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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K/A
AMENDMENT NO. 1 TO
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
Commission File Number: 0-28600
CCC INFORMATION SERVICES GROUP INC.
(Exact name of registrant as specified in its charter)
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DELAWARE 54-1242469
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
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WORLD TRADE CENTER CHICAGO
444 MERCHANDISE MART
CHICAGO, ILLINOIS 60654
(Address of principal executive offices, including zip code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
(312) 222-4636
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
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NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
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None None
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SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Common Stock, $0.10 par value
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes __X__ No _____
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. / /
The aggregate market value of voting shares (based on the closing price of
those shares listed on the Nasdaq National Market and the consideration received
for those shares not listed on a national or regional exchange) held by
non-affiliates (as defined in Rule 405) of the registrant as of March 7, 1997
was $347,120,954.
As of March 7, 1997, 23,533,624 shares of CCC Information Services Group
Inc. common stock, par value $0.10 per share, were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Part III of this Annual Report on Form 10-K incorporates by reference
portions of the registrant's Notice of 1997 Annual Meeting of Stockholders and
Proxy Statement.
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CC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
ANNUAL REPORT ON FORM 10-K
TABLE OF CONTENTS
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PAGE(S)
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PART I
Item 1. Business..................................................................................... 1-11
Item 2. Properties................................................................................... 11
Item 3. Legal Proceedings............................................................................ 11-12
Item 4. Submission of Matters to a Vote of Security Holders.......................................... 12
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters........................ 12
Item 6. Selected Financial Data...................................................................... 13-14
Item 7. Management's Discussion and Analysis of Results of Operations and Financial Condition........ 14-20
Item 8. Financial Statements and Supplementary Data.................................................. 20
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure......... 20
PART III
Item 10. Directors and Executive Officers of the Registrant........................................... 20
Item 11. Executive Compensation....................................................................... 21
Item 12. Security Ownership of Certain Beneficial Owners and Management............................... 21
Item 13. Certain Relationships and Related Transactions............................................... 21
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.............................. 21-43
Signatures............................................................................................... 44
Directors and Executive Officers......................................................................... 45
Corporate Information.................................................................................... 46
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CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
This Annual Report on Form 10-K contains forward-looking statements within
the definition of Federal Securities laws. The section entitled "Forward Looking
Statements" contains additional disclosures concerning forward-looking
statements.
PART I
ITEM 1. BUSINESS
ORGANIZATION
CCC Information Services Group Inc. ("Company") (formerly known as InfoVest
Corporation), through its wholly owned subsidiary CCC Information Services Inc.
("CCC"), is a supplier of automobile claims information and processing services,
claims management software and communication services. The Company's services
and products enable automobile insurance company and 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 to the
Consolidated Financial Statements, and through April 30, 1995, the Company
consisted of two primary operating entities: CCC and CCC Development Company
("Joint Venture" or "CCCDC"). The Company acquired its former partner's 50%
interest in CCCDC, 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, Certified Collateral
Corporation of Canada, Ltd.
As of December 31, 1996, White River Ventures Inc. ("White River") held
approximately 37% of the total outstanding common stock of the Company and had
51% of the voting power associated with the Company's total outstanding voting
stock. White River is a wholly owned subsidiary of White River Corporation.
BUSINESS SUMMARY
The principal services and products offered by the Company automate the
process of evaluating and settling both total loss and repairable automobile
claims. When a vehicle cannot be repaired, the Company's vehicle valuation
services and products, primarily TOTAL LOSS, provide insurance companies with
the ability to effect total loss settlements on the basis of market-specific
vehicle values. When a vehicle is repairable, the Company's collision estimating
services and products, principally EZEST and PATHWAYS, 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. The Company's claims outsourcing services and products,
include ACCESS, a vehicle restoration and management service. Communication
services offered by the Company connect insurers, appraisers and collision
repair facilities, providing the information required for decision making. 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 represent an integrated solution, combining
information, claims management software and secure communication systems to
improve the efficiency of the automobile claims process.
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The Company's customers include the largest U.S. automobile insurance
companies and most of the small to medium size automobile insurance companies in
the country. In addition, the Company's products are used by approximately
10,000 collision repair facilities. The Company's core competencies include
collection and processing of claims and automobile valuation and repair data,
development of client-server, object-oriented claims software products,
communications network management, customer service and the workflow processes
of automobile insurance claims.
The Company sells its services and products to insurance companies through a
direct sales force. The Company contracts with independent sales representatives
to sell its products to collision repair facilities. Over half of the Company's
revenue for 1996 was for services and products sold pursuant to contracts, which
generally have multi-year terms. A substantial portion of the Company's
remaining revenue represented sales to customers that have been doing business
with the Company for many years. The Company's services and products are
generally sold under multi-year contracts either on a monthly subscription or a
per transaction basis.
OVERVIEW OF THE AUTOMOBILE INSURANCE CLAIMS PROCESS
Automobile claims generally involve three types of participants: automobile
insurance companies, consumers and service providers, such as collision repair
facilities and attorneys. The interaction among these parties in the processing
of a claim can be referred to 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.
THE AUTOMOBILE INSURANCE INDUSTRY
Of the companies offering private passenger automobile insurance in the
United States, the twenty largest providers account for more than 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 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 automobile claims 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.
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THE COLLISION REPAIR INDUSTRY
The collision repair industry, which has historically been extremely
fragmented, is consolidating. Most collision repair facilities are
owner-operated, single-location businesses which focus on a local market. The
Company estimates that 20 to 25 thousand collision repair facilities have annual
revenues in excess of $300 thousand. These facilities tend to be larger, better
capitalized and increasingly reliant 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.
Because a substantial portion of collision repair facility revenue is
derived from insurance companies, 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 network of approved repair
facilities. 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.
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: in-house staff appraisals, direct repair programs and
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. This estimate is based on the Company's claims experience, and
interviews with its large insurance company customers. Staff appraisers handle a
broad range 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 most insurance company staff
appraisers use collision estimating software to prepare collision repair
estimates.
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 company 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
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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.
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 most independent
adjusters do not 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.
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 economies of scale benefits.
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 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.
SERVICES AND PRODUCTS
The Company's services and products are integrated for use with one another
across multiple platforms and are designed for ease of use by the large number
of people involved in the automobile claims process on a daily basis.
Approximately 69% of the Company's consolidated revenue for 1996 was from the
sale of services and products to insurance companies with the remainder sold to
collision repair facilities and other customers. Revenues from TOTAL LOSS
valuation services and EZEST and PATHWAYS Collision Estimating software
licensing accounted for 35% and 45%, respectively, of the Company's consolidated
1996 revenue.
VEHICLE VALUATION SERVICES AND PRODUCTS. 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 vehicle database, which contains
detailed information about millions of vehicles either physically inventoried
from one of more than 4,000 dealer lots or taken from recent advertisements, 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. The Company's
TOTAL LOSS
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product complies with the regulatory requirements of all 50 states. 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 previously totaled or stolen
vehicles.
COLLISION ESTIMATING SERVICES AND PRODUCTS. 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. P-page
logic represents procedure pages from crash estimating guides that detail the
steps involved in repairing various parts of a damaged vehicle depending on the
extent of the damage. 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 an 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
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. The EZEST software, Motor Crash Estimating
Guide database and other associated databases are updated via a monthly CD-ROM.
EZEST is sold under multi-year contracts on a monthly subscription basis to both
insurers and collision repair facilities. In April 1996, the Company began
delivery of its next-generation estimating product, 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. In November 1996, the Company
introduced a collision repair facility version of PATHWAYS Collision Estimating.
CLAIMS OUTSOURCING SERVICES AND PRODUCTS. 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 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.
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
communications network tailored to provide automated communication service to
participants in the automobile physical damage claim process, including:
mailboxing, messaging, routing, imaging, assignment tracking, record library and
third-party gateways. A unique feature of EZNET is the electronic appraisal
review feature that provides real-time exception reporting to target
re-inspections and improves management control of DRP networks and appraisers.
EZNET also facilitates the management of car rental and salvage disposition.
EZNET is sold both on a per transaction basis and on a monthly subscription
basis.
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
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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 insured-parties.
ACCLAIM services are sold to insurance companies on a fixed fee, per claim
basis. ACCLAIM is currently in pilot program status.
PATHWAYS APPRAISER WORKSTATION SOFTWARE. In April 1996, the Company began
delivery of PATHWAYS, its windows-based appraiser workstation software platform
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
communications network, allowing adjusters to operate in the field, and thereby
reduce office and other expenses. The first PATHWAYS application was 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. PATHWAYS is sold
under multi-year contracts on a monthly subscription basis.
CUSTOMERS
The Company's business is based on relationships with the two primary users
of the Company's services: automobile insurance companies and collision repair
facilities. The Company's customers include the largest U.S. automobile
insurance companies and most of the small to medium size automobile insurance
companies in the country.
The Company's products are used by approximately 10,000 collision repair
facilities. The Company has collision repair customers in all 50 states,
including most major metropolitan markets. In addition to assisting collision
repair facilities in managing their businesses, 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 1996 was for services and products
sold pursuant to contracts, which generally have multi-year terms. A substantial
portion of the Company's remaining revenue represented sales to customers that
have been doing business with the Company for many years. The Company's services
and products are sold either on a monthly subscription or a per transaction
basis.
SALES AND MARKETING
Including Collision Repair Representatives, the Company utilizes
approximately 300 sales professionals across five different sales organizations
and certain other sales and marketing functions to market and
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sell its services and products. Employee counts below for each of the five sales
organization are as of December 31, 1996.
STRATEGIC CLIENT GROUP. The Strategic Client Group comprises 45 national
account managers ("NAMs") who focus on the Company's overall relationships with
the home and regional offices of twenty five 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.
BUSINESS SOLUTIONS GROUP. The Business Solutions Group consists of
approximately 10 business solutions managers ("BSMs") that identify and develop
qualified consulting projects. The BSMs were recruited from a variety of major
consulting firms with backgrounds in workflow/process management and business
systems analysis. The BSMs 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. BSMs often work closely with
customer system staffs to assure smooth implementation of more technically
complicated and customized service offerings.
NATIONAL SALES GROUP. Approximately 15 national sales account managers
comprise the National Sales group. They market the Company's services and
products to the home offices of large and medium-sized insurance companies
outside of the top 25 ranking. 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 approximately 65 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's account executives assist
claim managers with the training of high turnover personnel, program result
analysis and problem resolution. Increasingly, account executives are
functioning as claim settlement consultants.
COLLISION REPAIR REPRESENTATIVES. The Company contracts with about 60
primary independent sales representatives who, in turn, contract with
approximately 60 secondary independent sales representatives to sell the
Company's products to collision repair facilities across the country. The
primary representatives are assigned geographic territories and often employ
secondary representatives to increase presence in particular areas. The
representatives are highly experienced within the collision repair industry and
typically assist customers in dealing with a variety of business issues.
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
executives and collision repair industry leaders. 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.
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TRAINING AND SUPPORT
Field appraisers, claim representatives and collision repair facility owners
use the Company's tools and information for decision making. The Company
addresses its customer service needs through a field and telephone training and
support staff that consists of approximately 180 employees. The support staff
consists of individuals with technical knowledge and experience relating not
only to application software, operating systems and network communications, but
also to new and used car automobile markets and collision repair. The Company
routinely analyzes customer call types to modify products or training and,
whenever necessary, will dispatch a field representative to provide process
assistance. In addition, Company field trainers 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 settlement services staff can make modifications to claims, provide
regulatory information or additional backup for a valuation, providing support
from the point of a loss report through claims settlement.
TECHNOLOGY
Underlying each of the Company's principal services and products are
databases which customers access through software and the Company's
communications network.
VEHICLE VALUATION 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 more than 4,000
automobile dealers in 228 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.
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. See
further discussion of this agreement under "Intellectual Property."
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 the Collision Industry Electronic Commerce Association.
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
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approach is intended to offer many advantages to the Company's customers,
including ease of training and 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.
PRODUCT DEVELOPMENT AND PROGRAMMING
The Company's 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 applications, and
database design and enhancement. The custom interfaces and applications are
developed through the Company's Business Solution Group. The Company employs
approximately 245 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. The
Company develops products in close collaboration with its clients based on
specific needs. The Company's total product development and programming expense
was $17.0 million, $14.9 million and $10.1 million for the years ended December
31, 1996, 1995 and 1994, 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 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
9
<PAGE>
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
alternative database that would provide comparable information to the Motor
Crash Estimating Guide, licensed from the Hearst Corporation through a scheduled
expiration of April 30, 2002. Absent notification of cancellation by either the
Company or the Hearst Corporation two years before the license's scheduled
expiration, the license agreement is automatically extended for one year on a
rolling annual basis. 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. The
Company has been previously involved, however, in intellectual property
litigation concerning certain data ownership rights, 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, Automatic Data Processing ("ADP") and Thomson Publishing
Corporation ("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 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.
10
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CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
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 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 December 31, 1996, the Company had approximately 950 full-time
employees of whom approximately 180 were employed in sales and marketing
functions (excluding independent collision repair representatives),
approximately 180 were employed in customer support functions, approximately 245
in product development and quality assurance functions, approximately 215 in
operations and approximately 130 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.
FORWARD-LOOKING STATEMENTS
This Item 1 contains forward-looking statements that involve risks and
uncertainties. When used, the words "anticipate", "believe", "estimate", and
"expect" and similar expressions as they relate to the Company and its
management are intended to identify such forward-looking statements. The
Company's actual results, performance or achievements could differ materially
from the results expressed in, or implied by, such forward-looking statements.
Factors that could affect such results, performance or achievements are set
forth in "Risk Factors" in the final Prospectus filed on August 16, 1996
pursuant to Rule 424(b) in connection with the Company's Registration Statement
on Form S-1 filed with the Securities and Exchange Commission (File Number
333-07287).
ITEM 2. PROPERTIES
The Company's corporate office is 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
84,000 square feet in Glendora, California where a satellite development center
and distribution center are housed, under a lease expiring in August 2000. The
Company is currently negotiating a lease for approximately 30,000 additional
square feet in a Chicago office facility separate from its corporate office.
This new space will house the Company's claims settlement services staff and
enable the use of existing leased space at the Company's corporate office for
additional staff growth, particularly product development and programming staff.
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.
ITEM 3. LEGAL PROCEEDINGS
In April 1996, the Company completed the settlement of a lawsuit involving
an independent publisher of used car valuation books. The settlement amount
approximated the settlement charge of $4.5 million
11
<PAGE>
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
previously recorded in April 1995. 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.
The Company is a party to various claims and routine litigation arising in
the normal course of business. Such claims and litigation are not expected to
have a material adverse effect on the financial condition or results of
operations of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Common Stock (symbol: CCCG) began trading on the Nasdaq National Market
("Nasdaq") on August 16, 1996. Low and high sales prices of the Common Stock
were as follows:
<TABLE>
<CAPTION>
1996
------------------------
THIRD FOURTH
QUARTER(*) QUARTER
----------- -----------
<S> <C> <C>
Low..................................................................... $ 14.00 $ 12.50
High.................................................................... $ 24.00 $ 23.00
</TABLE>
- ------------------------
(*) Represents trading activity for the period from August 16, 1996 through
September 30, 1996.
Since the public offering, no dividends have been declared on shares of the
Company's Common Stock and the Company's Board of Directors currently has no
intention to declare such dividends. As of March 7, 1997, there were 23,533,624
shares of Common Stock issued and outstanding. There were 140 stockholders of
record on March 7, 1997, plus an indeterminate number of stockholders that hold
shares of Common Stock in the names of nominees.
12
<PAGE>
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------------
1996 1995 1994(*) 1993 1992
---------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C>
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Revenues............................................... $ 130,977 $ 115,519 $ 91,917 $ 51,264 $ 45,805
Expenses:
Operating expenses................................... 110,846 104,697 84,094 44,233 41,429
Purchased research and development................... -- -- 13,791 -- --
Loss on lease termination............................ -- -- -- 3,802 --
Litigation settlements............................... -- 4,500 1,750 -- --
---------- ---------- ---------- ---------- ---------
Operating income (loss)................................ 20,131 6,322 (7,718) 3,229 4,376
Equity in loss of Joint Venture........................ -- -- (615) (3,564) (6,713)
Interest expense....................................... (2,562) (5,809) (7,830) (6,945) (9,606)
Other income (expense), net............................ 636 482 316 (311) 232
---------- ---------- ---------- ---------- ---------
Income (loss) from continuing operations
before income taxes.................................. 18,205 995 (15,847) (7,591) (11,711)
Income tax (provision) benefit......................... (2,683) 291 2,688 1,817 4,451
---------- ---------- ---------- ---------- ---------
Income (loss) from continuing operations............... 15,522 1,286 (13,159) (5,774) (7,260)
Income (loss) from discontinued operations,
net of income taxes.................................. -- -- 1,006 (4,357) 409
Extraordinary loss on early retirement of debt, net of
income taxes......................................... (678) -- -- -- --
---------- ---------- ---------- ---------- ---------
Net income (loss)...................................... 14,844 1,286 (12,153) (10,131) (6,851)
Dividends and accretion on mandatorily redeemable
preferred stock...................................... (6,694) (3,003) (1,518) -- --
---------- ---------- ---------- ---------- ---------
Net income (loss) applicable to common stock........... $ 8,150 $ (1,717) $ (13,671) $ (10,131) $ (6,851)
---------- ---------- ---------- ---------- ---------
---------- ---------- ---------- ---------- ---------
PER SHARE DATA:
Income (loss) from:
Continuing operations................................ $ 0.76 $ 0.08 $ (0.99) $ (0.61) $ (0.78)
Discontinued operations.............................. -- -- 0.07 (0.47) 0.04
Extraordinary loss on early retirement of debt, net
of income taxes.................................... (0.03) -- -- -- --
Dividends and accretion on mandatorily redeemable
preferred stock.................................... (0.33) (0.18) (0.11) -- --
---------- ---------- ---------- ---------- ---------
Net income (loss) applicable to common stock........... $ 0.40 $ (0.10) $ (1.03) $ (1.08) $ (0.74)
---------- ---------- ---------- ---------- ---------
---------- ---------- ---------- ---------- ---------
Weighted average common and common equivalent shares
outstanding.......................................... 20,367 17,028 13,241 9,396 9,231
</TABLE>
- ------------------------
(*) 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.
