or any of its subsidiaries in fixed asset
accounts as reflected in any of their balance sheets (including expenditures
for equipment purchased simultaneously with the trade-in of existing
equipment owned by a Borrower or any of its subsidiaries to the extent the
gross amount of such purchase price exceeds the book value of the equipment
being traded in, but excluding expenditures for equipment purchased for
resale or lease to customers in the ordinary course of business of a Borrower
or any of a Borrower's subsidiaries, PROVIDED, that the gross amount of such
resale price or the aggregate lease payments required to be made throughout
the term of the lease exceeds the purchase price of such equipment, PROVIDED,
that such resale or lease occurs within three months after the date of such
expenditure).
CAPITAL LEASE: as applied to a Borrower, any lease of any property
(whether real, personal or mixed) by such Borrower as lessee which, in
conformity with GAAP, is accounted for as capital lease on the balance sheet
of such Borrower (but excluding any lease of any property by such Borrower
which is sold or leased to customers in the ordinary course of business of
such Borrower or any of such Borrower's subsidiaries, PROVIDED, that the
gross amount of such sale price or the aggregate lease payments required to
be made throughout the term of the lease exceeds the
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aggregate lease payments required to be made by such Borrower, PROVIDED, that
such sale or lease occurs within three months after the date of the
origination of such lease by such Borrower).
CAPITAL STOCK: with respect to any Person, any capital stock of
such Person, regardless of class or designation, and all warrants, options,
purchase rights, conversion or exchange rights, voting rights, calls or
claims of any character with respect thereto.
CCCDC: has the meaning assigned to such term in the introduction
to this Agreement.
CCCDC SECURITY AGREEMENT: the CCC Development Company Security
Agreement dated as of April 29, 1994 among the Collateral Agent, CCCDC and
the Agent, in substantially the form attached as Exhibit G to this Agreement,
as the same from time to time may be extended, amended, supplemented, waived
or modified and in effect.
CCCIS: has the meaning assigned to such term in the introduction
of this Agreement.
CCCIS SECURITY AGREEMENT: the CCC Information Services Inc.
Security Agreement dated as of April 29, 1994 among the Collateral Agent,
CCCIS and the Agent, in substantially the form attached as Exhibit D to this
Agreement, as the same from time to time may be extended, amended,
supplemented, waived or modified and in effect.
CD PUBLISHED MOVING RATE: at any time, the latest three-week
moving average of daily secondary market morning offering rates in the United
States for three-month certificates of deposit of major United Stated money
market banks, such three-week moving average being determined weekly on the
second Business Day of each week by the Agent on the basis of
(a) such rates reported by certificate of deposit dealers to,
and published by, the Federal Reserve Bank of New York; or
(b) if such publication is suspended or terminated, the rate of
interest determined by the Agent to be the average of the bid rates
quoted to the Agent by two certificate of deposit dealers or
recognized standing selected by the Agent (in its sole discretion)
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<PAGE>
for the purchase at face value of three-month certificates of deposit in
an amount approximately equal or comparable to the Alternate Base Rate
Loan with respect to which the computation is being made,
in either case rounded upwards, if necessary, to the next higher 1/16 of 1%.
CODE: the Internal Revenue Code of 1986, as amended.
COLLATERAL AGENT: Canadian Imperial Bank of Commerce, together with
any successor or assignee, as collateral agent pursuant to the Security
Agreements.
COMMITMENT FEE: the fee described in Section 12.2 of this Agreement.
COMMITMENT PERCENTAGE: with respect to a Lender, the percentage
set forth opposite its signature hereto (as such percentage may be changed to
give effect to any Assignment by such Lender).
CONSOLIDATED CURRENT ASSETS: for any date, all amounts which
would, in conformity with GAAP, be included under current assets on a
consolidation balance sheet of CCCIS and its subsidiaries as of such date,
except that there shall be excluded therefrom cash and Permitted Investments.
CONSOLIDATED CURRENT LIABILITIES: for any date, all amounts which
would, in conformity with GAAP, be included under current liabilities on a
consolidated balance sheet of CCCIS and its subsidiaries as of such date,
except that there shall be excluded therefrom (i) the current portion of the
principal amount of long-term Indebtedness and of the Term Loans and (ii) the
outstanding principal amount of the Revolving Credit Loans.
CONSOLIDATED NET INTEREST EXPENSE: for any period, total interest
expense (including the interest component of Capital Leases) of CCCIS and its
subsidiaries on a consolidated basis determined for such period in conformity
with GAAP, including, without limitation, all commissions, discounts
(including discounts accrued under the Contract Funding Agreements) and other
fees and charges owed with respect to any financings or letters of credit and
net costs under Interest Rate Contracts, PLUS all cash dividends paid
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<PAGE>
on such period on preferred stock which is Indebtedness, MINUS total interest
income in that period.
CONSOLIDATED NET INCOME: for any period, the net earning (or
loss) after taxes of CCCIS and its subsidiaries on a consolidated basis
determined for such period in conformity with GAAP.
CONSOLIDATED WORKING CAPITAL: for any date, the Current Assets on
such date, MINUS the Current Liabilities on such date.
CONTINGENT OBLIGATION: any contractual obligation, contingent or
otherwise, of one Person with respect to any Indebtedness, obligation or
liability of another, including, without limitation, direct or indirect
guaranties, endorsements (except for collection or deposit in the ordinary
course of business), notes co-made or discounted, recourse agreements,
keep-well agreements, agreements to purchase or repurchase such Indebtedness,
obligation or liability or any security therefor or to provide funds for the
payment or discharge thereof, agreements to maintain solvency, assets, level
of income, or other financial condition, and agreements to make payment other
than for value received.
CONTRACT FUNDING AGREEMENTS: collectively, (i) the contracts
specified in Schedule 1-C and (ii) any similar contracts entered into by a
Borrower if (a) the aggregate lease payments required to be made throughout
the terms of all leases subject to such similar contracts shall not exceed
$1,000,000 and (b) the Agent shall have received executed copies of all
agreements and documents delivered in connection therewith no later than May
30, 1994.
CREDIT EXPIRATION DATE: has the meaning set forth in Section 5.1
of this Agreement.
DEFAULT: an Event of Default, or an event which with the notice or
lapse of time or both would become an Event of Default.
DOLLARS and $: lawful money of the United States of America.
EBITDA: for any period, Consolidated Net Income for such period,
PLUS (i) Consolidated Net Interest Expense, PLUS (ii) all charges in such
period for income taxes, PLUS
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(iii) all charges in such period for amortization of intangibles, depletion
and depreciation, in each case to the extent reflected in Consolidated Net
Income.
EFFECTIVE DATE: the first date on which the conditions precedent
set forth in Section 8 have been satisfied or waived and the Agent shall have
delivered a notice to the Borrowers and the Lenders to that effect.
ERISA: the Employee Retirement Income Security Act of 1974, as
amended.
ERISA AFFILIATE: (i) any corporation which is a member of the same
controlled group of corporations (within the meaning of Section 414(b) of the
Code) as a Borrower; (ii) a trade or business (whether or not incorporated)
which is under common control (within the meaning of Section 414(c) of the
Code) with a Borrower; and (iii) a member of the same affiliated service
group (within the meaning of Section 414(m) of the Code) as a Borrower, as
any corporation described in clause (i) above or as any trade or business
described in clause (ii) above.
EURODOLLAR LOAN: a Loan bearing interest based on the Eurodollar
Rate.
EURODOLLAR RATE: with respect to any Interest Period for any
Eurodollar Loan, the rate per annum determined by the Agent to be equal to
the quotient (rounded upwards, if necessary, to the next higher 1/16 of 1%)
of (y) (i) the rate of interest for deposits in Dollars for a period equal
to the number of days in such Interest Period which appears on the Telerate
Page 3750 as of 11:00 a.m., London time, on the day that is two London
Banking Days prior to the first day of such Interest Period, or (ii) if such
rate does not appear on the Telerate Page 3750 at such time, the rate per
annum at which deposits in Dollars are offered by the Agent in immediately
available funds at its Eurodollar Lending Office in an amount comparable to
the principal amount of such Eurodollar Loan for a period equal to such
Interest Period at approximately 10:00 A.M., New York City time, on the date
two Business Days before the first day of such Interest Period, divided by
(z) a number equal to 1.00 minus the Eurodollar Reserve Percentage.
EURODOLLAR RESERVE PERCENTAGE: for any day, the maximum percentage
(expressed as a decimal) specified from time to time by the Board of Governors
of the Federal
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Reserve System (or any successor) for determining the maximum reserve
requirements (including, but not limited to, supplemental, marginal and
emergency reserves) with respect to eurocurrency funding (currently referred
to as "Eurocurrency Liabilities") of a member bank in such System. The
Eurodollar Rate shall be adjusted automatically with respect to any
Eurodollar Loan outstanding on the effective date of any change in the
Eurodollar Reserve Percentage, as of such effective date.
EVENT OF DEFAULT: any of the Events of Default described in
Section 11 of this Agreement.
EXCESS CASH: for any period, EBITDA, MINUS actual payments in such
period for taxes, PLUS any reduction (or MINUS any increase) in the
Consolidated Working Capital of CCCIS and its consolidated subsidiaries for
such period, MINUS any principal payments of Indebtedness and of the Loans
not reflected in any reduction or increase in the Consolidated Work Capital
of CCCIS and its Consolidated Subsidiaries for such period, MINUS any Capital
Expenditures in such period, MINUS the capitalization of the cost of software
development by a Borrower or any of its subsidiaries for such period to the
extent that such capitalization is in accordance with GAAP, MINUS
expenditures in such period by a Borrower or any of its subsidiaries for
equipment purchased for resale or lease to customers in the ordinary course
of business of such Borrower or any such subsidiary, PROVIDED, that the gross
amount of such resale price or the aggregate lease payments required to be
made throughout the term of the lease exceeds the purchase price of such
equipment and such resale or lease occurs within three months after the date
of such expenditure, MINUS Consolidation Net interest Expense for such
period, MINUS, any principal payments under any Contract Funding Agreement,
MINUS $1,000,000.
EXISTING INDEBTEDNESS: indebtedness of CCCIS, InfoVest and certain
of its subsidiaries arising out of the agreements specified on Schedule 1-E.
FEDERAL BANKRUPTCY CODE: Title 11 of the United States Code,
Sections 101, ET SEG., and the rules and regulations promulgated thereunder,
as amended from time to time.
GAAP: generally accepted accounting principles in the United
States of America in effect from time to time.
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GOVERNMENTAL AUTHORITY: any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government.
GUARANTY: the Guaranty dated as of April 29, 1994 made by InfoVest
in favor of the Agent for the benefit of the Lenders, in substantially the
form attached as Exhibit E to this Agreement, as the same from time to time
may be extended, amended, supplemented, modified or waived and in effect.
INDEBTEDNESS: with respect to any Person, at any time, (a) all
indebtedness, obligations or other liabilities of such Person (i) for
borrowed money or evidenced by debt securities, debentures, acceptance, notes
or other instruments, (ii) under profit payment agreements (other than
profit-sharing or bonus plans or agreements for employees or, after calendar
year 1995, payments to Tech-Cor from the profits generated under the Tech-Cor
Agreement) or in respect of obligations to redeem, repurchase or exchange any
securities of such Person or to pay dividends in respect of any stock, (iii)
with respect to letters of credit issued for such Person's account, (iv) to
pay the deferred purchase price of property or services, except (A) accounts
payable and accrued expenses relating to the deferred purchase price of
property or services arising in the ordinary course of business but only if
and so long as the same are payable on conventional terms within 90 days of
the date such accounts payable or such accrued expenses were created, (B)
such accrued expenses relating to the deferred purchase price of property or
services arising in the ordinary course of business but only if and so long
as the same does not exceed in the aggregate $500,000 in any fiscal year of
the Borrower, (C) accounts payable to Tech-Cor in connection with services
rendered by Tech-Cor under the Tech-Cor Agreement, and (D) reasonable
attorney's and accountant's fees and expenses incurred in the ordinary course
of business of the Borrowers or InfoVest, (v) in respect of Capitalized
Leases and (vi) which are Contingent Obligations, (b) all indebtedness,
obligations or other liabilities of such Person or others secured by a Lien
on any property of such Person, whether or not such indebtedness, obligations
or liabilities are assumed by such Person, all as of such time, (c) all
indebtedness, obligations or other liabilities of such Person in respect
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of Interest Rate Contracts and currency hedging agreements, net of
liabilities owned to such Person by the counterparties thereon, and (d) all
preferred stock subject (upon the occurrence of any contingency or otherwise)
to mandatory redemption.
INFOVEST: InfoVest Corporation, a Delaware corporation.
INTEREST PERIOD: with respect to any Eurodollar Loan, each period
commencing on the date such Eurodollar Loan is made or converted from an
Alternate Base Rate Loan or the last day of the next preceding Interest
Period with respect to such Eurodollar Loan and ending on the same day in the
first, third or sixth calendar month thereafter, as the Borrowers may select
as provided in Section 2.1 hereof, except that each such Interest Period
which commences on the last Business Day of a calendar month) or on any day
for which there is no numerically corresponding day in the appropriate
subsequent calendar month) shall end on the last Business Day of the
appropriate subsequent calendar month.
Notwithstanding the foregoing, (i) no Interest Period may extend beyond the
Credit Expiration Date; (ii) each Interest Period which would otherwise end
of a day which is not a Business Day shall end on the next succeeding
Business Day (or, if such next succeeding Business Day falls in the next
succeeding calendar month, on the next preceding Business Day); (iii) each
Interest Period which would otherwise commence before and end after the
Credit Expiration Date shall end on the Credit Expiration Date; and (iv)
notwithstanding clauses (i) and (iii) above, no Interest Period shall have a
duration of less than one month and, if any Interest Period would otherwise
be a shorter period, such Eurodollar Loans shall be Alternate Base Rate Loans
during such period.
INTEREST RATE CONTRACTS: interest rate exchange, collar or cap
or similar agreements providing interest rate protection.
JOINT VENTURE AGREEMENT: the Joint Venture and Distribution
Agreement by and between CCC Vehicle Damage Estimators, Inc. and White River,
as successor in interest to UCOP, Inc., dated as of November 9, 1990.
LENDER and LENDERS: have the meanings assigned to such terms in
the introduction to this Agreement.
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LETTER OF AGREEMENT: the Letter of Agreement dated as of November
27, 1991 between CCCIS and Allstate Insurance Company, attached as Schedule
1-L to this Agreement.
LIEN: any mortgage, deed of trust, pledge, security interest,
encumbrance, lien or charge of any kind (including any agreement to give any
of the foregoing, any conditional sale or other title retention agreement,
any lease in the nature thereof, and the filing of or agreement to give any
jurisdiction in connection with any of the foregoing).
LOANS and LOAN: respectively, (i) Revolving Credit Loans and/or
Term Loans, and (ii) any single such Revolving Credit Loan or Term Loan.
LOAN DOCUMENTS: this Agreement, the Master Notes, the Term Notes,
the Security Agreements and each other agreement, document or instrument
delivered in connection herewith or therewith.
LOAN REQUEST: a written request, in substantially the form of
Exhibit I to this Agreement, delivered by the Borrowers to the Agent pursuant
to Section 2.3 of Section 3.3 of this Agreement.
LONDON BANKING DAY: any day on which dealings in Dollar deposits
are carried out in the London interbank markets.
MASTER NOTE and MASTER NOTES: respectively, (i) the promissory
note issued by the borrowers and payable to the order of a Lender evidencing
Revolving Credit Loans of such Lender, as provided herein, in substantially
the form attached as Exhibit A to this Agreement, and (ii) all such
promissory notes.
MULTIEMPLOYER PLAN: a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA which is, or was at any time during the five preceding
years, contributed to by a Borrower, any subsidiary of a Borrower or any
ERISA Affiliate for the benefit of its employees.
NOTES and NOTE: respectively, (i) Master Notes and/or Term Notes,
and (ii) any single Master Note or Term Note.
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NOTICE OF CONVERSION OR CONTINUATION: a written notice, in
substantially the form of Exhibit J to this Agreement, delivered by the
Borrowers to the Agent pursuant to section 4.1(c) of this Agreement.
OVERNIGHT FUNDS RATE: for any day, a fluctuating interest rate per
annum equal to the rate of interest offered in the interbank market to the
Agent as the overnight Federal funds rate as at or about 10:00 a.m., New
York City time, on such day (or if such day is not a Business Day, for the
next preceding Business Day).
PARTICIPANT: has the meaning set forth in Section 14.6 (b) of this
Agreement.
PARTICIPATION: a participation between a Lender and a Participant,
as provided in Section 14.6(b) hereof.
PBGC: Pension Benefits Guaranty Corporation or any successor
thereto.
PERMITTED INVESTMENTS: investments in the following: (i)
obligations issued by, or the principal of and interest on which are fully
guaranteed by, the United Stated of America or any agency or instrumentality
thereof; (ii) commercial paper rated A-1+ or A-1 by Standard & Poor's Ratings
Group and P-1 by Moody's Investor Services, Inc.; (iii) certificates of
deposit, other deposits or bankers' acceptances issued by or established with
commercial banks having unimpaired capital and unimpaired surplus of at least
$250,000,000 and whose commercial paper (or commercial paper which is
supported by such bank's letter of credit or commitment to lend) is rated
A-1+ or A-1 by Standard & Poor's Rating Group and P-1 by Moody's Investor
Services, Inc.; and (iv) money market funds whose investments are made solely
in securities having the highest rating then given by Standard & Poor's
Ratings Group and Moody's Investors. Service, Inc. which have maturity dates
not later than 90 days after the acquisition thereof by any such fund.
PERSON: an individual, a corporation, a partnership, a joint
venture, a trust or unincorporated organization, a joint stock company or
other similar organization, a government or any political subdivision
thereof, a court, or any other legal entity whether acting in an individual,
fiduciary or other capacity.
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PLAN: any "employee benefit pension plan" or other "plan"
(including a Multiemployer Plan) established or maintained, as to which
contributions have been made, by any Person for its respective employees and
which is covered by Title IV of ERISA or to which Section 412 of the Code
applies.
PLEDGE AGREEMENT: the Pledge and Security Agreement dated as of
April 29, 1994 among InfoVest, the Collateral Agent and the Agent, in
substantially the form attached as Exhibit F to this Agreement, as the same
from time to time may be extended, amended, supplemented, waived or modified
and in effect.
PLEDGE COLLATERAL: has the meaning set forth in Section 4.1 of the
Pledge Agreement.
POST-DEFAULT RATE: the Alternate Base Rate as in effect from time
to time plus three percent (3.0%).
PURCHASE MONEY DEBT: Indebtedness representing all or any part of
(but not more than) the purchase price of any property, and any Indebtedness
incurred at the time of or within 180 days prior to or after the acquisition
of any property for the purpose of financial all or any part of the purchase
price thereof, but only if, immediately after giving effect thereto, no
Default would exist, and any renewals, extensions or refundings thereof, but
not any increases in the principal amounts thereof or interest rates upon the
occasion of any such renewal, extension or refunding (but excluding
Indebtedness representing all or any part of the purchase price of any
property purchased for resale or lease to customers in the ordinary course of
business of a Borrower or any of a Borrower's subsidiaries, PROVIDED, that
the gross amount of such resale price or the aggregate lease payments
required to be made throughout the terms of the lease exceeds such
Indebtedness, that such resale or lease occurs within three months after the
date such Indebtedness arises, and that the terms of such resale or lease
require payments to such Borrower or such subsidiary that are sufficient to
repay such Indebtedness and interest thereon on a timely basis).
PURCHASE MONEY LIEN: a Lien securing Purchase Money Debt but only
if, in the case of any such Lien, (a) such Lien shall at all times be
confined solely to the property the purchase price of which was financed
through the incurrence of the Purchase Money Debt secured by such
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Lien, and (b) the aggregate principal amount of Purchase Money Debt secured
by such Lien shall at no time exceed an amount equal to 75% of the lesser of
(1) the cost (including the principal amount of such Purchase Money Debt) to
the related Borrower of the property subject to such Lien or (2) the fair
market value of such property at the time of such acquisition.
REGULATORY CHANGE: any change in United States federal, state or
foreign laws or the making of any interpretations, directives or requests
applying to a class of banks, including a Lender, of or under any United
States federal, state, or foreign laws, or regulations (whether or not having
the force of law) by any court or governmental or monetary authority charged
with the interpretation or administration thereof.
REPORTABLE EVENT: any event described in Section 4043(b) of ERISA.
REQUIRED LENDERS: the Lenders whose principal amount of
outstanding Loans aggregate at least 66-2/3% of the total aggregate principal
amount of Loans outstanding or, if no such amounts are outstanding, the
Lenders whose Commitment Percentages aggregate at least 66-2/3%.
REVOLVING CREDIT LOAN COMMITMENT: with respect to a Lender, an
amount equal to the product of (i) such Lender's Commitment Percentage and
(ii) the Aggregate Revolving Credit Loan Commitment.
REVOLVING CREDIT LOAN and REVOLVING CREDIT LOANS: respectively,
(i) a loan made from time to time by a Lender to the Borrowers under Section
2.1 hereof, and (ii) all of such loans made by the Lenders to the Borrowers.
SECURITY AGREEMENT and SECURITY AGREEMENTS: respectively, (i) the
CCCDC Security Agreement or the CCCIS Security Agreement, and (ii) both of
such agreements.
SERVICING AGREEMENT: the Servicing Agreement dated as of May ____,
1994, between CCCIS and InfoVest, attached hereto as Schedule 1-S.
TAXES: all taxes, levies, imposts, duties, or other charges of
whatsoever nature imposed by any government or any political subdivision or
taxing authority thereof, and any liability (including penalties and
interest) arising
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therefrom or with respect thereto, other than any taxes on the net income or
any similar tax in lieu of any income tax of a Lender pursuant to the income
tax laws of any governing jurisdiction where such Lender's principal office
or Booking Office is located and other than United Stated withholding taxes.
TECH-COR AGREEMENT: the agreement to be entered into between CCCIS
and Tech-Cor with respect to the installation and marketing of an automobile
repair estimating system developed by CCCIS in various automobile repair
facilities with whom Allstate Insurance Company transacts business, including
facilities through the Priority Repair Option program maintained by Allstate
Insurance Company, all as contemplated by the Letter of Agreement.
TERMINATION EVENT: (i) Reportable Event with respect to a Plan, as
to which the requirements of Section 4043(a) of ERISA have not been waived by
the PBGC (provided that a failure to meet the minimum funding standard of
Section 302 of ERISA shall be a reportable event regardless of the issuance
of any waivers by the PBGC); (ii) the filing of a notice of intent to
terminate any Plan under Section 4041 of ERISA or any other even or condition
which might constitute grounds under Section 4042 of ERISA for the
termination of, or for the appointment of a trustee to administer, any Plan;
(iii) the complete or partial withdrawal of a Borrower from a Multiemployer
Plan or the receipt by a Borrower of notice from a Multiemployer Plan that it
is in reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA
or that it intends to terminate or has terminated under Section 4041A of
ERISA; (iv) the institution of a proceeding by a fiduciary of any
Multiemployer Plan against a Borrower to enforce Section 515 of ERISA; or (v)
any event or circumstances under which a Borrower may reasonably be expected
to incur any liability under Title IV of ERISA with respect to any Plan other
than liabilities to make contributions and pay premiums in the ordinary
course.
TERM LOAN and TERM LOANS: respectively, (i) a loan made by a
Lender to the Borrowers under Section 3.1 hereof, and (ii) all of such loans
made by the Lenders to the Borrowers.
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TERM LOAN COMMITMENT: with respect to a Lender, an amount equal to
the product of (i) such Lender's Commitment Percentage and (ii) the Aggregate
Term Loan Commitment.
TERM NOTE and TERM NOTES: respectively, (i) the promissory note
issued by the Borrowers and payable to the order of a Lender evidencing the
Term Loan of such Lender, as provided herein, in substantially the form
attached as Exhibit B to this Agreement, and (ii) all such promissory notes.
TOTAL DEBT SERVICE COVERAGE: for any period, the quotient obtained
by dividing (i) EBITDA MINUS Capital Expenditures by (ii) Consolidated Net
Interest Expense, PLUS common or preferred stock cash dividends, or any other
cash distribution in respect thereof, paid by CCCIS, PLUS common or preferred
stock cash dividends, or any other cash distribution in respect thereof, paid
by CCCIS, PLUS scheduled Term Loan installment payments required to be made
pursuant to Section 3.1(b) (without giving effect to any prepayments made
with respect to such installment payments), PLUS principal payments required
to made under Contract Funding Agreements, in each case determined for such
period without duplication.
WHITE RIVER: White River Corporation, a Delaware corporation.
SECTION 2. REVOLVING CREDIT LOANS
2.1 REVOLVING CREDIT LOANS. (a) Subject to the terms and
conditions set forth in this Agreement, each Lender hereby severally and not
jointly agrees that it will, from time to time prior to the Credit Expiration
Date, make Revolving Credit Loans to the Borrowers, subject to the
immediately succeeding sentence. All Revolving Credit Loans shall be made by
the Lenders proportionately to their respective Commitment Percentages, it
being understood that no Lender shall be responsible for any failure by any
other Lender to perform its obligation to make any Revolving Credit Loan
hereunder nor shall the Revolving Credit Loan Commitment of any Lender be
increased or decreased as a result of any such failure. Anything contained
herein to the contrary notwithstanding, a Lender shall not be obligated in
any manner to make any Revolving Credit Loan in a principal amount which
exceeds the positive result of (i) such Lender's Revolving Credit Loan
Commitment, less (ii) the aggregate principal amount of Revolving Credit
Loans made by such Lender outstanding on the proposed date of the making of
such Revolving Credit Loan. Not later than
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1:00 p.m., New York City time, on the date of the proposed borrowing, each
Lender shall, to the extent required by the second sentence of this clause,
(a), pay over to the Agent in immediately available funds in Dollars an
amount equal to such Lender's Commitment Percentage of the aggregate
principal amount of the Revolving Credit Loans requested by the Borrower, and
the Agent shall, upon receipt of such funds from the Lenders, make such funds
available to the Borrowers at the Agent's office in New York City or shall
disburse such funds in Dollars to the Borrowers in accordance with the
disbursement instructions set forth in the Loan Request.
(b) A Lender shall not be obligated to make a Revolving Credit
Loan pursuant to this Section 2.1 on any date to the extent that (i) the
aggregate principal amount of all outstanding Revolving Credit Loans made by
such Lender immediately after the making by such Lender of its Commitment
Percentage of such requested Revolving Credit Loan would exceed the Revolving
Credit Loan Commitment of such Lender, or (ii) the aggregate principal amount
of all Revolving Credit Loans outstanding immediately after the making of
such requested Revolving Credit Loan and all other Revolving Credit Loans to
be made on such date would exceed the Aggregate Revolving Credit Loan
Commitment at such time. Each Loan Request, to be effective, shall include a
computation demonstrating compliance with the limits set forth in the
immediately preceding sentence. Each Revolving Credit Loan shall be subject
to the terms and provisions of Sections 4 and 6 hereof.
2.2 MASTER NOTES. Each Revolving Credit Loan made by a Lender
shall be evidenced by, and recorded on, a Master Note duly executed by the
Borrowers and payable to the order of such Lender. The Borrowers hereby
authorize each Lender to make the appropriate notations on the schedule
annexed to the Master Note payable to such Lender for purposes of recording
any Revolving Credit Loan made by such a Lender thereon and any payments or
prepayments made with respect thereto (provided that any failure by such
Lender to make any such notation shall not affect the obligations of the
Borrowers hereunder or under such Master Note in respect of such Revolving
Credit Loan). The Borrowers agree that each notation made by a Lender on the
schedule annexed to the Master Note payable to it shall be final and
conclusive absent demonstrable error. The aggregate principal amount of each
Lender's Revolving Credit Loans outstanding at any time shall constitute the
principal amount owing on such
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Lender's Master Note at such time. The principal of each Master Note,
together with all accrued and unpaid interest thereon, shall be payable on
the Credit Expiration Date, subject to Section 4.1 hereof and to acceleration
as provided in this Agreement.