13
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CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------------------------
1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
(IN THOUSANDS)
CONSOLIDATED BALANCE SHEET DATA:
Cash and marketable securities........................ $ 18,404 $ 3,895 $ 5,702 $ 375 $ 3,756
Working capital....................................... 8,093 (17,953) (15,549) (11,004) 969
Total assets.......................................... 58,268 44,093 52,232 40,058 40,423
Current portion of long-term debt..................... 120 7,660 5,340 7,857 4,522
Long-term debt, excluding current maturities.......... 111 27,220 35,753 56,624 61,585
Mandatorily redeemable preferred stock................ 4,688 34,125 31,122 -- --
Stockholders' equity (deficit)........................ 24,293 (56,420) (54,729) (53,416) (43,291)
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
RESULTS OF CONTINUING OPERATIONS
The Company's results from continuing operations, for the periods indicated,
are set forth below:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
(IN THOUSANDS)
Revenues..................................................................... $ 130,977 $ 115,519 $ 91,917
Expenses:
Operating Expenses:
Production and customer support........................................... 31,828 32,261 25,123
Commissions, royalties and licenses....................................... 14,009 11,720 7,153
Selling, general and administrative....................................... 40,653 36,279 33,426
Depreciation and amortization............................................. 7,330 9,572 8,331
Product development and programming....................................... 17,026 14,865 10,061
Purchased research and development.......................................... -- -- 13,791
Litigation settlements...................................................... -- 4,500 1,750
---------- ---------- ----------
Operating income (loss)..................................................... 20,131 6,322 (7,718)
Equity in loss of Joint Venture............................................. -- -- (615)
Interest expense............................................................ (2,562) (5,809) (7,830)
Other income, net........................................................... 636 482 316
---------- ---------- ----------
Income (loss) from continuing operations before income taxes................ 18,205 995 (15,847)
Income tax (provision) benefit.............................................. (2,683) 291 2,688
---------- ---------- ----------
Income (loss) from continuing operations.................................... $ 15,522 $ 1,286 $ (13,159)
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
OVERVIEW
The Company is a supplier of automobile claims information and processing,
claims management software and communication services. The Company's customers
include the largest U.S. automobile insurance companies and most of the small to
medium size automobile insurance companies in the country. In addition, the
companies products and services are used by approximately 10,000 collision
repair facilities. The Company's services and products are designed to improve
efficiency, manage costs and increase consumer satisfaction in the management of
automobile claims and restoration.
14
<PAGE>
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
The Company sells its products to two primary customer groups: insurance
companies (approximately 69% of revenue in 1996) 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 insurance
companies are its TOTAL LOSS vehicle valuation service, 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 its claims outsourcing service, ACCESS, an integrated appraisal and
restoration management service and 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's
principal product for collision repair facilities is its EZEST collision
estimating software.
TOTAL LOSS vehicle valuation services are generally obtained through direct
dial-up access to the Company's host-based valuation system and 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. Collision Estimating software subscriptions are billed monthly
in advance. ACCESS services are billed monthly to insurance companies and
collision repair facilities on a per transaction basis. EZNET communication
services are generally priced on a per transaction basis. Monthly subscription
and transaction rates for all products and 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.
Customer contracts generally have multi-year terms. A substantial portion of
the Company's revenues were earned under contracts with customers that provide
for exclusivity or specify minimum purchase requirements; most remaining revenue
represented sales to customers that have been doing business with the Company
for many years. Use of multi-year contracts is common practice within the
industry, making it difficult to take customers from competitors during the
contract term.
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 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 Mandatorily
Redeemable Preferred Stock ("Preferred Stock"), and 7,050,840 shares of the
Company's common stock (the "White River Transaction"), and CCC entered into the
1994 bank credit facility. White River immediately sold $1,462,000 of the
Preferred Stock (3.7% of the then-outstanding Preferred Stock) and 264,407
shares of the Common Stock (1.6% of the then-outstanding Common Stock) to two
investment partnerships affiliated with Hambrecht & Quist LLC. In 1994, the
Company acquired the 50% of CCCDC that it did not previously own. Since the
acquisition, the Company has consolidated the accounts of CCCDC.
The Preferred Stock includes certain rights set forth in detail in Notes 12
and 13 to the consolidated financial statements, Mandatorily Redeemable
Preferred Stock and Initial Public Offering of Common Stock, respectively. In
particular, the Series E Preferred Stock permits White River and its affiliates
to cast 51% of the votes to be cast on any matter to be voted on by the holders
of the Company's 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. In addition, under
the
15
<PAGE>
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
terms of a Stockholders Agreement among White River and certain stockholders,
including the Company's Chairman (the "Management Stockholders"), the parties
have agreed, subject to fiduciary duties, that White River will vote with the
Management Stockholders regarding defined business combinations and subsequent
offerings of Company common stock.
The principal payment obligations and the restrictive covenants of the 1994
bank credit facility constrained the Company's operating activities through the
first half of 1996. As a result of the payment obligations and restrictive
covenants, the Company did not incur certain operating expenditures and make
certain investments that it otherwise would have made. 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. The
postponed expenditures to enhance internal functions and capabilities (including
improvements to customer tracking software, additional staff hiring and
training, and certain sales and marketing activities) were made during the
second half of the year.
Depreciation expense includes depreciation attributable to certain software
acquired through the Company's acquisition of UCOP's 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 declined
to approximately $0.7 million in 1996.
The Company expenses research and development costs as incurred. The Company
has evaluated the establishment of technological feasibility of its product in
accordance with Statement of Financial Accounting Standard No. 86, "Accounting
for the Costs of Computer Software to be Sold Leased or Otherwise Marketed." The
Company sells its products in a market that is subject to rapid technological
change, new product development and changing customer needs. Accordingly, the
Company has concluded that technological feasibility is not established until
the development stage of the product is nearly complete. The Company defines
technological feasibility as the completion of a working model. The time period
during which costs could be capitalized, from the point of reaching
technological feasibility until the time of general product release, is very
short and, consequently, the amounts that could be capitalized are not material
to the Company's financial position or results of operations. Therefore, the
Company has charged all such costs to research and development in the period
incurred.
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 three years ended December 31, 1996
the Company expended approximately $42.0 million for product development and
programming.
The Company had 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 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. As a result of the Company's successful public
offering and recently improved operating results, valuation allowances totaling
$4.7 million were released to income in 1996.
Despite its pre-offering accumulated deficit, 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
16
<PAGE>
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
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 did 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, 1996, the Company had no research or investment tax credit
carryforwards.
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>
YEAR ENDED DECEMBER 31,
-------------------------------------
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Revenues.......................................................................... 100.0% 100.0% 100.0%
----- ----- -----
Expenses:
Operating Expenses:
Production and customer support............................................... 24.3 27.9 27.3
Commissions, royalties and licenses........................................... 10.7 10.1 7.8
Selling, general and administrative........................................... 31.0 31.4 36.4
Depreciation and amortization................................................. 5.6 8.3 9.1
Product development and programming........................................... 13.0 12.9 10.9
Purchased research and development.............................................. -- -- 15.0
Litigation settlements.......................................................... -- 3.9 1.9
----- ----- -----
Operating income (loss)........................................................... 15.4 5.5 (8.4)
Equity in loss of Joint Venture................................................... -- -- (0.7)
Interest expense.................................................................. (2.0) (5.0) (8.5)
Other income, net................................................................. 0.5 0.4 0.3
----- ----- -----
Income (loss) from continuing operations before income taxes...................... 13.9 0.9 (17.2)
Income tax (provision) benefit.................................................... (2.0) 0.2 2.9
----- ----- -----
Income (loss) from continuing operations.......................................... 11.9% 1.1% (14.3)%
----- ----- -----
----- ----- -----
</TABLE>
1996 COMPARED WITH 1995
For the year ended December 31, 1996, the Company reported net income
applicable to common stock of $8.2 million, or $0.40 per share, versus net loss
of $1.7 million, or $0.10 per share, for the same period last year. Operating
income for the year ended December 31, 1996 of $20.1 million was $13.8 million
higher than the same period last year. A litigation settlement charge of $4.5
million was recorded in the comparable 1995 period.
REVENUES. Revenues for the year ended December 31, 1996 of $131.0 million
were $15.5 million, or 13.4%, higher than the same period last year. The
increase in revenues was due primarily to higher revenues from collision
estimating software licensing, from ACCESS claims services and from TOTAL LOSS
vehicle valuation services. Collision estimating software licensing revenues
increased primarily because of an increase in the number of software licenses,
particularly at collision repair facilities. ACCESS claims services revenues
increased primarily as a result of higher transaction volume. TOTAL LOSS
revenues increased as a result of both higher volume and a slightly higher rate
per transaction.
17
<PAGE>
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
PRODUCTION AND CUSTOMER SUPPORT. Production and customer support decreased
from $32.3 million, or 27.9% of revenues, to $31.8 million or 24.3% of revenues,
due primarily to the Company's efforts to reduce selected production costs.
COMMISSIONS, ROYALTIES AND LICENSES. Commission, royalties and licenses
increased from $11.7 million, or 10.1% of revenues, to $14.0 million, or 10.7%
of revenues. The increase as a percent of revenues was due primarily to higher
revenues from collision estimating licensing which generates both a commission
and a data royalty.
SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative
increased from $36.3 million, or 31.4% of revenues, to $40.7 million, but
declined to 31.0% of revenues. The decline as a percentage of revenue primarily
represents the increase in revenues but also reflects the results of the
Company's cost containment programs.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization declined from
$9.6 million, or 8.3% of revenues, to $7.3 million, or 5.6% of revenues. The
decline relates primarily to expiration, as of March 31, 1996, of purchased
software amortization associated with the Company's acquisition of its former
partner's interest in CCCDC.
PRODUCT DEVELOPMENT AND PROGRAMMING. Product development and programming
increased from $14.9 million, or 12.9% of revenues to $17.0 million, or 13.0% of
revenues. The increase was due primarily to an increasing allocation of Company
resources to product development and wage pressure associated with retaining
software engineers.
INTEREST EXPENSE AND INCOME TAXES. Interest expense declined from $5.8
million to $2.6 million due to repayments of long-term debt, including the
substantial debt repayments following the Company's initial public offering of
common stock. The effective income tax rate for the year of 14.7% reflects the
release of deferred income tax valuation allowances totaling $4.7 million. The
decision to release these deferred income tax valuation allowances was based
upon the successful recapitalization of the Company through its initial public
offering and management's increased confidence in predicting the timing and
amount of future taxable income.
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. 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. TOTAL
LOSS valuation service revenues were down slightly, reflecting primarily lower
volume. In addition, sales of certain other miscellaneous services and products
were up slightly.
COMMISSIONS, ROYALTIES AND LICENSES. Commissions, royalties and licenses
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
18
<PAGE>
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
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.
LITIGATION SETTLEMENT. The litigation settlement charge of $4.5 million in
1995 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 16 to the
Consolidated Financial Statements.
LIQUIDITY AND CAPITAL RESOURCES
During the year ended December 31, 1996, net cash provided by operating
activities was $20.3 million, net of contract funding revenue amortization of
$3.3 million. The Company applied $5.6 million, excluding noncash capital
expenditures, to purchase equipment and software and invested $9.0 million in
marketable securities.
On August 21, 1996, the Company completed its initial public offering of
common stock, generating proceeds of $72.1 million, net of underwriters'
discounts and related equity issue costs. Proceeds from the offering of $36.1
million were used to redeem approximately 87% of the Company's mandatorily
redeemable preferred stock at stated value plus accrued dividends. In addition,
proceeds from the offering of
19
<PAGE>
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
$28.0 million were used to make principal repayments on long-term debt. The
balance of the Company's principal repayments during the year ended December 31,
1996 was generated from operations.
On August 22, 1996, the Company secured a $20.0 million revolving credit
facility through a new commercial bank. There have been no borrowings under the
new facility. Indebtedness under the new facility would bear interest at either
of two rates as selected by the Company: the London Inter-Bank Offering Rate
("LIBOR") plus 1.5% or the prime rate. Following the offering, the Company's
principal liquidity requirements include its operating activities, including
product development, and its investments in internal and customer capital
equipment.
Under the new bank facility, CCC is, with certain exceptions, prohibited
from making certain sales or transfers of assets, incurring nonpermitted
indebtedness or encumbrances, and redeeming or repurchasing its capital stock,
among other restrictions. In addition, the new bank credit facility also
requires CCC to maintain certain levels of operating cash flow and debt
coverage, and limits CCC's ability to make capital expenditures and investments
and declare dividends.
Management believes that cash flows from operations and the new credit
facility will be sufficient to meet the Company's liquidity needs over the next
12 months. 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.
FORWARD-LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 contains certain safe
harbors regarding forward-looking statements. In that context, the discussion in
this Item 7 contains forward-looking statements which involve certain degrees of
risk and uncertainties, including statements relating to liquidity and capital
resources. Except for the historical information, the matters discussed in this
Item 7 are such forward-looking statements that involve risks and uncertainties,
including, without limitation, the effect of competitive pricing within the
industry, the presence of competitors with greater financial resources than the
Company, the intense competition for top software engineering talent and the
volatile nature of technological change within the automobile claims industry.
Additional factors that could affect the Company's financial condition and
results of operations are included in the Company's Final Prospectus in
connection with the Registration Statement on Form S-1, as amended, filed with
the Securities and Exchange Commission on August 16, 1996, Commission File
Number 333-07287.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and supplementary data required with respect to
this Item 8 are listed in Item 14(a)(1) and 14(a)(2) included elsewhere in this
filing
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this item is hereby incorporated by reference to
CCC Information Services Group Inc.'s Notice of 1997 Annual Meeting of
Stockholders and Proxy Statement, which was filed with the Securities and
Exchange Commission and provided to stockholders on or about March 14, 1997.
20
<PAGE>
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item is hereby incorporated by reference to
CCC Information Services Group Inc.'s Notice of 1997 Annual Meeting of
Stockholders and Proxy Statement, which was filed with the Securities and
Exchange Commission and provided to stockholders on or about March 14, 1997.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this item is hereby incorporated by reference to
CCC Information Services Group Inc.'s Notice of 1997 Annual Meeting of
Stockholders and Proxy Statement, which was filed with the Securities and
Exchange Commission and provided to stockholders on or about March 14, 1997.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is hereby incorporated by reference to
CCC Information Services Group Inc.'s Notice of 1997 Annual Meting of
Stockholders and Proxy Statement, which was filed with the Securities and
Exchange Commission and provided to stockholders on or about March 14, 1997.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Index to Consolidated Financial Statements and Schedules
1. Consolidated Financial Statements
<TABLE>
<CAPTION>
PAGE(S)
---------
<S> <C>
Report of Independent Accountants............................................... 22
Consolidated Financial Statements:
Consolidated Statement of Operations.......................................... 23
Consolidated Balance Sheet.................................................... 24
Consolidated Statement of Cash Flow........................................... 25
Consolidated Statement of Stockholders' Equity (Deficit)...................... 26
Notes to Consolidated Financial Statements.................................... 27-41
</TABLE>
2. Financial Statement Schedule
<TABLE>
<S> <C>
Schedule II--Valuation and Qualifying Accounts.................. 42
</TABLE>
All other schedules have been omitted because the required information is
included in the financial statements or notes thereto or because they are not
required.
3. Exhibits
<TABLE>
<S> <C>
Index to Exhibits............................................... 43
</TABLE>
(b) Reports on Form 8-K
No reports on Form 8-K were filed by CCC Information Services Group Inc.
during 1996.
21
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders
of CCC Information Services Group Inc.