2.3 LOAN REQUESTS. The Borrowers shall deliver to the Agent a
Loan Request (i) for a Eurodollar Loan, not later than 11:00 a.m., New York
City time, at least three Business Days prior to the date of the proposed
borrowing and (ii) for an Alternate Base Rate Loan, not later than 11:00
A.M., New York City time, on the day of the proposed borrowing. The Loan
Request shall specify (i) the date of the proposed borrowing (which shall be
a Business Day, and, with respect to the first borrowing, shall be a Business
Day on or prior to the date which is thirty (30) days following the date of
execution of this Agreement), (ii) the aggregate amount of the Revolving
Credit Loans to be made on that date (which shall be a minimum principal
amount of $1,000,000, in the case of Eurodollar Loans, and $250,000, in the
case of Alternate Base Rate Loans, and be in integral multiples of $100,000),
(iii) whether such Loan is an Alternate Base Rate Loan or a Eurodollar Loan,
(iv) in the case of a Eurodollar Loan, the duration of the initial Interest
Period applicable to such Eurodollar Loan, (v) the disbursement instructions
for the proceeds of such Revolving Credit Loans and (vi) a certification by
the Borrowers that (x) the representations and warranties of the Borrowers set
forth in Section 7 of this Agreement are on the date of such Loan Request,
and will be on the date of the proposed borrowing, true and correct as if
made on and as of such dates, and (y) no Default or Event of Default shall
have occurred and be continuing on such dates. Any Loan Request given
pursuant hereto shall be irrevocable. Promptly after receipt of a Loan
Request, the Agent shall notify each Lender of the proposed borrowing.
2.4 THE REVOLVING LOAN COMMITMENT. (a) The Borrowers may from
time to time reduce the Aggregate Revolving Credit Loan Commitment by
$1,000,000 or a multiple thereof upon five Business Days' written notice to
the Agent (which shall give prompt notice of the receipt thereof to the
Lenders) signed by the President, the Chief Financial Officer or the
Treasurer of each Borrower. Any such reduction shall be permanent and
irrevocable and shall reduce the Revolving Loan Commitment of each Lender pro
rata based on its Commitment Percentage; PROVIDED that (1) the amount of the
Aggregate Revolving Loan Commitment as so
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reduce shall at no time be less than the aggregate principal amount of all
outstanding Revolving Credit Loans and (2) the amount of the Revolving Loan
Commitment of a Lender as so reduced shall at no time be less than the
aggregate principal amount of all outstanding Revolving Credit Loans made by
such Lender.
(b) Upon the occurrence of the Credit Expiration Date pursuant to
Section 5.1 hereof, the Revolving Loan Commitment of each Lender shall be
reduced to zero.
(c) After the effective date of any reduction pursuant to Section
2.4 (a) hereof, the terms "Revolving Credit Loan Commitment" and "Aggregate
Revolving Credit Loan Commitment" (as used with respect to any or all
Lenders), shall mean the Revolving Credit Loan Commitment and the Aggregate
Revolving Loan Commitment in effect immediately prior to such reduction less
the amount of such reduction of the Revolving Credit Loan Commitment and the
Aggregate Revolving Credit Loan Commitment.
2.5 MANDATORY PAYMENTS. If at any time the principal amount of
outstanding Revolving Credit Loans of a Lender shall exceed the amount of
such Lender's Revolving Credit Loan Commitment, the Borrowers shall
immediately prepay such Lender's Revolving Credit Loans in an amount equal to
such excess. If the aggregate principal amount of outstanding Revolving
Credit Loans of all of the Lenders shall exceed the Aggregate Revolving
Credit Loan Commitment, the Borrowers shall immediately prepay Revolving
Credit Loans in an amount equal to such excess, such prepayment to be paid to
each Lender pro rata based on such Lender's Commitment Percentage.
SECTION 3. TERM LOANS
3.1 TERM LOANS. (a) Subject to the terms and conditions set forth
in this Agreement, each Lender hereby severally and not jointly agrees that
it will make a Term Loan in immediately available funds in Dollars to the
Borrowers. The Term Loans shall be in the aggregate principal amount of the
Aggregate Term Loan Commitment and shall be payable as set forth in Section
3.1(a). The Term Loans shall be made by the Lenders simultaneously and
proportionately to their respective Commitment Percentages, it being
understood that no Lender shall be responsible for any failure by any other
Lender to perform its obligation to make any Term Loans hereunder nor shall
the Term Loan
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Commitment of any Lender be increased or decreased as a result of any such
failure. Each Lender shall pay over to the Agent at is office in New York
City, in Dollars and in immediately available funds, the aggregate amount of
such Lender's Term Loan, and the Agent shall make such amounts available to
the Borrowers at such office of the Agent, in Dollars and in immediately
available funds, or shall disburse such amounts to or for the account of the
Borrowers in accordance with the disbursement instructions set forth in the
Loan Request for such Term Loans. Each Term Loan shall be evidenced by a
Term Note duly executed by the Borrowers and payable to the order of a Lender.
(b) Subject to the application of mandatory prepayments, if any,
pursuant to Section 3.4, the aggregate principal amount of the Term Loans
shall be repayable in sixteen consecutive quarterly installments beginning on
the last Business Day of June 1995 and continuing quarterly thereafter as
follows:
Quarterly Installments Amount
(due on the last Business Day To Be Paid on
of each month specified below) all term loans
----------------------------- --------------
June, 1995 $1,500,000
September, 1995 $1,500,000
December, 1995 $1,500,000
March, 1996 $1,500,000
June, 1996 $1,750,000
September, 1996 $1,750,000
December , 1996 $1,750,000
March, 1997 $1,750,000
June, 1997 $1,750,000
September, 1997 $1,750,000
December, 1997 $1,750,000
March, 1998 $1,750,000
June, 1998 $2,500,000
September, 1998 $2,500,000
December, 1998 $2,500,000
March, 1999 $2,500,00
(c) Installment payments made by the Borrowers on the Term Loans
shall be paid to the Agent for the account of the Lenders. The Agent shall,
promptly following the receipt of any installment payment made by the
Borrowers on the Term Loans, distribute to each Lender an amount equal to
such Lender's Commitment Percentage of such installment payment.
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3.2 TERM NOTES. Each Term Loan made by a Lender shall be evidenced by, and
recorded on, a Term Note duly executed by the Borrowers and payable to the
order of such Lender. The Borrowers hereby authorize each Lender to make the
appropriate notation on the schedule annexed to the Term Note payable to such
Lender thereon, any payments or prepayments made with respect thereto, the
type of the Term Loan and, in the case of a Eurodollar Loan, the length of
each Interest Period with respect to such Eurodollar Loan (provided that any
failure by such Lender to make any such notation shall not affect the
obligations of the Borrower hereunder or under such Term Note in respect of
such Term Loan). The Borrowers agree that each notation made by a Lender on
the schedule annexed to the Term Note payable to it shall be final and
conclusive absent demonstrable error. The principal amount of each Lender's
Term Loan outstanding at any time shall constitute the principal amount owing
on such Lender's Term Note at such time. The principal of each Term Note,
together with all accrued and unpaid interest thereon, shall be payable as
set forth in Section 3.1(b) hereof, subject to prepayment and to acceleration
as provided in this Agreement.
3.3 LOAN REQUEST. The Borrowers shall deliver to the Agent a Loan Request
with respect to the Term Loans (i) for a Eurodollar Loan, not later than
11:00 A.M., New York City time, at least three Business Days prior to the
date of the proposed borrowing and (ii) for an Alternate Base Rate Loan, not
later than 11:00 A.M., New York City time, on the day of the proposed
borrowing. The Loan Request shall specify (i) the date of the proposed
borrowing (which shall be a Business Day on or prior to the date which is
thirty (30) days following the date of execution of this Agreement), (ii)
whether the Term Loans will be Alternate Base Rate Loans or Eurodollar Loans,
(iii) in the case of Eurodollar Loans, the duration of the initial Interest
Period applicable to such Eurodollar Loans, (iv) the disbursement
instructions for the proceeds of such Term Loans and (v) a certification by
the Borrowers that (x) the representations and warranties of the Borrowers
set forth in Section 7 of this Agreement are on the date of such Loan
Request, and will be on the date of the proposed borrowing, true and correct
as if made on and as of such dates, and (y) no Default or Event of Default
shall have occurred and be continuing on such dates. Any Loan Request given
pursuant thereto shall be irrevocable. Promptly after
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receipt of a Loan Request, the Agent shall notify each Lender of the proposed
borrowing.
3.4 PREPAYMENTS. If, as of April 30 of any fiscal year of CCCIS subsequent
to 1994, Excess Cash for the fiscal year of CCCIS ended on such April 30 is
equal to or greater than $100,000, the Borrowers shall, within ninety (90)
days of such April 30, pay to the Agent for the account of the Lenders, as a
prepayment of the Term Loans, a percentage of such Excess Cash as follows:
Fiscal Year Ended Percent of Excess Cash
----------------- ----------------------
April 30, 1995 100%
April 30, 1996 75%
April 30, 1997 75%
For each fiscal year
ended April 30 thereafter 50%
The Agent shall remit to each Lender such Lender's Commitment Percentage of
any prepayment made by the Borrowers pursuant to this Section 3.4. Each
lender shall apply an amount equal to 25% of the portion of such prepayment
received by such Lender with respect to the fiscal year of CCCIS ended April
30, 1995 to the scheduled principal payments of its Term Loan in the order of
their scheduled payment dates. The remaining amount of the portion of such
prepayment received by such Lender with respect to the fiscal year of CCCIS
ended April 30, 1995 shall be applied to the scheduled principal payments of
its Term Loan in the inverse order of their scheduled payment dates. Each
Lender shall apply each prepayment received by such Lender with respect to
any fiscal year of CCCIS ended subsequent to April 30, 1995 to the scheduled
principal payments of its Term Loan such that the amount applied to each
scheduled payment bears the same ratio to the total amount of the prepayment
as the remaining outstanding principal amount of each such scheduled payment
bears to the total remaining outstanding principal amount of such Lender's
Term Loan.
SECTION 4. TERMS APPLICABLE TO LOANS
4.1 PAYMENTS AND PREPAYMENTS. (a) Except to the extent otherwise provided
herein, all payments of principal, interest and other amounts to be made by
the Borrowers hereunder and under the Notes shall be made in Dollars, in
immediately available funds, to the Agent, not later than
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2:00 P.M., New York City time, on the date on which such payment shall become
due (each such payment made after such time on such due date to be deemed to
have been made on the next succeeding Business Day). The Borrowers shall, at
the time of making such payment hereunder or under the Notes, specify to the
Agent the Loans or other amounts payable by the Borrowers hereunder to which
such payment is to be applied (and in the event that it fails to so specify,
or if an Event of Default has occurred and is continuing, the Agent may apply
such payment to such type of Loan(s) or other amounts payable hereunder as it
may elect in its sole discretion, but subject to Section 4.1(f) hereof);
PROVIDED, that except as otherwise provided in this Agreement to the
contrary, all payments received by the Agent hereunder shall be remitted to
each Lender pro rata based on such Lender's Commitment Percentage. If the
due date of any payment hereunder or under a Note would otherwise fall on a
day which is not a Business Day, such due date shall be extended to the next
succeeding Business Day and interest shall be payable for any principal so
extended for the period of such extension; PROVIDED, that, with respect to
Eurodollar Loans, if such next succeeding Business Day falls in the next
succeeding calendar month, such due date shall be the next preceding Business
Day.
(b) BORROWERS OBLIGATIONS ABSOLUTE. The Borrowers' obligations to pay each
Lender hereunder and under each Note payable to such Lender shall be joint
and several, absolute, unconditional and irrevocable, and shall be paid
strictly in accordance with the terms hereof and thereof, under any and all
circumstances and irrespective of any setoff, counterclaim or defense to
payment which any Borrower may have or have had against such Lender.
(c) OPTIONAL CONVERSIONS. The Borrowers may, at their option, convert a
Loan of one type into a Loan of another type or continue a Eurodollar Loan as
a Eurodollar Loan, PROVIDED, that, except as otherwise provided in this
Agreement to the contrary, the Borrowers shall deliver to the Agent (which
shall give notice tot he Lenders of the receipt thereof as promptly as
practicable thereafter) a Notice of Conversion or Continuation not less than
three Business Days' prior to each such conversion or continuation, PROVIDED
such Notice of Conversion or Continuation is received by 11:00 A.M., New York
City time, on the date of such continuation or conversion specifying (x) the
amount of each Loan to be continued or converted (y) the date of
continuation or conversion, and (z) the type
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of Loan to be continued or converted (and in the case of a conversion, the
type of Loan to result from such conversion and, if a Eurodollar Loan, the
duration of the Interest Period applicable thereto); PROVIDED, that if a
Eurodollar Loan is converted on a day other than the last day of an Interest
Period with respect thereto, the Borrowers, jointly and severally, shall be
obligated to pay each Lender any loss, cost or expense incurred by such
Lender as a result of such conversion. In the event the Borrowers fail to
select the duration of the Interest Period applicable to any Eurodollar Loans
(if outstanding as Eurodollar Loans), such Eurodollar Loans will be
automatically converted into Alternate Base Rate Loans on the last day of the
then current Interest Period for such Eurodollar Loans or (if outstanding as
Alternate Base Rate Loans) will remain as, or (if not then outstanding) will
be made as, Alternate Base Rate Loans.
(d) OPTIONAL PREPAYMENTS. The Borrowers may, at their option, prepay,
without penalty or premium, all or any portion of the revolving Credit Loans
or the Term Loans, PROVIDED, that any such prepayment, if a partial
prepayment, shall be (x) remitted to each Lender by the Agent pro rata based
on such Lender's Commitment Percentage (except as may be required by Section
2.5 to the contrary) and (y) in a minimum principal amount of $1,000,000, in
the case of Eurodollar Loans, and $250,000, in the case of Alternate Base
Rate Loans, and integral multiples of $100,000 in excess thereof. The
Borrowers shall deliver to the Agent (which shall give notice to the Lenders
of the receipt thereof as promptly as practicable thereafter) notice of such
prepayment not less then three Business Days prior to each such prepayment
(except that Alternate Base Rate Loans may be prepaid at any time, PROVIDED,
such notice is received by 11:00 A.M., New York City time, on the date of
such prepayment) specifying (x) the amount of each Loan to be prepaid and (y)
the date of prepayment; PROVIDED, that if a Eurodollar Loan is prepaid on a
day other than the last day of an Interest Period with respect thereto, the
Borrowers, jointly and severally, shall be obligated to pay each Lender any
loss, cost or expense incurred by such Lender as a result of such prepayment.
(e) PAYMENT OF INTEREST. (i) The Borrowers, jointly and severally, hereby
promise to pay to the Agent for the account of each Lender interest on the
unpaid principal amount of each Loan made by such Lender for the period
commencing on the date of such Loan until but not
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including the stated maturity thereof (whether by acceleration or otherwise) or
the date of prepayment thereof (a) during the periods such Loan is an Alternate
Base Rate Loan, at the Alternate Base Rate, PLUS 1.5%; and (b) during the
periods such Loan is a Eurodollar Loan, at the Eurodollar Rate, PLUS 3.0%;
PROVIDED, however, that after the occurrence and during the continuance of an
Event of Default, all outstanding Loans shall bear interest at the Post-Default
Rate.
(ii) Notwithstanding the foregoing, the Borrowers, jointly and severally,
hereby promise to pay interest on any Loan or any installment thereof and (to
the extent that the payment of such interest shall be legally enforceable) on
any overdue installment of interest, and on any other amount payable by the
Borrowers hereunder which shall not be paid in full when due (whether at
stated maturity, by acceleration or otherwise) for the period commencing on
the due date thereof until but not including the date the same is paid in
full at the Post-Default Rate.
(iii) Except as provided in the next sentence, accrued interest on each
Loan shall be payable (x) in the case of Alternate Base Rate Loans, on the
last day of each calendar quarter, (y) in the case of Eurodollar Loans, on
the last day of each Interest Period for such Loan (and, if such Interest
Period exceeds three months' duration, on the last day of the third month of
the Interest Period and the last day of such Interest Period), and (z) in the
case of any Loan, upon the payment or prepayment thereof (including any
payment with respect to the Term Loan) or the conversion thereof into a Loan
of another type (but only on the principal so paid, prepaid or converted).
Interest payable at the Post-Default Rate shall be payable from time to time
on demand of the Agent.
(f) APPLICATION OF PREPAYMENTS. If the amount of any payment or prepayment
received by a Lender in respect of a Loan is less than the principal of and
interest accrued on such Loan to the date of payment or prepayment, the
amount paid or prepaid on such Loan shall be applied by such Lender first to
accrued interest and then to principal.
(g) NET PAYMENTS. (i) All payments made by the Borrowers under this
Agreement or any other Loan Document shall be made free and clear of, and
without reduction or withholding for or on account of, any present or future
Taxes now or hereafter imposed, levied, collected, withheld
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or assessed by any Governmental Authority, and all liabilities related
thereto. If any Taxes are required to be withheld or deducted from any
amounts payable to the Agent or any Lender under this Agreement or any other
Loan Document, the Borrowers shall pay the relevant amount of such Taxes and
the amounts so payable to the Agent or such Lender shall be increased to the
extent necessary to yield to the Agent or such Lender (after payment of all
Taxes) interest or any such other amounts payable hereunder at the rates or
in the amounts specified in this Agreement and the other Loan Documents.
Whenever any Taxes are paid by a Borrower with respect to payments made in
connection with this Agreement or any other Loan Document, as promptly as
possible thereafter, such Borrower shall send to the Agent for its own
account or for the account of such Lender, as the case may be, a certified
copy of an original official receipt received by such Borrower showing
payment thereof.
(ii) The Borrowers hereby, jointly and severally, indemnify the Agent and
each of the Lenders for the full amount of all Taxes attributable to payments
by or on behalf of a Borrower hereunder or under any other Loan Document, any
Taxes paid by the Agent or such Lender, as the case may be, any present or
future claims, liabilities or losses with respect to or resulting from any
omission to pay or delay in paying such Taxes (including, without limitation,
any incremental Taxes, interest or penalties that may become payable by the
Agent or such Lender as a result of any failure to pay such Taxes), whether
or not such Taxes were correctly or legally asserted. Such indemnification
shall be made within five (5) days from the date such Lender or the Agent, as
the case may be, makes written demand therefor.
(h) LIMITATION ON EURODOLLAR LOANS. Notwithstanding anything in this
Agreement to the contrary, the Borrowers shall not request a Eurodollar Loan
or convert an Alternate Base Rate Loan to a Eurodollar Loan if immediately
after such borrowing or conversion of such Loan, there shall be more than
five (5) Eurodollar Loans outstanding to any Lender.
4.2 MAXIMUM INTEREST. Anything in this Agreement or the Notes to the
contrary notwithstanding, the interest rate on any Loan shall in no event be
in excess of the maximum permitted by Applicable Law.
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4.3 COMPUTATIONS. (a) Interest on all Loans shall be computed on the
basis of the actual number of days elapsed in the period during which
interest accrues and a year of 365/366 days, in the case of Alternate Base
Rate Loans, and a year of 360 days, in the case of Eurodollar Loans. In
computing interest on any Loan, the date of the making of the Loan on the
first day of an Interest Period, as the case may be, shall be included and
the date of payment or the expiration date of an Interest Period, as the case
may be, shall be excluded; PROVIDED, that if a Revolving Credit Loan is
repaid on the same day on which it is made, one day's interest shall be paid
on that Revolving Credit Loan.
(b) All computations made by the Agent or a Lender under this
Agreement shall be conclusive absent demonstrable error.
4.4 MINIMUM AMOUNTS. Except for conversions or prepayments made
pursuant to Section 6.4 hereof, each borrowing, conversion and prepayment of
principal of Loans shall be in an amount at least equal to $1,000,000, in the
case of Eurodollar Loans, and $250,000, in the case of Alternate Base Rate
Loans and integral multiples of conversions of or into Loans of different
types or, in the case of Eurodollar Loans, having different Interest Periods
at the same time hereunder are to be deemed separate borrowings, conversions
and prepayments for purposes of the foregoing, one for each type of Interest
Period).
SECTION 5. TERMINATION
5.1 CREDIT EXPIRATION DATE. As used herein, "Credit Expiration Date"
shall mean the earlier of (i) April 29, 1999 or such later date as the
Borrowers and the Lenders shall agree, and (ii) such date as shall be
determined pursuant to Section 11.1 hereof.
5.2 TERMINATION BY THE BORROWERS. The Borrowers may terminate this
Agreement and the Aggregate Revolving Loan Commitment upon not less than
fifteen days' prior written notice to the Agent (which shall give prompt
notice of the receipt thereof to the Lenders) signed by the President, the
Chief Financial Officer, the Treasurer or an Assistant Treasurer of each of
the Borrowers and upon payment of all amounts owing to the Lenders hereunder
and on
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the Notes; PROVIDED, HOWEVER, that no such termination shall be effective
until all such amounts have been paid.
SECTION 6. YIELD PROTECTION AND ILLEGALITY
6.1 ADDITIONAL COSTS. (a) The Borrowers, jointly and severally, shall
pay directly to the Agent for the account of each lender from time to time
immediately upon demand such amounts as such Lender may determine to be
necessary to compensate it (or any Booking Office) for any costs incurred by
such Lender (or any Booking Office) or any reduction of the rate of return on
assets or equity of such Lender (or any Booking Office) to a level below that
which such Lender (or any Booking Office) could have achieved,
which it determines are attributable to its making or
maintaining of any Loans hereunder or its obligation to make or maintain any
Loans hereunder, or any reduction in any amount receivable by such Lender
(or any Booking Office) hereunder in respect of any Loans or such obligation
(such increases in costs and reductions in amounts receivable or rate of
return being herein called "ADDITIONAL COSTS"), resulting from any Regulatory
Charge which (i) changes the basis of taxation of any amounts payable to such
Lender under this Agreement or any Note payable to it (other than taxes
imposed on the overall net income of such Lender or of its Booking Office by
the jurisdiction in which such Lender has it principal place of business or
such Booking Office, unless such tax is imposed solely as a result of the
transactions contemplated by the Loan Documents); (ii) imposes or modifies
any reserve, special deposit, capital adequacy, capital maintenance or
similar requirements, or results in any change in the interpretation or
administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof,
or the compliance by such Lender (or any Booking Office) or such Lender's
holding company with any request or directive regarding capital adequacy or
capital maintenance (whether or not having the force of law) or with any such
authority, central bank or comparable agency; or (iii) imposes any other
condition affecting such Lender's return under this Agreement (or any of such
extensions of credit or liabilities). Each Lender will notify the Agent, who
in turn will notify the Borrowers, of any event which will entitle such Lender
to compensation pursuant to this Section 6.1(a) as promptly as practicable
after it obtains knowledge thereof and determines to request such
compensation; PROVIDED, that the failure of the Lender to so notify the
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Agent or the failure of the Agent to so notify the Borrowers shall not
affect the obligations of the Borrowers hereunder in respect of such
Additional Costs. Such Lender will furnish the Agent with a certificate
setting forth the basis and amount of each request by such Lender for
compensation under this Section 6.1(a). The Agent shall promptly forward a
copy of such certificate to the Borrowers.
(b) Without limiting the effect of the foregoing provisions of this
Section 6.1, in the event that, by reason of any Regulatory Change, a
Lender either (i) incurs Additional Costs based on or measured by the
excess above a specified level of the amount of a category of deposits or
other liabilities of such Lender which includes deposits by reference to
which the interest rate on Eurodollar Loans is determined as provided in
this Agreement or a category of extensions of credit or other assets of
such Lender which includes Eurodollar Loans or (ii) becomes subject to
restrictions on the amount of such a category of liabilities or assets
which it may hold, then, if such Lender so elects by notice to the Agent,
who shall give notice to the Borrowers, the obligation of such Lender to
make, and to convert Alternate Base Rate Loans into, Eurodollar Loans
hereunder shall be suspended until the date such Regulatory Change ceases
to be in effect (and all Eurodollar Loans held by such Lender then
outstanding shall be converted into Alternate Base Rate Loans in
accordance with Section 6.4 hereof).
(c) Determinations by a Lender for purposes of this Section 6.1 of the
effect of any Regulatory Change on its costs of making or maintaining its
Loans, its Revolving Credit Loan Commitment or its Term Loan Commitment or
on amounts receivable by it hereunder or under its Notes, and of the
additional amounts required to compensate such Lender in respect of any
Additional Costs, shall be conclusive absent demonstrable error.
(d) Each Lender that is incorporated or organized under the laws of any
jurisdiction other than the United States or any state thereof agrees
that, on or prior to the date any payment is due to be made to it
hereunder or under any Loan Document, it will furnish to the Borrowers and
the Agent:
(i) two valid, duly completed copies of United States Internal Revenue
Service Form 4224 or United States Internal Revenue Form 1001 or
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successor applicable form, as the case may be, certifying in each
case that such Lender is entitled to receive payments under this
Agreement and the other Loan Documents without deduction or withholding
of any United States federal income taxes; and
(ii) a valid, duly completed United States Internal Revenue Service
Form W-8 or W-9 or successor applicable form, as the case may be, to
establish an exemption from United States back-up withholding tax.
Each Lender that so delivers to the Borrowers and the Agent a Form 1001 or
4224 and Form W-8 or W-9, or successor applicable forms, agrees to deliver
to the Borrowers and the Agent two further copies of the said Form 1001 or
4224 and Form W-8 or W-9, or successor applicable forms, or other manner
of certification, as the case may be, on or before the date that any such
form expires or becomes obsolete or otherwise is required to be
resubmitted as a condition to obtaining an exemption from withholding tax,
or after the occurrence of any event requiring a change in the most recent
form previously delivered by it, and such extensions or renewals thereof
as may reasonably be requested by the Borrowers and the Agent, certifying
in the case of a Form 1001 or Form 4224 that such Lender is entitled to
receive payments under this Agreement or any other Loan Document without
deduction or withholding of any United States federal income taxes, unless
in any such cases an event (including, without limitation, any changes in
Applicable Law) has occurred prior to the date on which any such delivery
would otherwise be required that renders all such forms inapplicable or
that would prevent such Lender from duly completing and delivering any
such letter or form with respect to it and such Lender advises the
Borrowers and the Agent that it is not capable of receiving payments
without any deduction or withholding of United States federal income tax,
and in the case of a Form W-8 or W-9, establishing an exemption from
United States back-up withholding tax.
6.2 LIMITATION ON TYPES OF LOANS. Anything herein to the contrary
notwithstanding, if, on or prior to the
determination of any interest rate for any Eurodollar Loan for any
Interest Period therefor:
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(a) the Agent (after consultation with the Lenders) determines (which
determination shall be conclusive) that the rate of interest which appears
on the Telerate Page or the quotations of interest rates for the relevant
deposit referred to in the definition of the Eurodollar Rate in Section 1
hereof are not being provided in the relevant amounts or for the relevant
maturities for purposes of determining the rate of interest for such
Eurodollar Loan as provided in this Agreement; or
(b) the Agent (after consultation with the Lenders) determines (which
determination shall be conclusive) that the relevant rates of interest
referred to in the definition of the Eurodollar Rate in Section 1 hereof
upon the basis of which the rate of interest for such Eurodollar Loan for
such Interest Period is to be determined do not accurately reflect the
cost to a Lender of making or maintaining such Eurodollar Loan for such
Interest Period;
then the Agent shall give the Borrowers prompt notice thereof, and so long
as such condition remains in effect, such Lender shall be under no
obligation to make Eurodollar Loans or to convert Alternate Base Rate
Loans into Eurodollar Loans and the Borrowers shall, on the last day(s) of
the then current Interest Period(s) for the outstanding Eurodollar Loans
payable to such Lender, either prepay such Eurodollar Loans or convert such
Eurodollar Loans into Alternate Base Rate Loans in accordance with Section
6.4 hereof.
6.3 ILLEGALITY. Notwithstanding any other provision in this Agreement,
in the event that it becomes unlawful for a Lender or its Booking Office
to (a) honor its obligation to make Eurodollar Loans hereunder, or (b)
maintain Eurodollar Loans hereunder, then such Lender shall promptly
notify the Agent who shall give the Borrowers prompt notice thereof, and
such Lender's obligation to make Eurodollar Loans and to convert Alternate
Base Rate Loans into Eurodollar Loans hereunder shall be suspended until
such time as such Lender may again make and maintain Eurodollar Loans, and
such Lender's outstanding Eurodollar Loans shall be converted into
Alternate Base Rate Loans in accordance with Section 6.4 hereof.
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6.4 CERTAIN CONVERSIONS PURSUANT TO SECTIONS 6.1, 6,2 AND 6.3. If a
Eurodollar Loan (such Eurodollar Loan being herein called "AFFECTED LOAN") is
to be converted pursuant to Sections 6.1, 6.2 or 6.3 hereof, such Affected
Loan shall be automatically converted into an Alternate Base Rate Loan on the
last day(s) of the then current Interest Period for the Affected Loan (or, in
the case of a conversion required by Section 6.3 hereof, on such earlier date
as the Agent may specify to the Borrowers) and, unless and until such Lender
gives notice that the circumstances specified in Sections 6.1, 6.2 or 6.3
hereof which gave rise to such conversion no longer exist, to the extent that
the Affected Loan has been so converted, all payments and prepayments of
principal which would otherwise be applied to the Affected Loans shall be
applied instead to its Alternate Base Rate Loan.
6.5 COMPENSATION. The Borrowers, jointly and severally, shall pay to the
Agent (which shall immediately distribute the amount received to the Lender
entitled hereto, upon the request of such Lender given through the Agent)
such amount or amounts as shall be sufficient (in the opinion of such Lender)
to compensate it for any loss, cost or expense incurred by it as a result of:
(a) any payment, prepayment or conversion of a Eurodollar Loan made by
such Lender on a date other than the last day of an Interest Period for
such Eurodollar Loan; or
(b) any failure by the Borrowers to borrow, convert or prepay a
Eurodollar Loan held by such Lender on the date for such borrowing,
conversion or prepayment specified in the relevant Loan Request, Notice of
Conversion or Continuation or notice of prepayment delivered under Section
4.1(d) hereof, respectively;
such compensation to include, without limitation, an amount equal to the
excess, if any, of (i) the amount of interest which would have accrued on the
principal amount so paid, prepaid or converted or not borrowed for the period
from the date of such payment, prepayment or conversion or failure to borrow
to the last day of the then current Interest Period for such Eurodollar Loan
(or, in the case of a failure to borrow, the Interest Period for such
Eurodollar Loan which would have commenced on the date of such failure to
borrow) at the applicable rate of interest for such Eurodollar Loan
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provided for herein over (ii) the interest component (as reasonably
determined by such Lender) of the amount (as reasonably determined by such
Lender) such Lender would have bid in the Eurocurrency market for Dollar
deposits of amounts comparable to such principal amount and maturities
comparable to such period.
SECTION 7. REPRESENTATIONS AND WARRANTIES
On and after the Effective Date (except that the representation and
warranty contained in Section 7.19(b) shall be made only on and after the
date the Lenders make the initial Loans to the Borrower), each Borrower
represents and warrants, with respect to itself, to the Agent and the Lenders
that:
7.1 ORGANIZATION, POWERS, ETC. (a) CCCIS is a corporation duly
incorporated, validly existing and in good standing under the laws of the
State of Delaware and is duly qualified to do business as a foreign
corporation in each other jurisdiction in which the conduct of its business
requires such qualification other than those where the failure to so qualify
would not have a material adverse effect on the business, operations,
property or financial or other condition of CCCIS or impair the Assigned
Collateral or the Lenders' or the Agent's rights to exercise their remedies
upon an Event of Default. CCCIS has all requisite corporate power and
authority to conduct its business as contemplated to be conducted, to own its
properties and to execute, deliver, and perform all of its obligations
under the Loan Documents to which CCCIS is a party.
(b) The Joint Venture Agreement is in full force and effect, and is
a valid and binding agreement of all the parties thereto. CCCDC is a general
partnership duly formed, validly existing and in good standing under the laws
of the State of Delaware and is duly qualified to do business in each
jurisdiction in which the conduct of its business requires such qualification
other than those where the failure to so qualify would not have a material
adverse effect on the business operations, property or financial or other
condition of CCCDC or impair the Assigned Collateral or the Lenders' or the
Agent's rights to exercise their remedies upon an Event of Default. CCCDC has
all powers and authority under the Joint Venture Agreement to conduct its
business as contemplated to be conducted, to own its properties and to
execute, deliver, and perform all of its
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obligations under the Loan Documents to which CCCDC is a party.
7.2 CORPORATE AUTHORITY, ETC. The execution, delivery and performance by
such Borrower of the Loan Documents to which it is a party have been duly
authorized by all necessary action (corporate or otherwise), on the part of
such Borrower and do not and will not (i) violate any provision of any law,
rule, regulation, order, writ, judgment, injunction decree, determination or
award to which such Borrower is subject or, with respect to CCCIS, of the
certificate of incorporation or by-laws of CCCIS or, with respect to CCCDC,
any provision of the Joint Venture Agreement, (ii) result in a breach of or
constitute a default under any indenture or loan or credit agreement or any
other agreement, lease or instrument to which such Borrower is a party or by
which such Borrower or any of its properties is bound or (iii) result in, or
require, the creation or imposition of any mortgage, deed of trust,
assignment, pledge, Lien, security interest or other charge or encumbrance of
any nature upon or with respect to any of such Borrower's properties, except
as otherwise provided by the Security Agreement to which such party is
Borrower; nor is such Borrower in default under any such law, rule,
regulation (other than those laws, rules or regulations the violation of
which would not have a material adverse effect on the business, operations,
property or financial or other condition of such Borrower or any of its
subsidiaries or impair the Assigned Collateral or the Lenders' or the Agent's
rights to exercise their remedies upon an Event of Default), order, writ,
judgment, injunction, decree, determination or award to which it is subject
or any such indenture, agreement, lease or instrument to which it is a party
(by successor in interest or otherwise) or by which any of the properties
owned by it or used in the conduct of its business is affected (other than
(i) those indentures, agreements, leases or instruments which, in the
aggregate, involve future payment or receipt of less than $500,000 and (ii)
the Existing Indebtedness).
7.3 GOVERNMENT APPROVALS. Other than those which have been obtained and
are in full force and effect, no authorization, consent, approval, license,
exemption of or filing or registration with any commission, board, bureau,
agency or instrumentality, is or will be necessary to the valid execution,
delivery or performance by such Borrower of the Loan Documents to which it is
a party.
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7.4 GOVERNMENT REGULATION. Neither such Borrower nor any subsidiary of
such Borrower is subject to regulation under the Investment Company Act of
1940, as amended, or any other federal or state statute or regulation which
limits the ability of such Borrower to incur indebtedness or the ability of
such Borrower to consummate the transactions contemplated by the Loan
Documents to which it is a party.
7.5 VALID AND BINDING BORROWER OBLIGATIONS. The Loan Documents to which it
is a party are the legal, valid and binding obligations of such Borrower,
enforceable against such Borrower in accordance with their respective terms.
7.6 LITIGATION. Except as set forth in Schedule 7.6, there are no actions
suits or proceedings pending or, to the knowledge of such Borrower,
threatened against or affecting such Borrower or any subsidiary of such
Borrower, the business or any property of such Borrower or any subsidiary of
such Borrower, which, if adversely determined, could have a material adverse
effect on the business, operations, property or financial or other condition
of such Borrower or impair the Assigned Collateral or the Lenders' or the
Agent's rights to exercise their remedies upon an Event of Default, or
involving the legality, validity or enforceability of the Loan Documents to
which it is a party at law or in equity before any court, governmental agency
or regulatory authority (federal, state or local).
7.7 USE OF PROCEEDS. No part of the proceeds of any Loan will be used to
purchase or carry any "margin stock" (as defined in Federal Reserve
Regulation U) or to extend credit to others for such purpose. Such Borrower
does not engage in, nor have as one of its important activities, the business
of extending credit for the purpose of purchasing or carrying any margin
stock.
7.8 ACCURACY OF INFORMATION. All information, financial or otherwise,
written or verbal, supplied by such Borrower to the Agent or any Lender is
true, complete and accurate in all material respects and does not omit to
state a material fact necessary in order to make any statement contained
therein or herein not misleading, as of the date such statement was made.
7.9 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of such Borrower.
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contained in each Loan Document delivered by such Borrower in connection with
this Agreement are, or when such Loan Document is delivered will be, true and
correct.
7.10 EXISTING INDEBTEDNESS. The Existing Indebtedness, and accrued and
unpaid interest thereon, have been paid in full, and any and all Liens
securing such Existing Indebtedness have been released or provision for
release of such Liens satisfactory to the Agent and the Required Lenders has
been made.
7.11 FINANCIAL POSITION. The consolidated balance sheets of InfoVest and
its consolidated subsidiaries as at April 30, 1993 and the related statements
of income and shareholders' equity of InfoVest and its consolidated
subsidiaries for the fiscal year then ended, audited by Price Waterhouse,
independent accountants, copies of which have been furnished to the Lenders,
present the consolidated financial position of InfoVest and its consolidated
subsidiaries as at such date and the consolidated results of the operations
of InfoVest and its consolidated subsidiaries for the period ended on such
date, all in accordance with GAAP.
7.12 PLEDGE OF COLLATERAL. The Collateral Agent, pursuant to the Security
Agreement to which such Borrower is a party, holds a valid, perfected and
first priority security interest in the Assigned Collateral covered thereby.
7.13 TITLE TO ASSETS. Such Borrower has legal title to all assets owned by
it on the date hereof, and will have legal title to all assets acquired by it
at any time subsequent to the date hereof, free and clear of all Liens,
except as contemplated by the Security Agreement to which such Borrower is a
party.
7.14 TAX RETURNS. Such Borrower and each of its subsidiaries (i) has filed
all federal tax returns and state tax returns for the state in which it is
incorporated and the state in which it has its principal place of business,
and all other state and local tax returns required to be filed by it, other
than such tax returns with respect to which the failure to file would not (x)
materially adversely affect the business, properties, conditions (financial
or otherwise), results of operations or prospects of such Borrower and its
subsidiaries or (y) impair the Assigned Collateral or the Lenders' or the
Agent's rights to exercise
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their remedies upon an Event of Default, and (ii) has not failed to pay any
taxes, or interest and penalties relating thereto, on or before the due dates
thereof except for (x) taxes not yet due and (y) taxes with respect to which
the failure to pay would not (1) materially adversely affect the business,
properties, conditions (financial or otherwise), results of operations or
prospects of such Borrower and its subsidiaries or (2) impair the Assigned
Collateral or the Lenders' or the Agent's rights to exercise their remedies
upon an Event of Default. Except to the extent that reserves therefor are
reflected in the financial statements delivered pursuant to Section 7.11
hereof, (a) there are no material federal, state or local tax liabilities of
such Borrower or any of its subsidiaries due or to become due for any tax
year ended on or prior to the date of execution of this Agreement relating to
such Borrower or any of its subsidiaries, whether incurred in respect of or
measured by the income of such Borrower or any of its subsidiaries, which are
not properly reflected in the financial statements delivered pursuant to
Section 7.11, and (b) there are no material claims pending, proposed or
threatened against such Borrower or any of its subsidiaries for past federal,
state or local taxes, except those, if any, as to which proper reserves in
accordance with GAAP are reflected in such financial statements.
7.15 ERISA. Each Plan is in compliance with all of the applicable material
provisions of ERISA, except for such provisions with respect to which the
failure to comply would not (x) materially adversely affect the business,
properties, conditions (financial or otherwise), results of operations or
prospects of such Borrower and its subsidiaries or (y) impair the Assigned
Collateral or the Lenders' or the Agent's rights to exercise their remedies
upon an Event of Default. Each Plan intended to be qualified under Section
401(a) of the Code is so qualified. No Plan has incurred an "accumulated
funding deficiency" (within the meaning of Section 302 of ERISA or Section
412 of the Code) whether or not waived. Neither such Borrower nor any ERISA
Affiliate (i) has incurred or expects to incur any liability under Title IV
of ERISA with respect to any Plan which could give rise to a Lien in favor of
the PBGC, other than liability for the payment of premiums, all of which have
been timely paid when due in accordance with Section 4007 of ERISA, (ii) has
incurred or expects to incur any withdrawal liability, within the meaning of
Section 4201 of ERISA, (iii) is subject to any Lien under Section 412(n) of
the Code of Sections 302 (f) or 4068 of ERISA or arising
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out of any action brought under Sections 4070 or 4301 of ERISA, or (iv) is
required to provide security to a Plan under Section 401(a)(29) of the Code.
The PBGC has not instituted proceedings to terminate any Plan or to appoint a
trustee or administrator of any such Plan and no circumstances exist that
constitute grounds under Section 4042 of ERISA to commence any such
proceedings.
7.16 NO MATERIAL ADVERSE CHANGE. Since December 31, 1993, there has
occurred no event which has or had a material adverse effect upon the
business, properties, liabilities, condition (financial or otherwise),
results of operations or prospects of such Borrower and its subsidiaries,
taken as a whole, or upon the ability of such Borrower to perform its
obligations under this Agreement or the other Loan Documents to which it is a
party or upon the ability of the Lenders or the Agent to enforce this
Agreement or the other Loan Documents to which such Borrower is a party,
except as set forth in Schedule 7.16.
7.17 COMPLIANCE WITH LAWS. Such Borrower and its subsidiaries are in
compliance in all material respects with all Applicable Laws.
7.18 PARI PASSU. The obligations of such Borrower to the Agent and each
Lender hereunder rank and will at all times rank at least PARI PASSU with all
other unsubordinated Indebtedness of such Borrower.
7.19 CAPITAL STOCK. (a) No Person, other than InfoVest, has the right to
require CCCIS to issue to such Person or any other Person any Capital Stock,
other equity securities or any other ownership interest in (including,
without limitation, stock or securities exchangeable for or convertible into
Capital Stock, other equity securities or ownership interests) CCCIS.
(b) No Person, other than CCCIS, has the right to require CCCDC to issue
to such Person or any other Person any ownership interest in (including,
without limitation, securities exchangeable for or convertible into ownership
interests) CCCDC.
7.20 FRANCHISES, LICENSES, TRADEMARKS AND OTHER RIGHTS. Such Borrower and
its subsidiaries have all franchises, permits, licenses and other authority
as are necessary to enable them to conduct their respective businesses as
presently being conducted and as proposed to
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be conducted, and none of them is in default under any of such
franchises, permits, licenses or other authority, except for such
defaults which would not materially adversely affect the business,
properties, conditions (financial or otherwise), results of operations
or prospects of such Borrower and its subsidiaries or impair the
Assigned Collateral or the Lenders' or the Agent's rights to exercise
their remedies upon an Event of Default. Such Borrower and its
subsidiaries possess all patents, patent rights, trademarks, trademark
rights, trade names, trade name rights, copyrights and other
intellectual property rights necessary to conduct their respective
businesses as presently being conducted and as proposed to be
conducted, without conflict with any valid rights of others which could
materially adversely affect the business, properties, conditions
(financial or otherwise), results of operations or prospects of such
Borrower and its subsidiaries or impair the Assigned Collateral or the
Lenders' or the Agent's rights to exercise their remedies upon an Event
of Default.
SECTION 8. CONDITIONS PRECEDENT
Each borrowing of a Loan pursuant to this Agreement may be made only if
the following conditions precedent are met and each request for a Loan
shall constitute a representation and warranty that such conditions
precedent have been met:
8.1 NO DEFAULT. Except as otherwise consented to by the Required
Lenders in writing, on the date of each borrowing, no Default or Event
of Default shall have occurred and be continuing on such date.
8.2 OPINIONS OF COUNSEL. On the date of the initial borrowing, the
Agent shall have received (with sufficient copies for the Lenders):
(a) the favorable written opinion of Sidley & Austin, special
counsel to the Borrowers, addressed to and satisfactory in form, scope
and substance to the Agent and Lenders;
(b) the favorable written opinion of Sidley & Austin, special
counsel to InfoVest, addressed to and satisfactory in form, scope and
substance to the Agent and the Lenders; and
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(c) such other opinions as may be reasonably requested by the
Agent and the Lenders or counsel for the Agent and the Lenders.
8.3 OTHER SUPPORTING DOCUMENTS. On or prior to the date of the
initial borrowing, the Borrowers shall deliver, or cause to be
delivered, to the Agent (with sufficient copies for the Lenders):
(a) this Agreement, executed by each of the parties hereto,
together with all schedules hereto;
(b) an executed Guaranty;
(c) an executed Pledge Agreement, together with a written
acknowledgment by the Collateral Agent relating to its receipt of the
Capital Stock pledged pursuant thereto;
(d) an executed Master Note and Term Note payable to each Lender;
(e) good standing certificates as of dates no more than twenty
days prior to the date of such initial borrowing, with respect to
CCCIS, CCC Vehicle Damage Estimators, Inc. and InfoVest, from the
Secretary of State of the State of Delaware and from the Secretary of
State of each state in which CCCIS, CCC Vehicle Damage Estimators,
Inc. or InfoVest is qualified to be business;
(f) a certificate of the Secretary or an Assistant Secretary and
President or Chief Financial Officer of each Borrower substantially
in the form attached hereto as Exhibit C;
(g) a certificate of the Secretary or an Assistant Secretary and
President or Chief Financial Officer of InfoVest substantially in
the form attached hereto as Exhibit C;
(h) evidence of such filings of financing statements and
assignments or notices of assignments in such jurisdictions as the
Agent may deem necessary or appropriate in order to perfect the
Collateral Agent's first priority security interest in the Assigned
Collateral located in the State of Illinois;
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(i) executed Security Agreements;
(j) a copy of an executed agreement between the Borrower and each
holder of the Existing Indebtedness, pursuant to which the Borrower
shall have agreed to retire on the date of the initial borrowing under
this Agreement such Existing Indebtedness by payment to each holder
of an amount not in excess of the principal amount of such holder's
Existing Indebtedness plus accrued interest thereon to the date of
such payment;
(k) a copy of an executed agreement between White River and
InfoVest with respect to White River's equity investment in
InfoVest, substantially as contemplated in a letter dated
December 22, 1993 to Mr. Terry Baxter of Fund American Enterprises
Holding from Mr. Daniel D. Jackson on behalf of InfoVest and
in the Fund American Proposal dated as of December 22, 1993, copies
of which are attached hereto as Schedule 8.3;
(l) a copy of (x) the annual audited report for InfoVest and its
subsidiaries for the fiscal year ended April 30, 1993, including
therein the consolidated balance sheet of InfoVest and its subsidiaries
as at the end of such year and the related consolidated statements
of income and cash flows of InfoVest and its subsidiaries for such
year, or statements providing substantially similar information, in
each case as to which Price Waterhouse was unable to express an
opinion, and (y) the unaudited consolidated balance sheet of
InfoVest and its subsidiaries for the eight month period ended
December 31, 1993 and the related unaudited consolidated statements
of income and cash flows of InfoVest and its subsidiaries for such
eight month period and the portion of the fiscal year through such
date, setting forth in comparative form the figures for the previous
year certified by a responsible officer as fairly presenting the
financial position and the results of operations of InfoVest and
its subsidiaries as at and for such eight month period and as having
been prepared in accordance with GAAP (subject to normal year-end
audit adjustments); and
(m) such other documents, as the Agent and the Lenders or counsel
for the Agent and the Lenders may reasonably request.
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8.4 STOCKHOLDERS' EQUITY. White River shall invest, or cause to be
invested, either in cash or by a capital contribution in the form of cash or
securities or a combination thereof, in InfoVest an amount equal to
$40,000,000, in exchange for $39,000,000 Class A Redeemable Voting
Preferred Stock of InfoVest and common stock of InfoVest equal to 37.5% of
fully diluted common stock of InfoVest on the date of such investment.
8.5 CONTROL OF INFOVEST. White River shall own, directly or indirectly, at
least 51% of the then outstanding voting securities of InfoVest. InfoVest's
Board of Directors shall consist of no less than five (5) and no more than
seven (7) members (i) at least two of whom are either a director, an officer
or an employee of White River or of an affiliate of White River, and (ii) at
least three of whom were recommended by the senior management of InfoVest.
The remaining members, if any, of InfoVest's Board of Directors shall consist
of Persons recommended by White River.
8.6 INTEREST RATE CONTRACTS. On or prior to the date of each borrowing,
CCCIS shall have entered into Interest Rate Contracts with one or more
financial institutions acceptable to the Agent, in its sole discretion, with
an aggregate notional principal amount equal to the outstanding principal
amount of the Loans (after giving effect to such borrowing), at fixed or
maximum interest rates and upon terms and conditions (including, without
limitation, measures of damages for early termination), acceptable to the
Agent in its sole discretion.
8.7 LOAN REQUEST. The Borrowers shall have delivered to the Agent a Loan
Request complying with the provisions of Section 2.3, in the case of
Revolving Credit Loans, or Section 3.3, in the case of Term Loans.
8.8 FEES PAID. There shall have been paid to the Agent, for its own
account and for the account of each Lender, as applicable, the Commitment Fee
and the other fees due and payable on the date or through the date of such
borrowing.
8.9 NOTICES FROM THE LENDERS. The Agent shall not have received any
notification from the Required Lenders that any condition precedent set forth
in Section 8 has not then been satisfied.
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8.10 CCC DEVELOPMENT COMPANY. White River Ventures, Inc. shall have
purchased all of the issued and outstanding stock of UCOP Inc., and shall
have transferred to CCCIS its entire interest in UCOP Inc.; and as a result
thereof, CCCIS shall own 100% of the general partnership interests in CCCDC
free and clear of all Liens, except the Liens contemplated by the CCCIS
Security Agreement.
SECTION 9. AFFIRMATIVE COVENANTS
Each Borrower, with respect to itself, covenants and agrees with the Agent
and each Lender that from and after the Effective Date and so long as this
Agreement shall remain in effect or any Loans or any other amounts owing
under this Agreement shall be unpaid, unless the Required Lenders and the
Agent shall otherwise consent in writing, it will:
9.1 PAYMENT OF TAXES, ETC. Pay and discharge all Taxes imposed upon it or
upon its income or profits, prior to the date on which penalties attach
thereto, and all lawful claims, which, if unpaid, might become a Lien or
charge upon any of its assets, other than those Taxes and lawful claims which
(i) such Borrower is contesting the imposition or amount thereof in good
faith and by appropriate legal proceedings promptly instituted and diligently
conducted, (ii) such Borrower is lawfully permitted, in view of such contest,
to defer the payment thereof, (iii) such reserve or other appropriate
provision, if any, as shall be required in conformity with GAAP shall have
been made therefor, (iv) the Lenders are satisfied that the deferral of the
payment thereof will not impair the Assigned Collateral or the Lenders' or
the Agent's rights to exercise their remedies upon an Event of Default, or such
Borrower's ability to conduct its business, and (v) if the amount of the
Taxes or claims being contested equals or exceeds $100,000, if the Lenders so
require, such Borrower remits to the Agent an amount equal to the amount of
the Taxes or claims being contested, which amount the Agent will hold in
escrow until the termination of the contest, at which time it will, to the
extent required by law, be paid over to the appropriate taxing authority
(with any balance, and, if and only to the extent the funds remitted to the
Agent earn interest, interest thereon, returned to such Borrower).
9.2 PRESERVATION OF CORPORATE EXISTENCE. Continue to engage in business of
the same general type as now
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conducted and preserve and maintain its existence in the jurisdiction of its
incorporation or organization, and its rights, franchises and privileges
material to the conduct of its business as now being conducted, and qualify
and remain qualified as a foreign corporation or entity in each jurisdiction
in which such qualification is necessary or desirable in view of its business
operations or the ownership of its properties.
9.3 COMPLIANCE WITH LAWS, ETC. Comply with the requirements of all
Applicable Laws, of any Governmental Authority, except where such
noncompliance would not have a material adverse effect on the business,
operations, property or financial or other condition of such Borrower.
9.4 INSPECTION RIGHTS. At any reasonable time and from time to time during
normal business hours upon notice to such Borrower, permit the Agent, any
Lender or any agents or representatives thereof, at the expense of the Agent
or such Lender, to examine and make copies of the records and books of
account of such Borrower related to the transactions contemplated by the
Loan Documents and to visit its properties, and to discuss its affairs,
finances and accounts with any of its authorized agents or officers.
9.5 MAINTENANCE OF APPROVALS, FILINGS AND REGISTRATIONS. At all times
maintain in effect, renew and comply with all the terms and conditions of all
consents, licenses, approvals and authorizations as may be necessary or
appropriate under any Applicable Law or regulation (i) for the execution,
delivery and performance of the Loan Documents, (ii) to make the Loan
Documents to which such Borrower is a party legal, valid, binding and
enforceable against such Borrower and (iii) to conduct its business as now
being conducted.
9.6 REPORTING REQUIREMENTS. Furnish or cause to be furnished to the Agent
(with sufficient copies for the Lenders):
(a) As soon as available, but, in any event not later than ninety (90)
days after the end of each fiscal year of each of InfoVest and CCCIS, a
copy of the annual audited consolidated and consolidating reports for
InfoVest or CCCIS, as the case may be, for such year, including therein
the consolidated and consolidating balance sheets of InfoVest or CCCIS, as
the case may be, as at the end of such year and the related consolidated
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and consolidating statements of income and cash flows of InfoVest
or CCCIS, as the case may be, for such year, or statements
providing substantially similar information, in each case certified
without qualification by an independent public accountant of
recognized national standing as fairly representing the financial
position and results of operation of InfoVest or CCCIS, as the case
may be, and its subsidiaries as at and for the year ending on its
date and having been prepared in accordance with GAAP.
(b) As soon as available, but in any event not later than
forty-five (45) days after the end of each of the first three
quarterly periods of each fiscal year of each of InfoVest and
CCCIS, the unaudited consolidated and consolidating balance sheets
of InfoVest or CCCIS, as the case may be, and its subsidiaries as
at the end of each such quarter and the related unaudited
consolidated and consolidating statements of income and cash flows
of InfoVest or CCCIS, as the case may be, and its subsidiaries for
such quarter and the portion of the fiscal year through such date,
setting forth in each case in comparative form the figures for the
previous year, certified by a responsible officer as fairly
presenting the financial position and the results of operations of
InfoVest or CCCIS, as the case may be, and its subsidiaries as at
and for the quarter ending on its date and as having been prepared
in accordance with GAAP (subject to normal year-end audit
adjustments).
(c) Concurrently with the delivery of the financial statements
referred to in Sections 9.6(a) and (b) above, a certificate of the
Treasurer of InfoVest or CCCIS, as the case may be, (i) stating
that such officer has reviewed the terms of this Agreement and the
other Loan Documents to which InfoVest or CCCIS, as the case may
be, is a party and has made, or caused to be made under his
supervision, a review in reasonable detail of the transactions and
condition of InfoVest or CCCIS, as the case may be, and its
subsidiaries during the accounting period covered by such financial
statements and that such review has not disclosed the existence
during or at the end of such accounting period, and that such
officer does not have knowledge of the existence as at the date of
such certificate, of any Default or Event of Default except as
specified in such certificate and (ii) containing the computation
of, and showing
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compliance with, each of Sections 9.13, 10.2, 10.10, 10.11 and
10.12.
(d) Promptly and in any event within five (5) Business Days
after such Borrower or any ERISA Affiliate knows or has reason to
know that a Reportable Event has occurred with respect to any Plan,
a statement of the chief financial officer of such Borrower setting
forth details as to such reportable event and the action that such
Borrower or such ERISA Affiliate proposes to take with respect
thereto, together with a copy of the notice of such Reportable
Event, if any, given to the PBGC, the Internal Revenue Service or
the Department of Labor; (ii) promptly and in any event within ten
(10) Business Days after receipt thereof, a copy of any notice such
Borrower or any ERISA Affiliate may receive from the PBGC relating
to the intention of the PBGC to terminate any Plan or to appoint a
trustee to administer any such Plan; (iii) promptly and in any
event within ten (10) Business Days after a filing with the PBGC
pursuant to Section 412(n) of the Code of a notice of failure to
make a required installment or other payment with respect to a
Plan, a statement of the chief financial officer of such Borrower
setting forth details as to such failure and the action that such
Borrower or an ERISA Affiliate proposes to take with respect
thereto, together with a copy of such notice given to the PBGC; and
(iv) promptly and in any event within ten (10) Business Days after
receipt thereof by such Borrower or any ERISA Affiliate from the
sponsor of a Multiemployer Plan, a copy of each notice received by
such Borrower or any ERISA Affiliate concerning the imposition of
withdrawal liability or a determination that a Multiemployer Plan
is, or is expected to be, terminated or reorganized.
(e) Promptly and in any event with five (5) Business Days after
the same are publicly available, copies of all regular and periodic
financial information, proxy materials and other information and
reports, if any, which such Borrower or any of its subsidiaries
shall file with the Securities and Exchange Commission or any
securities exchange.
(f) As soon as available, but in any event not later than
fifteen (15) days after the end of each quarterly period of each
fiscal year of such Borrower,
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an aging analysis of all outstanding accounts receivable as of the
end of such quarterly period.
(g) Such other information respecting the business or the
condition or operation of such Borrower, financial or otherwise, as
the Agent or the Lenders may from time to time reasonably request.