In our opinion, the consolidated financial statements listed in the
accompanying index appearing under Item 14(a)1 and (a)2 on page 21 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, 1996 and 1995,
and the results of their operations and their cash flows for each of the three
years in the period ended December 31, 1996, 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 22, 1997
Chicago, Illinois
22
<PAGE>
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
Revenues...................................................................... $ 130,977 $ 115,519 $ 91,917
Expenses:
Production and customer support............................................. 31,828 32,261 25,123
Commissions, royalties and licenses......................................... 14,009 11,720 7,153
Selling, general and administrative......................................... 40,653 36,279 33,426
Depreciation and amortization............................................... 7,330 9,572 8,331
Product development and programming......................................... 17,026 14,865 10,061
Purchased research and development.......................................... -- -- 13,791
Litigation settlements...................................................... -- 4,500 1,750
---------- ---------- ----------
Operating income (loss)....................................................... 20,131 6,322 (7,718)
Equity in loss of Joint Venture............................................... -- -- (615)
Interest expense.............................................................. (2,562) (5,809) (7,830)
Other income, net............................................................. 636 482 316
---------- ---------- ----------
Income (loss) from continuing operations before income taxes.................. 18,205 995 (15,847)
Income tax (provision) benefit................................................ (2,683) 291 2,688
---------- ---------- ----------
Income (loss) from continuing operations...................................... 15,522 1,286 (13,159)
Income from discontinued operations, net of income taxes...................... -- -- 1,006
Extraordinary loss on early retirement of debt, net of income taxes........... (678) -- --
---------- ---------- ----------
Net income (loss)............................................................. 14,844 1,286 (12,153)
Dividends and accretion on mandatorily redeemable preferred stock............. (6,694) (3,003) (1,518)
---------- ---------- ----------
Net income (loss) applicable to common stock.................................. $ 8,150 $ (1,717) $ (13,671)
---------- ---------- ----------
---------- ---------- ----------
Income (loss) per common and common equivalent share from:
Continuing operations....................................................... $ 0.76 $ 0.08 $ (0.99)
Discontinued operations..................................................... -- -- 0.07
Extraordinary loss on early retirement of debt, net of income taxes......... (0.03) -- --
Dividends and accretion on mandatorily redeemable preferred stock........... (0.33) (0.18) (0.11)
---------- ---------- ----------
Net income (loss) applicable to common stock.................................. $ 0.40 $ (0.10) $ (1.03)
---------- ---------- ----------
---------- ---------- ----------
Weighted average common and common equivalent shares outstanding.............. 20,367 17,028 13,241
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
23
<PAGE>
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)
ASSETS
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Cash...................................................................................... $ 9,403 $ 3,895
Investments in marketable securities...................................................... 9,001 --
Accounts receivable, net.................................................................. 9,772 9,899
Income taxes receivable................................................................... -- 1,079
Other current assets...................................................................... 3,207 2,877
---------- ----------
Total current assets.................................................................... 31,383 17,750
Equipment and purchased software, net of accumulated depreciation
of $20,361 and $23,695 at December 31, 1996 and 1995, respectively...................... 8,088 7,310
Goodwill, net of accumulated amortization of $8,893 and $7,548
at December 31, 1996 and 1995, respectively............................................. 11,230 12,575
Deferred income taxes..................................................................... 6,410 3,810
Other assets.............................................................................. 1,157 2,648
---------- ----------
Total Assets............................................................................ $ 58,268 $ 44,093
---------- ----------
---------- ----------
LIABILITIES, MANDATORILY REDEEMABLE PREFERRED STOCK
AND STOCKHOLDERS' EQUITY (DEFICIT)
Accounts payable and accrued expenses..................................................... $ 15,821 $ 19,652
Income taxes payable...................................................................... 1,517 --
Current portion of long-term debt......................................................... 120 7,660
Deferred revenues......................................................................... 5,709 5,063
Current portion of contract funding....................................................... 123 3,328
---------- ----------
Total current liabilities............................................................... 23,290 35,703
Long-term debt............................................................................ 111 27,220
Contract funding.......................................................................... -- 135
Deferred revenues......................................................................... 1,997 597
Other liabilities......................................................................... 3,889 2,733
Commitments and contingencies (Note 15)
---------- ----------
Total liabilities....................................................................... 29,287 66,388
---------- ----------
Mandatorily redeemable preferred stock ($1.00 par value,
100,000 shares authorized, 4,915 and 39,000 shares designated
and outstanding at December 31, 1996 and 1995, respectively............................. 4,688 34,125
---------- ----------
Common stock ($0.10 par value, 30,000,000 shares authorized,
23,472,355 and 16,316,400 shares issued and outstanding at
December 31, 1996 and 1995, respectively)............................................... 2,347 1,632
Additional paid-in capital................................................................ 84,223 11,679
Accumulated deficit....................................................................... (61,898) (69,519)
Treasury stock, at cost ($0.10 par value, 112,505 and 111,920 shares
in treasury at December 31, 1996 and 1995, respectively)................................ (379) (212)
---------- ----------
Total stockholders' equity (deficit).................................................... 24,293 (56,420)
---------- ----------
Total Liabilities, Mandatorily Redeemable Preferred Stock
and Stockholders' Equity (Deficit).................................................. $ 58,268 $ 44,093
---------- ----------
---------- ----------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
24
<PAGE>
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Operating Activities:
Net income (loss).............................................................. $ 14,844 $ 1,286 $ (12,153)
Adjustments to reconcile net income (loss) to net cash
provided by (used for) operating activities:
Income from discontinued operations, net of income taxes..................... -- -- (1,006)
Extraordinary loss on early retirement of debt, net of income taxes.......... 678 -- --
Purchased research and development........................................... -- -- 13,791
Equity in loss of Joint Venture.............................................. -- -- 615
Depreciation and amortization of equipment and purchased software............ 5,948 8,154 6,770
Amortization of goodwill..................................................... 1,345 1,346 1,380
Deferred income tax provision (benefit)...................................... (2,600) 1,659 (2,885)
Contract funding proceeds.................................................... -- 149 4,995
Contract funding revenue amortization........................................ (3,340) (10,249) (12,989)
Other, net................................................................... 451 559 560
Changes in:
Accounts receivable, net................................................... 127 (1,272) 185
Other current assets....................................................... (330) 339 853
Other assets............................................................... (58) (149) (21)
Accounts payable and accrued expenses...................................... (3,831) 5,194 (769)
Current income taxes....................................................... 3,371 (961) (827)
Deferred revenues.......................................................... 2,046 1,312 971
Other liabilities.......................................................... 1,604 356 547
--------- --------- ---------
Net cash provided by (used for) operating activities:
Continuing operations.......................................................... 20,255 7,723 17
Discontinued operations, net................................................... -- -- (4,169)
--------- --------- ---------
Net cash provided by (used for) operating activities..................... 20,255 7,723 (4,152)
--------- --------- ---------
Investing Activities:
Purchases of equipment and software............................................ (5,568) (3,003) (5,220)
Purchase of investment securities.............................................. (9,001) -- --
Acquisition of Joint Venture, net of cash acquired............................. -- -- (4,519)
Purchase of Faneuil ISG stock and options...................................... -- -- (530)
Proceeds from sale of discontinued operations, net of expenses................. -- 500 5,728
Other, net..................................................................... 25 48 (643)
--------- --------- ---------
Net cash used for investing activities................................... (14,544) (2,455) (5,184)
--------- --------- ---------
Financing Activities:
Principal payments on long-term debt........................................... (46,740) (11,101) (15,842)
Proceeds from issuance of long-term debt....................................... 10,750 4,000 30,793
Public offering of common stock, net of underwriters' discounts................ 73,795 -- --
Redemption of preferred stock, including accrued dividends..................... (36,131) -- --
Payment of equity and debt issue costs......................................... (2,053) -- (1,802)
Advances from Joint Venture, net............................................... -- -- 1,511
Other, net..................................................................... 176 26 3
--------- --------- ---------
Net cash provided by (used for) financing activities..................... (203) (7,075) 14,663
--------- --------- ---------
Net increase (decrease) in cash.................................................. 5,508 (1,807) 5,327
Cash:
Beginning of period............................................................ 3,895 5,702 375
--------- --------- ---------
End of period.................................................................. $ 9,403 $ 3,895 $ 5,702
--------- --------- ---------
--------- --------- ---------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
25
<PAGE>
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
(IN THOUSANDS, EXCEPT NUMBER OF SHARES)
<TABLE>
<CAPTION>
OUTSTANDING
COMMON STOCK TREASURY STOCK TOTAL
---------------------- ADDITIONAL ---------------------- STOCKHOLDERS'
NUMBER OF PAID-IN ACCUMULATED NUMBER OF EQUITY
SHARES PAR VALUE CAPITAL (DEFICIT) SHARES COST (DEFICIT)
----------- --------- ----------- ------------ ----------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
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)
Initial public offering of
common stock, net of
underwriters' discounts
and equity issue costs.......... 6,900,000 690 71,434 -- -- -- 72,124
Preferred stock accretion......... -- -- -- (6,006) -- -- (6,006)
Preferred stock
dividends accrued............... -- -- -- (688) -- -- (688)
Stock options exercised, including
income tax benefit (*).......... 242,355 24 678 -- 14,185 (193) 509
Treasury stock issuance........... 13,600 1 21 -- (13,600) 26 48
Investment security distribution.. -- -- -- (530) -- -- (530)
Other............................. -- -- 411 1 -- -- 412
Net income........................ -- -- -- 14,844 -- -- 14,844
----------- --------- ----------- ------------ ----------- --------- ------------
December 31, 1996................... 23,472,355 $ 2,347 $ 84,223 $ (61,898) 112,505 $ (379) $ 24,293
----------- --------- ----------- ------------ ----------- --------- ------------
----------- --------- ----------- ------------ ----------- --------- ------------
</TABLE>
- --------------------------
(*) Note 14--Stock Option Plan contains a table of stock option activity that
reflects 256,540 stock options exercised in 1996. The difference between the
table in Note 14 and the Statement above represents the payment of a portion
of the exercise price and/or income tax obligation arising from the stock
option exercise with mature shares of the Company's common stock. These
shares totaled 14,185 in 1996 and are held in treasury.
The accompanying notes are an integral part of these consolidated financial
statements.
26
<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 supplier of automobile claims information and processing, claims
management software and communication services. The Company's services and
products enable automobile insurance company customers and 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,
Certified Collateral Corporation of Canada, Ltd.
As of December 31, 1996, White River Ventures, Inc. ("White River") held
approximately 37% of the total outstanding common stock of the Company. White
River is a wholly owned subsidiary of White River Corporation. As a result of
White River's substantial equity interest and 51% voting power, including voting
rights established through its ownership interest in the Company's Series E
Preferred Stock, the Company is a consolidated subsidiary of White River. See
Note 12--Mandatorily Redeemable Preferred Stock and Note 13--Initial Public
Offering of Common Stock.
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 1996, 1995 and 1994, 69%, 70% and 79%, respectively, were
attributable to revenues from insurance companies.
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, 1996 and 1995, $1.9 million, and $1.5 million, respectively, have
been applied as a reduction of accounts receivable. Of total accounts
receivable, net of reserves, at December 31, 1996 and 1995, $8.7 million and
$8.4 million, respectively, were due from insurance companies.
INTERNAL SOFTWARE DEVELOPMENT COSTS
The Company expenses research and development costs as incurred. The Company
has evaluated the establishment of technological feasibility of its product in
accordance with SFAS No. 86, "Accounting for
27
<PAGE>
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 2--SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
the Costs of Computer Software to be Sold Leased or Otherwise Marketed." The
Company sells its products in a market that is subject to rapid technological
change, new product development and changing customer needs. Accordingly, the
Company has concluded that technological feasibility is not established until
the development stage of the product is nearly complete. The Company defines
technological feasibility as the completion of a working model. The time period
during which costs could be capitalized, from the point of reaching
technological feasibility until the time of general product release, is very
short and, consequently, the amounts that could be capitalized are not material
to the Company's financial position or results of operations. Therefore, the
Company has charged all such costs to research and development in the period
incurred. For the years 1996, 1995 and 1994, research and development costs of
approximately $4.3 million, $3.5 million and $2.8 million, respectively, are
reflected in the accompanying consolidated statement of operations.
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.
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 1996, 1995 and 1994, amortization of purchased
software to be marketed was $0.7 million, $2.6 million and $2.0 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
As of December 31, 1996 and 1995, deferred debt issue costs, net of
accumulated amortization, of $0.4 million and $1.3 million, respectively, were
included in other assets.
CONTRACT FUNDING
Future revenue streams under certain end-user collision estimating contracts
(Contracts) were 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.
The Company no longer utilizes Contract funding as a financing vehicle.
28
<PAGE>
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 2--SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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.
FAIR VALUE OF FINANCIAL INSTRUMENTS
As of December 31, 1996, 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.
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 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.
Effective January 1, 1996, the Company adopted the "disclosure method"
provisions of SFAS No. 123, "Accounting for Stock-Based Compensation," which
became effective January 1, 1996. As permitted by SFAS No. 123, the Company
continues to recognize stock-based compensation costs under the intrinsic
value-based method of accounting as prescribed by Accounting Principles Board
("APB") Opinion No. 25, "Accounting for Stock Issued to Employees."
NOTE 3--NONCASH INVESTING AND FINANCING ACTIVITIES
The Company directly charges accumulated deficit for preferred stock
accretion and preferred stock dividends accrued. During 1996, 1995 and 1994,
these amounts totaled $6.7 million, $3.0 million and $1.5 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 1996, 1995 and 1994, these noncash capital
expenditures totaled $1.3 million, $0.9 million and $0.4 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.
29
<PAGE>
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
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.
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 and options to purchase additional common stock in
Faneuil ISG, a Canadian Corporation that will conduct the future operations of
these businesses. At December 31, 1995, this investment was 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. (Phone Base). Both the gain and cash
proceeds from the sale were not material.
Revenues and income from discontinued operations for the year ended December
31, 1994 were as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
Revenues...................................................................... $ 25,137
-------
-------
Loss before income taxes...................................................... $ (5,171)
Income tax benefit............................................................ 2,536
-------
Loss from operations.......................................................... (2,635)
-------
Gain on sale.................................................................. 4,650
Income tax provision.......................................................... (1,009)
-------
Net gain on sale.............................................................. 3,641
-------
Income from discontinued operations......................................... $ 1,006
-------
-------
</TABLE>
30
<PAGE>
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 6--INCOME TAXES
Income taxes applicable to continuing operations consisted of the following
(provision) benefit:
<TABLE>
<CAPTION>
1996 1995 1994
--------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Current:
Federal...................................................... $ (4,225) $ 1,792 $ (193)
State........................................................ (1,057) 134 73
International................................................ (1) 24 (77)
--------- --------- ---------
Total current.............................................. (5,283) 1,950 (197)
--------- --------- ---------
Deferred:
Federal...................................................... 2,098 (1,668) 1,910
State........................................................ 502 9 975
--------- --------- ---------
Total deferred............................................. 2,600 (1,659) 2,885
--------- --------- ---------
Total income tax (provision) benefit....................... $ (2,683) $ 291 $ 2,688
--------- --------- ---------
--------- --------- ---------
</TABLE>
The Company's effective income tax rate applicable to continuing operations
differs from the federal statutory rate as follows:
<TABLE>
<CAPTION>
1996 1995 1994
----------------------- ----------------------- -----------------------
(IN THOUSANDS, EXCEPT %'S)
<S> <C> <C> <C> <C> <C> <C>
Federal income tax (provision) benefit at
statutory rate................................ $ (6,190) (34.0)% $ (338) (34.0)% $ 5,388 34.0 %
State and local taxes, net of federal income tax
effect and before valuation allowances........ (924) (5.1) 60 6.0 960 6.1
International taxes............................. (21) (0.1) 12 1.2 (132) (0.8)
Goodwill amortization........................... (471) (2.6) (494) (49.6) (337) (2.1)
Change in valuation allowance................... 4,679 25.7 1,260 126.6 (2,630) (16.6)
Nondeductible expenses.......................... (186) (1.0) (242) (24.3) (48) (--)
Other, net...................................... 430 2.4 33 3.3 (513) (3.6)
--------- ----- --------- ----- --------- -----
Income tax (provision) benefit................ $ (2,683) (14.7)% $ 291 29.2 % $ 2,688 17.0 %
--------- ----- --------- ----- --------- -----
--------- ----- --------- ----- --------- -----
</TABLE>
During 1996 and 1994, the Company made income tax payments, net of refunds,
of $1.9 million and $1.6 million, respectively. During 1995, the Company
received income tax refunds, net of payments, of $1.0 million.
31
<PAGE>
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 6--INCOME TAXES (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,
--------------------
1996 1995
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Deferred income tax assets:
Deferred revenue......................................................... $ 1,893 $ 2,394
Rent..................................................................... 1,363 980
Depreciation and amortization............................................ 997 990
Bad debt expense......................................................... 759 568
Capital loss carryforward................................................ 284 --
Accrued compensation..................................................... 247 1,127
Long-term receivable..................................................... 145 150
Lease termination........................................................ 48 440
Net operating loss carryforward.......................................... 18 110
Litigation settlement.................................................... -- 1,145
Other, net............................................................... 940 1,121
--------- ---------
Subtotal................................................................. 6,694 9,025
Valuation allowance...................................................... (284) (4,963)
--------- ---------
Total deferred income tax asset............................................ 6,410 4,062
--------- ---------
Deferred income tax liabilities:
Purchased software....................................................... -- (252)
--------- ---------
Total deferred income tax liability........................................ -- (252)
--------- ---------
Net deferred income tax asset............................................ $ 6,410 $ 3,810
--------- ---------
--------- ---------
</TABLE>
The Company had previously established deferred income tax asset valuation
allowances because of its history of operating losses and an inability to
project future taxable income with certainty. Valuation allowances totaling $4.7
million were released to income in 1996 as a result of the Company's successful
recapitalization, through its public offering of common stock, and its
demonstrated pattern of profitability. The valuation allowance as of December
31, 1996 pertains to the capital loss carryforward.
Net operating loss carryforwards totaled $52 thousand as of December 31,
1996. These net operating loss carryforwards expire in 2005.
Prior to calendar year 1995, the Company's fiscal year-end was April 30. The
Internal Revenue Service (IRS) has examined the Company's income tax returns for
fiscal years 1992 through 1995. The findings must be reported to the Joint
Committee on Taxation before they become final. All Company income tax returns
for fiscal years prior to 1992 are closed to further examination by the IRS.
32
<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,
--------------------
1996 1995
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Prepaid data royalties..................................................... $ 1,195 $ 1,138
Prepaid equipment maintenance.............................................. 614 444
Prepaid commissions........................................................ 614 259
Computer inventory......................................................... 210 522
Prepaid insurance.......................................................... 170 56
Other, net................................................................. 404 458
--------- ---------
Total.................................................................... $ 3,207 $ 2,877
--------- ---------
--------- ---------
</TABLE>
NOTE 8--EQUIPMENT AND PURCHASED SOFTWARE
Equipment and purchased software consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1996 1995
---------- ----------
(IN THOUSANDS)
<S> <C> <C>
Computer equipment.................................................... $ 22,614 $ 19,997
Purchased software, licenses and databases............................ 2,858 8,007
Furniture and other equipment......................................... 2,804 2,814
Leasehold improvements................................................ 173 187
---------- ----------
Total, gross........................................................ 28,449 31,005
Less accumulated depreciation......................................... (20,361) (23,695)
---------- ----------
Total, net.......................................................... $ 8,088 $ 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, 1996, this acquired software had been fully
amortized. As of December 31, 1995 it had a net asset value of $0.7 million.
As of December 31, 1996 and 1995, computer equipment, net of accumulated
depreciation, that is on lease to certain customers under operating leases of
$3.6 million and $2.5 million, respectively, is included in computer equipment.
Future minimum rentals under noncancelable customer leases aggregate
approximately $2.9 million and $1.0 million in years 1997 and 1998,
respectively.
33
<PAGE>
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 8--EQUIPMENT AND PURCHASED SOFTWARE (CONTINUED)
Furniture and other equipment includes equipment under capital leases as
follows:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1996 1995
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Capital leases............................................................... $ 574 $ 574
Less accumulated depreciation................................................ (357) (240)
--------- ---------
Total, net................................................................. $ 217 $ 334
--------- ---------
--------- ---------
</TABLE>
NOTE 9--GOODWILL
Goodwill consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
LIFE 1996 1995
--------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
CCC acquisition (1988)...................................... 20years $ 16,458 $ 16,458
UCOP acquisition (1994)..................................... 7years 3,665 3,665
--------- ---------
Total, gross.............................................. 20,123 20,123
Less accumulated amortization............................... (8,893) (7,548)
--------- ---------
Total, net................................................ $ 11,230 $ 12,575
--------- ---------
--------- ---------
</TABLE>
NOTE 10--ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1996 1995
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Accounts payable........................................................ $ 5,783 $ 5,464
Compensation............................................................ 4,652 2,799
Professional fees....................................................... 1,484 2,586
Sales tax............................................................... 1,283 1,501
Commissions............................................................. 1,162 1,015
Health insurance........................................................ 406 957
Lease termination....................................................... 121 1,136
Litigation settlement................................................... -- 2,956
Other, net.............................................................. 930 1,238
--------- ---------
Total................................................................. $ 15,821 $ 19,652
--------- ---------
--------- ---------
</TABLE>
NOTE 11--LONG-TERM DEBT
In August 1996, CCC negotiated a new credit facility with a new commercial
bank to replace its prior bank credit facility. The new credit facility provides
CCC with the ability to borrow up to $20 million under
34
<PAGE>
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 11--LONG-TERM DEBT (CONTINUED)
a revolving line of credit for general corporate purposes. The Company
guarantees CCC's obligations under the new credit facility, which is secured by
a lien on the Company's common stock interest in CCC and CCC's assets. The
interest rate under the new bank credit facility is the London Interbank
Offering Rate (LIBOR) plus 1.5% or the prime rate in effect from time to time,
as selected by CCC. When borrowings are outstanding, interest payments are made
monthly. There were no borrowings under the new revolving credit facility during
1996. CCC pays a commitment fee of 0.25% on any unused portion of the revolving
credit facility. The revolving credit facility terminates on October 1, 2001.