9.7 INDEMNIFICATION. Pay, protect, indemnify and save harmless, jointly
and severally, the Agent, each Lender and in their capacity as such, each of
its officers, directors, shareholders, controlling persons, employees and
agents from and against all liabilities, losses, claims, damages, penalties,
causes of action, suits, costs and expenses (including, without limitation,
attorneys' fees and expenses) or judgments of any nature related to the
transactions contemplated by this Agreement and the other Loan Documents;
PROVIDED, that such Borrower will not be liable to the Agent, a Lender or, in
their capacity as such, any officer, director, shareholder, controlling
person, employee or agent of the Agent or the Lender for such liabilities,
losses, claims, damages, penalties, causes of action, suits, costs and
expenses (including, without limitation, attorneys' fees) or judgments
arising from the gross negligence or willful misconduct of the Agent, such
Lender or such officer, director, shareholder, controlling person, employee
or agent.
9.8 PERFORMANCE OF AGREEMENTS. Duly and punctually pay and perform each of
its obligations under this Agreement and the other Loan Documents.
9.9 NOTICES. Promptly give notice to the Agent:
(a) of the occurrence of any Default or Event of Default,
stating that such notice is a "notice of default";
(b) of any (i) default or event of default under any contractual
obligation of such Borrower or any of its subsidiaries or (ii)
litigation, investigation or proceeding which may exist at any time
between such Borrower or any of its subsidiaries and any
Governmental Authority, which in either case, if not cured or if
adversely determined, as the case may be, would have a material
adverse effect on the business, operations, property or financial
or other condition of such Borrower and its subsidiaries taken as a
whole;
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(c) of any litigation or proceeding to which such Borrower or any of
its subsidiaries is a party and which, if adversely determined, could have
a material adverse effect on the business, operations, property or
financial or other condition of such Borrower or such Borrower and its
subsidiaries taken as a whole;
(d) of a material adverse change in the business, operations, property or
financial or other condition of the Borrower or such Borrower and its
subsidiaries taken as a whole; and
(e) of material developments, as they occur, but in no event less than
quarterly, with respect to the negotiations between CCCIS and Allstate
Insurance Company in connection with the Tech-Cor Agreement.
Each notice pursuant to this subsection shall be accompanied by a statement
of a responsible officer setting forth details of the occurrence referred to
therein and stating what action such Borrower proposes to take with respect
thereto.
9.10 PAYMENT OF OBLIGATIONS. Pay, discharge or otherwise satisfy at or
before maturity or before they become delinquent in accordance with its
normal business practices, as the case may be, all its material obligations
or whatever nature.
9.11 BOOKS AND RECORDS. Keep, or cause to be kept, adequate records and
books of account, in which complete entries are to be made reflecting its
business and financial transactions, such entries to be made in accordance
with GAAP as in effect in the United States consistently applied in the case
of financial transactions or as otherwise required by Applicable Laws.
9.12 FURTHER ASSURANCES. As from time to time requested by the Agent or a
Lender, at the cost and expense of the Borrowers, execute and deliver to the
Agent and the Lenders all such documents and instruments and do all such
other acts and things as may be reasonably required to enable the Agent and
the Lenders to exercise and enforce their respective rights under this
Agreement, and record and file and re-record and refile all such documents
and instruments, at such time or times, in such manner and at such place or
places, all as may be necessary to validate, preserve and protect the
position of the Agent and the
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Lenders under the Loan Documents. The Agent may, and at the request of any
Lender shall, upon any extension of this Agreement, request an opinion of
counsel, selected by the Borrowers and approved by the Agent, with respect to
action required to be taken for the protection of the rights of the Agent and
the Lenders hereunder and under the other Loan Documents.
9.13 EQUITY OFFERINGS. Apply, on the first Business Day following the
receipt thereof, to the repayment of the Term Loans the funds remitted to
CCCIS by InfoVest from the sale of any Capital Stock by InfoVest. Each Lender
shall apply each such repayment received by such Lender to the scheduled
principal payments of its Term Loan such that the amount applied to each
scheduled payment bears the same ratio to the total amount of such repayment
as the remaining outstanding principal amount of each such scheduled payment
bears to the total remaining outstanding principal amount of such Lender's
Term Loan.
9.14 OTHER AGREEMENTS.
(a) Maintain in full force and effect, on terms no less favorable to the
Borrowers and InfoVest then exist on the date of this Agreement, the Amended
and Restated Data Base Licensing Agreement dated as of May 1, 1992 among the
Borrowers, InfoVest, CCC Vehicle Damage Estimators, Inc. and Motor Books
Division, a unit of Hearst Business Publishing, Inc.
(b) Enter into, on or prior to April 29, 1995, the Tech-Cor Agreement.
(c) Maintain in full force and effect Interest Rate Contracts with one or
more financial institutions acceptable to the Agent, in its sole discretion,
with an aggregate notional principal amount equal to the outstanding
principal amount of the Loans, at fixed or maximum interest rates and upon
terms and conditions (including, without limitation, measures of damages for
early termination), acceptable to the Agent in its sole discretion.
(d) Comply in all material respect with all indentures, loan or credit
agreements and any other agreement, lease or instrument (including, without
limitation, Contract Funding Agreements) to which such Borrower is a party.
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(e) Prior to May 30, 1994, deliver to the Agent executed copies of any
Contract Funding Agreement entered into by such Borrower after the date of
this Agreement.
9.15 INSURANCE. Maintain, and cause each subsidiary to maintain with
financially sound and reputable insurers, insurance as may be required by
Applicable Law and such other insurance, to such extent and against such
hazards and liabilities, as is customarily maintained by companies similarly
situated.
SECTION 10. NEGATIVE COVENANTS
Each Borrower with respect to itself, covenants and agrees with the Agent
and each Lender that from and after the Effective Date and so long as this
Agreement shall remain in effect and Loans or any other amounts owing under
this Agreement shall be unpaid, such Borrower will not, directly or
indirectly, unless the Required Lenders shall otherwise consent in writing;
10.1 USE OF PROCEEDS. Use the proceeds of the Loans for any purpose other
than to (i) retire the Existing Indebtedness, (ii) acquire from White River
Ventures, Inc. its entire interest in UCOP Inc. for a purchase price not to
exceed $7,000,000, plus interest thereon, as contemplated in the Call
Agreement dated as of March 30, 1994 between InfoVest and White River
Ventures, Inc. (a copy of which is attached hereto as Schedule 10.1), (iii)
pay fees and transaction expenses incurred in connection with the
transactions contemplated by the Loan Documents and the transaction described
in clauses (i) and (ii) above, or (iv) provide funds for general corporate
purposes in accordance with the terms of this Agreement.
10.2 FINANCIAL COVENANT. Permit the Total Debt Service Coverage, as
determined for CCCIS's fiscal year ending April 30, to be less than the ratio
set forth opposite such fiscal year below:
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Minimum
Fiscal Year Ending Ratio
------------------ -------
April 30, 1995 1.10
April 30, 1996 1.50
April 30, 1997 1.75
April 30, 1998 2.00
April 30, 1999 2.00
10.3 AMENDMENTS. Amend, or consent to any amendment, waiver, supplement or
modification of any Loan Document or the Servicing Agreement.
10.4 MAXIMUM CREDITS OUTSTANDING. Permit (i) the aggregate principal amount
of outstanding Revolving Credit Loans or the Term Loan of a Lender to exceed
such Lender's Revolving Credit Loan Commitment or Term Loan Commitment,
respectively, or (ii) the aggregate principal amount of outstanding Revolving
Credit Loans or Term Loans of the Lenders to exceed the Aggregate Revolving
Credit Loan Commitment or Aggregate Term Loan Commitment, respectively.
10.5 LIENS. Create, incur, assume or suffer to exist any Lien upon or
with respect to any of its assets, whether now owned or hereafter acquired,
or assign or otherwise convey any right to receive income to secure any
obligation, except (i) as contemplated by the Security Agreement to which
such Borrower is a party, (ii) with respect to permitted Indebtedness which,
when combined with permitted Indebtedness of the other Borrower, in the
aggregate, does not exceed $500,000, (iii) with respect to Contract Funding
Agreements, (iv) Purchase Money Liens with respect to Purchase Money Debt in
an aggregate principal amount, when combined with Purchase Money Debt
incurred by the other Borrower, of no more than $500,000, (v) Liens with
respect to Capital Leases arising in the ordinary course of business of such
Borrower; PROVIDED, that (x) the property underlying such Capital Leases is
not property subject to the Lien of any Security Agreement and (y) the
aggregate outstanding principal amount of all such Capital Leases, when
combined with the aggregate outstanding principal amount of all Capital
Leases of the other Borrower, does not at any time exceed $2,000,000, and
(vi) Liens with respect to Indebtedness representing all or any part of the
purchase price of any property purchased for resale or lease to customers in
the ordinary course of business of a Borrower or any of a Borrower's
subsidiaries, PROVIDED, that the gross amount of such resale price or the
aggregate lease
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payments required to be made throughout the terms of the lease exceeds such
Indebtedness, that such resale or lease occurs within three months after the
date such Indebtedness arises and that the terms of such
resale or lease require payments to such Borrower or such subsidiary that are
sufficient to repay such Indebtedness and interest thereon on a timely basis.
10.6 INDEBTEDNESS. Create, incur, assume or suffer to exist any
Indebtedness, whether current or funded, or any other liability except (i)
the Loans, (ii) Indebtedness existing on the date of the execution of this
Agreement; PROVIDED, HOWEVER, that such Indebtedness shall not be extended
beyond the maturity date therefor and increased above the amount thereof as
both existed on the date of execution of this Agreement, (iii) other
Indebtedness to the Agent or the Lenders arising hereunder, (iv) Indebtedness
representing the fees payable to the Collateral Agent pursuant to the
Security Agreement to which such Borrower is a party, (v) Indebtedness or
other liability incurred in the ordinary course of business of such Borrower;
PROVIDED, that such Indebtedness, when combined with permitted Indebtedness
of the other Borrower, does not exceed at any one time outstanding $100,000,
(vi) Indebtedness with respect to Contract Funding Agreements, (vii) Purchase
Money Debt in an aggregate principal amount, when combined with Purchase
Money Debt incurred by the other Borrower, of no more than $500,000, (viii)
Indebtedness with respect to Capital Leases, when combined with the aggregate
outstanding principal amount of Capital Leases of the other Borrower, not to
exceed at any time an aggregate outstanding principal amount equal to
$2,000,000, (ix) Indebtedness representing all or any part of the purchase
price of any property purchased for resale or lease to customers in the
ordinary course of business of a Borrower or any of a Borrower's
subsidiaries, PROVIDED, that the gross amount of such resale price or the
aggregate lease payments required to be made throughout the terms of the
lease exceeds such Indebtedness, that such resale or lease occurs within
three months after the date such Indebtedness arises and that the terms of
such resale or lease require payments to such Borrower or such subsidiary
that are sufficient to repay such Indebtedness on a timely basis, and (x)
loans borrowed by CCCIS from InfoVest; PROVIDED, that such loans are made
from the proceeds of the sale of the stock or assets of Credit Card Service
Corporation, GIS Information Systems, Inc., Equitel Corp., Original Research
II Corporation, Uniphone Systems, Inc. or
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Phone Base Systems, Inc. and that such loans are unsecured and subordinated
to the Loans and are made on terms and conditions acceptable to the Agent and
the Banks.
10.7 PROHIBITION OF FUNDAMENTAL CHANGES. Wind up, liquidate or dissolve
its affairs or enter into any transaction of merger or consolidation, or
convey, sell, lease or otherwise dispose of (or agree to do any of the
foregoing at any future time), whether in one or a series of transactions, all
or any substantial part of its assets, or permit any of its subsidiaries to
do any of the foregoing; PROVIDED, HOWEVER, that (i) any subsidiary (other
than a Borrower) may merge or consolidate with any other subsidiary (other
than a Borrower), (ii) any subsidiary (other than a Borrower) may sell,
lease, transfer or otherwise dispose of any or all of its assets to another
subsidiary (other than a Borrower), (iii) such Borrower may merge or
consolidate with the other Borrower, PROVIDED that, immediately after such
merger or consolidation, no Event of Default shall exist and there shall not
be a default under any Loan Document or any material loan agreement to which
either Borrower is a party, (iv) any subsidiary (other than a Borrower) may
merge or consolidate with any other corporation, provided that, immediately
after giving effect to such merger or consolidation (A) the continuing or
surviving entity of such merger or consolidation shall be such subsidiary and
(B) no Event of Default shall exist, (v) such Borrower may sell, lease,
transfer or otherwise dispose of any or all of its assets to the other
Borrower, (vii) CCCIS may wind up, liquidate, dissolve, convey, sell or
otherwise dispose of the stock or assets of Equitel Corp. or Original
Research II Corporation, (vii) CCCIS may transfer the Capital Stock of
Equitel Corp. or Original Research II Corporation to InfoVest and (viii)
CCCDC may wind up, liquidate or dissolve its affairs and in connection with
any such winding up, liquidation or dissolution, shall transfer all of its
assets to CCCIS or a wholly-owned subsidiary of CCCIS; PROVIDED, that in the
case of the transfer of all of the assets of CCCDC to such subsidiary, such
subsidiary executes and delivers to the Agent such agreements, documents and
instruments requested by the Agent to add such subsidiary as a "Borrower"
hereunder and to effectuate the granting by such subsidiary to the Collateral
Agent of a security interest in all of its assets.
10.8 SALES OF ASSETS. Sell, lease, assign, transfer or otherwise dispose
of any of its assets, including its accounts receivable, except for (i) the
stock
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or assets of Equitel Corp. and Original Research II Corporation, (ii)
equipment leased or sold by such Borrower to its customers in the ordinary
course of the business of such Borrower in connection with generation by such
Borrower of accounts receivable, (iii) the sale of obsolete or worn out
assets, PROVIDED, that the fair market value of such assets at the time of
sale thereof, together with the fair market value of assets sold by the other
Borrower at the time of such sale thereof, shall not exceed $500,000 in any
one fiscal year of such Borrower and (iv) the assignment of leases pursuant
to the Contract Funding Agreements.
10.9 OTHER SUPPORTED CREDIT. Agree to, or, become liable with respect
to any surety bond, letter of credit or any commercial paper, promissory note
support or acceptance financing.
10.10 DIVIDENDS. Declare or pay any cash dividends or make any cash
distribution in respect of, any shares of its Capital Stock now or
hereafter outstanding; PROVIDED, that CCCIS may pay cash dividends to
InfoVest after April 29, 1997 to the extent legally permitted to do so in an
amount not to exceed the lesser of (i) the amount of dividends, if any, paid
by InfoVest to the holders of record of the $39,000,000 Class A Redeemable
Voting Preferred Stock of InfoVest and (ii) eight percent (8.0%) of the
$39,000,000 Class A Redeemable Voting Preferred Stock of InfoVest in any
calendar year if Total Debt Service Coverage at the time of payment of such
cash dividends exceeds 2.0.
10.11 CAPITAL EXPENDITURES; INVESTMENTS. Make any Capital
Expenditures or any advance, loan, extension of credit or capital
contribution to, or purchase any stock, bonds, notes, debentures or other
securities of, or make any other investment in, any Person in an amount, in
any fiscal year of CCCIS, which together with such Capital Expenditures,
advances, loans, extensions, capital contributions, purchases or investments
made by the other Borrower, exceeds the sum of $2,000,000 plus the Excess
Cash for such year not applied as a reduction of the Term Loan pursuant to
Section 3.4, except for (i) Permitted Investments and (ii) loans to employees
and sales representatives; PROVIDED, that the aggregate outstanding amount of
such loans shall not exceed $300,000 at any one time.
10.12 TRANSACTIONS WITH AFFILIATES. Enter into any transactions,
including without limitation, any
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purchase, sale, lease or exchange of property or the rendering of any
service, with InfoVest, White River or any affiliate listed on Schedule
10.12; PROVIDED, that (x) CCCIS may make payments (i) in an amount not to
exceed $1,500,000 in any fiscal year to InfoVest as compensation for the
services which are rendered by InfoVest to CCCIS pursuant to the Servicing
Agreement, (ii) to GIS Information Systems, Inc. as compensation for the
purchase of computer service bureau services, PROVIDED, that such services
are furnished in arms-length transactions between CCCIS and GIS Information
Systems, Inc. and that GIS Information Systems, Inc. charges CCCIS no more
for such services than the lowest rate charged by GIS Information Systems,
Inc. to any third party, unaffiliated entity for similar services, (iii) to
White River as compensation for corporate services provided by White River to
CCCIS, PROVIDED, that such services are furnished in arms-length transactions
between CCCIS and White River and are related to either (a) investment advisory
services furnished to CCCIS by White River, (b) services in connection with
the filing of all regular and periodic financial information, proxy materials
and other information and reports, if any, by White River on behalf of CCCIS
or any of its subsidiaries with the Securities and Exchange Commission, or
(c) legal, tax and treasury services furnished by White River on behalf of
CCCIS, (iv) on behalf of CCCDC for (a) compensation of employees of
CCCDC, (b) permitted Indebtedness incurred by CCCDC and (c) other expenses that
arise in the ordinary course of business of CCCDC, (v) to Original Research II
Corporation as compensation in connection with "consumer satisfaction index
services" provided by Original Research II Corporation to CCCDC, PROVIDED,
that such services are furnished in arms-length transactions between Original
Research II Corporation and CCCDC, and (vi) to InfoVest as reimbursement
for federal, state or local income taxes actually paid by InfoVest on behalf
of CCCIS, (y) CCCDC may make payments on behalf of CCCIS for (1) compensation
of employees of CCCIS, (2) permitted Indebtedness incurred by CCCIS and
(3) other expenses that arise in the ordinary course of business of CCCIS, and
(z) CCCIS may borrow loans from InfoVest; PROVIDED, that such
loans are from the proceeds of the sale of the stock or assets of Credit Card
Service Corporation, GIS Information Systems, Inc., Equitel Corp., Original
Research II Corporation, Uniphone Systems, Inc. or Phone Base Systems, Inc.
and that such loans are unsecured and subordinated to the Loans and are made
on terms and conditions acceptable to the Agent and the Required Lenders.
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10.13 ACQUISITIONS. Make any acquisition of by lease, purchase or otherwise,
all or substantially all of the assets of any Person, or enter into any joint
venture or economic or equity partnership with, any Person, except (i) in the
normal course of business of such Borrower,
PROVIDED, that such Borrower may make any such acquisition or enter into any
such joint venture or partnership (x) at any time during the period ending on
the date which is twelve months after the date of this Agreement if such
Borrower will not be obligated to expend an amount which, when added to the
amount expended or obligated to be expended by such Borrower or the other
Borrower with respect to other acquisitions, joint ventures or partnerships
during such period would cause the aggregate amount expended by the Borrowers
for such purposes to exceed $1,000,000 during such period, and (y) during any
twelve month period thereafter if the Borrower will not be obligated to
expend an amount which, when added to the amount expended or obligated to be
expended by such Borrower or the other Borrower with respect to
acquisitions, joint ventures or partnerships during such period would cause
the aggregate amount expended by the Borrowers for such purposes to exceed
$2,000,000 during such period, (ii) with Tech-Cor in connection with the
Tech-Cor Agreement, and (iii) with Hearst Business Publishing, Inc. in
connection with the Amended and Restated Data Base Licensing Agreement
dated as of May 1, 1992 among CCCIS, InfoVest, CCCDC, CCC Vehicle Damage
Estimates, Inc. and Motor Books Division, a unit of Hearst Business
Publishing, Inc.
10.14 CAPITAL STOCK. Issue any Capital Stock, other equity securities or
any other ownership interest in (including, without limitation, stock or
securities exchangeable for or convertible into Capital Stock, other equity
securities or ownership interests) either Borrower to any Person, except to
InfoVest.
SECTION 11. EVENTS OF DEFAULT
11.1 EVENTS OF DEFAULT. In case of the happening of any of the following
events (herein sometimes called "Events of Default"):
(a) the principal amount of any Loan, any Note or any installment of
principal with respect to a Term Loan shall not be paid when due and
payable; or
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(b) any interest payable on any Note or any Loan, the Commitment
Fee or any other fees related to this Agreement or the transactions
contemplated hereby shall not be paid within three days after the date
when due and payable; or
(c) any other amount payable under this Agreement shall not be
paid within ten days after the date when due and payable; or
(d) any representation or warranty made or deemed to be made or
reaffirmed by a Borrower herein or in any Loan Document, certificate,
agreement, instrument or statement contemplated by or made or delivered
pursuant to or in connection herewith, shall prove to have been
incorrect in any material respect when made or deemed made; or
(e) a Borrower shall fail to perform or observe any term,
covenant or agreement contained in this Agreement or any other Loan
Document; PROVIDED, that the failure to perform or observe any
covenant contained in Sections 9.3, 9.5 (iii), 9.8 (but only to the
extent such failure is not covered by another subsection of this
Section 11.1) or 9.15 of this Agreement, or Sections 3.2(a) (but only
to the extent such failure is not covered by another subsection of this
Section 11.1), 3.2(b) or 3.2(m) of any Security Agreement, shall not be
an Event of Default unless such failure shall remain unremedied for
thirty (30) days after the earlier of the date such Borrower has become
aware of such failure or the date after such Borrower has received
notice thereof; PROVIDED, FURTHER, that the failure to perform or
observe any covenant contained in Sections 9.9
or 9.11 of this Agreement, or Sections 3.2(e) or 3.2(i) of any Security
Agreement, shall not be an Event of Default unless such failure shall
remain unremedied for fifteen (15) days after the earlier of the date
such Borrower has become aware of such failure or the date after such
Borrower has received notice thereof; or
(f) any Loan Document shall, at any time after its execution and
delivery, for any reason cease to be in full force and effect in any
material respect (unless such occurrence is in accordance with its
terms or after payment thereof) or shall be declared to be null and
void or the validity or enforceability thereof shall be contested by a
Borrower or any Borrower shall deny that
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it has any or further liability or obligation thereunder; or
(g) the Guaranty or the Pledge Agreement shall, at any time after
its execution and delivery, for any reason cease to be in full force
and effect in any material respect (unless such occurrence is in
accordance with its terms or after payment thereof) or shall be
declared to be null and void or the validity or enforceability thereof
shall be contested by InfoVest or InfoVest shall deny that it has any
or further liability or obligation thereunder; or
(h) a Borrower or InfoVest or any subsidiary of either (other
than Credit Card Service Corporation, GIS Information Systems, Inc.,
Equitel Corp., Original Research II Corporation, Uniphone Systems, Inc.
and Phone Base Systems, Inc.) shall (i) apply for or consent to the
appointment of, or the taking of possession by, a receiver, custodian,
trustee or liquidator of itself or of all or a substantial part of its
property, (ii) admit in writing its inability, or be generally unable,
to pay its debts as they become due, (iii) make a general assignment
for the benefit of its creditors, (iv) commence a voluntary case under
the Federal Bankruptcy Code (as now or hereafter in effect), (v) be
adjudicated a bankrupt or insolvent, (vi) commence a voluntary case
under, or file a petition seeking to take advantage, of any other law
relating to bankruptcy, insolvency, reorganization, winding-up or
composition or adjustment of debts, (vii) fail to controvert in a
timely and appropriate manner, or acquiesce in writing to, any
allegations, or any petition filed, against it in an involuntary case
under such Federal Bankruptcy Code or other law, or (viii) take any
corporate action for the purpose of effecting any of the foregoing; or
(i) a proceeding or case shall be commenced without the
application or consent of a Borrower or InfoVest or any subsidiary of
either (other than Credit Card Service Corporation, GIS Information
Systems, Inc., Equitel Corp., Original Research II Corporation,
Uniphone Systems, Inc. and Phone Base Systems, Inc.), in any court of
competent jurisdiction, seeking (i) the liquidation, reorganization,
dissolution or winding-up, or the composition or readjustment of debts,
of such Borrower or InfoVest or any subsidiary of either (other than
Credit Card Service Corporation, GIS Information
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Systems, Inc., Equitel Corp., Original Research II Corporation,
Uniphone Systems, Inc. and Phone Base Systems, Inc.), (ii) the
appointment of a trustee, receiver, custodian, liquidator, supervisor
or the like of such Borrower or InfoVest or any subsidiary of either
other than Credit Card Service Corporation, GIS Information Systems,
Inc., Equitel Corp., Original Research II Corporation, Uniphone
Systems, Inc. and Phone Base Systems, Inc.) or of all or any
substantial part of their respective assets or (iii) similar relief in
respect of such Borrower or InfoVest or any subsidiary of either (other
than Credit Card Service Corporation, GIS Information Systems, Inc.,
Equitel Corp., Original Research II Corporation, Uniphone Systems, Inc.
and Phone Base Systems, Inc.) under any law relating to bankruptcy,
insolvency, reorganization, winding-up or composition or adjustment of
debts, and such proceeding or case shall continue undismissed, or an
order, judgment or decree approving or ordering any of the foregoing
shall be entered and continue unstayed and in effect, for a period of
sixty consecutive days, or an order for relief against such Borrower or
InfoVest or any subsidiary of either (other than Credit Card Service
Corporation, GIS Information Systems, Inc., Equitel Corp., Original
Research II Corporation, Uniphone Systems, Inc. and Phone Base Systems,
Inc.) shall be entered in an involuntary case under the Federal
Bankruptcy Code (as now or hereafter in effect); or any judgment, writ,
warrant of attachment or execution or similar process shall be issued
or levied in respect of an obligation (alleged or otherwise) of such
Borrower or InfoVest or any subsidiary of either (other than Credit
Card Service Corporation, GIS Information Systems, Inc., Equitel Corp.,
Original Research II Corporation, Uniphone Systems, Inc. and Phone Base
Systems, Inc.) against a substantial part of the property of such
Borrower or InfoVest or any subsidiary of either (other than Uniphone
Systems, Inc. and Phone Base Systems, Inc.) and such judgment, writ, or
similar process shall not be released, vacated, stayed or fully bonded
within thirty days after its issue or levy; or
(j) A Borrower or InfoVest shall fail to pay when due any amount
in respect of any Indebtedness in the aggregate in excess of $100,000
for money borrowed or for the deferred purchase price of property
created, issued, guaranteed, incurred or assumed by such Borrower
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or InfoVest, as the case may be, or any other event shall occur or any
condition shall exist in respect of any such Indebtedness the effect of
which is to cause (or permit any holder thereof or a trustee to cause),
without giving effect to the giving of notice or the lapse of time, or
both, such Indebtedness to become due prior to its stated maturity; or
(k) White River shall not own, directly or indirectly, at least 51% of
the then outstanding voting securities of InfoVest, or InfoVest's Board of
Directors shall consist of more than seven (7) members, or InfoVest's
Board of Directors shall not have (i) at least two members each of whom is
either a director, an officer or an employee of White River or of any
affiliate of White River, (ii) at least three members each of whom was
recommended by the senior management of InfoVest, and (iii) remaining
members, if any, each of whom was recommended by White River; or
(l) any representation or warranty made or reaffirmed by InfoVest in
the Pledge Agreement, in the Guaranty or in any certificate, agreement,
instrument or written statement made or delivered pursuant thereto, shall
have been incorrect when made or reaffirmed in any material adverse
respect; or
(m) the lien of a Security Agreement in favor of the Collateral Agent
shall cease to be a valid assignment of, and valid and perfected first
priority lien upon and security interest in, the Assigned Collateral, as
security for the repayment of the Borrowers' obligations under this
Agreement, or such lien shall cease to be valid as against creditors of
such Borrower; or
(n) the lien of the Pledge Agreement in favor of the Collateral Agent
shall cease to be a valid assignment of, and valid and perfected first
priority lien upon and security interest in, the Pledged Collateral, as
security for the payment of InfoVest's obligations under Guaranty, or such
lien shall cease to be valid as against creditors of InfoVest; or
(o) any judgment against a Borrower or InfoVest or any of their
respective subsidiaries or any attachment, levy or execution against any
of their respective properties shall remain unpaid, unstayed on appeal,
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undischarged, unbonded or undismissed for a period of thirty (30) days or
more; or
(p) a Termination Event shall have occurred with respect to a Plan,
resulting in the imposition of liability against a Borrower or InfoVest in
an amount in excess of $100,000; or
(q) InfoVest shall fail to perform or observe any term, covenant or
agreement contained in the Guaranty or the Pledge Agreement; PROVIDED,
that the failure to perform or observe any covenant contained in Sections
4.3, 4.5 (iii), 4.8 (but only to the extent such failure is not covered by
another subsection of this Section 11.1) or 4.15 of the Guaranty, or
Sections 3.2(a) (but only to the extent such failure is not covered by
another subsection of this Section 11.1), 3.2(b) or 3.2(m) of the Pledge
Agreement, shall not be an Event of Default unless such failure shall
remain unremedied for thirty (30) days after the earlier of the date
InfoVest has become aware of such failure or the date InfoVest has
received notice thereof; PROVIDED, FURTHER, that the failure to perform or
observe any covenant contained in Sections 4.9 or 4.11 of the Guaranty, or
Sections 3.2(e) or 3.2(i) of the Pledge Agreement, shall not be an Event
of Default unless such failure shall remain unremedied for fifteen (15)
days after the earlier of the date InfoVest has become aware of such
failure or the date InfoVest has received notice thereof; or
(r) InfoVest shall not own, directly or indirectly, 100% of the then
outstanding voting securities of either Borrower, or CCCIS shall not own,
directly or indirectly, 100% of CCCDC; or
(s) the agreement between White River and InfoVest with respect to
White River's equity investment in InfoVest, in form and substance
satisfactory to the Required Lenders, substantially as contemplated by the
letter and proposal attached hereto as Schedule 8.3, shall, at any time
after its execution and delivery, for any reason cease to be in full force
and effect in any material respect (unless such occurrence is in
accordance with its terms) or shall be declared to be null and void or the
validity or enforceability thereof shall be contested by White River or
InfoVest or either
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of them shall deny that it has any or further liability
or obligation thereunder; or
(t) a termination or dissolution of CCCDC shall occur pursuant to
Article XI of the Joint Venture Agreement; PROVIDED, that the termination
or dissolution of CCCDC in connection with the transfer of all of the
assets of CCCDC to CCCIS or a wholly-owned subsidiary of CCCIS shall not be
an Event of Default; PROVIDED, that in the case of the transfer of all of
the assets of CCCDC to such subsidiary, such subsidiary executes and
delivers to the Agent such agreements, documents and instruments requested
by the Agent to add such subsidiary as a "Borrower" hereunder and to
effectuate the granting by such subsidiary to the Collateral Agent of a
security interest in all of its assets;
then, at any time after the continuance of such event, the Agent shall,
upon the direction of the Required Lenders at the same or different times,
take one or more of the following actions: (i) give notice (which may be
telephone notice confirmed in writing) to the Lenders and the Borrowers of
the occurrence of an Event of Default, and the date of the giving of such
notice shall become the Credit Expiration Date with respect to each Lender
hereunder and each Lender's obligation to make Loans shall be terminated,
and (ii) by notice to the Borrowers (except that in the case of the
occurrence of any Event of Default described in Section 11.1(h) or
11.1(i), no such notice shall be required and such termination and
acceleration shall be automatic) declare the unpaid principal amount and
interest under the Notes, the Loans and all other amounts payable to the
Lenders by the Borrowers hereunder to be forthwith due and payable,
whereupon such amounts shall become forthwith due and payable, both as to
principal and interest, without presentment, demand, protest or any other
notice of any kind, all of which are hereby expressly waived, anything
contained herein or in the Notes to the contrary notwithstanding.
SECTION 12. FEES
12.1 AGENT FEES. The Borrowers shall pay to the Agent such fees at
such times as set forth in a letter agreement between the Agent and the
Borrowers.
12.2 COMMITMENT FEE. As consideration for incurring the obligation
to make the Revolving Credit Loans,
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the Borrowers, jointly and severally, shall pay to Agent, for the account of
the Lenders in proportio: Commitment Percentages, a daily Commitment Fee,
from and including the date of execution of this Agreement to but excluding
the Credit Expiration Date, equal to the quotient of (i) the product of (A)
the positive result of (1) the Aggregate Revolving Credit Loan Commitment,
less (2) the aggregate outstanding Revolving Credit Loans and (B) 0.5%,
divided by (ii) 360. The Commitment Fee shall be due and payable quarterly in
arrears on the last Business Day of March, June, September and December of
each year, commencing on the last Business Day of June, 1994.
12.3 EXPENSES. The Borrower, jointly and severally, will pay all reasonable
out-of-pocket costs and expenses incurred by the Agent and the Lenders
(including, without limitation, the fees and out-of-pocket expenses of Seward
& Kissel, counsel to the Agent) (i) in connection with the preparation of
this Agreement and the other Loan Documents (whether or not the transactions
hereby or thereby contemplated shall be consummated), (ii) in connection with
any waivers, amendments or extensions with respect to any of the foregoing
documents, and (iii) in connection with the Loans hereunder. The Borrowers,
jointly and severally, will also pay all costs and expenses incurred by the
Agent and the Lenders (including the fees and out-of-pocket expenses of
counsel to the Agent and the Lenders) in connection with the administration
of and the enforcement and protection of the rights of the Agent and the
Lenders in connection with, this Agreement and the other Loan Documents.
12.4 INVOICES FOR FEES. Each Lender and the Agent shall from time to time
submit to the Borrowers for payment invoices for fees under this Agreement
when the same shall become due and payable and for any costs and expenses
incurred by each Lender and the Agent in connection with this Agreement and
the transactions contemplated hereby.
SECTION 13. THE AGENT
13.1 APPOINTMENT. Each Lender hereby appoints the Agent to act as herein
specified. Each Lender hereby irrevocably authorizes the Agent to take such
action on its behalf under the provisions of this Agreement and the Loan
Documents and to exercise such powers hereunder and thereunder as are
specifically delegated to the Agent by the terms hereof and thereof and such
other powers as are reasonably incidental thereto. The Agent may perform any
of
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its duties hereunder, or under the Loan documents, by or through its
agents or employees.
13.2 NATURE OF DUTIES. The Agent shall have no duties or responsibilities
except those expressly set forth in this Agreement and the other Loan
Documents. The duties of the Agent shall be mechanical and administrative in
nature. The Agent shall not have by reason of this Agreement and the other
Loan Documents, a fiduciary relationship in respect of any Lender. Nothing in
this Agreement or any of the Loan Documents, expressed or implied, is
intended to or shall be so construed as to impose upon the Agent any
obligations in respect of this Agreement or any of the Loan Documents except
as expressly set forth herein or therein. Each Lender shall make its own
independent investigation of the financial condition and affairs of the
Borrowers in connection with its making the Loans hereunder and shall make
its own appraisal of the creditworthiness of the Borrowers; and the Agent
shall have no duty or responsibility, either initially or on a continuing
basis, to provide any Lender with any credit or other information with
respect thereto.
13.3 CERTAIN RIGHTS OF THE AGENT. Neither the Agent nor any its officers,
directors, employees or agents shall be liable to any Lender for any action
taken or omitted by it hereunder or under any of the Loan Documents, or in
connection herewith or therewith, unless caused by its or their gross
negligence or willful misconduct. The Agent shall not be responsible to any
Lender for any recitals, statements, representations or warranties herein or
for the execution, effectiveness, genuineness, priority, validity,
enforceability, collectibility, or sufficiency of this Agreement or any of
the Loan Documents or the financial condition of any Borrower. The Agent
shall not be required to make any inquiry concerning either the performance
or observance of any of the terms, provisions or conditions of this Agreement
or any of the Loan Documents or the financial condition of any Borrower, or
the existence or possible existence of any Event of Default or Default. The
Agent may at any time request instructions from the Lenders with respect to
any actions or approvals which by the terms of this Agreement or any of the
Loan Documents it is permitted or required to take or to grant, and if such
instructions are requested, the Agent shall be absolutely entitled to refrain
from taking any action or to withhold any approval and shall not be under any
liability whatsoever to any Person for refraining from any action or
withholding any
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approval under this Agreement or any of the Loan Documents until it shall
have received such instructions from the Lenders. Without limiting the
foregoing, no Lender shall have any right of action whatsoever against the
Agent as a result of the Agent acting or refraining from acting hereunder or
under any of the Loan Documents in accordance with the instructions of the
Lenders.
13.4 RELIANCE. The Agent shall be entitled to rely upon any written notice
or other document or any telephone message believed by it to be genuine and
correct and to have been signed, sent or made by the proper person, and,
with respect to all legal matters pertaining to this Agreement or any of the
Loan Documents and its duties hereunder or thereunder, upon advice of counsel
selected by it.
13.5 INDEMNIFICATION. To the extent that the Agent is not reimbursed and
indemnified by the Borrowers, each Lender will reimburse and indemnify the
Agent for and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever which may be imposed on, incurred by, or asserted
against the Agent, acting pursuant hereto, in any way relating to or arising
out of this Agreement or any of the Loan Documents or any action taken or
omitted by the Agent under this Agreement or any of the Loan Documents, in
proportion to such Lender's Commitment Percentage as a result of which any
such liability, obligation, loss, damage, penalty, action, judgment, suit,
cost, expense or disbursement is so imposed on, incurred by or asserted
against the Agent; PROVIDED, HOWEVER,
that no Lender shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the Agent's gross negligence or
willful misconduct. The obligations of the Lenders under this paragraph shall
survive the termination of this Agreement.
13.6 AGENT INDIVIDUALLY. With respect to its obligations hereunder and
under the other Loan Documents, the Agent shall have and may exercise the
same rights and powers hereunder and is subject to the same obligations and
liabilities as and to the extent set forth herein for any Lender. The Agent
may accept deposits from, lend money to and generally engage in any kind of
banking, trust or other business with either Borrower or any other Person as
if it were not acting pursuant hereto.
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13.7 RESIGNATION BY THE AGENT. The Agent may resign from the performance of
all of its functions and duties as Agent hereunder or under any other Loan
Document at any time by giving fifteen (15) Business Days prior written
notice to the Borrowers and the Lenders. Such resignation shall take effect
upon the appointment of a successor. Upon any such resignation, the Required
Lenders shall appoint a mutually acceptable successor Agent (which shall be
reasonably acceptable to the Borrowers).
SECTION 14. MISCELLANEOUS
14.1 NOTICES. Except where telephonic (which shall be confirmed in writing
promptly) instructions or notices are authorized herein to be given, all
notices, demands, instructions and other communications required or permitted
to be given under this Agreement shall be in writing and shall be personally
delivered or sent by registered, certified or express mail, postage prepaid,
return receipt requested, or by facsimile, or telegram (with messenger
delivery specified in the case of a telegram), and shall be deemed to be
given for purposes of this Agreement on the date on which such writing is
delivered or sent to the intended recipient thereof in accordance with the
provisions of this Section 14.1 (except that any notice sent by registered or
certified mail shall be deemed to have been given on the fifth Business Day
after such notice is deposited for delivery in the United States mail).
Unless otherwise specified in a notice sent or delivered in accordance with
the foregoing provisions of this Section 14.1, notices, demands, instructions
and other communications in writing shall be given to or made upon the
respective parties hereto at their respective addresses (or to their
respective facsimile numbers) indicated below, and, in the case of telephonic
instructions or notices, by calling the telephone number or numbers
indicated for such party below:
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(a) with respect to CCCIS:
CCC Information Services Inc.
World Trade Center Chicago
444 Merchandise Mart
4th Floor
Chicago, Illinois 60654-1005
Attention: Mr. Gary Bjarnson
Telephone: (312) 222-4636, ext. 2575
Facsimile: (312) 527-2298
with a copy to:
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Attention: Leland Hutchinson, Esq.
Telephone: (312) 853-7403
Facsimile: (312) 853-7036
(b) with respect to CCCDC:
CCC Development Company
World Trade Center Chicago
444 Merchandise Mart
4th Floor
Chicago, Illinois 60654-1005
Attention: Mr. Gary Bjarnson
Telephone: (312) 222-4636, ext 2575
Facsimile: (312) 527-2298
with a copy to:
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Attention: Leland Hutchinson, Esq.
Telephone: (312) 853-7403
Facsimile: (312) 853-7036
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(c) with respect to the Agent:
Canadian Imperial Bank of Commerce
New York Agency
425 Lexington Avenue
New York, New York 10017
Attention: Ms. Arlene Tellerman,
Syndications Department
Telephone: (212) 856-3695
Facsimile: (212) 856-3763
(d) with respect to CIBC Inc., as Lender:
CIBC Inc.
425 Lexington Avenue
New York, New York 10017
Attention: Ms. Arlene Tellerman,
Syndications Department
Telephone: (212) 856-3695
Facsimile: (212) 856-3763
(e) with respect to any other Lender, such address for notices as set
forth on the applicable signature page hereto or in the Assignment
Agreement pursuant to which such Lender became a party hereto.
Any party may designate a different or additional address for the delivery of
notices by providing notice thereof to the other parties. Except as provided
to the contrary above, all notices, demands, and other communications shall be
effective upon personal delivery or upon the date of receipt by the addressee
as shown on the return receipt. Rejection or other refusal to accept notices,
demands, or other communications shall be of no effect, and all notices,
demands, and other communications which are rejected or acceptance of which
is refused shall be deemed to be effective upon the date on which the same
were rejected or refused.
14.2 SURVIVAL AND TERMINATION OF AGREEMENT. All covenants, agreements,
representations and warranties made herein and in the certificates and other
documents delivered pursuant hereto shall survive (i) the making by the
Lenders of the Loans herein contemplated, (ii) the execution and delivery to
the Lenders of the Notes, and (iii) the making of any investigation, and
shall continue in full force and effect to the Credit Expiration Date or so
long as any Loan or any amount payable to the Lenders or the Agent in
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connection with this Agreement is unpaid whichever is later, at which time
this Agreement shall terminate, it being expressly understood that the
obligations of the Borrowers under Sections 6.1, 6.5, 9.7 and 12 hereof shall
survive any termination of this Agreement.
14.3 APPLICABLE LAW. THIS AGREEMENT AND THE MASTER NOTES SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK.
14.4 WAIVER; MODIFICATIONS IN WRITING. No failure or delay on the part of
the Agent or a Lender in exercising any right, power or remedy hereunder or
under the Notes or with respect to the Loans shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of
any other right, power or remedy. The remedies provided for herein are
cumulative and are not exclusive of any remedies that may be available to the
Agent or a Lender at law or in equity. No amendment, modification,
supplement, termination or waiver of or to any provision of this Agreement,
nor consent to any departure by a Borrower thereoffrom, shall be effective
unless the same shall be in writing and signed by or on behalf of the Agent
and the Required Lenders except that any amendment, modification, or waiver
(i) reducing the principal amount of, reducing the interest rate borne by, or
extending the final maturity of the Loans, or (ii) revising the repayment
schedule for the Term Loans, or (iii) reducing the amount of the fees payable
pursuant hereto, or (iv) changing the definition of "Required Lenders" or
"Commitment Percentage", or the provisions contained in this Section 14.4 or
(v) releasing Assigned Collateral or Pledged Collateral, except to the extent
the sale of such Assigned Collateral or Pledged Collateral is permitted by
this Agreement, any Security Agreement or the Pledge Agreement, shall not be
effective unless evidenced by a writing signed by or on behalf of all
Lenders. Any waiver of any provisions of this Agreement and any consent to
any departure by a Borrower from the terms of any provision of this
Agreement, shall be effective only in the specific instance and for the
specific purpose for which given. No notice to or demand on a Borrower in any
case shall entitle such Borrower to any other or further notice or demand in
similar or other circumstances.
14.5 NON-WAIVER OF RIGHTS. Neither any failure nor any delay on the part of
the Agent or any Lender in
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exercising any right, power or privilege hereunder or under the Loan
Documents shall operate as a waiver thereof, nor shall a single or partial
exercise thereof preclude any other or further exercise of any other right,
power or privilege.
14.6 RIGHT TO GRANT ASSIGNMENTS AND PARTICIPATIONS. (a) Each Lender may
from time to time sell Assignments in its Loans and its Notes (or any portion
thereof) to Assignees (but only with the consent of the Borrowers and the
Agent, which consents will not be unreasonably withheld or delayed, and which
consent, in the case of the Borrowers, will be deemed to have been given in
the absence of a written notice delivered by the Borrowers to the Agent, on
or before the fifth Business Day after receipt by the Borrowers of such
Lender's request for consent, stating, in reasonable detail, the reasons why
the Borrowers propose to withhold such consent); PROVIDED, that (i) no such
consent by the Borrowers or the Agent shall be required in the case of an
Assignment by a Lender to any of its affiliates or to another Lender, (ii)
any such partial Assignment must be in a minimum amount of $5,000,000 (such
amount with respect to the Assignment of the Revolving Credit Loan Commitment
to be reduced pro rata by any permanent reductions in the Revolving Loan
Commitment), and (iii) each such Assignment by a Lender of its Loans, Notes
or commitment under this Agreement shall be made in such manner so that the
same portion of its Loans, Notes and commitment under this Agreement is
assigned to the respective Assignee. Upon execution and delivery by the
assigning Lender and the Assignee to the Borrowers and the Agent of an
Assignment Agreement pursuant to which the Assignee agrees to become a
"Lender" hereunder (if not already a Lender), having the Revolving Credit
Loan Commitment and the Term Loan Commitment and Loans specified in such
instrument, and upon consent thereto by the Borrowers and the Agent to the
extent required above, the Assignee shall have, to the extent of such
Assignment (unless otherwise provided in such Assignment with the consent of
the Borrowers and the Agent), the obligations, rights and benefits of a
Lender hereunder and under the other Loan Documents holding the commitments
and Loans (or portions thereof) assigned to it (in addition to the
commitments and Loans, if any, theretofore held by such Assignee and the
assigning Lender shall, to the extent of such Assignment, be released from
its oblgiations hereunder and under the other Loan Documents. Within five
Business Days after its receipt of an Assignment Agreement, the
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Borrowers shall execute and deliver to the Agent (for delivery to the
relevant Assignee) a new Master Note and a new Term Note evidencing such
Assignee's Loans and commitments and, if the assigning Lender has retained
Loans and commitments hereunder,a replacement Master Note and a replacement
Term Note in the principal amount of the Revolving Credit Loans and Term
Loans retained by the assigning Lender hereunder (such Notes to be in
exchange for, but not in payment of, the Notes then held by the assigning
Lender). Each such Note shall be dated the date of the predecessor Note.
(b) Upon notice to the Borrowers and the Agent, but without the consent of
the Borrowers, a Lender may sell or agree to sell to one or more financial
institutions (each a "Participant") a Participation in all or any part of any
Loans held by it, or in its commitments under this Agreement; PROVIDED, that
each Lender may grant no more than two Participations; PROVIDED, FURTHER,
that (i) no Participation contemplated in this Section 14.6(b) shall relieve
such Lender from its commitments or obligations under this Agreement or under
any other Loan Document, (ii) such Lender shall remain solely responsible for
the performance of its obligations under this Agreement and under any Loan
Document, and (iii) the Borrowers and the Agent shall continued to deal
solely and directly with such Lender in connection with such Lender's rights
and obligations under this Agreement and each of the other Loan Documents.
Each Participant shall not have any rights or benefits under this Agreement
or any Note (the Participant's rights against such Lender in respect of such
Participation to be those set forth in the agreement executed by such Lender
in favor of the Participant), except that, notwithstanding anything contained
herein to the contrary, each Participant shall have the same rights as a
Lender in respect of the rights granted to the Lenders under Sections 6.1,
6.5 and 9.7. All amounts payable by the Borrowers to any Lender in respect of
Loans held by it, and its commitments, shall be determined as if such Lender
had not sold or agreed to sell any Participations in such Loans and
commitments, and as if such Lender were funding each of such Loans and
commitments in the same way that it is funding the portion of such Loans and
commitments in which no Participations have been sold. In no event shall a
Lender that sells a Participation agree with the Participant to take or refrain
from taking any action hereunder except that such Lender may agree with the
Participant that it will, not without the consent of the Participant, agree to
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(i) increase or extend the term, or extend the time or waive any requirement
for the reduction or termination, of such Lender's related commitment, (ii)
extend the date fixed for the payment of principal of or interest on the
related Loan or Loans or any portion of any fee hereunder payable to the
Participant, (iii) reduce the amount of any such payment of principal, (iv)
reduce the rate at which interest is payable thereon, or any fee hereunder
payable to the Participant, to a level below the rate at which the
Participant is entitled to receive such interest or fee, or (v) release
Assigned Collateral or Pledged Collateral, except to the extent the sale of
such Assigned Collateral or Pledged Collateral is permitted by this
Agreement, any Security Agreement or the Pledge Agreement.
(c) Anything in this Section 14.6 to the contrary notwithstanding, any
Lender may assign or pledge all or any portion of its Loans and its Notes to
any Federal Reserve Bank as collateral security pursuant to Regulation A of
the Board of Governors of the Federal Reserve System and any Operating
Circular issued by such Federal Reserve Bank. No such assignment shall
release the assigning Lender from its obligations hereunder.
(d) A Lender may furnish any information concerning a Borrower or InfoVest
in the possession of such Lender from time to time to Assignees and
Participants (including prospective Assignees and Participants) subject to
such Assignees' or Participant's agreement to be bound by the requirements of
Section 14.12 hereof.
14.7 SUCCESSORS AND ASSIGNS. (a) This Agreement shall be binding upon and
inure to the benefit of each party hereto and its respective successors and
assigns, except that the Borrowers may not assign or transfer (by operation
of law or otherwise) all or any part of its rights or obligations hereunder
without the prior written consent of the Agent and the Lenders.
(b) Notwithstanding the foregoing, each Lender may at any time change the
Booking Office designated by it on Schedule 1-B. Each Lender shall give
prompt notice to the Agent and the Borrowers of any change in any Booking
Office.
14.8 CAPTIONS. Captions and section headings appearing herein are included
solely for convenience of reference and are not intended to affect the
interpretation of any provision of this Agreement.
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14.9 COUNTERPARTS. This Agreement may be executed in counterparts which,
taken together, shall constitute a single document.
14.10 SEVERABILITY. In case any one or more of the provisions contained in
this Agreement or any Note should be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining
provisions contained herein and therein shall not in any way be affected or
impaired thereby.
14.11 WAIVER OF TRIAL BY JURY; CONSENT TO JURISDICTION. THE PARTIES
HERETO, TO THE EXTENT PERMITTED BY LAW, WAIVE TRIAL BY JURY IN ANY LITIGATION
IN ANY COURT WITH RESPECT TO, IN CONNECTION WITH, OR ARISING OUT OF, THIS
AGREEMENT OR ANY INSTRUMENT OR DOCUMENT DELIVERED PURSUANT TO THIS AGREEMENT,
OR THE VALIDITY, PROTECTION, INTERPRETATION, COLLECTION OR ENFORCEMENT
THEREOF. Each Borrower irrevocably consents that any legal action or
proceeding against it under, arising out of or in any manner relating to this
Agreement or any instrument or document delivered pursuant to this Agreement
may be brought in the Supreme Court of the State of New York, County of New
York, or in the United States District Court for the Southern District of New
York. Each Borrower, by its execution and delivery of this Agreement,
expressly and irrevocably assents and submits to the personal jurisdiction of
any of such courts in any such action or proceeding. Each Borrower has
irrevocably appointed The Prentice-Hall Corporation System, Inc., located as
of the date hereof at 15 Columbus Circle, New York, New York 10023-7773, as
its agent to receive, accept and acknowledge for and on its behalf, service
of any and all legal process, summons, notices and documents which may be
served in any proceeding brought in any court which may be made on such
agent. If for any reason such agent shall cease to be available to act as
such, each Borrower agrees to designate a new agent in The City of New York
on the terms and for the purposes of this Section 14.11 satisfactory to the
Agent and the Required Lenders. Each Borrower further irrevocably consents to
the service of summons, notice, or other process relating to any such action
or proceeding by delivery thereof to it by hand or by mail in the manner
provided for in Section 14.1 hereof. Each Borrower hereby expressly and
irrevocably waives any claim or defense in any such action or proceeding in
either such court based on any alleged lack of personal jurisdiction,
improper venue or FORUM NON CONVENIENS or any
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similar basis. Nothing in this Section 14.11 shall affect or impair in any
manner or to any extent the right of the Agent or a Lender to commence legal
proceedings or otherwise proceed against a Borrower in any jurisdiction or to
serve process in any manner permitted by law.
14.12 CONFIDENTIALITY. Each of the Agent and each Lender agrees that any
non-public information (including, but not limited to, financial information)
in its possession concerning the business and operations of each Borrower
and InfoVest which was provided pursuant to the terms of this Agreement or
the other Loan Documents shall be kept in strict confidence and shall not be
disclosed to any third party, provided that (i) such information may be
disclosed as required by or pursuant to Applicable Law or court order or
process or as required by and to United States federal, state or provincial
banking regulatory authorities, or the federal, state or provincial banking
regulatory authorities of any other jurisdiction of organization of a
Lender, conducting examinations of the Agent or any Lender, (ii) any such
non-public information then in the possession of the Agent or such Lender may
be examined by the accountants or attorneys utilized by the Agent or such
Lender, and (iii) such non-public information may be furnished by the Agent
or such Lender to Assignees and Participants (including prospective assignees
and participants) if the Agent or such Lender requires that each prospective
participant or assignee agree that any such non-public information regarding
such Borrower or InfoVest, as the case may be, obtained by such prospective
participant or assignee shall be kept in strict confidence and not disclosed
to a third party without the written consent of such Borrower or InfoVest, as
the case may be, except to such prospective participant's or assignee's
accountants or attorneys and as may be required by or pursuant to Applicable
Law, regulation or court order or process.
14.13 SET-OFF. Each lender (including any of its branches) is hereby
authorized at any time or from time to time, without notice to a Borrower or
to any other Persons, any such notice being hereby expressly waived, to set
off and to appropriate any and all deposits (general or special, matured or
unmatured, time or demand, in whatever currency) and any other Indebtedness
at any time held or owing by such Lender to or for the credit or the account
of a Borrower against and on account of the obligations and liabilities of
the Borrowers to such Lender under this Agreement or any other Loan Document,
irrespective of whether or not such
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Lender shall have made any demand hereunder and although said obligations,
liabilities or claims, or any of them, shall be contingent or unmatured. In
the event that any Lender exercises any of its rights set forth in the
preceding sentence, such Lender agrees to provide written notice to the Agent
of such exercise, specifying the amount of the obligation set off or
appropriated, but no failure to provide notice shall in any way affect the
set-off.
14.14 SHARING. The Lenders agree among themselves that if any Lender shall
obtain payment (whether through the exercise of a right of banker's lien,
set-off or otherwise) in respect of the obligations of the Borrowers
hereunder to such Lender and as a result thereof such Lender shall have
received an amount in excess of its ratable share of such payment, such
Lender shall promptly purchase from the other Lenders such participations, or
make such other adjustments, as may be equitable to the end that the Lenders
shall share the benefit of such payment pro rata in accordance with their
Commitment Percentages hereunder; PROVIDED, HOWEVER, that if all or a
portion of such payment is thereafter rescinded or must otherwise be
restored, such purchase or adjustment shall be pro tanto rescinded and the
purchase price restored (without interest). Each Borrower expressly consents
to the foregoing arrangements and agrees that any Lender so purchasing a
participation may exercise any and all rights of banker's lien.
14.15 BORROWERS' OBLIGATIONS. Notwithstanding anything contained in this
Agreement to the contrary, all of the Borrowers' obligations under this
Agreement shall be joint and several.
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FIRST AMENDMENT
FIRST AMENDMENT dated as of August 4, 1995 (the "Amendment") among CCC
INFORMATION SERVICES INC., a Delaware corporation (the "Borrower"), INFORVEST
CORPORATION, a Delaware corporation ("InfoVest"), the financial institutions
party hereto as lenders (each such institution, together with any assignees
thereof, collectively, a "Lender", and such institutions, together with any
assignees thereof, collectively, the "Lenders"), CANADIAN IMPERIAL BANK OF
COMMERCE, as agent for the Lenders (together with its successors in such
capacity, the "Agent"), and CANADIAN IMPERIAL BANK OF COMMERCE, as collateral
agent (together with its successors in such capacity, the "Collateral Agent").
WITNESSETH:
WHEREAS, the Borrower, CCC Development Company ("CCCDC"), the Lenders
and the Agent are party to that certain Loan Agreement dated as of April 29,
1994 (the "Agreement"); and
WHEREAS, all of the assets and liabilities of CCCDC were transferred to
the Borrower and CCCDC was dissolved by operation of law; and
WHEREAS, the Borrower, the Agent and the collateral Agent are party to
that certain CCC Information Services Inc. Security Agreement dated as of
April 29, 1994 (the "Security Agreement"); and
WHEREAS, InfoVest has made that certain Guaranty dated as of April 29,
1994 (the "Guaranty") in favor of the Lenders and the Agent; and
WHEREAS, the parties hereto desire to amend the Agreement, the Security
Agreement and the Guaranty in the manner and on the terms and conditions set
forth herein;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the parties hereto agree as follows:
I. DEFINITIONS
"Amendment Effective Date" means, upon the satisfaction of the
conditions precedent set forth in Article VI, April 29, 1995.