Under the new bank facility, CCC is, with certain exceptions, prohibited
from making certain sales or transfers of assets, incurring nonpermitted
indebtedness or encumbrances, and redeeming or repurchasing its capital stock,
among other restrictions. In addition, the new bank credit facility requires CCC
to maintain certain levels of operating cash flow and debt coverage, and limits
CCC's ability to make capital expenditures and investments and declare
dividends.
CCC's prior bank credit facility consisted of a term loan and revolving
credit facility. The average interest rate in effect during the years ended
December 31, 1996 and 1995 for the term loan and revolving credit facility was
8.7% and 8.7%, and 9.2% and 9.0%, respectively. The Company made cash interest
payments of $2.6 million, $4.1 million and $3.3 million during the year ended
December 31, 1996, 1995 and 1994, respectively.
Long-term debt consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1996 1995
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Senior bank term loan..................................................... $ -- $ 25,500
Senior bank revolving credit facility..................................... -- 8,000
Equipment financing obligations........................................... -- 985
Capital lease obligations................................................. 231 395
--------- ---------
Total debt.............................................................. 231 34,880
Due within one year....................................................... (120) (7,660)
--------- ---------
Due after one year........................................................ $ 111 $ 27,220
--------- ---------
--------- ---------
</TABLE>
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) 7,050,840 shares of the Company's 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
35
<PAGE>
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 12--MANDATORILY REDEEMABLE PREFERRED STOCK (CONTINUED)
$14.8 million, less certain transaction costs of $2.4 million, was assigned to
common stock and credited to paid-in capital.
As part of the reorganization and recapitalization, the Company and White
River entered into an agreement under which the Company, following receipt of
written notification from White River that the number of shares of the Company's
common stock owned by White River represents less than a majority of the issued
and outstanding shares of common stock of the Company, must issue to White River
500 shares of the Company's preferred stock, par value $1.00, designated as
Series E Cumulative Redeemable Preferred Stock ("Series E Preferred Stock") in
exchange for 500 shares of the Series D Preferred Stock. (Collectively, the
Series C, D and E Preferred Stock are hereinafter referred to as "Preferred
Stock.") The terms of the Series E Preferred Stock and the Series C and 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/or its affiliates that own any shares of Series E Preferred Stock
would be entitled to vote on all matters voted on by holders of the Company's
common stock.
Subject to the pro-ration provisions described below, the number of votes
that 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/or it affiliates to
have 51% of the votes to be cast on any matter to be voted upon by holders of
the Company's common stock, for so long as all of the shares of Series E
Preferred Stock are issued, outstanding and held by White River and/or its
affiliates. To the extent White River also owns shares of the Company's 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
Company common stock, will provide White River with a maximum of 51% of the
votes. Under the terms of a Stockholders Agreement among White River and certain
stockholders, including the Company's Chairman (the "Management Stockholders"),
the parties have agreed, subject to fiduciary duties, that White River will vote
with the Management Stockholders regarding defined business combinations and
subsequent offerings of Company common stock.
The terms of the Series E Preferred Stock provide for the pro-rata reduction
of Series E Preferred Stock voting power from the voting power established as of
its original issuance, 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/or its affiliates. Outstanding shares of Series E Preferred Stock are
redeemable pro rata with the outstanding shares of Series C and Series D
Preferred Stock.
Through the date of redemption, Preferred Stock dividends have accrued at a
rate of 2.75% per annum. Because the Company completed the required redemption
of Preferred Stock through the use of proceeds from the company's initial public
offering of common stock, Preferred Stock dividends from the date of redemption
through June 16, 1998 have been eliminated. See Note 13--Initial Public Offering
of Common Stock. Beginning June 17, 1998, Preferred Stock dividends, payable
quarterly, accrue at an annual rate of 8%. The Preferred Stock is mandatorily
redeemable, at stated value plus accrued dividends, on June 16, 1999. Prior to
the mandatory redemption date, under the terms of the Preferred Stock, White
River is only required to accept an offer to redeem that is funded through a
public offering of the Company's common stock. If White River should decline a
good faith offer to redeem all or a portion of the Preferred Stock, the dividend
rate on the Preferred Stock subject to the redemption offer shall be reduced
from 8% to 1%.
36
<PAGE>
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 12--MANDATORILY REDEEMABLE PREFERRED STOCK (CONTINUED)
During the years ended December 31, 1996, 1995 and 1994, the original
discount on the Preferred Stock accreted $6.0 million, $1.9 million and $0.9
million, respectively, and dividends of $0.7 million, $1.1 million and $0.6
million, respectively, were accrued.
NOTE 13--INITIAL PUBLIC OFFERING OF COMMON STOCK
On June 27, 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 (IPO) of the Company's common stock. In addition, on
August 13, 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
reported share information has been restated to reflect the split. On August 21,
1996, the Company completed its IPO by issuing 6,900,000 shares of common stock,
par value $0.10, at $11.50 per share. Gross proceeds from the IPO of $79.4
million were reduced by Underwriters' discounts of $5.6 million and equity issue
costs of $1.7 million. Proceeds from the IPO were used to repay certain bank
debt and, as required by the terms of the Company's Series C and Series D
Preferred Stock, the Company used 50% of the net proceeds from the IPO to redeem
34,085 shares of outstanding Preferred Stock at its stated value of $34.1
million plus accrued dividends of $2.0 million. As a result of the redemption
and in accordance with the terms of the Preferred Stock, Preferred Stock
dividends from the IPO date through June 16, 1998 have been eliminated.
As a result of the IPO, White River's common equity ownership percentage was
reduced from approximately 52% to approximately 37%. On August 23, 1996, White
River informed the Company of its intention to exchange 500 shares of Series D
Preferred Stock for 500 shares of the Company's Series E Preferred Stock.
Pursuant to the request from White River, the Company issued 500 Shares of
Series E Preferred Stock in exchange for 500 Shares of Series D Preferred Stock.
At December 31, 1996, 630 Shares of Series C Preferred Stock, 3,785 Shares
of Series D Preferred Stock and 500 Shares of Series E Preferred Stock are
issued and outstanding.
NOTE 14--STOCK OPTION PLAN
In May 1988, the Company's Board of Directors adopted a nonqualified stock
option plan (the "1988 Plan"). Under the 1988 Plan, as amended in 1992, options
may be granted at a per share price of not less than the greater of $1.375 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 1988 Plan subsequent to June
16, 1994 was limited to 3% of outstanding stock on June 16, 1994 or 488,880
shares. Including these incremental options, 2,956,040 total options were
available under the plan to be granted. No additional options can be granted
under the 1988 Plan. The Company's Board of Directors has approved a new stock
option plan that, if approved by the Company's shareholders, would provide for
the granting to employees of up to 675,800 new options to purchase Company
common stock.
37
<PAGE>
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 14--STOCK OPTION PLAN (CONTINUED)
Option activity during 1996, 1995 and 1994 is summarized below:
<TABLE>
<CAPTION>
1996 1995 1994
----------------------- ----------------------- -----------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
SHARES PRICE SHARES PRICE SHARES PRICE
---------- ----------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Options Outstanding:
Beginning of year........................ 2,956,040 $ 1.93 2,193,079 $ 1.40 2,312,453 $ 1.46
Granted.................................. 409,280 11.20 1,247,521 2.64 269,680 1.38
Exercised (*)............................ (256,540) 1.43 (19,200) 1.38 (640) 1.38
Surrendered or terminated................ (428,841) 2.47 (465,360) 1.39 (388,414) 1.75
---------- ----------- ---------- ----- ---------- -----
End of year............................ 2,679,939 $ 3.29 2,956,040 $ 1.93 2,193,079 1.40
---------- ----------- ---------- ----- ---------- -----
---------- ----------- ---------- ----- ---------- -----
Options exercisable at year-end............ 1,764,774 $ 2.11 1,694,999 $ 1.60 1,643,303 $ 1.43
---------- ----------- ---------- ----- ---------- -----
---------- ----------- ---------- ----- ---------- -----
Weighted-average fair value of options
granted during the year.................. $ 11.20 $ 2.65 $ 1.38
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
- ------------------------
(*) In 1996, the number of options exercised in the accompanying consolidated
statement of stockholders' equity (deficit) is net of shares tendered by
employees as payment of the stock exercise price and related income taxes.
Shares tendered to the Company, which are held in treasury, totaled 14,185
in 1996.
The next table summarizes information about fixed stock options outstanding
at December 31, 1996:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
--------------------------------------------- -----------------------
WEIGHTED WEIGHTED
WEIGHTED AVERAGE AVERAGE AVERAGE
NUMBER REMAINING EXERCISE NUMBER EXERCISE
RANGE OF EXERCISE PRICES OUTSTANDING CONTRACTUAL LIFE PRICE EXERCISABLE PRICE
- ------------------------------------------------ ----------- ------------------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C>
$ 1.38 to $ 1.38................................ 1,402,518 1.81 $ 1.38 1,306,526 $ 1.38
$ 1.75 to $ 2.88................................ 580,821 3.06 $ 1.87 260,392 $ 1.96
$ 4.38 to $ 4.38................................ 292,680 3.95 $ 4.38 117,072 $ 4.38
$11.20 to $11.20................................ 403,920 4.49 $ 11.20 80,784 $ 11.20
----------- ----------
$ 1.38 to $11.20................................ 2,679,939 2.72 $ 3.29 1,764,774 $ 2.11
----------- ----------
----------- ----------
</TABLE>
The fair value of each option grant was estimated on the date of grant using
the Black-Scholes option pricing model. The principal determinants of option
pricing are: fair market value of the Company's common stock at the date of
grant, expected volatility, risk-free interest rate, expected option lives and
dividend yields. Weighted average assumptions employed by the Company for 1996
and 1995, respectively, were: expected volatility of 30% and 31%; and a
risk-free interest rate of 6.5% and 6.4%. In addition, the Company assumed an
expected option life of 4.5 years and no dividend yield in both years.
The Company applies APB Opinion 25 in accounting for its fixed stock option
plan and, accordingly, has not recognized compensation cost in the accompanying
consolidated statement of operations. Had compensation cost been recognized
based on fair value as of the grant dates as defined in SFAS No. 123,
38
<PAGE>
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 14--STOCK OPTION PLAN (CONTINUED)
the Company's net income (loss) applicable to common stock and related per share
amounts would have been reduced as indicated below:
<TABLE>
<CAPTION>
1996 1995
--------- ---------
(IN THOUSANDS,
EXCEPT
PER SHARE DATA)
<S> <C> <C>
Net income (loss) applicable to common stock:
As reported.......................................................... $ 8,150 $ (1,717)
Pro forma............................................................ $ 7,864 $ (2,019)
Per share net income (loss) applicable to common stock:
As reported.......................................................... $ 0.40 $ (0.10)
Pro forma............................................................ $ 0.39 $ (0.12)
</TABLE>
The effects of applying SFAS No. 123 in the above pro forma disclosures are
not indicative of future amounts as they do not include the effects of awards
granted prior to 1995, some of which would have had income statement effects in
1996 and 1995 due to the four-year vesting period associated with the fixed
stock option awards. Additionally, future amounts are likely to be affected by
the number of grants awarded since additional awards are generally expected to
be made at varying amounts.
NOTE 15--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, 1996, future minimum
cash lease payments were as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
1997.......................................................................... $ 2,848
1998.......................................................................... 3,186
1999.......................................................................... 3,484
2000.......................................................................... 2,509
2001.......................................................................... 2,042
Thereafter.................................................................... 16,490
-------
Total....................................................................... $ 30,559
-------
-------
</TABLE>
During 1996, 1995 and 1994, operating lease expense was $3.2 million, $2.9
million and $3.2 million, respectively.
In conjunction with the sale of the Faneuil Group, CCC entered into a
contract with GIS Information systems, Inc. ("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, 1996, future
minimum payments due GIS in 1997 totaled $1.1 million. During 1996, 1995 and
1994, CCC incurred charges from GIS for computer services of $3.6 million, $3.2
million and $3.7 million, respectively.
39
<PAGE>
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 16--LEGAL PROCEEDINGS
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.
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 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.
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 17--SUMMARIZED QUARTERLY OPERATING RESULTS (UNAUDITED)
The following table sets forth unaudited consolidated statements of
operations for the quarters in the years ended December 31, 1996 and 1995. These
quarterly statements of operations have been prepared on a basis consistent with
the audited financial statements. 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 consolidated financial statements and the notes thereto. The
operating results for any quarter are not necessarily indicative of results for
any future period.
40
<PAGE>
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 17--SUMMARIZED QUARTERLY OPERATING RESULTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
1996 1995
------------------------------------------ ------------------------------------------
FIRST SECOND THIRD FOURTH FIRST SECOND THIRD FOURTH
--------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues.............................. $ 31,369 $ 31,956 $ 32,602 $ 35,050 $ 28,012 $ 28,612 $ 28,817 $ 30,078
Expenses:
Operating expenses.................. 27,031 26,241 27,235 30,339 25,106 26,401 26,394 26,796
Litigation settlements(*)........... -- -- -- -- -- 4,500 -- --
--------- --------- --------- --------- --------- --------- --------- ---------
Operating income (loss)............... 4,338 5,715 5,367 4,711 2,906 (2,289) 2,423 3,282
Interest expense...................... (1,032) (950) (526) (54) (1,610) (1,500) (1,422) (1,277)
Other income, net..................... 53 240 169 174 82 251 68 81
--------- --------- --------- --------- --------- --------- --------- ---------
Income (loss) from continuing
operations before income taxes...... 3,359 5,005 5,010 4,831 1,378 (3,538) 1,069 2,086
Income tax (provision) benefit........ (775) (898) (292) (718) (511) 1,564 (243) (519)
--------- --------- --------- --------- --------- --------- --------- ---------
Income (loss) from continuing
operations.......................... 2,584 4,107 4,718 4,113 867 (1,974) 826 1,567
Extraordinary loss on early retirement
of debt, net of income taxes........ -- -- (678) -- -- -- -- --
--------- --------- --------- --------- --------- --------- --------- ---------
Net income (loss)..................... 2,584 4,107 4,040 4,113 867 (1,974) 826 1,567
Dividends and accretion on mandatorily
redeemable preferred stock.......... (793) (811) (5,003) (87) (715) (740) (765) (783)
--------- --------- --------- --------- --------- --------- --------- ---------
Net income (loss) applicable to common
stock............................... $ 1,791 $ 3,296 $ (963) $ 4,026 $ 152 $ (2,714) $ 61 $ 784
--------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- ---------
Income (loss) per common and common
equivalent share from:
Continuing operations................. $ 0.15 $ 0.23 $ 0.22 $ 0.16 $ 0.05 $ (0.12) $ 0.05 $ 0.09
Extraordinary loss on early retirement
of debt, net of income taxes........ -- -- (0.03) -- -- -- -- --
Dividends and accretion on mandatorily
redeemable preferred stock.......... (0.05) (0.04) (0.24) -- (0.04) (0.04) (0.05) (0.04)
--------- --------- --------- --------- --------- --------- --------- ---------
Net income (loss) applicable to common
stock............................... $ 0.10 $ 0.19 $ (0.05) $ 0.16 $ 0.01 $ (0.16) $ (--) $ 0.05
--------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- ---------
Weighted average common and common
equivalent shares outstanding....... 17,618 17,757 21,270 24,765 16,523 16,691 17,017 17,299
</TABLE>
- --------------------------
(*) See Note 16--Legal Proceedings.
41
<PAGE>
CCC INFORMATION SERVICES GROUP, INC.
AND SUBSIDIARIES
SUPPLEMENTAL FINANCIAL STATEMENT SCHEDULES
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)
<TABLE>
<CAPTION>
BALANCE AT CHARGED TO CHARGED TO BALANCE AT
BEGINNING COSTS AND OTHER END OF
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD
- -------------------------------------------------- ----------- ----------- ------------- ------------ -----------
<S> <C> <C> <C> <C> <C>
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
1996 Allowance for Doubtful Accounts.............. 1,465 3,781 -- (3,300)(b) 1,946
1994 Deferred Income Tax Valuation Allowance...... 3,550 1,701 972(a) -- 6,223
1995 Deferred Income Tax Valuation Allowance...... 6,223 -- -- (1,260)(c) 4,963
1996 Deferred Income Tax Valuation Allowance...... 4,963 -- -- (4,679)(c) 284
</TABLE>
- ------------------------
(a) Purchase of remaining 50% in the Joint Venture, effective March 30, 1994.
(b) Accounts receivable write-offs, net of recoveries.
(c) Reversal of deferred tax valuation allowances.
42
<PAGE>
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
EXHIBIT INDEX
<TABLE>
<C> <S>
3.1 Amended and Restated Certificate of Incorporation
3.2 Amended and Restated Bylaws
4.2 Stockholders' Agreement (incorporated herein by reference to Exhibit 4.2 of the
Company's Registration Statement on Form S-1, Commission File Number 333-07287)
10.1 Credit Facility Agreement between CCC Information Services Inc., Signet Bank and the
other financial institutions party thereto
10.2 Motor Crash Estimating Guide Data License (incorporated herein by reference to
Exhibit 10.2 of the Company's Registration Statement on Form S-1, Commission File
Number 333-07287)
10.3 Stock Option Plan
11 Statement Re: Computation of Per Share Earnings
23 Consent of Price Waterhouse LLP
27 Financial Data Schedule
</TABLE>
43
<PAGE>
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
<TABLE>
<S> <C> <C>
Date: April 3, 1997 CCC Information Services Group Inc.
By: /s/ DAVID M. PHILLIPS
------------------------------------
Name: David M. Phillips
Title: Chairman, President and Chief
Executive Officer
By: /s/ LEONARD L. CIARROCCHI
------------------------------------
Name: Leonard L. Ciarrocchi
Title: Executive Vice President and Chief
Financial Officer
By: /s/ DONALD J. HALLAGAN
------------------------------------
Name: Donald J. Hallagan
Title: Vice President, Controller and Chief
Accounting Officer
</TABLE>
44
<PAGE>
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
<TABLE>
<S> <C>
DIRECTORS John J. Byrne
Chairman, President and
Chief Executive Officer
Fund American Enterprise Holdings, Inc.
Morgan W. Davis
President and Chief Executive Officer
White Mountain Insurance Company
Thomas L. Kempner
Chairman and Chief Executive Officer
Loeb Partners Corporation
Gordon S. Macklin
Chairman
White River Corporation
Robert T. Marto
President and Chief Executive Officer
White River Corporation
David M. Phillips
Chairman, President and
Chief Executive Officer
Michael R. Stanfield
Managing Director
Loeb Partners Corporation
EXECUTIVE OFFICERS David M. Phillips
Chairman, President and
Chief Executive Officer
J. Laurence Costin Jr.
Vice Chairman
Githesh Ramamurthy
Chief Technology Officer and
President -- Insurance Division
John Buckner
President -- Automotive Services Division
Blaine R. Ornburg
Executive Vice President --
New Market Development
Leonard L. Ciarrocchi
Executive Vice President --
Chief Financial Officer
Donald J. Hallagan
Vice President, Controller --
Chief Accounting Officer
</TABLE>
45
<PAGE>
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
CORPORATE INFORMATION
<TABLE>
<S> <C>
CORPORATE OFFICE ANNUAL MEETING
World Trade Center Chicago The 1997 Annual Meeting of Stockholders will
444 Merchandise Mart be held on April 15, 1997 at The Fairmont
Chicago, Illinois 60654 Hotel, 200 Columbus Drive, Chicago, Illinois
(312) 222-4636 60601 at 10:00 a.m.
TRANSFER AGENT REGISTRAR FOR COMMON STOCK INDEPENDENT ACCOUNTANTS
Harris Trust and Savings Bank Price Waterhouse LLP
Shareholder Communications 200 East Randolph Drive
P.O. Box A3504 Chicago, Illinois 60601
Chicago, Illinois 60690-3504 STOCKHOLDER AND INVESTMENT
(312)-360-5213 COMMUNITY INQUIRIES
(312)-461-5633 (TDD) Written inquiries should be sent to the Chief
STOCKHOLDER SERVICES Financial Officer at the Company's corporate
You should deal with the Transfer Agent for office.
the stockholder services listed below: ADDITIONAL INFORMATION
Change of Mailing Address This Annual Report on Form 10-K provides all
Consolidation of Multiple Accounts annual information filed with the Securities
Elimination of Duplicate Report Mailings and Exchange Commission, except for exhibits.
Lost or Stolen Certificates A listing of exhibits appears on page 43 of
Transfer Requirements this Form 10-K. Copies of exhibits will be
Duplicate 1099 Forms provided upon request for a nominal charge.
Please be prepared to provide your tax Written requests should be directed to the
identification or social security number, Investor Relations Department at the
description of securities and address of Company's corporate office.
record.
STOCK LISTING AND TRADING SYMBOL
The Company's common stock is listed on the
Nasdaq National Market System. The trading
symbol is CCCG.
</TABLE>
46
<PAGE>
EXHIBIT A
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
CCC INFORMATION SERVICES GROUP INC.
It is hereby certified that CCC Information Services Group Inc. (the
"CORPORATION") existing pursuant to the provisions of the Delaware General
Corporation Law, as from time to time amended (the "ACT"), hereby is amending
its Certificate of Incorporation, as previously amended, by amending and
restating the original Certificate of Incorporation, as previously amended, in
its entirety, and further certified as follows:
The original Certificate of Incorporation was filed on April 28, 1983
under the name "Financial Protection Services, Inc." The exact text of the
entire Certificate of Incorporation, as amended and restated (the
"CERTIFICATE"), is set forth in its entirety below:
ARTICLE 1
The name of the Corporation is:
CCC INFORMATION SERVICES GROUP INC.
ARTICLE 2
The address of the Corporation's registered office in the State of
Delaware is 229 South State Street, in the City of Dover, County of Kent.
The name of the Corporation's registered agent at that address is
Prentice-Hall Corporation System, Inc.
ARTICLE 3
The purpose of the corporation is to engage in any lawful act or
activity for which a corporation may be organized under the Delaware General
Corporation Law (the "DELAWARE LAW").
ARTICLE 4
4.1 The total number of shares of stock which the Corporation shall
have authority to issue is 30,000,000 shares of Common Stock, having a par value
of $.10 per share (the "COMMON STOCK"), and 100,000 shares of Preferred Stock,
having a par value of $1.00 per share (the "PREFERRED STOCK").
<PAGE>
4.2 Each holder of record of shares of the Common Stock shall be
entitled to vote at all meetings of the stockholders and shall have one (1) vote
for each share held by him of record.
4.3 Subject to all of the rights of the holders of all classes or
series of stock at the time outstanding having prior rights as to dividends, the
holders of the Common Stock shall be entitled to receive dividends at such times
and in such amounts as may be determined by the Board of Directors of the
Corporation.
4.4 The Board of Directors is expressly authorized to provide for
the issuance of all or any shares of the Preferred Stock in one or more classes
or series, and to fix for each such class or series such voting powers, full or
limited, or no voting powers, and such distinctive designations, preferences and
relative, participating, optional or other special rights and such
qualifications, limitations or restrictions thereof, as shall be stated and
expressed in the resolution or resolutions adopted by the Board of Directors
providing for the issuance of such class or series and as may be permitted by
the Delaware Law. As of the date of the filing of this Amended and Restated
Certificate of Incorporation, the Corporation shall have series of Preferred
Stock with the designations, number of shares, rights, preferences and
limitations as set forth on EXHIBIT A hereto.
4.5 In the event of any liquidation, dissolution or winding up of
the Corporation, whether voluntary or involuntary, the holders of the Common
Stock shall be entitled, after payment or provision for payment of the debts and
other liabilities of the Corporation and the amount to which the holders of any
class or series of the Preferred Stock shall be entitled, to share ratably in
the remaining net assets of the Corporation.
ARTICLE 5
The following provisions are inserted for the management of the
business and the conduct of the affairs of the Corporation, and for further
definition, limitation and regulation of the powers of the Corporation and of
its directors and stockholders:
(a) The business and affairs of the Corporation shall be managed by
or under the direction of the Board of Directors.
(b) The number of directors of the Corporation shall be not less
than three (3) nor more than seven (7) and shall be fixed in accordance
with the By-Laws of the Corporation. Election of directors need not be by
written ballot unless the By-Laws so provide.
(c) Subject to the rights, if any, of holders of any series of the
Preferred Stock then outstanding, any vacancy on the Board of Directors
that results from an increase in the number of directors may be filled by a
majority of the Board of Directors then in office, provided that a quorum
is present, and any other vacancy occurring in the Board of Directors may
be filled by a majority of the directors then in office, even if less than
a quorum. Any
-2-
<PAGE>
director elected to fill a vacancy not resulting from an increase in the
number of directors shall have the same remaining term as that of his
predecessor.
(d) No director shall be personally liable to the Corporation or
any of its stockholders for monetary damagers for breach of fiduciary duty
as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which 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.
(e) In addition to the powers and authority hereinbefore or by
statute expressly conferred upon them, the directors are hereby empowered
to exercise all such powers and do all such acts and things as may be
exercised or done by the Corporation, subject, nevertheless, to the
provisions of the Delaware Law, this Amended and Restated Certificate of
Incorporation, and any By-Laws adopted by the stockholders; provided,
however, that no By-Laws hereafter adopted by the stockholders shall
invalidate any prior act of the directors which would have been valid if
such By-Laws had not been adopted.
ARTICLE 6
The Corporation shall indemnify, in accordance with and to the full
extent now or hereafter permitted by law, any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(including, without limitation, an action by or in the right of the
Corporation), by reason of his acting as a director of the Corporation (and the
Corporation, in the discretion of the Board of Directors, may so indemnify a
person by reason of the fact that he is or was an officer or employee of the
Corporation or is or was serving at the request of the Corporation in any other
capacity for or on behalf of the Corporation) against any liability or expense
actually or reasonably incurred by such person in respect thereof; PROVIDED,
HOWEVER, that the Corporation shall not be obligated to indemnify any such
person: (i) with respect to proceedings, claims or actions initiated or brought
voluntarily without the authorization or consent of the Corporation by such
person and not by way of defense; or (ii) for any amounts paid in settlement of
an action effected without the prior written consent of the Corporation to such
settlement. Such indemnification is not exclusive of any other right of
indemnification provided by law, agreement or otherwise.
ARTICLE 7
No amendment to or repeal of Articles 5(d) or 6 of this Amended and
Restated Certificate of Incorporation shall apply to or have any effect on the
rights of any individual referred to in Article 5(d) or 6 for or with respect to
acts or omissions of such individual occurring prior to such amendment or
repeal.
-3-
<PAGE>
ARTICLE 8
Meetings of stockholders may be held within or without the State of
Delaware, as the By-Laws may provide. The books of the Corporation may be kept
(subject to any provision contained in Delaware Law) outside the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the By-Laws of the Corporation. Election of directors
need not be by written ballot unless the By-laws of the Corporation shall so
provide.
ARTICLE 9
No stockholder of the Corporation shall by reason of holding shares of
any class of stock have any pre-emptive or preferential right to purchase or
subscribe to any shares of any class of stock of the Corporation, now or
hereafter to be authorized, or any notes, debentures, bonds, or other securities
convertible into or carrying options or warrants to purchase shares of any class
of such stock, now or hereafter to be authorized, whether or not the issuance of
any such shares, or such notes, debentures, bonds or other securities would
adversely affect the dividend or voting rights of such stockholder, other than
such rights, if any, as the Board of Directors, in its discretion from time to
time, may grant and at such price as the Board of Directors in its discretion
may fix; and the Board of Directors may issue shares of any class of stock of
the Corporation, or any notes, debentures, bonds or other securities convertible
into or carrying options or warrants to purchase shares of any class of such
stock, without offering any such shares of any class, either in whole or in
part, to the existing stockholders of any class of such stock.
ARTICLE 10
The By-laws may be altered, amended or repealed or new By-laws may be
adopted by the holders of at least 50% of the total voting power of all shares
of stock of the Corporation entitled to vote in the election of directors,
considered for the purposes of this Article 10 as one class, at any regular
meeting of the stockholders, or at any special meeting of the stockholders if
notice of such alteration, amendment, repeal or adoption of new By-laws be
contained in the notice of such special meeting.
ARTICLE 11
The Corporation is hereby exempt from the applicability and coverage
of Section 203 of the Delaware Law.
-4-
<PAGE>
This Certificate has been duly adopted in accordance with the
provisions of Sections 228, 242 and 245 of the Act.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
executed by the undersigned duly authorized officer of the Corporation on this
21st day of August, 1996.
CCC INFORMATION SERVICES
GROUP INC.
By: /s/ Gerald P. Kenney
--------------------------------
Name: Gerald P. Kenney
------------------------------
Title: Secretary
-----------------------------
<PAGE>
EXHIBIT A
CERTIFICATE OF DESIGNATIONS
of
SERIES C CUMULATIVE REDEEMABLE PREFERRED STOCK
of
CCC INFORMATION SERVICES GROUP INC.
(Pursuant to Section 151 of the
Delaware General Corporation Law)
-------------------------
Section 1. DESIGNATION AND AMOUNT. The shares of such series shall be
designated as Series C Cumulative Redeemable Preferred Stock (the "Series C
Preferred Stock") and the number of shares constituting the Series C Preferred
Stock shall be 5,000 shares. The stated value of each share of Series C
Preferred Stock (the "Stated Value") shall be $1,000. The Series C Preferred
Stock shall rank prior to the common stock, par value $0.10 per share (the
"Common Stock") and any other capital stock of the Corporation which by its
terms is junior to the Series C Preferred Stock with respect to dividend rights
and with respect to the distribution of assets upon liquidation, dissolution or
winding up, whether voluntary or involuntary, of the Corporation ("Junior
Stock") and on a parity with the Series D Cumulative Redeemable Preferred Stock,
par value $1.00 per share (the "Series D Preferred Stock"), the Series E
Cumulative Redeemable Preferred Stock, par value $1.00 per share (the "Series E
Preferred Stock"), and any other capital stock subsequently issued by the
Corporation which by its terms is on a parity with the Series C Preferred Stock
with respect to dividend rights and with respect to the distribution of assets
upon the liquidation, dissolution or winding up, whether voluntary or
involuntary, of the Corporation ("Parity Stock").
Section 2. DIVIDENDS. (a) GENERAL. Commencing on the first Dividend
Payment Date (as defined below) to occur following the fourth anniversary of the
Original Issue Date (the "Dividend Rate Adjustment Date"), the holders of
shares of the Series C Preferred Stock shall be entitled to receive cash
dividends, when and as declared by the Board of Directors or by a duly
authorized committee of said Board of Directors, out of assets legally available
for such purpose, at the Dividend Rate set forth below in Section 3 applied to
the Stated Value. Such dividends shall be cumulative from the date of original
issue of such shares (the "Original Issue Date"), whether or not there shall
have been net profits or net assets of the Corporation legally available for the
payment of
<PAGE>
dividends at the time such dividends were payable, and shall be payable
quarterly, when and as declared by the Board of Directors of the Corporation
or by a duly authorized committee of said Board of Directors, on November 30,
February 28, May 31 and August 31 of each year (each such date being
hereafter referred to as a "Dividend Payment Date"), commencing on the
Dividend Rate Adjustment Date; PROVIDED; HOWEVER, in the event the
Corporation shall fail to redeem shares of the Series C Preferred Stock in
accordance with Section 7(b)(ii), dividends shall be payable commencing
on the first Dividend Payment Date following the 90th day after the
consummation of the IPO (as defined in Section 9). Each such dividend shall
be payable to the holders of record of shares of the Series C Preferred Stock
as they appear on the stock register of the Corporation on such record date,
not more than 60 days preceding the payment date thereof, as shall be fixed
by the Board of Directors or by a duly authorized committee of said Board of
Directors, PROVIDED THAT such record date shall not precede the date upon
which the resolution fixing the record date is adopted. Dividends on account
of arrears for any past Dividend Periods (as defined in subsection (b) of
this Section 2) may be declared and paid at any time, without reference to
any regular Dividend Payment Date, to holders of record on such record date,
not exceeding 60 days preceding the payment date thereof, as may be fixed by
the Board of Directors or a duly authorized committee of said Board of
Directors.
(b) DIVIDEND PERIODS. Dividend periods (hereinafter called "Dividend
Periods") shall commence on December 1, March 1, June 1 and September 1 of each
year and shall end on and include the calendar day next preceding the first day
of the next Dividend Period (other than the initial Dividend Period which shall
commence on the Original Issue Date and shall end on and include the Dividend
Rate Adjustment Date). The amount of dividends payable for each Dividend Period
or portion thereof for the Series C Preferred Stock shall be computed by
multiplying the Stated Value by a fraction, (i) the numerator of which is (A)
the applicable Dividend Rate multiplied by (B) the number of calendar days
elapsed during such Dividend Period or portion thereof and (ii) the denominator
of which is 365. If more than one Dividend Rate applies to any Dividend Period
or portion thereof, the calculation in the preceding sentence shall be applied
for each period of time during which a given Dividend Rate is applicable. The
dividend payable to each holder of Series C Preferred Stock shall be rounded to
the nearest one cent with $.005 being rounded upward.
(c) DIVIDENDS ON PARITY STOCK. So long as any shares of the Series C
Preferred Stock are outstanding, no full dividends shall be declared on any
Parity Stock for any period unless full cumulative dividends have been or
contemporaneously are declared on the Series C Preferred Stock for all Dividend
Periods terminating on or prior to the date of payment of such full cumulative
dividends. When dividends are not declared to be paid in full, as described
above, upon the shares of the Series C Preferred Stock and any Parity Stock, all
dividends declared upon shares of the Series C Preferred Stock and any Parity
Stock shall be declared pro rata so that the amount of dividends declared per
share on the Series C Preferred Stock and such Parity Stock shall in all cases
bear to each other the same ratio that accrued dividends per share on the shares
of the Series C Preferred Stock and such Parity Stock bear to each other.
(d) DIVIDENDS ON JUNIOR STOCK. So long as any shares of the Series C
Preferred Stock are outstanding, no dividend (other than dividends or
distributions paid in shares of, or options,
-2-
<PAGE>
warrants or rights to subscribe for or purchase shares of Junior Stock) shall be
declared or paid or set aside for payment or other distribution declared or made
upon any Junior Stock, or upon any Parity Stock except as provided in Subsection
(c) of this Section 2, nor shall any Junior Stock or Parity Stock (other than
the Series D Preferred Stock and the Series E Preferred Stock) be redeemed,
purchased or otherwise acquired for any consideration (or any monies be paid to
or made available for a sinking fund for the redemption of any shares of any
such stock) by the Corporation (except by conversion into or exchange for Junior
Stock).
(e) NO ADDITIONAL DIVIDENDS. Holders of shares of the Series C Preferred
Stock shall not be entitled to any dividends, whether payable in cash, property
or stock, in excess of full cumulative dividends, as herein provided, on the
Series C Preferred Stock. No interest, or sum of money in lieu of interest,
shall be payable in respect to any dividend payment or payments on the Series C
Preferred Stock.
Section 3. DIVIDEND RATE. The Dividend Rate on the shares of Series C
Preferred Stock shall be 2.75% per annum for the period from the Original Issue
Date to and including the EARLIER of the (i) date of the consummation of the IPO
or (ii) the Dividend Rate Adjustment Date and shall be 8.0% per annum for each
Dividend Period or portion thereof thereafter occurring, subject to adjustment
as follows:
(a) If the Corporation consummates an IPO prior to the Dividend Rate
Adjustment Date and redeems the Series C Preferred Stock in accordance with the
terms set forth in Section 7(b)(i) or 7(b)(ii),, then the Dividend Rate shall be
0% per annum from the date of consummation of the IPO to the Dividend Rate
Adjustment Date.
(b) If, prior to the date for mandatory redemption of all outstanding
shares of Series C Preferred Stock established pursuant to Section 7(a), 7(b)(i)
or 7(b)(ii), the Corporation offers in good faith to repurchase on a pro rata
basis all or a portion of the outstanding shares of each of the Series C
Preferred Stock, Series D Preferred Stock and Series E Preferred Stock at a
repurchase price per share equal to at least the Stated value, together with
accrued and unpaid dividends thereon to (and including) the date fixed for such
repurchase, the Dividend Rate applicable to the shares of Series C Preferred
Stock which the Corporation offered to repurchase and which the holders thereof
refused such offer to repurchase shall, after the date fixed for such repurchase
of the Series C Preferred Stock, be the LESSER of 1% and any Dividend Rate
calculated pursuant to Subsection (a) of this Section 3.