Unless otherwise defined herein, capitalized terms used herein shall
have the meanings assigned to them in the Agreement.
II. AMENDMENTS TO THE AGREEMENTS
1. AMENDMENT TO THE RECITALS. The introduction to the Agreement is
hereby amended to read in its entirety as follows:
LOAN AGREEMENT dated as of April 29, 1994
among CCC INFORMATION SERVICES INC., a Delaware
corporation (the "Borrower"), the financial
institutions party hereto as lenders (each such
institution, together with any assignee thereof, a
"Lender", and such institutions, together with
any assignees thereof, collectively, the
"Lenders") and CANADIAN IMPERIAL BANK OF
COMMERCE, as agent for the Lenders (together with
its successors in such capacity, the "Agent").
2. AMENDMENTS TO SECTION 1. (a) The definitions of "CCCDC", "CCCDC
Security Agreement", "CCCIS", "CCCIS Security Agreement" and
<PAGE>
"Joint Venture Agreement" in Section 1 of the Agreement are hereby deleted
in their entirety.
(b) The definition of "Borrower and Borrowers" in Section 1 of the
Agreement is hereby amended to read in its entirety as follows:
Borrower: has the meaning assigned to
such term in the introduction to this
Agreement.
(c) The definition of "Consolidated Working Capital" in Section 1 of the
Agreement is hereby amended by adding the word "Consolidated" before the word
"Current" in two places on the second line thereof.
(d) The definition of "Security Agreement and Security Agreements" in
Section 1 of the Agreement is hereby amended to read in its entirety as follows:
SECURITY AGREEMENT: the CCC Information
Services Inc. Security Agreement dated as
of April 29, 1994 among the Collateral
Agent, CCCIS and the Agent in substantially
the form attached as Exhibit D to this
Agreement, as amended by the First Amendment
dated August 4, 1995 among the Borrower,
InfoVest, the Lenders, the Agent and the
Collateral Agent, as the same from time to
time may be extended, further amended,
supplemented, waived or modified and in
effect.
(e) The definition of "Servicing Agreement" in Section 1 of the Agreement
is hereby amended by deleting "__" on the second line thereof and substituting
in replacement thereof the number "1".
(f) The definition of "Total Debt Service Coverage" in Section 1 of the
Agreement is hereby amended by adding a comma after the word "EBITDA" on the
second line thereof.
(g) Section 1 of the Agreement is hereby amended by adding the following
definitions in the proper alphabetical positions:
AVERAGE TOTAL DEBT SERVICE COVERAGE: as of the end of any
fiscal quarter of the Borrower, the quotient obtained by dividing (I)
EBITDA, MINUS Capital Expenditures, by (ii) the sum of Consolidated
Net Interest Expense, PLUS common or preferred stock cash dividends, or
any other cash distribution in respect thereof, paid by CCCIS, PLUS
scheduled Term Loan installment payments required to be made pursuant
to Section 3.1(b) (without giving effect to any prepayments made with
respect to such installment payments), PLUS principal payments
required to be made under Contract Funding Agreements, each of clauses
(i) and (ii) to be determined for such fiscal quarter and the three
fiscal quarters of the Borrower immediately preceding such fiscal
quarter without duplication.
EBIT: for any period, Consolidated Net Income for such
period, PLUS (i) Consolidated Net Interest Expense for such period, PLUS
(ii) all charges in such period for income taxes, in each case to the
extent reflected in Consolidated Net Income.
INTEREST COVERAGE RATIO: for any period, the quotient
obtained by dividing (i) EBIT, PLUS, for the Borrower's fiscal year
ended April 30, 1995, the amount of the provision for the settlement of
the Red Book Litigation reflected in EBIT, by (ii) Consolidated
Net Interest Expense, in each case determined for such period without
duplication.
<PAGE>
RED BOOK LITIGATION: CCC Information Services Inc. V. Maclean
Hunter Market Reports, Inc. and Creative Automation Co., U.S. District
Court - District of Connecticut Case No. 2:91 CV 264 (AHN).
3. AMENDMENT TO SECTION 4.1. Section 4.1(b) of the Agreement is hereby
amended by (1) deleting the word "Borrowers'" on the second line thereof
and substituting in replacement thereof the word "Borrower's", (2) deleting
the words "joint and several," on the third and fourth lines thereof and
(3) deleting the word "any" on the penultimate line thereof and
substituting in replacement thereof the word "the".
4. AMENDMENT TO SECTION 7.1. Section 7.1 of the Agreement is hereby
amended by deleting the "(a)" at the beginning of the first paragraph
thereof and deleting paragraph (b) thereof in its entirety.
5. AMENDMENT TO SECTION 7.2. Clause (i) of Section 7.2 of the Agreement is
hereby amended to read in its entirety as follows:
(i) violate any provision of any law, rule regulation, order, writ,
judgment, injunction, decree, determination or award to which the
Borrower is subject of the certificate of incorporation or by-laws of
the Borrower,
6. AMENDMENT TO SECTION 7.12. Section 7.12 of the Agreement is hereby
amended by deleting the words "to which such Borrower is a party" on the
second and third lines thereof.
7. AMENDMENT TO SECTION 7.13. Section 7.13 of the Agreement is hereby
amended by deleting the words "to which such Borrower is a party" on the
last two lines thereof.
8. AMENDMENT TO SECTION 7.19. Section 7.19 of the Agreement is hereby
amended by deleting the "(a)" at the beginning of the first paragraph
thereof and deleting paragraph (b) thereof in its entirety.
9. AMENDMENT TO SECTION 8.10. Section 8.10 of the Agreement is hereby
deleted in its entirety.
10. AMENDMENT TO SECTION 9.6. Section 9.6 of the Agreement is hereby
amended by relettering paragraph (g) thereof as (j) and adding new
paragraphs (g), (h) and (i) as follows:
(g) As soon as available, but in any event not later than
forty-five (45) days following the end of each of the first three
quarterly periods of each fiscal year of the Borrower, ninety (90) days
following the end of each fiscal year of the Borrower and forty (40)
days following the end of each fiscal month of the Borrower which is
not the last month of a fiscal quarterly period or fiscal year, the
monthly financial results package, including, without limitation,
consolidated financial information with respect to the Borrower and a
written analysis by the Chief Financial Officer or Controller of such
financial results, substantially in the form attached hereto as
Exhibit G.
(h) As soon as available, but in any event not later than (x)
August 10, 1995, the consolidated projected balance sheets of the
Borrower and its subsidiaries and the related consolidated statements
of income and cash flows
<PAGE>
of the Borrower and its subsidiaries for the fiscal quarter ending on
July 31, 1995 and (y) (30) days following July 31, 1995 and October 31,
1995, the consolidated projected balance sheets of the Borrower and its
subsidiaries and the related consolidated statements of income and cash
flows of the Borrower and its subsidiaries for the fiscal quarter
immediately succeeding such date.
(i) As soon as availavble, but in any event not later than
ninety (90) days after the end of each fiscal year of the Borrower,
beginning with the fiscal year ending December 31, 1995, the
consolidated projected balance sheets of the Borrower and its
subsidiaries and the related consolidated statements of income and cash
flows of the Borrower and its subsidiaries for the immediately
succeeding fiscal year.
11. AMENDMENT TO SECTION 9.14. Section 9.14 of the Agreement is hereby
amended by deleting paragraph (b) thereof in its entirety and relettering
paragraphs (c), (d) and (e) thereof as (b), (c) and (d), respectively.
12. AMENDMENT TO SECTION 10.2. Section 10.2 of the Agreement is hereby
amended to read in its entirety as follows:
10.2 FINANCIAL COVENANTS. (a) Permit the Total Debt Service
Coverage, as determined for any of the three month periods ended on
the dates set forth below, to be less than the ratio set forth below, to
be less than the ratio set forth opposite such dates:
Minimum
Three Month Period Ended Ratio
------------------------ -------
October 31, 1995 1.00
January 31, 1996 1.40
March 31, 1996 1.50
(b) Permit the Total Debt Service Coverage, as determined for any
fiscal quarter of the Borrower beginning with the fiscal quarter ended
June 30, 1996, to be less than 1.00.
(c) Permit the Average Total Debt Service Coverage, as determined
for any fiscal quarter of the Borrower set forth below, to be less than
the ratio set forth opposite such quarter:
Minimum
Fiscal Quarter Ended Ratio
-------------------- --------
June 30, 1996 1.40
September 30, 1996 1.60
December 31, 1996 1.75
March 31, 1997 1.85
June 30, 1997 1.95
September 30, 1997 2.00
each fiscal quarter therafter 2.00
(d) Permit the Interest Coverage Ratio, as determined for the
Borrower's fiscal year ended April 30, 1995 and for any of the three month
periods ended on the dates set forth below, to be less than the
ratio set forth opposite such dates:
Minimum
Period Ended Ratio
------------ --------
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April 30, 1995 1.65
July 31, 1995 1.25
October 31, 1995 2.00
January 31, 1996 3.35
March 31, 1996 3.50
13. AMENDMENT TO SECTION 10.5. Section 10.5 of the Agreement is hereby
amended by deleting the words "to which such Borrower is a party" on the
sixth line thereof.
14. AMENDMENT TO SECTION 10.6. Section 10.6 of the Agreement is hereby
amended by deleting the words "to which such Borrower is a party" on the
eleventh and twelfth lines thereof.
15. AMENDMENT TO SECTION 10.7. Section 10.7 of the Agreement is hereby
amended by (1) adding the word "and" before the number "(vii)" on the
thirteenth line from the end thereof, (2) adding a period after the word
"InfoVest" on the eleventh line from the end therof and (3) deleting the
remainder of the section in its entirety.
16. AMENDMENT TO SECTION 10.12. Section 10.12 of the Agreement is hereby
amended by (1) deleting clause (iv) thereof in its entirety,
(2) renumbering clauses (v) and (vi) thereof as clauses (iv) and (v),
respectively, (3) deleting clause (y) thereof in its entirety,
(4) relattering clause (z) thereof as clause (y), and (5) deleting "CCCDC"
in two places in the new clause (iv) and substituting in replacement
thereof the words "the Borrower".
17. AMENDMENT TO SECTION 10.13. Section 10.13 of the Agreement is hereby
amended by deleting "CCCDC" on the third line from the end thereof.
18. AMENDMENT TO SECTION 10. Section 10 of the Agreement is hereby
amended by adding new Sections 10.15 and 10.16 as follows:
10.15 RED BOOK LITIGATION. Settle the Red Book Litigation for an
amount (Excluding royalty payment to be made by the Borrower to K-III
Corporate Communications Inc. following the settlement thereof) in excess
of the amount actually received from InfoVest as a capital
contribution specifically for the settlement of the Red Book Litigation.
10.16 TECH-COR AGREEMENT. Enter into the Tech- Cor Agreement on
terms less favorable to the Borrower than those described to the Lenders
by the Borrower in May, 1995, as such terms are outlined in Schedule
10.16.
19. AMENDMENT TO SECTION 11.1. (a) Paragraph (r) of Section 11.1 of the
Agreement is hereby amended to read in its entirety as follows:
(r) InfoVest shall not own, directly of indirectly, 100% of the
outstanding voting securities of the Borrower; or
(b) Section 11.1 of the Agreement is hereby further amended by deleting the
word "or" at the end of paragraph (s) and by deleting paragraph (t) thereof
in its entirety.
20. AMENDMENT TO SECTION 14.1. Section 14.1 of the Agreement is hereby
amended by deleting paragraph (b) thereof in its entirety and relettering
paragraphs (c), (d) and (e) thereof as paragraphs (b), (c) and (d),
respectively.
<PAGE>
21. AMENDMENT TO SECTION 14.15. Section 14.15 of the Agreement is hereby
deleted in its entirety.
22. AMENDMENT TO SCHEDULES. Schedule 7.6 to the Agreement is hereby
amended to read as set forth in Exhibit A hereto and a new Schidule 10.16
is added to the Agreement as set forth in Exhibit B hereto.
23. AMENDMENT TO EXHIBITS. Exhibits A, B and G of the Agreement are
hereby amended to read as set forth in Exhibits C, D and E hereto.
III. AMENDMENT TO THE SECURITY AGREEMENT
1. AMENDMENT TO SCHEDULES. Schedules 1.1 and 3.1(h) of the Security
Agreement are hereby amended to read as set forth in Exhibits F and G
hereto.
IV. AMENDMENTS TO THE GUARANTY
1. AMENDMENT TO THE RECITALS. The firsts recital to the Guaranty is
hereby amended to read in its entirety as follows:
WHEREAS, CCC Information Services Inc. (the "Borrower"), the
Lenders and the Agent have entered into a Loan Agreement dated as of
April 29, 1994, as amended by the First Amendment dated as of
August 4, 1995 among the Borrower, the Guarantor, the Lenders, the Agent
and the Collateral Agent (as hereinafter defined) (as further
modified, supplemented or amended from time to time, the " Loan
Agreement"), providing for the making of Loans as contemplated therin;
and.
2. AMENDMENT TO SECTION 3.17. Section 3.17 of the Guaranty is hereby
amended to read in its entirety as follows:
Section 3.17 OWNERSHIP OF THE BORROWER. The Guarantor owns,
directly or indirectly, 100% of the outstanding voting securities of
CCCIS.
3. AMENDMENT TO SECTION 4.14. Section 4.14 of the Guaranty is hereby
amended by deleting "CCCDC" on the fourth line thereof.
4. AMENDMENT TO SECTION 4.16. Section 4.16 of the Guaranty is hereby
amended to read in its entirety as follows:
Section 4.16 CONTROL OF THE BORROWER. Own, directly or
indirectly, 100% of the outstanding voting securities of CCCIS.
5. AMENDMENT TO ARTICLE IV. Article IV of the Guaranty is hereby amended
by adding a new Section 4.18 as follows:
Section 4.18 RED BOOK LITIGATION. Make a capital contribution
to the Borrower, at the time of the settlement of the Red Book Litigation
or, to the extent taht a judgment is rendered in respect of the Red
Book Litigation, prior to the occurrences of the Event of Default
described in Section 11.1(o) of the Loan Agreement as a result of
such judgment, at least equal to the amoutn of such settlement or such
judgment, as the case may be (excluding royalty payments to be made by
the Borrower to K-III Corporation Communications Inc. following such
settlement or such
<PAGE>
judgment); PROVIDED, that, the Guarantor shall not
be obligated to make a capital contribution in excess of its
avbailable resources, as determined by the Lenders in their reasonable
sole discretion, at the time of such settlement or such judgment.
6. AMENDMENT TO SECTION 5.4. Section 5.4 of the Guaranty is hereby
amended by (1) deleting clauses (v), (vi) and (viii) thereof in their
entirety, (2) deleting the word "and" immediately preceding such former
clause (viii), (3) renumbering clause (vii) thereof as clause (v) and (4)
adding the word "and" immediately preceding such new clause (v).
7. AMENDMENT TO SECTION 5.8. Section 5.8 of the Guaranty is hereby
amended by (1) adding the word "further," after the word "provided," on the
sixth line thereof and (2) deleting the words "with any funds received from
CCCIS under the Servicing Agreement" on the fifth and sixth lines thereof
and substituting in replacement thereof the following:
<PAGE>
; PROVIDED, HOWEVER, that the Guarantor may (i) make capital
contributions to the Borrower, (ii) before the Guarantor has
made capital contributions to the Borrower in accordance with
Section 4.18, make Capital Expenditures or advances, loans,
extension of credit or capital contributions to, or purchase any
stock, bonds, notes, debentures, or other securities of, or make
any other investments in, any Person so long as the aggregate
amount thereof outstanding at any one time does not exceed
$100,000, (iii) make Permitted Investments, and (iv) extend
credit to the Borrower in connection with the Servicing Agreement
on terms no less favorable than the terms the Guarantor would
provide to unaffiliated third parties; PROVIDED, FURTHER, that,
after the Guarantor has made capital contributions to the
Borrower in accordance with Section 4.18, the Guarantor may make
Capital Expenditures or advances, loans, extension of credit or
capital contributions to, or purchase any stock, bonds, notes,
debentures, or other securities of, or make any other investments
in, any Person with funds other than funds received from the
Borrower under the Servicing Agreement; PROVIDED further, that
the Guarantor may use the funds received from the Borrower under
the Servicing Agreement to make Permitted Investments.
8. AMENDMENT TO SECTION 5.9 . Section 5.9 of the Guaranty is
hereby amended by (1) adding the word "FURTHER," after the word "PROVIDED," on
the sixth line thereof and (2) deleting the words "with any funds received from
CCCIS under the Servicing Agreement" on the fifth and sixth lines thereof and
substituting in replacement thereof the following:
; PROVIDED, that, after the Guarantor has made capital
contributions to the Borrower in accordance with Section 4.18,
the Guarantor may enter into any such transactions with White
River or any affiliate listed on Schedule 5.9-A with funds other
than funds received from the Borrower under the Servicing
Agreement
9. AMENDMENT TO SECTION 5.10. Section 5.10 of the Guaranty is
hereby amended by deleting the words "with any funds received from CCCIS under
the Servicing Agreement" on the fifth and sixth lines thereof and substituting
in replacement thereof the following:
<PAGE>
; PROVIDED, that, after the Guarantor has made capital
contributions to the Borrower in accordance with Section 4.18,
the Guarantor may make or maintain any such acquisition or enter
into any such joint venture or economic equity partnership with
funds other than funds received from the Borrower under the
Servicing Agreement
10. AMENDMENT TO SCHEDULES. Schedule 3.6 and 5.9-A of the Guaranty
are hereby amended to read as set forth in Exhibits H and I hereto.
V. REPRESENTATIONS AND WARRANTIES
1. Each of the Borrower and InfoVest hereby repeats and reaffirms,
with respect to itself, at the Amendment Effective Date and as of the date
hereof the representations and warranties of the Borrower and InfoVest
contained in the Loan Documents, the Pledge Agreement and the Guaranty with
the same force and effect as though such representations and warranties had
been made as of the Amendment Effective Date; PROVIDED, that all references
in such representations and warranties to the Agreement, the Security
Agreement and the Guaranty shall, at the Amendment Effective Date, refer to
the Agreement, the Security Agreement and the Guaranty as amended by this
Amendment.
2. Each of the Borrower and InfoVest represents and warrants, with
respect to itself, that:
(a) It has all requisite corporate power and authority to execute
and deliver this Amendment and the documents to be delivered in connection
herewith.
(b) The execution and delivery of this Amendment and the documents
to be delivered in connection herewith have been duly authorized by all
necessary corporate action on its part and do not and will not (i) violate
any provision of any law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award to which it is subject or of its
certificate of incorporation or by-laws, (ii) result in a breach of or
constitute a default under any indenture or loan or credit agreement or any
other agreement, lease or instrument to which it is a party or by which it or
any of its properties is bound or (iii) result in, or require, the creation
or imposition of any mortgage, deed of trust, assignment, pledge, lien,
security interest or other charge or encumbrance of any nature upon or with
respect to any of its properties, except as otherwise provided by the
Security Agreement or the Pledge Agreement; nor is it in default under any
such law, rule, regulation (other than those laws, rules, or regulations the
violation of
<PAGE>
which would not have a material adverse effect on its business, operations,
property or financial or other condition or that of any of its subsidiaries
or impair the Assigned Collateral, the Pledged Collateral or the Lenders' or
the Agent's rights to exercise their remedies upon an Event of Default),
order, writ, judgment, injunction, decree, determination or award to which it
is subject or any such indenture, agreement, lease or instrument to which it
is a party (by successor in interest or otherwise) or by which any of the
properties owned by it or used in the conduct of its business is affected (
other than those indentures, agreements, leases or instruments which, in the
aggregate, involve future payment or receipt of less than $500,000).
(c) Other than those which have been obtained and are in full
force and effect, no authorization, consent, approval, license, exemption of
or filing or registration with any commission, board, bureau, agency or
instrumentality, is or will be necessary to the valid execution and delivery
by it of this Amendment or the documents delivered in connection herewith.
(d) Neither it nor any of its subsidiaries is subject to
regulation under the Investment Company Act of 1940, as amended, or under any
other federal or state statute or regulation which limits its ability to
consummate the transactions contemplated by this Amendment.
(e) This amendment and each of the documents delivered in
connection herewith are legal, valid and binding obligations, enforceable
against it in accordance with their respective terms.
VI. CONDITIONS PRECEDENT
The occurrence of the Amendment Effective Date shall be subject to
the following conditions precedent, each dated such date, and in form, scope
and substance, satisfactory to the Agent and the Lenders:
1. The Agent and Lenders shall have received an executed Amendment.
2. Each Lender shall have received, in substitution and exchange
for the existing Master Note and Term Note payable to such Lender, an
executed Master Note and Term Note payable to such Lender, in substantially
the form of Exhibits A and B, respectively, to the Agreement, with the
outstanding Loans and Term Loans noted on the respective schedules attached
thereto.
3. The Agent and the Lenders shall have received:
<PAGE>
(a) the favorable written opinion of Winston & Strawn, special
counsel to the Borrower, addressed to the Agent and the Lenders;
(b) the favorable written opinion of Winston & Strawn, special
counsel to the InfoVest, addressed to the Agent and the Lenders; and
(c) such other opinions as may be reasonably requested by the Agent
and the Lenders or counsel for the Agent and the Lenders.
4. The Agent and the Lenders shall have received a certificate of the
Secretary or Assistant Secretary and President or Chief Financial Officer of the
Borrower and of InfoVest substantially in the form attached hereto as Exhibit J.
5. The Agent and the Lenders shall have received evidence of such
filings of financing statements and assignments or notices of assignments in
such jurisdictions as the Agent or any Lender may deem necessary or
appropriate in order to perfect the Collateral Agent's first priority
security interest in the Assigned Collateral located in the State of Illinois.
6. The Agent and the Lenders shall have received evidence of the
dissolution of CCC Development Company.
7. The Agent and the Lenders shall have received such other documents
as the Agent or any Lender or counsel for the Agent or any Lender may reasonably
request.
VII. MISCELLANEOUS
1. AGREEMENTS TO REMAIN IN FULL FORCE AND EFFECT. The Borrower,
InfoVest, the Lenders, the Agent and the Collateral Agent hereby agree that the
Agreement, the Security Agreement and the Guaranty shall be amended as set forth
in this Amendment as of the Amendment Effective Date, and, except as amended
hereby, the Agreement, the Security Agreement and the Guaranty shall remain in
full force and effect is hereby ratified, adopted and confirmed in all respects;
PROVIDED, that all references in the Agreement, the Security Agreement and the
Guaranty to (i) "the Borrowers", "related Borrower", "a Borrower", "such
Borrower", "each Borrower", "each of the Borrowers", "either Borrower", "any
Borrower", "other Borrower", or "CCCIS" shall be deemed to be "the Borrower",
and (ii) "the CCCIS Security Agreement" or "the Security Agreements" shall be
deemed to be the "Security Agreement". All references to the Agreement, the
Security Agreement or the Guaranty in any other agreement or
<PAGE>
document shall hereafter be deemed to refer to the Agreement, the Security
Agreement or the Guaranty, as the case may be, as amended hereby.
2. CCCDC SECURITY AGREEMENT. Notwithstanding the provisions of
the CCC Development Company Security Agreement dated as of April 29, 1994
("CCCDC Agreement") among CCC Development Company, the Agent and the
Collateral Agent, the CCCDC Agreement shall terminate, and the form of the
CCCDC Agreement attached as Exhibit G to the Agreement shall be removed as an
exhibit hereto, as of the Amendment Effective Date.
3. EXECUTION IN COUNTERPARTS. This Amendment may be executed in
any number of counterparts and by different parties hereto on separate
counterparts, when so executed and delivered, shall be deemed to be an
original, and all of which counterparts, when taken together, shall
constitute but one and the same Amendment.
4. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
5. SEVERABILITY OF PROVISIONS. Any provision of this Amendment
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the ability or enforceability of such provision in any other
jurisdiction.
6. CAPTIONS . The captions in this Amendment are for convenience of
reference only and shall not define or limit any of the terms or provisions
hereof.
7. WAIVER. The Lenders and the Agent hereby waive, until the
close of business of the fifth Business Day after the receipt of the Borrower
of a fully-executed copy of this Amendment, the Events of Default under
Sections 11.1(e) and 11.1(q) of the Agreement which arise as a result of the
failure of each of the Borrower and InfoVest to deliver its annual audited
report for its fiscal year ended April 30, 1995 at the time required by
Section 9.6(a) of the Agreement and Section 4.6(a) of the Guaranty,
respectively. By so waiving such Events of Default, however, the Lenders and
the Agent shall not be deemed to have waived their right to indemnity under
the Agreement or the Guaranty for any liability, loss, claim, damage,
penalty, cause of action, suit, cost or expense (including, without
limitation, attorneys' fees and expenses) or judgment of any nature which
arises from the failure of the Borrower of InfoVest to deliver such annual
audited reports
<PAGE>
at the time required under the Agreement or the Guaranty, as the case may be.
The failure of the Borrower of InfoVest to deliver such annual audited
reports by the close of business on the fifth Business Day after the receipt
by the Borrower of a fully-executed copy of this Amendment shall constitute
an immediate Event of Default under the Agreement, giving the Lenders and the
Agent all of the rights and remedies as set forth therein. The waiver
contained in this paragraph shall be limited precisely as written and shall
not be deemed to be a waiver of any other provision of the Agreement or the
Guaranty.
<PAGE>
GUARANTY
GUARANTY dated as of April 29, 1994 made by INFOVEST CORPORATION, a
corporation organized and existing under the laws of Delaware (the
"Guarantor"), in favor of the financial institutions party to the Loan
Agreement referred to below as lenders (such institution, together with any
assignees thereof, collectively, the "Lenders") and CANADIAN IMPERIAL BANK OF
COMMERCE ("CIBC"), as agent for the Lenders (in such capacity, the "Agent").
W I T N E S S E T H :
WHEREAS, CCC Information Services, Inc. ("CCCIS"), CCC Development
Company ("CCCDC"; and together with CCCIS, collectively, the "Borrowers"),
the Lenders and the Agent have entered into a Loan Agreement dated as of
April 29, 1994 (as modified, supplemented or amended from time to time, the
"Loan Agreement") , providing for the making of Loans as contemplated
therein; and
WHEREAS, it is a condition to the making of Loans under the Loan
Agreement that the Guarantor shall have executed and delivered the Guaranty;
and
WHEREAS, the Guarantor will obtain benefits as a result of the Loans made
to the Borrowers under the Loan Agreement and, accordingly, desires to
execute and deliver this Guaranty in order to satisfy the condition described
in the preceding paragraph; and
WHEREAS, in order to secure the Guarantor's obligations hereunder, the
Guarantor, the Agent and CIBC, as collateral agent for the Agent and the
Lenders (together with its successors and assigns in such capacity, the
"Collateral Agent"), have entered into the Pledge and Security Agreement
dated as of April 29, 1994.
NOW, THEREFORE, in consideration of the foregoing and other benefits
accruing to the Guarantor, the receipt and sufficiency of which are hereby
acknowledged, the Guarantor hereby makes the following representations and
warranties to the Agent and each Lender and hereby covenants and agrees with
the Agent and each Lender as follows:
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ARTICLE I
DEFINITIONS
Section 1.1 DEFINITIONS. As used in this Guaranty and unless the
context requires a different meaning, capitalized terms used herein and not
otherwise defined have the meanings assigned to such terms in the Loan
Agreement.
ARTICLE II
THE GUARANTY
Section 2.1 THE GUARANTY. (a) The Guarantor, as primary obligator and
not merely as surety, hereby irrevocably and unconditionally guarantees the
full and prompt payment when due (whether by acceleration or otherwise) of
all obligations and liabilities of the Borrowers to the Agent and the Lenders
now existing or hereafter incurred under, arising out of or in connection
with the Loan Agreement or any other Loan Document (including, without
limitation, principal and interest with respect of all Loans, the Commitment
Fee, other fees and expenses, indemnities and Additional Costs) and the due
performance and compliance with the terms of the Loan Agreement and the other
Loan Documents by the Borrowers (all such principal, interest, obligations
and liabilities, collectively, the "Guaranteed Obligations"). All payments
by the Guarantor under this Guaranty, to the extent owing to the Agent and
the Lenders, shall be made on the same basis as payments by the Borrowers
under the Loan Agreement. In the event the Borrowers shall fail to pay duly
and punctually any Guaranteed Obligation when and if the same shall be due
and payable in accordance with the terms of the Loan Document, the Guarantor
will pay the same on the last day of any applicable grace period with respect
thereto to such Person to whom such Guaranteed Obligation is owed.