Section 4. VOTING RIGHTS.
(a) The holders of the Series C Preferred Stock shall not have any voting
rights, except as required by the Delaware General Corporation Law; PROVIDED,
HOWEVER, that the affirmative vote of the holders of at least 66-2/3% of the
outstanding shares of the Series C Preferred Stock, voting separately as a
class, in person or by proxy, at a special or annual meeting of stockholders
called for the purpose, shall be necessary to (i) authorize, create or increase
the authorized or issued
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number of shares of, or issue (including on conversion or exchange of any
convertible or exchangeable securities or by reclassification) any shares of
any class or classes or series of Parity Stock or the capital stock of the
Corporation having rights senior to the Series C Preferred Stock with respect
to dividend rights and with respect to the distribution of assets upon the
liquidation, dissolution or winding up, whether voluntary or involuntary of
the Corporation ("Senior Stock") or (ii) amend, alter or repeal (whether by
merger, consolidation or otherwise) any of the provisions of the Certificate
of Incorporation of the Corporation or the Certificate of Designations of the
Series C Preferred Stock which would materialy and adversely affect any right,
preference, privilege or voting power of the Series C Preferred Stock or the
holders thereof; PROVIDED, HOWEVER, that the creation and issuance of any
Junior Stock, shall not be deemed to materially and adversly affect such
rights, preferences or voting powers. For the taking of any action as
provided in this paragraph (a) by the holders of shares of the Series C
Preferred Stock, each such holder shall have one vote for each share of
Series C Preferred Stock standing in his or her name on the transfer books of
the Corporation as of any record date fixed for such purpose or, if no such
date has been fixed, at the close of business on the Business Day (as defined
in Section 9) next preceding the day on which notice is given, or if notice
is waived, at the close of business on the Business Day next preceding the
day on which the meeting is held. At each meeting of stockholders at which
the holders of shares of the Series C Preferred Stock shall have the right,
voting separately as a single class, to take any action pursuant to this
paragraph (a), the presence in person or by proxy of the holders of record of
50% of the total number of shares of the Series C Preferred Stock then
outstanding and entitled to vote on the matter shall be necessary and
sufficient to constitute a quorum. At any such meeting or at any adjournment
thereof, (i) the absence of a quorum of the holders of shares of any other
class or series of capital stock of the Corporation shall not prevent the
taking of any action as provided in this paragraph (a) and (ii) in the
absence of a quorum of the holders of shares of the Series C Preferred Stock,
the holders of a majority of such shares present in person or by proxy shall
have the power to adjourn the meeting as to the actions to be taken by the
holders of shares of the Series C Preferred Stock from time to time and place to
place without notice other than announcement at the meeting until a quorum shall
be present.
(b) So long as White River Ventures, Inc. ("White River") or any of its
Affiliates (as defined in Section 9) beneficially owns at least fifty percent
of the issued and outstanding shares of Series C Preferred Stock, if the
Corporation shall fail (i) to discharge its obligation to redeem shares of
the Series C Preferred Stock pursuant to Section 7 (a "Redemption Default")
or (ii) to declare and pay in full the dividends on the Series C Preferred
Stock with respect to a Dividend Period pursuant to Section 2 and such
dividends have not been declared and paid within 90 days after the end of
such Dividend Period (such failure to declare and pay being hereinafter
referred to as a "Dividend Default"), the number of directors constituting
the Board of Directors shall, without further action, be increased by a
number of directors sufficient to permit the directors elected to fill such
newly created directorships to constitute a majority of the directors of the
Corporation and shall thereafter be increased by a number of directors
sufficient to permit the directors elected to fill all such newly created
directorships to continue to constitute a majority of the directors of the
Corporation, and the holders of the Series C Preferred Stock shall have, in
addition to the other voting rights set forth herein, the exclusive right,
voting separately as a single class, to elect the
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directors of the Corporation to fill such newly created directorships, the
remaining directors to be elected by the other classes and series of stock
entitled to vote therefor, at each meeting of stockholders held for the purpose
of electing directors. In the case of a Redemption Default, such additional
directors shall continue as directors and such additional voting rights shall
continue until such time as White River and its Affiliates shall cease to own at
least fifty percent of the issued and outstanding shares of the Series C
Preferred Stock, at which tame such additional directors shall cease to be
directors and such additional voting rights of the holders of the Series C
Preferred Stock shall terminate. In the case of a Dividend Default, such
additional directors shall continue as directors and such additional voting
rights shall continue until such time as a Dividend Default no longer exists, at
which time such additional directors shall cease to be directors and such
additional voting rights of the Series C Preferred Stock shall terminate subject
to revesting in the event of each and every subsequent Dividend Default. In the
event that for any reason the number of directors constituting the Board of
Directors cannot be increased sufficiently to permit the implementation of this
Subsection (b), the Corporation shall take all actions necessary to implement
the intent of this Subsection (b), including, without limitation, causing a
number of directors to resign from the Board of Directors sufficient to permit
directors elected pursuant to this Subsection (b) to fill the resulting
vacancies and constitute a majority of the Board of Directors.
(c) The foregoing rights of holders of shares of the Series C
Preferred Stock to take any actions as provided in this section 4 may be
exercised at any annual meeting of stockholders or at a special meeting of
stockholders held for such purpose or at any adjournment thereof, or by the
written consents delivered to the Secretary of the Corporation, of the holders
of the minimum number of shares required to take such action.
Section 5. REACQUIRED SHARES. Any shares of Series C Preferred
Stock redeemed, purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after the acquisition thereof.
All such shares shall upon their cancellation become authorized but unissued
shares of preferred stock, par value $1.00 per share, of the Corporation and may
be reissued as part of another series of preferred stock, par value $1.00 per
share, of the Corporation subject to the conditions or restrictions on
authorizing or creating any class or series, or any shares of any class or
series as set forth herein.
Section 6. LIQUIDATION DISSOLUTION OR WINDING-UP. (a) In the event
of any liquidation, dissolution or winding up of the corporation, whether
voluntary or involuntary, before any payment or distribution of the assets of
the Corporation (whether capital or surplus) shall be made to or set apart for
the holders of shares of any series or class or classes of Junior Stock, the
holders of the shares of the Series C Preferred Stock shall be entitled to
receive the Stated Value per share plus an amount equal to all dividends
(whether or not earned or declared) accrued and unpaid thereon to the date of
final distribution to such holders; but such holders shall not be entitled to
any further payment, if, upon any liquidation, dissolution or winding up of the
Corporation, the assets of the Corporation, or proceeds thereof, distributable
among the holders of the shares of the Series C Preferred Stock shall be
insufficient to pay in full the preferential amount aforesaid and liquidating
payment on any Parity Stock, then such assets, or the proceeds thereof, shall be
distributed among
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the holders of shares of Series C Preferred Stock and any Parity Stock ratably
in accordance with the respective amounts which would be payable on such shares
of Series C Preferred Stock and any Parity Stock if all amounts payable thereon
were paid in full. For the purposes of this Section 6, a consolidation or
merger of the Corporation with one or more corporations shall not be deemed to
be a liquidation, dissolution or winding up, voluntary or involuntary.
(b) Subject to the rights of the holders of shares of any series or
classes of Parity Stock or Senior Stock, upon any liquidation, dissolution or
winding up of the Corporation, after payment shall have been made in full to the
holders of the Series C Preferred Stock as provided in this Section 6, but not
prior thereto, any series or class of classes of Junior Stock shall, subject to
the respective terms and provisions (if any) applying thereto, be entitled to
receive any and all assets remaining to be paid or distributed, and the holders
of the Series C Preferred Stock shall not he entitled to share therein.
Section 7. REDEMPTION.
(a) MANDATORY FIVE YEAR REDEMPTION. Unless redeemed pursuant to
Sections 7(b), 7(c) and 7(d) prior to June 16, 1999, the Corporation shall, on
such date and to the extent the Corporation has funds legally available
therefor, redeem all shares of Series C Preferred Stock then outstanding at a
redemption price per share equal to the Stated Value, together with accrued and
unpaid dividends thereon to (and including) such redemption date, without
interest.
(b) MANDATORY REDEMPTION EVENTS. (i) Concurrent with the consummation
of an IPO having net proceeds to the Corporation less than or equal to
$40,000,000, the Corporation shall, to the extent the Corporation has funds
legally available therefor, redeem the LESSER of (A) the number of shares of
Series C Preferred Stock then outstanding and (B) that number of shares of
Series C Preferred Stock having an aggregate Stated Value and accrued and unpaid
dividends equal to $2,564,103 at a redemption price per share equal to the
Stated Value, together with accrued and unpaid dividends thereon to (and
including) such redemption date, without interest, employing a Dividend Rate of
8.0% on the portion to be so redeemed for the period from the date of the
consummation of such IPO to (and including) such redemption date; PROVIDED,
HOWEVER, that to the extent the Corporation after giving effect to any required
payments under the Loan Agreement (as defined in Section 9) from the net
proceeds of the IPO would not have sufficient funds available to so redeem
shares of Series C Preferred Stock in accordance with this subsection (b)(i) and
any Parity Stock entitled to redemption in accordance with the terms of such
Parity Stock, the Corporation shall redeem concurrent with the consummation of
the IPO that number of shares of Series C Preferred Stock and Parity Stock
entitled to redemption having an aggregate Stated Value equal to the balance of
the net proceeds of the IPO remaining after any such payments under the Loan
Agreement and shall redeem the remaining shares of Series C Preferred Stock to
be redeemed pursuant to this Section (b)(i) and any Parity Stock entitled to
redemption within 120 calendar days after the consummation of the IPO; PROVIDED,
FURTHER, that to the extent that all shares of Series C Preferred Stock to be
redeemed pursuant to this Subsection (b)(i) have not been redeemed within such
120 calendar day period, the Corporation shall, to the extent the Corporation
has funds legally available
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therefor, redeem all shares of Series C Preferred Stock then outstanding at a
redemption price per share equal to the Stated Value, together with accrued and
unpaid dividends thereon to (and including) such redemption date, without
interest, employing a Dividend Rate of 8.0% for the period from the date of the
consummation of the IPO to (and including) such redemption date.
(ii) Concurrent with the consummation of an IPO having net proceeds to
the Corporation in excess of $40,000,000, the Corporation shall, to the extent
the Corporation has funds legally available therefor, redeem the LESSER of (1)
the number of shares of Series C Preferred Stock then outstanding and (2) the
number of shares of Series C Preferred Stock having an aggregate Stated Value
and accrued and unpaid dividends at least equal to 6.424% of the net proceeds to
the Corporation from the IPO at a redemption price per share equal to the Stated
Value, together with accrued and unpaid dividends thereon to (an including) such
redemption date, without interest, employing a Dividend Rate of 8.0% for the
period from the date of the consummation of such IPO to (and including) such
redemption date; PROVIDED, HOWEVER, that to the extent the Corporation after
giving effect to any required payments under the Loan Agreement would not have
sufficient funds available to so redeem shares of Series C Preferred Stock in
accordance with this subsection (b)(ii) and any Parity Stock entitled to
redemption in accordance with the terms of such Parity Stock, the Corporation
shall redeem concurrent with the consummation of the IPO that number of shares
of Series C Preferred Stock and Parity Stock entitled to redemption having an
aggregate Stated Value equal to the balance of the net proceeds of the IPO
remaining after any such payments under the Loan Agreement and shall redeem the
remaining shares of Series C Preferred Stock to be redeemed pursuant to this
subsection (b)(ii) and any Parity Stock entitled to redemption within 90
calendar days after the consummation of the IPO; PROVIDED, FURTHER, that to the
extent that shares of the Series C Preferred Stock to be redeemed pursuant to
this subsection (b)(ii) having an aggregate Stated Value and accrued and unpaid
dividends of at least $2,564,103 have not been redeemed within such 90 calendar
day period, the Corporation shall, to the extent the Corporation has funds
legally available therefor redeem all shares of Series C Preferred Stock then
outstanding at a redemption price per share equal to the Stated Value; together
with accrued and unpaid dividends thereon to (and including) such redemption
date, without interest, employing a Dividend Rate of 8.0% for the period from
the date of the consummation of the IPO to (and including) such redemption date
and; PROVIDED, FURTHER, to the extent that the Corporation has redeemed shares
of the Series C Preferred Stock to be redeemed pursuant to this subsection
(b)(ii) having an aggregate Stated Value and accrued and unpaid dividends of at
least $2,564,103, but less that the full amount of shares of Series C Preferred
Stock required by this subsection (b)(ii), the Corporation shall on June 15,
1998, to the extent the Corporation has funds legally available therefor, redeem
all shares of Series C Preferred Stock then outstanding at a redemption price
per share equal to the Stated Value, together with accrued and unpaid dividends
thereon to (and including) such redemption date, without interest.
(iii) In the event that the Corporation fails to use at least
6.41% of the net proceeds received by the Corporation from any Subsequent
Offering (as defined in Section 9) to redeem any outstanding shares of Series C
Preferred Stock on the date of the consummation of such Subsequent Offering, the
Series C Preferred Stock shall be subject to redemption, in whole or in part, in
cash, at the option of the holder thereof from time to time and at any time as
determined by the
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holders of a majority of the outstanding shares of the Series C Preferred Stock
(with written notice thereof being delivered to the Corporation) at a redemption
price per share equal to the Stated Value, together with accrued and unpaid
dividends thereon to (and including) the redemption date, without interest. On
the redemption date, the Corporation shall redeem all shares of Series C
Preferred Stock tendered for redemption pursuant to this subsection (b)(iii).
(c) REDEMPTION IN THE EVENT OF ACCELERATION OF INDEBTEDNESS. In the
event that the Corporation or any Subsidiary shall fail to perform or observe
any term, covenant or condition related to any Indebtedness (as defined in
section 9) of the Corporation or any Subsidiary (other than any Indebtedness of
Phone Base Systems, Inc. ("Phone Base") which is non-recourse to the Corporation
or any subsidiary, other than Phone Base) and the effect of such failure to
perform or observe is (i) a failure by the Corporation or any Subsidiary to pay
any principal or interest on any indebtedness when due or during any applicable
grace period therefor or (ii) receipt of notice by the Corporation or any
Subsidiary of the acceleration of the maturity or required prepayment (other
than by a regularly scheduled required prepayment) prior to the stated maturity
of any Indebtedness and demand for payment with respect thereto, in either case
with respect to Indebtedness in an aggregate amount in excess of $500,000 (the
"Acceleration Redemption Event"), (A) the Series C Preferred Stock shall be
subject to redemption, in whole or in part, in cash at the option of the holder
thereof from time to time and at any time as determined by the holders of a
majority of the outstanding shares of the Series C Preferred Stock (with written
notice thereof being delivered to the Corporation) after the Accelerated
Redemption Event at a redemption price per share equal to the Stated Value,
together with accrued and unpaid dividends thereon to (and including) the
redemption date, without interest and (B) notwithstanding Section 4(b), the
holders of a majority of the outstanding Series C Preferred Stock shall have the
sole discretion to determine on behalf of the Corporation any and all actions to
be taken by the Corporation or any Subsidiary with respect to any Indebtedness
related to the Accelerated Redemption Event so long as any such actions permit
all holders of the Common Stock to participate on a proportionate basis in any
actions to be effected by the holders of the Common Stock. On the redemption
date, the Corporation shall redeem all shares of Series C Preferred Stock
tendered for redemption pursuant to this subsection (c).
(d) REDEMPTION IN THE EVENT OF CERTAIN BUSINESS COMBINATIONS. For
so long as White River or any of its Affiliates shall own any shares of
Series C Preferred Stock (A) neither the Corporation nor any of its Material
Subsidiaries (as defined in Section 9) shall engage in any merger,
reorganization or consolidation (other than transactions involving the
merger, reorganization or consolidation of a Subsidiary of the Corporation
with or into the Corporation or with or into a wholly owned Subsidiary of the
Corporation) and (B) the Corporation shall not sell or otherwise transfer, in
a single transaction or series of transactions, all or substantially all or a
material part of the assets or shares of the Common Stock of the Corporation
to or with any Person (as defined in section 9) other than in connection with
the sale of the Faneuil Group or to or with the Corporation or a wholly owned
Subsidiary of the Corporation unless on or prior to the consummation of the
transactions described in clauses (A) and (B) all shares of the Series C
Preferred Stock shall have been redeemed at a redemption price per share
equal to the Stated Value, together with accrued and unpaid dividends thereon
to (and including) such redemption date, without interest.
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(e) RIGHTS OF SERIES C PREFERRED STOCK FOLLOWING REDEMPTION. On and
after any date fixed for redemption, PROVIDED THAT the redemption price
(including any accrued and unpaid dividends to (and including) the date fixed
for redemption) has been duly paid or segregated and held in trust by a duly
authorized independent paying agent for the benefit of the Persons entitled
thereto, dividends shall cease to accrue on the Series C Preferred Stock called
for redemption, such shares shall no longer be deemed to be outstanding and all
rights of the holders of such shares as stockholders of the Corporation shall
cease and the right to receive the moneys payable upon such redemption, without
interest thereon, upon surrender of the certificates evidencing such shares.
(f) NOTICE OF REDEMPTION. Notice of any redemption be given to the
holders of shares of Series C Preferred Stock not less than 30 nor more than 60
days prior to the date fixed for redemption. Notice of redemption shall be given
by first class mail to such holders, respective addresses as shown on the stock
books of the corporation and will specify (A) the date fixed for redemption, (B)
the applicable redemption price and (C) in the case of a partial redemption, the
number of shares of Series C Preferred Stock to be redeemed and the aggregate
number of shares of Series C Preferred Stock which will be outstanding after
such redemption. If less than all shares of Series C Preferred Stock then
outstanding are to be redeemed, the shares of Series C Preferred stock will be
redeemed pro rata from among the holders of shares of Series C Preferred Stock
then outstanding.
(g) FINAL REDEMPTION OBLIGATION. If the Corporation shall fail any
time to discharge its obligation to redeem shares of Series C Preferred Stock
pursuant to this Section 7 (the "Final Redemption Obligation"), such Final
Redemption obligation shall be discharged as soon as the Corporation is able to
discharge such Final Redemption Obligation using funds legally available
therefor. Notwithstanding anything in this Section 7 to the contrary, in the
event the Corporation fails to discharge its obligation to redeem shares of
Series C Preferred Stock as and when such shares are tendered for redemption
pursuant to Section 7 for any reason whatsoever (including, without limitation,
the failure of the Corporation to have funds legally available therefor), such
failure shall constitute a failure by the Corporation to discharge its
obligation to redeem shares of the Series C Preferred Stock for purposes of
Section 4(b).