(b) The Guarantor hereby waives in connection with any defense to
enforcement of this Guaranty (a) notice of acceptance by the Agent or the
Lenders of this Guaranty, (b) notice of the existence or creation or
nonpayment of or other default with respect to all or any of the Guaranteed
Obligations, (c) presentment, demand of payment, protest, notice of dishonor
and all other notices whatsoever with respect to the Guaranteed Obligations,
(d) any requirement that the Agent or the Lenders act with promptness or
diligence in collection or protection of or realization upon any or all of
the Guaranteed Obligations or any thereof, any obligation of the Guarantor
under this Guaranty, or any security for or guaranty of any of the foregoing;
(e) any requirement that the Agent or the Lenders exhaust any right or take
any action against the Borrowers or any other Person or
2
<PAGE>
Assigned Collateral, (f) any defense arising out of the absence, impairment
or loss of any or all rights of recourse, reimbursement, contribution or
subrogation or any other rights or remedies of the Guarantor against the
Borrowers, any other Person, or any security, whether resulting from an
election by the Agent or by the Lenders to foreclosure on the Assigned
Collateral by trustee's sale rather than judicial foreclosure, or from any
other election of rights or remedies by the Agent or by the Lenders , or
otherwise, (g) any requirement that, absent a request for such information by
the Guarantor, the Agent or any Lender advise the Guarantor of information
known to the Agent or such Lender regarding the financial condition of the
Borrowers or any other circumstance bearing upon the risk of nonperformance
of the Guaranteed Obligations which inquiry would reveal, the Guarantor
hereby assuming responsibility for being and keeping informed of each such
condition and circumstance, (h) the benefit of any statute of limitations
affecting the obligations of the Borrowers under the Loan Documents or the
enforcement hereof to the fullest extent permitted by law, the Guarantor
agreeing, without limiting the foregoing, that any circumstance which
operates to toll the statute of limitations as to the Borrowers shall operate
to toll any statute of limitations as to the Guarantor, and (i) any right to
exoneration of sureties which may otherwise be applicable. The Guarantor
further waives, to the extent it may be lawfully do so, all right to have its
property marshalled upon any enforcement action by the Agent or the Lender.
The Guarantor hereby represents and warrants to the Agent and the Lenders,
and acknowledges that the Agent and the Lenders shall rely upon such
representation and warranty, that the Guarantor is affiliated with the
Borrowers and is otherwise in a position to have access to any and all
relevant information bearing upon the present and continuing creditworthiness
of the Borrowers and the risk of the Borrowers' inability to pay the
indebtedness or perform the obligations guaranteed hereby.
(c) The Agent, may, and shall, at the request of the Required Lenders,
at any time and from time to time without the consent of the Guarantor,
without incurring responsibility to the Guarantor and without impairing or
releasing the obligations of the Guarantor hereunder, upon or without any
terms or conditions take or refrain from taking any and all actions with
respect to the Guaranteed Obligations, the Loan Agreement, and other Loan
Document, the Assigned Collateral, the Pledged Collateral or any Person
(including the Borrowers) that the Agent or the Required Lenders determine in
its or their sole discretion, as the case may be, to be necessary or
appropriate.
Section 2.2 OBLIGATIONS ABSOLUTE; ENFORCEABILITY. (a) The obligations
of the Guarantor under this Guaranty are absolute and unconditional and shall
remain in full force and effect without regard to, and
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<PAGE>
shall not be released, suspended, discharged, terminated, or otherwise
affected by, any circumstance or occurrence whatsoever, including, without
limitation:
(i) any lack of validity or enforceability of the Loan Agreement,
the Security Agreements, any Note, the Pledge Agreement, any Loan
Document or any other document or instrument relating to the
Guaranteed Obligations;
(ii) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Guaranteed Obligations, or
any other amendment or waiver of or any consent to departure from the
Loan Agreement, any Note or any other Loan Document;
(iii) any insolvency, bankruptcy, liquidation, reorganization,
dissolution, winding up or other similar proceeding involving or
affecting the Borrowers;
(iv) any change in the ownership of either of the Borrowers or
any change in the identity or structure of either of the Borrowers;
whether by consolidation, merger or otherwise;
(v) any exchange, release or non-perfection of any collateral, or
any release or amendment or waiver of or consent to departure from any
other guaranty, for all or any of the Guaranteed Obligations;
(vi) any failure on the part of a Borrower, the Guarantor, the
Agent, any Lender or Collateral Agent to perform or observe any term,
covenant or agreement on its part to be performed or observed under
this Guaranty, the Pledge Agreement or any Loan Document;
(vii) the existence of any Indebtedness now or at any time
hereafter payable or owing by the Guarantor to a Borrower or the
existence of any setoff, counterclaim, recoupment, defense or other
right or claim which the Guarantor may at any time have or have had
against a Borrower, the Agent, the Collateral Agent, any Lender or any
other Person; or
(viii) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, the Borrowers in respect of
the Guaranteed Obligations or the Guarantor in respect of this
Guaranty, whether similar or dissimilar to any of the circumstances
specified in clauses (i) through (vii) above.
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(b) The Agent and each Lender may, from time to time without
impairing this Guaranty, whether before or after any discontinuance of
this Guaranty, at its sole discretion and without notice to, demand
upon, or consent of, the Guarantor, take any or all of the following
actions:
(i) retain or obtain any security interest which may hereafter
be granted in any property to secure any of the Guaranteed Obligations
or any obligation of the Guarantor under this Guaranty or apply any
security interest or the proceeds thereof and direct the order or
manner of sale or other disposition thereof;
(ii) retain or obtain the primary or secondary obligation of any
obligor or obligors, in addition to the Guarantor, with respect to any
of the Guaranteed Obligations;
(iii) extend or renew for one or more periods (whether or not
longer than the original period), alter or exchange any of the
Guaranteed Obligations, or release or compromise any obligation of the
Guarantor under this Guaranty or any obligation of any nature of any
other obligor with respect to any of the Guaranteed Obligations;
(iv) release its security interest in, or surrender, release or
permit any substitution or exchange for, all or any part of any
property securing any of the Guaranteed Obligations of any obligation
of the Guarantor under this Guaranty, or extend or renew for one or
more periods (whether or not longer than the original period), or
release, compromise, alter or exchange any obligations of any nature
of any obligor with respect to any such property;
(v) fail or delay in enforcing any of its rights under any
document or instrument related to the Guaranteed Obligations;
(vi) resort to the Guarantor for payment of any of the Guaranteed
Obligations, whether or not the Agent or such Lender shall have
resorted to any property securing any of the Guaranteed Obligations or
any obligation of the Guarantor under this Guaranty or shall have
proceeded against any other obligor primarily or secondarily obligated
with respect to any of the Guaranteed Obligations; or
(vii) modify, amend or restate any provision or provisions of the
Loan Agreement or any other Loan Document.
Section 2.3 WAIVER OF SUBROGATION AND CONTRIBUTION. (a) The Guarantor
shall not enforce or otherwise exercise any right of subrogation to any of
the rights of any Lender, the Collateral Agent or the Agent against the
Borrowers and, notwithstanding anything to the contrary contained herein,
hereby waives all rights of subrogation (whether contractual, under Section
509 of the Federal Bankruptcy Code, at law or in equity or otherwise) to the
claims of the Lenders, the Collateral Agent or the Agent against the
Borrowers and all contractual, statutory or legal or equitable rights of
contribution, reimbursement, indemnification and similar rights and "claims"
(as that term is defined in the Federal Bankruptcy Code) which the Borrowers
that arise from the existence or performance of the Guarantor's obligations
hereunder.
(b) Any amount received by the Agent or a Lender from whatsoever source
on account of the Guaranteed Obligations shall be applied by it toward the
payment of such of the Guaranteed Obligations in accordance with the terms of
the Loan Agreement.
Section 2.4 INSOLVENCY OF A BORROWER, ETC. The Guarantor hereby agrees
that, in the event of the dissolution of a Borrower, the adjudication of a
Borrower as insolvent, a Borrower's admission in writing of its inability to
pay, or a Borrower's generally not paying, its debts as they become due, or a
general assignment by a Borrower for the benefit of creditors, or the
commencement of any case proceeding in respect of the Issuer under any
bankruptcy, insolvency or similar law, any such proceeding shall continue
undismissed or an order, judgment or decree approving or ordering any of the
foregoing shall be entered any continue unstayed and in effect, for a period
of 60 consecutive days, or an order for relief against a Borrower shall be
entered in an involuntary case under the Federal Bankruptcy Code (as now or
hereafter in effect), and if such event shall occur at a time when any of the
Guaranteed Obligations may not then be due and payable or if acceleration or
collection of the Guaranteed Obligations is enjoined, prevented or stayed
from for whatever reason, the Guarantor shall pay all Guaranteed Obligations
within 5 days of receipt of notice of such fact from the Agent.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders to make the Loans, the Guarantor makes the
following representations and warranties:
Section 3.1 ORGANIZATION, CORPORATE POWERS, ETC. The Guarantor is a
corporation duly incorporated, validly existing and in good standing under
the laws of the State of Delaware and is duly qualified to do business as a
foreign corporation in each other jurisdiction in which the conduct of its
business requires such qualification other than those where
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the failure to so qualify would not have a material adverse effect on the
business, operations, property or financial or other condition of the
Guarantor or impair the Pledged Collateral or the Lenders' or the Agent's
rights to exercise their remedies upon an Event of Default. The Guarantor
has all requisite corporate power and authority to conduct business as
contemplated to be conducted, to own its properties and to execute, deliver,
and perform all of its obligations under this Guaranty and the Pledge
Agreement.
Section 3.2 CORPORATE AUTHORITY, ETC. The execution, delivery and
performance by the Guarantor of this Guaranty and the Pledge Agreement have
been duly authorized by all necessary corporate action on the part of the
Guarantor and do not and will not (i) violate any provision of any law,
rule, regulation, order, writ, judgment, injunction, decree, determination or
award to which the Guarantor is subject or of the certificate of
incorporation or by-laws of the Guarantor, (ii) result in breach of or
constitute a default under any indenture or loan or credit agreement or any
other agreement, lease or instrument to which the Guarantor is a party or by
which the Guarantor or any of its properties is bound or (iii) result in, or
require, the creation or imposition of any mortgage, deed of trust,
assignment, pledge, lien, security interest or other charge of encumbrance of
any nature upon or with respect to any of the Guarantor's properties, except
as otherwise provided by the Pledge Agreement; nor is the Guarantor in
default under any such law, rule, regulation, (other than those laws, rules
or regulations the violation of which would not have a material adverse
effect on the business, operations, property or financial or other condition
of the Guarantor or either of the Borrowers or impair the Pledged Collateral
or the Lenders' or the Agent's rights to exercise their remedies upon an
Event of Default), order, writ, judgment, injunction, decree, determination
or award to which it is subject or any such indenture, agreement, lease or
instrument to which it is a party (by successor in interest or otherwise) or
by which any of the properties owned by it or used in the conduct of its
business is affected (other than (i) those indentures, agreements, leases or
instruments which, in the aggregate, involve future payment or receipt of
less than $500,000 and (ii) the Existing Indebtedness).
Section 3.3 GOVERNMENT APPROVALS. No authorization, consent, approval,
license, exemption of or filing registration with any commission, board,
bureau, agency or instrumentality, or performance by the Guarantor of this
Guaranty and the Pledge Agreement.
Section 3.4 GOVERNMENT REGULATIONS. Neither the Guarantor nor any
subsidiary of the Guarantor is subject to regulation under the Investment
Company Act of 1940, as amended, or any other federal or
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state statute or regulation which limits the ability of the Guarantor to
consummate the transactions contemplated by this Guaranty and the Pledge
Agreement. The Guarantor does not engage in, nor have as one of its
important activities, the business of extending credit for the purpose of
purchasing or carrying any margin of stock.
Section 3.5 VALID AND BINDING GUARANTOR OBLIGATIONS. This Guaranty and
the Pledge Agreement are the legal, valid and binding obligations of the
Guarantor, enforceable against the Guarantor in accordance with their
respective terms.
Section 3.6 LITIGATION. Except as set forth in Schedule 3.6, there are
no actions, suits or proceedings pending or, to the knowledge of the
Guarantor, threatened against or affecting the Guarantor or any subsidiary of
the Guarantor, the business or any property of the Guarantor or any
subsidiary of the Guarantor, which, if adversely determined, could have a
material adverse effect on the business, operations, property or financial or
other condition of the Guarantor or impair the Pledged Collateral or the
Lenders' or the Agent's rights to exercise their remedies upon an Event of
Default, or involving the legality, validity or enforceability of this
Guaranty or the Pledge Agreement to law or in equity before any court,
governmental agency or regulatory authority (federal, state, or local).
Section 3.7 ACCURACY OF INFORMATION. All information, financial or
otherwise, written or verbal, supplied by the Guarantor to the Agent or any
Lender is true, complete and accurate in all material respects and does not
omit to state a material fact necessary in order to make any statement
therein or herein not misleading, as of the date such statement was made.
Section 3.87 FINANCIAL POSITION. The consolidated balance sheets of the
Guarantor and its consolidated subsidiaries as at April 30, 1993 and the
related statements of income and shareholders' equity of the Guarantor and
its consolidated subsidiaries for the fiscal year then ended, audited by
Price Waterhouse, independent accountants, copies of which have been
furnished to the Agent and the Lenders, present the consolidated financial
position of the Guarantor and its consolidated subsidiaries as at such date
and the consolidated results of the operations of the Guarantor and its
consolidated subsidiaries for the period ended on such date, all in
accordance with GAAP.
Section 3.9 PLEDGE OF COLLATERAL. The Collateral Agent, pursuant to the
Pledge Agreement, holds a valid, perfected and first priority security
interest in the Pledge Collateral.
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Section 3.10 TITLE TO ASSETS. The Guarantor has legal title to all
assets owned by it on the date hereof, and will have legal title to all
assets acquired by it at any time subsequent to the date hereof, free and
clear of all Liens, except as contemplated by the Pledge Agreement.
Section 3.11 TAX RETURNS. Each of the Guarantor and its subsidiaries (i)
has filed all federal tax returns and state tax returns for the state in
which it is incorporated and the state in which it has its principal place of
business, and all other state and local tax returns required to be filed by
it, other than such tax returns with respect to which the failure to file
would not (x) materially adversely affect the business, properties,
conditions (financial or otherwise), results of operations or prospects of
the Guarantor or the Borrowers or (y) impair the Pledged Collateral or the
Lenders' or the Agent's rights to exercise their remedies upon an Event of
Default. Except to the extent that reserves therefor are reflected in the
financial statements delivered pursuant to Section 3.8 hereof, (a) there
are no material federal, state or local tax liabilities of the Guarantor or
any of its subsidiaries due or to become due for any tax year ended on or
prior to the date of execution of this Guaranty relating to the Guarantor or
any of its subsidiaries, whether incurred in respect of or measured by the
income of the Guarantor or any of its subsidiaries, which are not properly
reflected in the financial statements delivered pursuant to Section 3.8, and
(b) there are no material claims pending, proposed or threatened against the
Guarantor or any of its subsidiaries for past federal, state or local taxes,
except those, if any, as to which proper reserves in accordance with GAAP are
reflected in such financial statements.
Section 3.12 ERISA . Each Plan is in compliance with all of the
applicable material provisions of ERISA and each Plan intended to be
qualified under Section 401(a) of the Code is so qualified. No plan has
incurred an "accumulated funding deficiency" (within the meaning of Section
302 of ERISA of Section 412 of the Code) whether or not waived. Neither the
Guarantor nor any ERISA Affiliate (i) has incurred or expects to incur any
liability under Title IV of ERISA with respect to any Plan which could give
rise to a Lien in favor of the PBGC, other than liability for the payment of
premiums, all of which have been timely paid when due in accordance with
Section 4007 of ERISA, (ii) has incurred or expects to incur any withdrawal
liability, within the meaning of Section 4201 of ERISA, (iii) is subject to
any Lien under Section 412(n) of the Code or Sections 302(f) or 4068 of ERISA
or arising out of any action brought under Sections 4070 or 4301 of ERISA, or
(iv) is required to provide security to a Plan under Section 401(a)(29) of
the Code. The PBGC has not instituted proceedings to terminate any Plan or
to appoint a trustee or administrator of any such Plan and no circumstances
exist that constitute grounds under Section 4042 of ERISA to commence any
such proceedings.
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Section 3.13 NO MATERIAL ADVERSE CHANGE. Since December 31, 1993, there
has occurred no event which has or had a material adverse effect upon the
business, properties, liabilities, condition (financial or otherwise),
results of operations or prospects of the Guarantor or upon the ability of
the Guarantor to perform its obligations under this Guaranty or the Pledge
Agreement or upon the ability of the Lenders of the Agent to enforce this
Guaranty or the Pledge Agreement, except as set forth in Schedule 3.13.
Section 3.14 COMPLIANCE WITH LAWS. The Guarantor and its subsidiaries
are in compliance in all material respects with all Applicable Laws.
Section 3.15 PARI PASSU. The obligations of the Guarantor to the Agent
and each Lender hereunder rank and will at all times rank at least PARI PASSU
with all other unsecured and unsubordinated Indebtedness of the Guarantor.
Section 3.16 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Guarantor contained in each agreement
and document delivered by the Guarantor in connection with this Guaranty are,
or when such agreement or document delivered will be, true and correct.
Section 3.17 OWNERSHIP OF CCCIS. The Guarantor owns, directly or
indirectly, 100% of the outstanding voting
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securities of CCCIS and, immediately after the making of the initial Loans by
the Lenders, 100% of the general partnership interests in CCCDC.
Section 3.18 BOARD OF DIRECTORS. As of the date of this Agreement, the
Guarantor's Board of Directors consists of the members identified on Schedule
3.18.
ARTICLE IV
COVENANTS
The Guarantor hereby covenants and agrees that on and after the date
hereof and until the repayment in full of the Loans and the Notes, together
with all interest thereon, the Commitment Fee, the Agency Fee and all other
Guaranteed Obligations, the Guarantor will, unless the Required Lenders and
the Agent shall otherwise consent in writing:
Section 4.1 PAYMENT OF TAXES, ETC. Pay and discharge all Taxes imposed
upon it or upon its income or profits, prior to the date on which penalties
attach thereto, and all lawful claims, which, if unpaid, might become a Lien
or charge upon any of its assets, other than those Taxes and lawful claims
which (i) the Guarantor is contesting the imposition or amount thereof in
good faith and by appropriate legal proceedings promptly instituted and
diligently conducted, (ii) the Guarantor is lawfully permitted, in view of
such contest, to defer the payment thereof, (iii) such reserve or other
appropriate provision, if any, as shall be required in conformity with GAAP
shall have been made therefor, (iv) the Lenders are satisfied that the
deferral of the payment thereof will not impair the Pledged Collateral or the
Lenders' or the Agent's rights to exercise their remedies upon an Event of
Default, or the Guarantor's ability to conduct its business, and (v) if the
Lenders so require, the Guarantor remits to the Agent an amount equal to the
amount of the taxes or claims being contested, which amount the Agent will
hold in escrow until the termination of the context, at which time it will,
to the extent required by law, be paid over to the appropriate taxing
authority (with any balance returned to the Guarantor.
Section 4.2 PRESERVATION OF CORPORATE EXISTENCE. Continue to engage in
business of the same general type as now conducted and preserve and maintain
its corporate existence in the jurisdiction of its incorporation, and its
rights, franchises and privileges material to the conduct of its business as
now being conducted, and qualify and remain qualified as a foreign
corporation in each jurisdiction in
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which such qualification is necessary or desirable in view of its business
operations or the ownership of its properties.
Section 4.3 COMPLIANCE WITH LAWS, ETC. Comply with the requirements of
all Applicable Laws of any Governmental Authority, except where such
noncompliance would not have a material adverse effect on the business,
operations, property or financial or other condition of the Guarantor.
Section 4.4 INSPECTION RIGHTS. At any reasonable time and from time to
time during normal business hours upon notice to the Guarantor, permit the
Agent, any Lender or any agents or representatives thereof, at the expense of
the Agent or such Lender, to examine and make copies of the records and books
of account of the Guarantor related to the transactions contemplated by this
Guaranty and the Pledge Agreement and to visit its properties, and to discuss
its affairs, finances and accounts with any of its authorized agents or
officers.
Section 4.5 MAINTENANCE OF APPROVALS, FILINGS AND REGISTRATIONS. At all
times maintain in effect, renew and comply with all the times maintain in
effect, renew and comply with all the terms and conditions of all consents,
licenses, approvals and authorizations as may be necessary or appropriate
under any applicable law or regulation (i) for the execution, delivery and
performance of this Guaranty and the Pledge Agreement legal, valid, binding and
enforceable against the Guarantor and (iii) to conduct its business as now
being conducted.
Section 4.6 REPORTING REQUIREMENTS. Furnish or cause to be furnished to
the Agent (with sufficient copies for the Lenders):
(a) As soon as available, but in any event not later than ninety (90)
days after the end of each fiscal year of the Guarantor, a copy of the annual
audited consolidated and consolidating reports for the Guarantor for such
year, including therein the consolidated and consolidating balance sheets of
the Guarantor as at the end of such year and the related consolidated and
consolidating statements of income and cash flows of the Guarantor for such
year, or statements providing substantially similar information, in each case
certified without qualification buy an independent public accountant of
recognized national standing as fairly representing the financial position
and results of operation of the Guarantor and its
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subsidiaries as at and for the year ending on its date and having been
prepared in accordance with GAAP.
(b) As soon as available, but in any event not later than forty-five
(45) days after the end of each of the first three quarterly periods of
each fiscal year of the Guarantor, the unaudited consolidated and
consolidating balance sheets of the Guarantor and its subsidiaries as
at the end of each such quarter and the related unaudited consolidated and
consolidating statements of income and cash flows of the Guarantor and its
subsidiaries for such quarter and the portion of the fiscal year through
such date, setting forth in each case incomparative form the figures for
the previous year, certified by a responsible officer as fairly presenting
the financial position and the results of operations of the Guarantor and
its subsidiaries as at and for the quarter ending on its date and as
having been prepared in accordance with GAAP (subject to normal year-end
audit adjustments).
(c) Concurrently with the delivery of the financial statements
referred to in Section s4.6(a) and (b) above, a certificate of the
Treasurer of the Guarantor (i) stating that such officer has reviewed the
terms of this Guaranty and the other Loan Documents and has made, or
caused to be made under his supervision, a review in reasonable detail of
the transactions and condition of the Guarantor and its subsidiaries during
the accounting period covered by such financial statements and that such
review has not disclosed the existence during or at the end of such
accounting period, and that such officer does not have knowledge of the
existence as at the date of such certificate, of any Default or Event of
Default except as specified in such certificate and (ii) containing the
computation of, and showing compliance with, each of Sections 4.13, 5.9,
5.10 and 5.11.
(d) Promptly and in any event within five (5) Business Days after
the Guarantor or any ERISA Affiliate knows or has reason to know that a
Reportable Event has occurred with respect to any Plan, a statement of the
chief financial officer of the Guarantor setting forth details as to such
reportable event and the action that the Guarantor or such ERISA Affiliate
proposes to take with respect thereto, together with a copy of the notice
of such Reportable Event, if any, given to the PBGC, the Internal Revenue
Service or the Department of Labor; (ii) promptly and in any event within
ten (10) Business Days after
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receipt thereof, a copy of any notice the Guarantor or any Erisa
Affiliate may receive from the PBGC relating to the intention of the
PBGC to terminate any Plan or to appoint a trustee to administer any
such Plan; (iii) promptly and in any event within ten (10) Business
Days after a filing with the PBGC pursuant to Section 412(n) of the
Code of a notice of failure to make a required installment or other
payment with respect to a Plan, a statement of the chief financial
officer of the Guarantor setting forth details as to such failure and
the action that the Guarantor or an ERISA Affiliate proposes to take
with respect thereto, together with a copy of such notice given to the
PBGC; and (iv) promptly and in any event within ten (10) Business Days
after receipt thereof by the Guarantor or any ERISA Affiliate from the
sponsor of a Multiemployer Plan, a copy of each notice received by the
Guarantor or any ERISA Affiliate concerning the imposition of
withdrawal liability or a determination that a Multiemployer Plan is,
or is expected to be, terminated or reorganized.
(e) Promptly and in any event five (5) Business Days after the same
are publicly available, copies of all regular and periodic financial
information, proxy materials and other information and reports, if any,
which the Guarantor or any of its subsidiaries shall file with the
Securities and Exchange Commission or any securities exchange.
(f) Such other information respecting the business or the condition
or operation of the Guarantor, financial or otherwise, as the Agent or the
Lenders may from time to time reasonably request.
Section 4.7 INDEMNIFICATION. Pay, protect, indemnify and save
harmless the Agent, each Lender and in their capacity as such, each of its
officers, directors, shareholders, controlling persons, employees and agents
from and against all liabilities, losses, claims, damages penalties, causes
of action, suits, costs and expenses (including, without limitation,
attorneys' fees and expenses) or judgments of any nature arising from the
transactions contemplated by this Guaranty and the Pledge Agreement,
PROVIDED, that the Guarantor will not be liable to the Agent, a Lender or, in
their capacity as such, any officer, director, shareholder, controlling
person, employee or agent of the Agent or the Lender for such liabilities,
losses, claims, damages, penalties, causes of action, suites, costs and
expenses (including, without limitation, attorneys' fees) or judgments
arising from the gross negligence or willful misconduct of the Agent, such
Lender
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or such officer, director, shareholder, controlling person, employee or agent.
Section 4.8 PERFORMANCE OF AGREEMENTS. Duly and punctually pay and
perform each of its obligations under this Guaranty and the Pledge Agreement.
Section 4.9 NOTICES. Promptly give notice to the Agent:
(a) of the occurrence of any Default or Event of Default, stating that
such notice is a "notice of default";
(b) of any (i) default or event of default under any contractual
obligation of the Guarantor or any of its subsidiaries and any Governmental
Authority, which in either case, if not cured or if adversely determined, as
the case may be, would have a material adverse effect on the business,
operations, property or financial or other condition of the Guarantor and its
subsidiaries taken as a whole;
(c) of any litigation or proceeding to which the Guarantor or any of its
subsidiaries is a party and which, if adversely determined, could have a
material adverse effect on the business, operations, property or financial or
other condition of the Guarantor; and
(d) of a material adverse change in the business, operations, property or
financial or other condition of the Guarantor or the Guarantor and the
Borrowers taken as a whole.
Each notice pursuant to this subsection shall be accompanied by a statement
of a responsible officer setting forth details of the occurrence referred to
therein and stating what action the Guarantor proposes to take with respect
thereto.
Section 4.10 PAYMENT OF OBLIGATIONS. Pay, discharge or otherwise satisfy
at or before maturity or before they become delinquent in accordance with its
normal business practices, as the case may be, all its material obligations
of whatever nature.
Section 4.11 BOOKS AND RECORDS. Keep, or cause to be kept, adequate
records and books of account, in which complete entries are to be made
reflecting its business and financial transactions, such entries to be made
in accordance with GAAP as in effect in the United States
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consistently applied in the case of financial transactions or as otherwise
required by Applicable Laws.
Section 4.12 FURTHER ASSURANCES. As from time to time requested by the
Agent or a Lender, at the cost and expense of the Guarantor, execute and
deliver to the Agent and the Lenders all such documents and instruments, at
such time to times, in such manner and at such place of places, all as may be
necessary to validate, preserve and protect the position of the Agent and the
Lenders under this Guaranty and the Pledge Agreement. The Agent may, and at
the request of any Lender shall, upon any extension of the Loan Agreement,
request an opinion of counsel, selected by the Guarantor and approved by the
Agent, with respect to action required to be taken for the protection of the
rights of the Agent and the Lenders hereunder and under the Pledge Agreement.
4.13 EQUITY OFFERINGS. Remit on the first Business Day following the
receipt thereof, to CCCIS from the net proceeds of the sale of any Capital
Stock of the Guarantor an amount equal to the amount of such proceeds applied
to retire any portion of the $39,000,000 Class A Redeemable Voting Preferred
Stock of the Guarantor; PROVIDED, that any proceeds of such sale not used to
retire any portion of the $39,000,000 Class A Redeemable Voting Preferred
Stock shall be remitted to CCCIS to be applied to the repayment of the Loans.
Section 4.14 OTHER AGREEMENTS. (a) maintain in full force and effect the
Amended and Restated Data Base Licensing Agreement dated as of May 1, 1992
among CCCIS, InfoVest, CCCDC, CCC Vehicle Damage Estimators, Inc. and Motor
Books Division, a unit of Hearst Business Publishing, Inc.
(b) Enter into, and maintain in full force and effect, an agreement with
White River with respect to White River's equity investment in the Guarantor,
substantially as contemplated in a letter dated December 22, 1993 to Mr. Terry
Baxter of Fund American Enterprises Holding from Mr. Daniel D. Jackson on
behalf of InfoVest and in the Fund American Proposal dated as of December 22,
1993, copies of which are attached hereto as Schedule 4.14.
(c) Comply in all material respect with all indentures, loan or credit
agreements and any other agreement, lease or instrument to which the
Guarantor is a party.
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Section 4.15 INSURANCE. Maintain, and cause each subsidiary to maintain,
with financially sound and reputable insurers, insurance as may be required
by Applicable Law and such other insurance, to such extent and against such
hazards and liabilities, as is customarily maintained by companies similarly
situation.
Section 4.16 CONTROL OF THE BORROWER. Own, directly or indirectly, 100%
of the then outstanding voting securities of CCIS and 100% of the general
partnership interests in CCCDC.
Section 4.17 EXISTING INDEBTEDNESS. Immediately after the making of the
initial Loans by the Lenders, the Existing Indebtedness, and accrued and
unpaid interest thereon, will be paid in full, and any and all Liens securing
such Existing Indebtedness will be released.
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ARTICLE V
NEGATIVE COVENANTS
The Guarantor covenants and agrees that on and after the date hereof and
until the repayment in full of the Loans and the Notes, together with all
interest thereon, the Commitment Fee, the Agency Fee and all other Guaranteed
Obligations, the Guarantor will not, directly or indirectly, unless the
Required Lenders and the Agent shall otherwise consent in writing:
Section 5.1 AMENDMENTS. Amend, or consent to any amendment, waiver,
supplement or modification of this Guaranty, the Pledge Agreement of the
Servicing Agreement.
Section 5.2 LIENS. Create, incur, assume or suffer to exist any Lien
upon or with respect to any of its assets, whether now owned or hereafter
acquired, or assign or otherwise convey any right to receive income to secure
any obligation, except (i) as contemplated by the Pledge Agreement and (ii)
with respect to permitted Indebtedness which, in the aggregate, does not
exceed $500,000.
Section 5.3. INDEBTEDNESS. Create, incur, assume or suffer to exist any
Indebtedness, whether current of funded, or any other liability except (i)
Indebtedness existing on the date of the execution of this Guaranty;
PROVIDED, HOWEVER, that such Indebtedness shall not be extended beyond the
maturity date therefor and increased above the amount thereof as both existed
on the date of execution of this Guaranty, (ii) Indebtedness to the Agent or
the Lenders arising hereunder, (iii) Indebtedness representing the fees
payable to the Collateral Agent pursuant to the Pledge Agreement, (iv)
Indebtedness or other liability incurred in the ordinary course of business
of the Guarantor; PROVIDED, that such Indebtedness does not exceed at any one
time outstanding $500,000; PROVIDED, FURTHER, that the Guarantor may
indemnify and hold harmless any Person in connection with the purchase by
such Person of the stock or assets of Credit Card Service Corporation, GIS
Information Systems, Inc., Equitel Corp., Original Research II Corporation,
Uniphone Systems, Inc. or Phone Base Systems, Inc. from the Guarantor;
PROVIDED, that the Guarantor shall not agree to indemnify and hold harmless
such Person for an amount which exceeds the net proceeds paid to the
Guarantor in connection with the purchase by such Person of such stock or
assets, and (v) $29,000,000 Class A Redeemable Voting Preferred Stock of the
Guarantor.
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Section 5.4 PROHIBITION OF FUNDAMENTAL CHANGES. Wind up, liquidate or
dissolve its affairs or enter into any transaction of merger or
consolidation, or convey, sell, lease or otherwise dispose of (or agree to do
any of the foregoing at any future time), whether in one or a series of
transactions, all or any substantial part of its assets, or permit any of its
subsidiaries to do any of the foregoing; PROVIDED, HOWEVER, that (i) any
subsidiary (other than a Borrower) may merge or consolidate with any other
subsidiary (other than a Borrower) or the Guarantor, (ii) any subsidiary
(other than a Borrower) may sell, lease, transfer or otherwise dispose of any
or all of its assets to the Guarantor or another subsidiary (other than a
Borrower) (iii) the Guarantor may merge with any other entity, provided that
(A) the Guarantor shall be the continuing or surviving corporation and (B)
immediately after such merger, no Event of Default shall exist and the
Guarantor shall not be in default under any material loan agreement to which
it is a party, (iv) any subsidiary (other than a Borrower) may merge or
consolidate with any other corporation, provided that, immediately after
giving effect to such merger or consolidation (A) the continuing or surviving
corporation of such merger or consolidation shall be such subsidiary and (B)
no Event of Default shall exist, (v) a Borrower may merge or consolidate with
the other Borrower, PROVIDED that, immediately after such merger or
consolidation, no Event of Default shall exist and there shall not be a
default under any Loan Document or any material loan agreement to which
either Borrower is a party, (vi) a Borrower may sell, lease, transfer or
otherwise dispose of any or all of its assets to the other Borrower, (vii)
the Guarantor may wind up, liquidate, dissolve, convey, sell or otherwise
dispose of the stock or assets of Credit Card Service Corporation, GIS
Information Systems, Inc., Equitel Corp., Original Research II Corporation,
Uniphone Systems, Inc. or Phone Base Systems, Inc. and (viii) CCCDC may wind
up, liquidate or dissolve its affairs and, in connection with any such
winding up, liquidation or dissolution, shall transfer all of its assets to
CCCIS or a wholly-owned subsidiary of CCCIS; PROVIDED, that in the case of
the transfer of all of the assets of CCCDC to such subsidiary, such
subsidiary executes and delivers to the Agent such agreements, documents and
instruments requested by the Agent to add such subsidiary as a "Borrower"
under the Loan Agreement and to effectuate the granting by such subsidiary to
the Collateral Agent of a security interest in all of its assets.
Section 5.5 SALES OF ASSETS. Sell, lease, assign, transfer or otherwise
dispose of any of its assets, except for (i) the stock or assets of Credit
Card Service Corporation, GIS Information Systems, Inc., Equitel Corp.,
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Original Research II Corporation, Uniphone Systems, Inc. and Phone Base
Systems, Inc., and (ii) the sale of obsolete or worn out assets, PROVIDED,
that the fair market value of such assets at the time of sale thereof shall
not exceed $500,000 in any one fiscal year of the Guarantor.
Section 5.6 OTHER SUPPORTED CREDIT. Agree to, or, become liable with
respect to any surety bond, letter of credit or any commercial paper,
promissory note support or acceptance financing, except as permitted by
Section 5.3.
Section 5.7 DIVIDENDS. Declared or pay any cash dividends or make any
cash distribution in respect of, any shares of its Capital Stock now or
hereafter outstanding; PROVIDED, that the Guarantor may pay cash dividends to
the holders of record of the $39,000,000 Class A Redeemable Voting Preferred
Stock of the Guarantor after April 29, 1997 to the extent legally permitted
to do so in an amount not to exceed eight percent (8.0%) of such Capital
Stock in any calendar year of Total Debt Service Coverage of CCCIS at the
time of payment of such cash dividends exceeds 2.0.
Section 5.6 CAPITAL EXPENDITURES; INVESTMENTS. Make any Capital
Expenditures or any advance, loan, extension of credit or capital
contribution to, or purchase any stock, bonds, notes, debentures or other
securities of, or make any other investment in, any person with any funds
received from CCCIS under the Servicing Agreement; PROVIDED, that if the
Guarantor makes any advances, loans or extensions of credit to a Borrower,
such advances, loans or extensions of credit shall be unsecured and
subordinated to the Loans and shall be made on terms and conditions
acceptable to the Agent and the Required Lenders.
Section 5.9 TRANSACTIONS WITH AFFILIATES. Enter into any transactions,
including without limitation, any purchase, sale, lease or exchange of
property or the rendering of any service, with White River or any affiliate
listed on Schedule 5.9-A with any funds received from CCCIS under the
Servicing Agreement; PROVIDED, that the Guarantor may (i) make payments to
White River as compensation for corporate services provided by White River to
the Guarantor, PROVIDED, that such services are furnished in arms-length
transactions between the Guarantor and White River and are related to either
(a) investment advisory services furnished to the Guarantor by White River,
(b) services in connection with the filing of all regular and periodic
financial information, proxy materials and other information and reports, if
any, by White River on behalf of the Guarantor, and (ii) enter into, and
perform its obligations under, the Servicing Agreement with CCCIS.
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Section 5.10 ACQUISITIONS. Make or maintain any acquisition of, by
lease, purchase or otherwise, all or substantially all of the assets of any
Person, or enter into any joint venture or economic or equity partnership
with, any Person with any funds received from CCCIS under the Servicing
Agreement.
Section 5.11 CAPITAL STOCK. Issue any Capital Stock, other
equity securities or any other ownership interest in (including,
without limitation, stock or securities exchangeable for or
convertible into Capital Stock, other equity securities or ownership
interests) either Borrower to any Person if any Event of Default has
occurred and is continuing or any Event of Default will occur as a
result of such issuance (with or without notice or the passage of
time).
ARTICLE VI
MISCELLANEOUS
Section 6.1 NO WAIVER; CUMULATIVE REMEDIES. This Guaranty is a
continuing one and all liabilities to which it applies or may apply under the
terms hereof shall be conclusively presumed to have been created in reliance
hereon. No failure or delay on the part of the Agent or a Lender in
exercising any right, power or privilege hereunder, and no course of dealing
between the Guarantor and the Agent or a Lender shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights, powers and
remedies herein expressly provided are cumulative and not exclusive of any
rights, powers or remedies which the Agent or a Lender would otherwise have.
No notice to or demand on the Guarantor in any case shall entitle the
Guarantor to any other further notice or demand in similar or other
circumstances or constitute a waiver of the rights of the Agent or the
Lenders to any other or further action in any circumstances without notice or
demand.
Section 6.2 SUCCESSORS AND ASSIGNS. This Guaranty shall be binding upon
the Guarantor and its successors and assigns and shall inure to the benefit
of the Agent, the Lenders and their successors and assigns.
Section 6.3 NO WAIVER. Neither this Guaranty nor any provision hereof
may be changed, waived, discharged or
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terminated except with the prior written consent of the Agent and the Lenders.
Section 6.4 RECEIPT OF LOAN AGREEMENT. The Guarantor acknowledges that
an executed (or conformed) copy of the Loan Agreement has been made available
to its principal executive officers and such officers are familiar with the
contents thereof.
Section 6.5 SET-OFF. In addition to any rights now or hereafter granted
under Applicable Law or otherwise, and not be way of limitation of any such
rights, each Lender and the Agent is hereby authorized at any time or from
time to time, without presentment, demand, protest or other notice of any
kind to the Guarantor or to any other Person, any such notice being hereby
expressly waived, to set off and to appropriate and apply any and all
deposits (general or special, matured or unmatured, time or demand, in
whatever currency) and any other Indebtedness at any time held or owing by
such Lender or the Agent (including without limitation by branches and
agencies of such Lender or the Agent wherever located) to or for the credit
or the obligations and liabilities of the Guarantor to such Lender or the
Agent under this Guaranty, irrespective of whether or not such Lender or the
Agent shall have made any demand hereunder and although said obligations, or
any of them, shall be contingent or unmatured. In the event that any Lender
exercises any of its rights set forth in the preceding sentence, such Lender
agrees to provide written notice to the Agent of such exercise, specifying
the amount of the obligation set off or appropriated, but no failure to
provide notice shall in any way affect the set-off.
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Section 6.6 NOTICES. Except where telephonic (which shall be confirmed in
writing promptly) instructions or notices are authorized herein to be given,
all notices, demands, instructions and other communications required or
permitted to be given under this Guaranty shall be in writing and shall be
personally delivered or sent by registered certified or express mail, postage
prepaid, return receipt requested, or by, facsimile or telegram (with
messenger delivery specified in the case of a telegram), and shall be deemed
to be given for purposes of this Guaranty on the date on which such writing
is delivered or sent to the intended recipient thereof in accordance with the
provisions hereof (except that any notice sent by registered or certified
mail shall be deemed to have been given on the fifth Business Day after such
notice is deposited for delivery in the United States mail). Unless otherwise
specified in a notice sent or delivered in accordance with the foregoing
provisions hereof, notices, demands, instructions and other communications in
writing shall be given to or made upon the respective parties hereto at their
respective addresses (or to their respective facsimile numbers) indicated
below, and, in the case of telephonic instructions or notices, by calling the
telephone number or numbers indicated for such party below:
(a) with respect to the Guarantor:
InfoVest Corporation
World Trade Center Chicago
444 Merchandise Mart - 4th Floor
Chicago, Illinois 60654-1005
Attention: Mr. Gary Bjarnson
Telephone: (312) 222-4636, ext. 2575
Facsimile: (312) 527-2298
with a copy to:
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Attention: Leland Hutchinson, Esq.
Telephone: (312) 853-7403
Facsimile: (312) 853-7036
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(a) with respect to the Agent:
Canadian Imperial Bank of Commerce
425 Lexington Avenue
New York, New York 10017
Attention: Ms. Arlene Tellerman,
Syndications Department
Telephone: (212) 856-3695
Facsimile: (212) 856-3763
(c) with respect to a Lender, the notice address for such
Lender as indicated in the Loan Agreement.
Any party may designate a different or additional address for the
delivery of notices by providing notice thereof to the other parties. Except
as provided to the contrary above, all notices, demands, and other
communications shall be effective upon personal delivery or upon the date of
receipt by the addressee as shown on the return receipt. Rejection or other
refusal to accept notices, demands, or other communications which are
rejected or acceptance of which is refused shall be deemed to be effective
upon the date on which the same were rejected or refused.
Section 6.7 REINSTATEMENT. The Guarantor agrees that, to the
extent that a Borrower or the Guarantor makes a payment or payments to the
Agent or a Lender, which payment or payments or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set
aside and/or required to be repaid to a Borrower or the Guarantor or their
respective estate, trustee, receiver or any other party under any bankruptcy
law, state or federal law, common law or equitable cause, then to the extent
of such payment or repayment, this Guaranty and the advances or part thereof
which have been paid, reduced or satisfied by such amount shall be reinstated
and continued in full force and effect as of the date such initial payment,
reduction or satisfaction occurred.
Section 6.8 TOLLING OF THE STATUTE OF LIMITATIONS. Any
acknowledgment or new promise, whether by payment of principal or interest or
otherwise and whether by a Borrower or others (including the Guarantor), with
respect to any of the Guaranteed Obligations shall, if the statute of
limitations in favor of the Guarantor against the Agent or any Lender shall
have commended to run, toll the running of such statute of limitations, and
if the period of such statute of limitations shall have expired, prevent the
operation of such statute of limitations.
25
<PAGE>
Section 6.9 GOVERNING LAW; WAIVER OF TRIAL BY JURY: CONSENT TO
JURISDICTION. THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF THE AGENT, THE
LENDERS AND THE GUARANTOR HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAW OF THE STATE OF NEW YORK. THE PARTIES HERETO, TO THE
EXTENT PERMITTED BY LAW, WAIVE TRIAL BY JURY IN ANY LITIGATION IN ANY COURT
WITH RESPECT TO, IN CONNECTION WITH, OR ARISING OUT OF, THIS AGREEMENT OR ANY
INSTRUMENT OR DOCUMENT DELIVERED PURSUANT TO THIS AGREEMENT, OR THE VALIDITY,
PROTECTION, INTERPRETATION, COLLECTION OR ENFORCEMENT THEREOF. The guarantor
irrevocable consent that any legal action or proceeding against it under,
arising out of or in any manner relating to this Guaranty may be brought in
the Supreme Court of the State of New York, County of New York or in the
United States District Court for the Southern District of New York, and, by
execution and delivery of this Agreement, the Guarantor hereby irrevocable
accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforementioned courts. The Guarantor
has irrevocably appointed the Prentice-Hall Corporation System, Inc., located
as of the date hereof at 15 Columbus Circle, New York, New York 10023-7773,
as its agent to receive, accept and acknowledge for and on its behalf,
service or any and all legal process, summons, notices and documents which
may be served in any proceeding brought in any court which may be made on such
agent. If for any reason such agent shall cease to be available to act as
such agent shall cease to be available to act as such, the Guarantor agrees
to designate a new agent in The City of New York on the terms and for the
purposes of this Section 6.9 satisfactory to the Agent and the Required
Lenders. The Guarantor further irrevocably consents to the service of
summons, notice, or other process relating to any such action or proceeding
by delivery thereof to it by hand or by mail in the manner provided for in
Section 6.6 hereof. The guarantor hereby expressly and irrevocably waives any
claim or defense in any such action or proceeding in either such court based
on any alleged lack of personal jurisdiction, improper venue or FORUM NON
CONVENIENS or any similar basis. Nothing in this Section 6.9 shall affect or
impair in any manner or to any extent the right of the Agent or a Lender to
commerce legal proceedings or otherwise proceed against the Guarantor in any
jurisdiction or to serve process in any manner permitted by law.
Section 6.10 INCREASED COSTS. The Guarantor shall pay to the Agent for
the account of each Lender such amounts as the Agent or such Lender may
determine to be necessary to compensate it for any reduction in any amount
receivable by the Agent or such Lender hereunder in respect of this Guaranty,
resulting from any Regulatory Change which
26
<PAGE>
(i) changes the basis of taxation of any amounts payable to the Agent
or such Lender under this Guaranty (other than taxes imposed on the
overall net income of the Agent or such Lender); (ii) is based on any
assertion by the United States taxing authorities that a United States
Federal excise tax is due with respect to the amounts receivable under
this Guaranty or which could be interpreted as requiring the payment
of such an excise tax; or (iii) imposes any other condition affecting
this Guaranty. The Agent will notify the Guarantor of any event which
would entitle the Agent or a Lender to compensation pursuant to this
Section as promptly as practicable after it obtains knowledge thereof
and determines to request such compensation. The Agent will and
determines to request such compensation. The Agent will furnish the
Guarantor with a certificate setting forth the basis and amount of
each request for compensation hereunder, which certificate shall be
conclusive absent manifest error.
Section 6.11 ENFORCEMENT BY THE LENDERS. The Guarantor agrees
that this Guaranty may be enforced directly by a Lender to the extent
that the Agent does not enforce this Guaranty. The Agent agrees that
to the extent that a Lender recovers any Guaranteed Obligations under
this Guaranty or any Loan Document, the Agent shall not be entitled to
enforce this Guaranty with respect to such Guaranteed Obligations.
Section 6.12 SEVERABILITY OF PROVISIONS. Any provision of this
Guaranty which is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining
provisions hereof or affecting the validity or enforceability of such
provision in any other jurisdiction.
Section 6.13 HEADINGS. Article and Section headings used in this
Guaranty are for convenience of reference only and shall not affect
the construction of this Guaranty.
Section 6.14 EXECUTION IN COUNTERPARTS. This Guaranty may be
executed in any number of counterparts and by different parties hereto
on separate counterparts, each of which counterparts, when so executed
and delivered, shall be deemed to be an original and all of which
counterparts, when taken together, shall constitute one and the same
Guaranty.
27
<PAGE>
EXHIBIT 11
CCC INFORMATION SERVICES GROUP, INC.
STATEMENT RE: COMPUTATION OF NET INCOME (LOSS) PER SHARE
<TABLE>
<CAPTION>
Actual Year Ended
-----------------------------------------------------------------------
12/31/91 12/31/92 12/31/93 12/31/94 12/31/95
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net income (loss) per share from continuing operations:
Net income (loss) from continuing operations ($5,946,000) ($7,260,000) ($5,774,000) ($13,159,000) $1,286,000
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Weighted average common shares outstanding:
Shares attributable to common stock outstanding 8,671,629 9,080,716 9,245,033 13,089,916 16,294,387
Shares to be issued in proposed offering -- -- -- -- --
Shares attributable to common stock equivalents
outstanding -- -- -- -- 582,937
Shares attributable to options pursuant to
Staff Accounting Bulletin No. 83 147,227 147,227 147,227 147,227 147,227
----------- ----------- ----------- ----------- -----------
8,818,856 9,227,943 9,392,260 13,237,143 17,024,551
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Net income (loss) per share from continuing
operations ($0.67) ($0.78) ($0.61) ($0.99) $0.08
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Per share dividends and accretion:
Dividends and accretion -- -- -- ($1,518,000) ($3,003,000)
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Weighted average common shares outstanding:
Shares attributable to common stock outstanding -- -- -- 13,089,916 16,294,387
Shares to be issued in proposed offering -- -- -- -- --
Shares attributable to common stock equivalents
outstanding -- -- -- -- 582,937
Shares attributable to options pursuant to
Staff Accounting Bulletin No. 83 -- -- -- 147,227 147,227
----------- ----------- ----------- ----------- -----------
-- -- -- 13,237,143 17,024,551
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Per share dividends and accretion -- -- -- ($0.11) ($0.18)
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Net income (loss) per share from total continuing operations:
Net income (loss) from total
continuing operations (5,946,000) (7,260,000) (5,774,000) (14,677,000) (1,717,000)
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Weighted average common shares outstanding:
Shares attributable to common stock outstanding 8,671,629 9,080,716 9,245,033 13,089,916 16,294,387
Shares to be issued in proposed offering -- -- -- -- --
Shares attributable to common stock equivalents
outstanding -- -- -- -- 582,937
Shares attributable to options pursuant to Staff
Accounting Bulletin No. 83 147,227 147,227 147,227 147,227 147,227
----------- ----------- ----------- ----------- -----------
8,818,856 9,227,943 9,392,260 13,237,143 17,024,551
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Net income (loss) per share from total
continuing operations:
Net income (loss) from total continuing operations (.67) (.79) (.61) (1.10) (.10)
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Net income (loss) per share from discontinued operations:
Net income (loss) from discontinued operations $ (194,000) $ 409,000 ($4,357,000) $1,006,000 --
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Weighted average common shares outstanding:
Shares attributable to common stock outstanding 8,671,629 9,080,716 9,245,033 13,089,916 --
Shares to be issued in proposed offering -- -- -- -- --
Shares attributable to common stock equivalents
outstanding -- -- -- -- --
Shares attributable to options pursuant to
Staff Accounting Bulletin No. 83 147,227 147,227 147,227 147,227 --
----------- ----------- ----------- ----------- -----------
8,818,856 9,227,943 9,392,260 13,237,143 --
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Net income (loss) per share from discontinued
operations ($.02) $.04 ($.47) $.07 --
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Net income per share applicable to common stock:
Net income (loss) applicable to common stock ($6,140,000) ($6,851,000) ($10,131,000) ($13,671,000) ($1,717,000)
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Weighted average common shares outstanding:
Shares attributable to common stock outstanding 8,671,629 9,080,716 9,245,033 13,089,916 16,294,387
Shares to be issued in proposed offering -- -- -- -- --
Shares attributable to common stock equivalents
outstanding -- -- -- -- 582,937
Shares attributable to options pursuant to
Staff Accounting Bulletin No. 83 147,227 147,227 147,227 147,227 147,227
----------- ----------- ----------- ----------- -----------
8,818,856 9,227,943 9,392,260 13,237,143 17,024,551
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Net income (loss) per share applicable
to common stock ($.69) ($.74) ($1.08) ($1.03) ($0.10)
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
<CAPTION>
Pro Forma
Pro forma Actual Six Months Ended Six Months Ended
Year Ended -------------------------- -------------------------
12/31/95 6/30/95 6/30/96 6/30/95 6/30/96
----------- ----------- ----------- ----------- -----------
<C> <C> <C> <C> <C>
Net income per share from continuing operations:
Net income (loss) from continuing operations $3,538,000 ($1,107,000) $6,691,000 ($97,000) $7,520,000
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Weighted average common shares outstanding:
Shares attributable to common stock outstanding 16,294,387 16,150,745 16,344,885 16,150,745 16,344,885
Shares to be issued in proposed offering 5,500,000 -- -- 5,500,000 5,500,000
Shares attributable to common stock equivalents
outstanding 582,937 319,272 1,101,240 319,272 1,101,240
Shares attributable to options pursuant to
Staff Accounting Bulletin No. 83 147,227 147,227 147,227 147,227 147,227
----------- ----------- ----------- ----------- -----------
22,524,551 16,617,244 17,593,352 22,117,244 23,093,352
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Net income (loss) per share from continuing
operations $0.16 ($0.06) $0.38 ($0.01) $0.32
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Per share dividends and accretion:
Dividends and accretion ($991,000) ($1,455,000) ($1,604,000) ($480,000) ($529,000)
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Weighted average common shares outstanding:
Shares attributable to common stock outstanding 16,294,387 16,150,745 16,344,885 16,150,745 16,344,885
Shares to be issued in proposed offering 5,500,000 -- -- 5,500,000 5,500,000
Shares attributable to common stock equivalents
outstanding 582,937 319,272 1,101,240 319,272 1,101,240
Shares attributable to options pursuant to
Staff Accounting Bulletin No. 83 147,227 147,227 147,227 147,227 147,227
----------- ----------- ----------- ----------- -----------
22,524,551 16,617,244 17,593,352 22,117,244 23,093,352
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Per share dividends and accretion ($0.05) ($0.09) ($0.09) ($0.02) ($0.02)
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Net income (loss) per share from total
continuing operations:
Net income (loss) from total continuing operations 2,547,000 (2,562,000) 5,087,000 (577,000) 6,991,000
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Weighted average common shares outstanding:
Shares attributable to common stock outstanding 16,294,387 16,150,745 16,344,885 16,150,745 16,344,885
Shares to be issued in proposed offering 5,500,000 -- -- 5,500,000 5,500,000
Shares attributable to common stock equivalents
outstanding 582,937 319,272 1,101,240 319,272 1,101,240
Shares attributable to options pursuant to Staff
Accounting Bulletin No. 83 147,227 147,227 147,227 147,227 147,227
----------- ----------- ----------- ----------- -----------
22,524,551 16,617,244 17,593,352 22,117,244 23,093,352
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Net income per share from total continuing operations .11 (.15) .29 (.03) .30
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Net income per share from discontinued operations:
Net income from discontinued operations -- -- -- -- --
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Weighted average common shares outstanding:
Shares attributable to common stock outstanding -- -- -- -- --
Shares to be issued in proposed offering -- -- -- -- --
Shares attributable to common stock equivalents
outstanding -- -- -- -- --
Shares attributable to options pursuant to
Staff Accounting Bulletin No. 83 -- -- -- -- --
----------- ----------- ----------- ----------- -----------
-- -- -- -- --
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Net income (loss) per share from discontinued
operations -- -- -- -- --
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Net income (loss) per share applicable to common stock:
Net income (loss) applicable to common stock $2,547,000 ($2,562,000) $5,087,000 ($577,000) $6,991,000
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Weighted average common shares outstanding:
Shares attributable to common stock outstanding 16,294,387 16,150,745 16,344,885 16,150,745 16,344,885
Shares to be issued in proposed offering 5,500,000 -- -- 5,500,000 5,500,000
Shares attributable to common stock equivalents
outstanding 582,937 319,272 1,101,240 319,272 1,101,240
Shares attributable to options pursuant to
Staff Accounting Bulletin No. 83 147,227 147,227 147,227 147,227 147,227
----------- ----------- ----------- ----------- -----------
22,524,551 16,617,244 17,593,352 22,117,244 23,093,352
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Net income (loss) per share applicable
to common stock $0.11 ($0.15) $0.29 ($0.03) $0.30
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
</TABLE>
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-1 of our report dated January 30, 1996, except
for Note 17 which is as of August 13, 1996 relating to the consolidated
financial statements of CCC Information Services Group Inc., which appears in
such Prospectus. We also consent to the application of such report to the
Financial Statement Schedule for the three years ended December 31, 1995 listed
under Item 16(b) of this Registration Statement when such schedule is read in
conjunction with the consolidated financial statements referred to in our
report. The audits referred to in such report also included this schedule. We
also consent to the use of our report dated July 22, 1996 relating to the
financial statements of CCC Development Company which appears in the Prospectus
constituting part of this Registration Statement on Form S-1. We also consent to
the references to us under the headings "Experts" and "Selected Financial Data"
in such Prospectus. However, it should be noted that Price Waterhouse LLP has
not prepared or certified such "Selected Financial Data."
Price Waterhouse LLP
Chicago, Illinois
August 13, 1996