(h) REDEMPTION OF PARITY STOCK PRO-RATA. If upon the occurrence of
any event requiring redemption of the shares of Series C Preferred Stock
pursuant to this Section 7, the assets of the Corporation, or net proceeds
thereof, shall be insufficient to redeem in full the applicable amount of Series
C Preferred Stock and any Parity Stock required to be redeemed by the
Corporation, then the Corporation shall redeem shares of Series C Preferred
Stock and any Parity Stock ratably in accordance with the respective amounts
which would be redeemable if the Series C Preferred Stock and the Parity Stock
required to be redeemed by the Corporation were redeemed in full.
Section 8. CERTAIN COVENANTS. Any registered holder of the Series
C Preferred Stock may proceed to protect and enforce its rights and the rights
of such holders by any available remedy by proceeding at law or in equity to
protect and enforce any such rights, whether for the
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specific enforcement of any provision or in aid of the exercise of any power
granted herein, or to enforce any other proper remedy.
Section 9. DEFINITIONS. For the purposes of this Certificate of
Designations of Series C Redeemable Preferred Stock, the following terms shall
have the meanings indicated:
"Affiliate" means a Person that directly or indirectly through one or
more intermediaries, controls, or is controlled by, or is under common control
with, another Person.
"Business Day" means any day other than a Saturday, Sunday or a day on
which banking institutions in the State of New York are authorized or obligated
by law or executive order to close.
"Capital Lease" means any lease of any property (whether real,
personal or mixed) by the Corporation or any of the Subsidiaries as lessee
which, in conformity with generally accepted accounting principles, is accounted
for as a capital lease on the balance sheet of the Corporation or any of the
Subsidiaries; PROVIDED, HOWEVER, any such lease which is nonrecourse to the
Corporation or any of the Subsidiaries shall not constitute a Capital Lease.
"Common Stock Equivalents" means all options, warrants and other
rights to acquire Common Stock or securities convertible into or exchangeable
for Common Stock.
"Contingent Obligation" means 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.
"Faneuil Group" means GIS Information Systems, Inc., and Illinois
corporation, Equitel Corp., a Virginia corporation, Original Research II
Corporation, a Delaware corporation, and Credit Card Service Corporation, a
Delaware corporation, collectively.
"Indebtedness" means, with respect to the Corporation or any of the
Subsidiaries, at any time, (a) all indebtedness, obligations or other
liabilities of the Corporation or any of the Subsidiaries (i) for borrowed money
or evidenced by debt securities, debentures, acceptances, notes or other similar
instruments, (ii) with respect to letters of credit issued for the Corporation's
or any of the Subsidiaries, account, (iii) in respect of Capital Leases and (iv)
which are Contingent Obligations, (b) all indebtedness, obligations or other
liabilities of the Corporation or any of the Subsidiaries or others secured by a
Lien on any property of the Corporation or any of the Subsidiaries, whether or
not such indebtedness, obligations or liabilities are assumed by the
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Corporation or any of the subsidiaries, all as of such time, (c) all
indebtedness, obligations or other liabilities of the Corporation or any of the
Subsidiaries in respect of Interest Rate Contracts and currency hedging
agreements, net of liabilities owed to the Corporation or any of the
Subsidiaries by the counterparties thereon, and (d) all preferred stock subject
(upon the occurrence of any contingency or otherwise) to mandatory redemption,
other than the Series C Preferred Stock, Series D Preferred Stock and Series E
Preferred Stock.
"Interest Rate Contracts" means interest rate exchange, collar or cap
or similar agreements providing interest rate protection.
"IPO" means the initial public offering of Common Stock on a firm
commitment basis pursuant to an effective registration statement under the
Securities Act.
"Lien" means 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
financing statement under the Uniform Commercial Code of any jurisdiction in
connection with any of the foregoing).
"Loan Agreement" means (i) the Loan Agreement, dated as of April 29,
1994, among CCC Information Services Inc. and CCC Development Company, as
Borrowers, the financial institutions party thereto, as Lenders and Canadian
Imperial Bank of Commerce, as Agent, (ii) the Security Agreement, dated as of
April 29, 1994, among CCC Information Services Inc., Canadian Imperial Bank of
Commerce, as Agent and Canadian Imperial Bank of Commerce, as Collateral Agent,
(iii) the Guaranty, dated as of April 29, 1994, made by the Corporation in favor
of the Lenders party to the Loan Agreement and Canadian Imperial Bank of
Commerce, as Agent, (iv) the Pledge and Security Agreement, dated as of April
29, 1994, among the Corporation, Canadian Imperial sank of Commerce, as Agent
and Canadian Imperial Bank of Commerce, as Collateral Agent and (v) each other
agreement, document or instrument delivered in connection with the foregoing.
"Material Subsidiary" means any Subsidiary which produces or
represents 20% or more of (i) consolidated net assets of the Corporation, (ii)
consolidated gross revenues of the Corporation or (iii) consolidated net income
of the Corporation.
"Person" means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, joint venture, joint stock company
or any other entity or organization, including a government or political
subdivision or agency or instrumentality thereof.
"Public Offering" means a sale of any of the Corporation's securities
pursuant to an effective registration statement under the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended.
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"Subsequent Offering" means a sale of Common Stock or any Common Stock
Equivalent of the Corporation in a Public Offering after an IPO.
"Subsidiary" means (i) any Person of which 50% or more of the
securities having ordinary voting power for the election of directors are at the
time owned directly or indirectly by the Corporation or any Subsidiary thereof,
(ii) any Person of which 50% or more of the joint venture, limited partnership
or partnership interests are at the time owned directly or indirectly by the
Corporation or any Subsidiary thereof or (iii) any Person which is a limited
partnership in which the corporation or any Subsidiary is at the time the
general partner or at the time owns 50% or more of the general partner of such
person.
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CERTIFICATE OF DESIGNATIONS
of
SERIES D CUMULATIVE REDEEMABLE PREFERRED STOCK
of
CCC INFORMATION SERVICES GROUP INC.
(Pursuant to Section 151 of the
Delaware General Corporation Law)
___________________
Section 1. DESIGNATION AND AMOUNT. The shares of such series
shall be designated as Series D Cumulative Redeemable Preferred Stock (the
"Series D Preferred Stock") and the number of shares constituting the Series
D Preferred Stock shall be 34,000 shares. The stated value of each share of
Series D Preferred Stock (the "Stated Value") shall be $1,000. The Series D
Preferred Stock shall rank prior to the common stock, par value $0.10 per
share (the "Common Stock"), and any other capital stock of the Corporation
which by its terms is junior to the Series D Preferred Stock with respect to
dividend rights and with respect to the distribution of assets upon
liquidation, dissolution or winding up, whether voluntary or involuntary, of
the Corporation ("Junior Stock") and on a parity with the Corporation's
Series C Cumulative Redeemable Preferred Stock, par value $1.00 per share
(the "Series C Preferred Stock"), Series E Cumulative Redeemable Preferred
Stock, par value $1.00 per share (the "Series E Preferred Stock"), and any
other capital stock subsequently issued by the corporation which by its terms
is on a parity with the Series D Preferred Stock with respect to dividend
rights and with respect to the distribution of assets upon the liquidation,
dissolution or winding up, whether voluntary or involuntary, of the
Corporation ("Parity Stock").
Section 2. DIVIDENDS. (a) GENERAL. Commencing on the first
Dividend Payment Date (as defined below) to occur following the fourth
anniversary of the Original Issue Date (the "Dividend Rate Adjustment Date"),
the holders of shares of the Series D Preferred Stock shall be entitled to
receive cash dividends, when and as declared by the Board of Directors or by
a duly authorized committee of said Board of Directors, out of assets legally
available for such purpose, at the Dividend Rate set forth below in Section 3
applied to the Stated Value. Such dividends shall be
<PAGE>
cumulative from the date of original issue of such shares (the "Original
Issue Date"), whether or not there shall have been net profits or net assets
of the Corporation legally available for the payment of dividends at the time
such dividends were payable, and shall be payable quarterly, when and as
declared by the Board of Directors of the Corporation or by a duly authorized
committee of said Board of Directors, on November 30, February 28, May 31 and
August 31 of each year (each such date being hereinafter referred to as a
"Dividend Payment Date"), commencing on the Dividend Rate Adjustment Date;
PROVIDED, HOWEVER, in the event the Corporation shall fail to redeem shares of
the Series D Preferred Stock in accordance with Section 7(b)(ii), dividends
shall be payable commencing on the first Dividend Payment Date following the
90th day after the consummation of the IPO (as defined in Section 9). Each
such dividend shall be payable to the holders of record of shares of the
Series D Preferred Stock as they appear on the stock register of the
Corporation on such record date, not more than 60 days preceding the payment
date thereof, as shall be fixed by the Board of Directors or by a duly
authorized committee of said Board of Directors, PROVIDED THAT such record date
shall not precede the date upon which the resolution fixing the record date is
adopted. Dividends on account of arrears for any past Dividend Periods (as
defined in subsection (b) of this Section 2) may be declared and paid at any
time, without reference to any regular Dividend Payment Date, to holders of
record on such record date, not exceeding 60 days preceding the payment date
thereof, as may be fixed by the Board of Directors or a duly authorized
committee of said Board of Directors.
(b) DIVIDEND PERIODS. Dividend periods (hereinafter called
"Dividend Periods") shall commence on December 1, March 1, June 1 and
September 1 of each year and shall end on and include the calendar day next
preceding the first day of the next Dividend Period (other than the initial
Dividend Period which shall commence on the Original Issue Date and shall and
on and include the Dividend Rate Adjustment Date). The amount of dividends
payable for each Dividend Period or portion thereof for the Series D
Preferred Stock shall be computed by multiplying the Stated Value by a
fraction, (i) the numerator of which is (A) the applicable Dividend Rate
multiplied by (B) the number of calendar days elapsed during such Dividend
Period or portion thereof and (ii) the denominator of which is 365. If more
than one Dividend Rate applies to any Dividend Period or portion thereof, the
calculation in the preceding sentence shall be applied for each period of
time during which a given Dividend Rate is applicable. The dividend payable
to each holder of Series D Preferred Stock shall be rounded to the nearest
one cent with $.005 being rounded upward.
(c) DIVIDENDS ON PARITY STOCK. So long as any shares of the
Series D Preferred Stock are outstanding, no full dividends shall be declared
on any Parity Stock for any period unless full cumulative dividends have been
or contemporaneously are declared on the Series D Preferred Stock for all
Dividend Periods terminating on or prior to the date of payment of such full
cumulative dividends. When dividends are not declared to be paid in full, as
described above, upon the shares of the Series D Preferred Stock and any
Parity Stock, all dividends declared upon shares of the Series D Preferred
Stock and any Parity Stock shall be declared pro rata so that the amount of
dividends declared per share on the Series D Preferred Stock and such Parity
Stock shall in all cases bear to each other the same ratio that accrued
dividends per share on the shares of the Series D Preferred Stock and such
Parity Stock of the Corporation bear to each other.
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(d) DIVIDENDS ON JUNIOR STOCK. So long as any shares of
the Series D Preferred Stock are outstanding, no dividend (other than
dividends or distributions paid in shares of, or options, warrants or rights
to subscribe for or purchase shares of Junior Stock) shall be declared or
paid or set aside for payment or other distribution declared or made upon any
Junior Stock, or upon any Parity Stock (other than the Series C Preferred
Stock and the Series E Preferred Stock) except as provided in subsection (c)
of this Section 2, nor shall any Junior Stock or Parity Stock (other than the
Series C Preferred Stock and the Series E Preferred Stock) be redeemed,
purchased or otherwise acquired for any consideration (or any monies be paid
to or made available for a sinking fund for the redemption of any shares of
any such stock) by the Corporation (except by conversion into or exchange for
Junior Stock).
(e) NO ADDITIONAL DIVIDENDS. Holders of shares of the Series
D Preferred Stock shall not be entitled to any dividends, whether payable in
cash, property or stock, in excess of full cumulative dividends, as herein
provided, on the Series D Preferred Stock. No interest, or sum of money in
lieu of interest, shall be payable in respect to any dividend payment or
payments on the Series D Preferred Stock.
Section 3. DIVIDEND RATE. The Dividend Rate on the shares of
Series D Preferred Stock shall be 2.75% per annum for the period from the
Original Issue Date to and including the EARLIER of the (i) date of the
consummation of the IPO or (ii) the Dividend Rate Adjustment Date and shall
be 8.0% per annum for each Dividend Period or portion thereof thereafter
occurring, subject to adjustment as follows:
(a) If the Corporation completes an IPO prior to the Dividend
Rate Adjustment Date and redeems the Series D Preferred Stock, in accordance
with the terms set forth in Section 7(b)(i) or (b)(ii), then the Dividend
Rate shall be 0% per annum from the date of closing of the IPO to the
Dividend Rate Adjustment Date.
(b) If, prior to the date for mandatory redemption of all
outstanding shares of Series D Preferred Stock established pursuant to
Section 7(a), 7(b)(i) or (b)(ii), the Corporation offers in good faith to
repurchase on a pro rata basis all or a portion of the outstanding shares of
each of the Series C Preferred Stock, Series D Preferred Stock and Series E
Preferred Stock at a repurchase price per share equal to at least the Stated
Value, together with accrued and unpaid dividends thereon to (and including)
the date fixed for such repurchase, the Dividend Rate applicable to the
shares of Series D Preferred Stock which the Corporation offered to
repurchase and which the holders thereof refused such offer to repurchase
shall, after the date fixed for such repurchase of the Series D Preferred
Stock, be the LESSER of 1% and any Dividend Rate calculated pursuant to
subsection (a) of this Section 3.
Section 4. VOTING RIGHTS.
(a) The holders of the Series D Preferred Stock shall not
have any voting rights, except as required by the Delaware General
Corporation Law; PROVIDED, HOWEVER, the affirmative
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vote of the holders of at least 66-2/3% of the outstanding shares of the
Series D Preferred Stock, voting separately as a class, in person or by
proxy, at a special or annual meeting of stockholders called for the purpose,
shall be necessary to (i) authorize, create, increase the authorized or
issued number of shares of, or issue (including on conversion or exchange of
any convertible or exchangeable securities or by reclassification) any shares
of any class or classes or series of Parity Stock or the Corporation's
capital stock having rights senior to or on a parity with the Series D
Preferred Stock with respect to dividend rights and with respect to the
distribution of assets upon the liquidation, dissolution or winding up,
whether voluntary or involuntary, of the Corporation ("Senior Stock") or (ii)
amend, alter or repeal (whether by merger, consolidation or otherwise) any of
the provisions of the Certificate of Incorporation of the Corporation or the
certificate of Designations of the Series D Preferred Stock which would
materially and adversely affect any right, preference, privilege or voting
power of the Series D Preferred Stock or the holders thereof; PROVIDED,
HOWEVER, that the creation and issuance of any Junior Stock, shall not be
deemed to materially and adversely affect such rights, preferences or voting
powers. For the taking of any action as provided in this paragraph (a) by the
holders of shares of the Series D Preferred Stock, each such holder shall
have one vote for each share of Series D Preferred Stock standing in his or
her name on the transfer books of the Corporation as of any record date fixed
for such purpose or, if no such date has been fixed, at the close of business
on the Business Day (as defined in Section 9) next preceding the day on which
notice is given, or if notice is waived, at the close of business on the
Business Day next preceding the day on which the meeting is held. At each
meeting of stockholders at which the holders of shares of the Series D
Preferred Stock shall have the right, voting separately as a single class, to
take any action pursuant to this paragraph (b), the presence in person or by
proxy of the holders of record of 50% of the total number of shares of the
Series D Preferred Stock then outstanding and entitled to vote on the matter
shall be necessary and sufficient to constitute a quorum. At any such meeting
or at any adjournment thereof, (i) the absence of a quorum of the holders of
sharers of any other class or series of capital stock of the Corporation
shall not prevent the taking of any action as provided in this paragraph (b)
and (ii) in the absence of a quorum of the holders of shares of the Series D
Preferred Stock, the holders of a majority of such shares present in person
or by proxy shall have the power to adjourn the meeting as to the actions to
be taken by the holders of shares of the Series D Preferred Stock from time
to time and place to place without notice other than announcement at the
meeting until a quorum shall be present.
(b) The foregoing rights of holders of shares of the Series D
Preferred Stock to take any actions as provided in this Section 4 may be
exercised at any annual meeting of stockholders or at a special meeting of
stockholders held for such purpose or at any adjournment thereof, or by the
written consent, delivered to the Secretary of the Corporation, of the
holders of the minimum number of shares required to take such action.
Section 5. REACQUIRED SHARES. Any shares of Series D
Preferred Stock redeemed, purchased or otherwise acquired by the Corporation
in any manner whatsoever shall be retired and canceled promptly after the
acquisition thereof. All such shares shall upon their cancellation become
authorized but unissued shares of preferred stock par value $1.00 per share,
of the Corporation and may be reissued as part of another series of preferred
stock, par value $1.00 per share, of the
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Corporation subject to the conditions or restrictions on authorizing or creating
any class or series, or any shares of any class or series as set forth herein.
Section 6. LIQUIDATION, DISSOLUTION OR WINDING UP.
(a) In the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, and subject to the rights of the
holders of shares of any series or class or classes of Senior Stock before any
payment or distribution of the assets of the Corporation (whether capital or
surplus) shall be made to or set apart for the holders of shares of any series
or class or classes of Junior Stock, the holders of the shares of the Series D
Preferred Stock shall be entitled to receive the Stated Value per share plus an
amount equal to all dividends (whether or not earned or declared) accrued and
unpaid thereon to the date of final distribution to such holders; but such
holders shall not be entitled to any further payment. If, upon any liquidation,
dissolution or winding up of the Corporation, the assets of the Corporation, or
proceeds thereof, distributable among the holders of the shares of the Series D
Preferred Stock shall be insufficient to pay in full the preferential amount
aforesaid and liquidating payment on any Parity Stock, then such assets, or the
proceeds thereof, shall be distributed among the holders of shares of Series D
Preferred Stock and any Parity Stock ratably in accordance with the respective
amounts which would be payable on such shares of Series D Preferred Stock and
any Parity Stock if all amounts payable theron were paid in full. For the
purposes of this Section 6, a consolidation or merger of the Corporation with
one or more corporations shall not be deemed to be a liquidation, dissolution or
winding up, voluntary or involuntary.
(b) Subject to the rights of the holders of shares of any series or
class or classes of Parity Stock or Senior Stock, upon any liquidation,
dissolution or winding up of the Corporation, after payment shall have been made
in full to the holders of the Series D Preferred Stock as provided in this
Section 6, but not prior thereto any other series or class or classes of Junior
Stock shall, subject to the respective terms and provisions (if any) applying
thereto, be entitled to receive any and all assets remaining to be paid or
distributed, and the holders of the Series D Preferred Stock shall not be
entitled to share therein.
Section 7. REDEMPTION.
(a) MANDATORY FIVE YEAR REDEMPTION. Unless redeemed pursuant to
Section 7(b) and 7(c), prior to June 16, 1999, the Corporation shall, on such
date and to and to the extent the Corporation has funds legally available
therefor, redeem all shares of Series D Preferred Stock then outstanding at a
redemption price per share equal to the Stated Value, together with accrued and
unpaid dividends thereon to (and including) such redemption date, without
interest.
(b) MANDATORY REDEMPTION EVENTS. (i) Concurrent with the
consummation of an IPO having net proceeds to the Corporation less than or equal
to $40,000,000, the Corporation shall, to the extent the Corporation has funds
legally available therefor, redeem the LESSER of (A) the number of shares of
Series D Preferred Stock then outstanding and (B) that number of shares of
Series D
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Preferred Stock having an aggregate Stated Value and accrued and unpaid
dividends equal to (1) $17,435,897 or (2) in the event that any shares of the
Series E Preferred Stock are issued and outstanding on the date of the closing
of the IPO, $17,179,487, at a redemption price per share equal to the Stated
Value, together with accrued and unpaid dividends thereon to (and including)
such redemption date, without interest, employing a Dividend Rate of 8.0% on the
portion to be so redeemed for the period from the date of the consummation of
such IPO to (and including) such redemption date; PROVIDED, HOWEVER, that to
the extent that the Corporation after giving effect to any required payments
under the Loan Agreement (as defined in Section 9) from the net proceeds of the
IPO would not have sufficient funds available to so redeem shares of Series D
Preferred Stock in accordance with this subsection (b)(i) and any Parity Stock
entitled to redemption in accordance with the terms of such Parity Stock, the
Corporation shall redeem concurrent with the closing of the IPO that number of
shares of Series D Preferred Stock and any Parity Stock entitled to redemption
having an aggregate Stated Value equal to the balance of the net proceeds of the
IPO remaining after any such payments under the Loan Agreement and shall redeem
the remaining shares of Series D Preferred Stock to be redeemed pursuant to this
subsection (b)(i) within 120 calendar days after the consummation of the IPO;
PROVIDED, FURTHER, that to the extent that all shares of Series D Preferred
Stock to be redeemed pursuant to this subsection (b)(i) have not been redeemed
within such 120 calendar day period, the Corporation shall; to the extent the
Corporation has funds legally available therefor, redeem all shares of Series D
Preferred Stock then outstanding at a redemption price per share equal to the
Stated Value, together with accrued and unpaid dividends thereon to (and
including) such redemption date, without interest, employing a Dividend Rate of
8.0% for the period from the date of the closing of the IPO to (and including)
such redemption date.
(ii) Concurrent with the closing of an IPO having net proceeds
to the Corporation in excess of $40,000,000, the Corporation shall, to the
extent the Corporation has funds legally available therefor, redeem the LESSER
of (1) the number of shares of Series D Preferred Stock then outstanding and (2)
the number of shares of Series D Preferred Stock having an aggregate Stated
Value and accrued and unpaid dividends at least equal to (I) 43.59% of the net
proceeds to the Corporation, from the IPO or (II) in the event that any shares
of the Series E Preferred Stock are issued and outstanding on the date of the
consummation of the IPO, 42.95% of the proceeds to the Corporation from the IPO,
at a redemption price per share equal to the Stated Value, together with accrued
and unpaid dividends thereon to (and including) such redemption date, without
interest, employing a Dividend Rate of 8.0% for the period from the date of the
closing of such IPO to (and including) such redemption date; PROVIDED, HOWEVER,
that to the extent that the Corporation after giving effect to any required
payments under the Loan Agreement would not have sufficient funds available
to so redeem shares of Series D Preferred Stock in accordance with this
Subsection (b)(ii) and any Parity Stock entitled to redemption in accordance
with the terms of such Parity Stock, the Corporation shall redeem concurrent
with the consummation of the IPO that number of shares of Series D Preferred
Stock and any Parity Stock entitled to redemption having an aggregate Stated
Value equal to the balance of the net proceeds of the IPO remaining after any
such payments under the Loan Agreement and shall redeem the remaining shares of
Series D Preferred Stock to be redeemed pursuant to this subsection (b)(ii) and
any Parity Stock entitled to redemption within 90 calendar days after the
consummation of the IPO; PROVIDED, FURTHER, that to the extent the shares of
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the Series D Preferred Stock to be redeemed pursuant to this subsection (b)(ii)
having an aggregate Stated Value and accrued and unpaid dividends of at least
(1) $17,435,897 or (2) in the event that any shares of the Series E Preferred
Stock are issued and outstanding on the date of the closing of the IPO,
$17,179,487, have not been redeemed within such 90 calendar day period, the
Corporation shall, to the extent the Corporation has funds legally available
therefore redeem all shares of Series D Preferred Stock then outstanding at a
redemption price per share equal to the Stated Value, together with accrued and
unpaid dividends thereon to (and including) such redemption date, without
interest, employing a Dividend Rate of 8.0% for the period from the date of the
consummation of the IPO to (and including) such redemption date and; PROVIDED,
FURTHER, to the extent that the Corporation has redeemed shares of the Series D
Preferred Stock to be redeemed pursuant to this subsection (b)(ii) having an
aggregate Stated Value and accrued and unpaid dividends of at least (1)
$17,435,897 or (2) in the event that any shares of the Series E Preferred Stock
are issued and outstanding on the date of the closing of the IPO, $17,179,487,
but less than the full amount of shares of Series D Preferred Stock required by
this subsection (b)(ii), the Corporation shall on June 15, 1998, to the extent
the Corporation has funds legally available therefor, redeem all shares of
Series D Preferred Stock then outstanding at a redemption price per share equal
to the Stated Value, together with accrued and unpaid dividends thereon to (and
including) such redemption date, without interest.
(iii) In the event that the Corporation fails to use at least
(1) 43.59% of the net proceeds received by the Corporation from any Subsequent
Offering (as defined in Section 9) or (2) in the event that any shares of the
series B Preferred Stock are issued and outstanding on the date of the closing
of such Subsequent Offering, 42.95% of such proceeds, to redeem any outstanding
shares of Series D Preferred Stock on date of the consummation of such
Subsequent Offering, the Series D Preferred Stock shall be subject to
redemption, in whole or in part, in cash, as determined by the holders of a
majority of the outstanding shares of the Series C Preferred Stock at a
redemption price per share equal to the Stated Value, to ether with accrued and
unpaid dividends thereon to (and including) the redemption date, without
interest. On the redemption date, the Corporation shall redeem all shares of
Series D Preferred Stock tendered for redemption pursuant to this subsection
(b)(iii).
(c) REDEMPTION IN THE EVENT OF ACCELERATION OF INDEBTEDNESS. In the
event that the Corporation or any Subsidiary shall fail to perform or observe
any term, covenant or condition related to any Indebtedness (as defined in
Section 9) of the Corporation or any Subsidiary (other than any Indebtedness of
Phone Base Systems, Inc. ("Phone Base") which is non-recourse to the Corporation
or any Subsidiary, other than Phone Base) and the effect of such failure to
perform or observe is (i) a failure by the Corporation or any Subsidiary to pay
any principal or interest on any Indebtedness when due or during any applicable
grace therefor or (ii) receipt of notice by the Corporation or any Subsidiary of
the acceleration of the maturity or required prepayment (other than by a
regularly scheduled required prepayment) prior to the stated maturity of any
Indebtedness and demand payment with respect thereto, in either case with
respect to Indebtedness in an aggregate amount in excess of $500,000 (the
"Accelerated Redemption Date"), the Series D Preferred Stock shall be subject to
redemption, in whole or in part, in cash, as determined by the holders of a
majority of the outstanding shares of the Series C Preferred Stock after the
Accelerated Redemption Date at
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a redemption price per share equal to the Stated Value, together with accrued
and unpaid dividends thereon to (and including) the redemption date, without
interest. On the redemption date, the Corporation shall redeem all shares
of Series D Preferred Stock tendered for redemption pursuant to this
subsection (c).
(d) REDEMPTION IN THE EVENT OF CERTAIN BUSINESS COMBINATIONS. For
so long as White River or any of its Affiliates shall own any shares of
Series D Preferred Stock (A) neither the Corporation nor any of its Material
Subsidiaries (as defined in Section 9) shall engage in any merger,
reorganization or consolidation (other than transactions involving the
merger, reorganization or consolidation of a Subsidiary of the Corporation
with or into the Corporation or with or into a wholly owned Subsidiary of the
Corporation) and (B) the Corporation shall not sell or otherwise transfer, in
a single transaction or series of transactions, all or substantially all or a
material part of the assets or shares of the Common Stock of the Corporation
to or with any Person (as defined in Section 9) other than in connection with
the sale of the Faneuil Group or to or with the Corporation or a wholly owned
Subsidiary of the Corporation unless on or prior to the consummation of the
transactions described in clauses (A) and (B) all shares of the Series D
Preferred Stock shall have been redeemed at a redemption price per share
equal to the Stated Value, together with accrued and unpaid dividends thereon
to (and including) such redemption date, without interest.
(e) RIGHTS OF SERIES D PREFERRED STOCK FOLLOWING REDEMPTION. On and
after any date fixed for redemption, PROVIDED THAT the redemption price
(including any accrued and unpaid dividends to (and including) the date fixed
for redemption) has been duly paid or segregated and hold in trust by a duly
authorized independent paying agent for the benefit of the Persons entitled
thereto, dividends shall cease to accrue on the Series D Preferred Stock called
for redemption, such shares shall no longer be deemed to be outstanding and all
rights of the holders of such shares as stockholders of the Corporation shall
cease and the right to receive the moneys payable upon such redemption, without
interest thereon, upon surrender of the certificates evidencing such shares.
(f) NOTICE OF REDEMPTION. Notice of any redemption pursuant to
Section 7(a) shall be given to the holders of shares of Series D Preferred Stock
not less than 30 nor more than 60 days prior to the date fixed for redemption.
Notice of redemption shall be given by first class mail to such holders,
respective addresses as shown on the stock books of the Corporation and will
specify (A) the date fixed for redemption, (B) the applicable redemption price
and (C) in the case of a partial redemption, the number of shares of Series D
Preferred Stock to be redeemed and the aggregate number of shares of Series D
Preferred Stock which will be outstanding after such redemption. If less than
all shares of Series D Preferred Stock then outstanding are to be redeemed, the
shares of Series D Preferred Stock will be redeemed pro rata from among the
holders of shares of Series D Preferred Stock then outstanding.
(g) FINAL REDEMPTION OBLIGATION. If the Corporation shall fail at
any time to discharge its obligation to redeem shares of Series D Preferred
Stock pursuant to this Section 7 (the "Final Redemption Obligation"), such Final
Redemption obligation shall be discharged as soon as the
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Corporation is able to discharge such Final Redemption Obligation using funds
legally available therefore.
(h) REDEMPTION OF PARITY STOCK PRO-RATA. If upon the occurrence of
any event requiring redemption of the shares of Series D Preferred Stock
pursuant to this Section 7, the assets of the Corporation, or proceeds
thereof, shall be insufficient to redeem in full the applicable amount of
Series D Preferred Stock and any Parity Stock required to be redeemed by the
Corporation, then the Corporation shall redeem shares of Series D Preferred
Stock and any Parity Stock ratably in accordance with the respective amounts
which would be redeemable if the Series D Preferred Stock and the Parity
Stock required to be redeemed by the Corporation were redeemed in full.
Section 8. CERTAIN COVENANTS. Any registered holder of the Series
D Preferred Stock may proceed to protect and enforce its rights and the
rights of such holders by any available remedy by proceeding at law or in
equity to protect and enforce any additional rights, whether for the specific
enforcement of any provision or in aid of the exercise of any power granted
herein, or to enforce any other proper remedy.
Section 9. DEFINITIONS. For the purposes of this Certificate of
Designations of Series D Redeemable Preferred Stock, the following terms
shall have the meanings indicated:
"Affiliate" means a Person that directly, or indirectly through one
or more intermediaries, controls, or is, controlled by, or is under common
control with, another Person.
"Business Day" means any day other than a Saturday, Sunday or a day
on which banking institutions in the State of New York are authorized or
obligated by law or executive order to close.
"Capital Lease" means any lease of any property (whether real,
personal or mixed) by the Corporation or any of the Subsidiaries as lessee
which, in conformity with generally accepted accounting principles, is
accounted for as a capital lease on the balance sheet of the Corporation or
any of the Subsidiaries; PROVIDED, HOWEVER, any such lease which is
nonrecourse to the Corporation or any of the Subsidiaries shall not
constitute a Capital Lease.
"Common Stock Equivalents" means all options, warrants and other
rights to acquire Common Stock or securities convertible into or exchangeable
for Common Stock.
"Contingent Obligation" means 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 of discharge thereof, agreements to maintain solvency,
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assets, level of income, or other financial condition, and agreements to make
payment other than for value received.
"Faneuil Group" means GIS Information Systems, Inc., an Illinois
corporation, Equitel Corp., a Virginia corporation, Original Research II
Corporation, a Delaware corporation, and Credit Card Service Corporation, a
Delaware corporation, collectively.
"Indebtedness" means, with respect to the Corporation or any of the
Subsidiaries, at any time, (a) all indebtedness, obligations or other
liabilities of the Corporation or any of the Subsidiaries (i) for borrowed
money or evidenced by debt securities, debentures, acceptances, notes or
other similar instruments, (ii) with respect to letters of credit issued for
the Corporation's or any of the Subsidiaries, account, (iii) in respect of
Capital Leases and (iv) which are Contingent Obligations, (b) all
indebtedness, obligations or other liabilities of the Corporation or any of
the Subsidiaries or others secured by a Lien on any property of the
Corporation or any of the Subsidiaries whether or not such indebtedness,
obligations or liabilities are assumed by the Corporation or any of the
subsidiaries, all as of such time, (a) all indebtedness, obligations or other
liabilities of the Corporation or any of the subsidiaries in respect of
Interest Rate Contracts and currency hedging agreements, net of liabilities
owed to the Corporation or any of the Subsidiaries by the counterparties
thereon, and (d) all preferred stock subject (upon the occurrence of any
contingency or otherwise) to mandatory redemption, other than Series C
Preferred Stock, Series D Preferred Stock and Series B Preferred Stock.
"Interest Rate Contracts" means interest rate exchange, collar or
cap or similar agreements providing interest rate protection.
"IPO" means the initial public offering of Common Stock on a firm
commitment basis pursuant to an effective registration statement under the
Securities Act.
"Lien" means 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
financing statement under the Uniform Commercial Code of any jurisdiction in
connection with any of the foregoing).
"Loan Agreement" means (i) the Loan Agreement, dated as of April 29,
1994, among CCC Information Services Inc. and CCC Development Company, as
Borrowers, the financial institutions party thereto, as Lenders and Canadian
Imperial Bank of Commerce, as Agent; (ii) the Security Agreement, dated as of
April 29, 1994, among CCC Information Services Inc., Canadian Imperial Bank
of Commerce, as Agent and Canadian Imperial Bank of Commerce, as Collateral
Agent, (iii) the Guaranty, dated as of April 29, 1994, made by the
Corporation in favor of the Lenders party to the Loan Agreement and Canadian
Imperial Bank of Commerce, as Agent, (iv) the Pledge and Security Agreement,
dated as of April 29, 1994 among the Corporation, Canadian Imperial Bank
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of Commerce, as Agent and Canadian Imperial Bank of Commerce, as Collateral
Agent and (v) each other agreement, document or instrument delivered in
connection with the foregoing.
"Material Subsidiary" means any Subsidiary which produces or
represents 20%, or more of (i) consolidated net assets of the Corporation,
(ii) consolidated gross revenues of the Corporation or (iii) consolidated net
income of the Corporation.
"Person" meant an individual or a corporation, partnership, trust,
incorporated or unincorporated association, joint venture, joint stock
company or any other entity or organization, including a government or
political subdivision or agency or instrumentality thereof.
"Public Offering" means a sale of any of the Corporation's
securities pursuant to an effective registration statement under the
Securities Act.
"Securities Act" means the Securities Act of 1933, as amended.
"Subsequent Offering" means a sale of Common Stock or any Common
Stock Equivalent of the Corporation in a Public Offering after an IPO.
"Subsidiary" means (i) any Person of which 50% or more of the
securities having ordinary voting power for the election of directors are at
the time owned directly or indirectly by the Corporation or any Subsidiary
thereof, (ii) any person of which 50% or more of the joint venture, limited
partnership or partnership interests are at the time owned directly or
indirectly by the Corporation or any Subsidiary thereof or (iii) any Person
which is a limited partnership in which the Corporation or any Subsidiary is
at the time the general partner or at the time owns 50% or more of the
general partner of such Person.
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CERTIFICATE OF DESIGNATIONS
of
SERIES E CUMULATIVE REDEEMABLE PREFERRED STOCK
of
CCC INFORMATION SERVICES GROUP INC.
(Pursuant to Section 151 of the
Delaware General Corporation Law)
____________
Section 1. DESIGNATION AND AMOUNT. The shares of such series shall
be designated as Series E Cumulative Redeemable Preferred Stock (the "Series
E Preferred Stock") and the number of shares constituting the Series E
Preferred Stock shall be 500 shares. The stated value of each share of Series
E Preferred Stock (the "Stated Value") shall be $1,000. The Series E
Preferred Stock shall rank prior to the common stock, par value $0.10 per
share (the "Common Stock"), and any other capital stock of the Corporation
which by its terms is junior to the Series E Preferred Stock with respect to
dividend rights and with respect to the distribution of assets upon
liquidation, dissolution or winding up, whether voluntary or involuntary, of
the Corporation ("Junior Stock") and on a parity with the Corporation's
Series C Cumulative Redeemable Preferred Stock (the "Series C Preferred
Stock"), Series D Cumulative Redeemable Preferred Stock (the "Series D
Preferred Stock") and any other capital stock subsequently issued by the
Corporation which by its terms is on a parity with the Series E Preferred
Stock with respect to dividend rights and with respect to the distribution of
assets upon the liquidation, dissolution or winding up, whether voluntary or
involuntary, of the Corporation ("Parity Stock").
Section 2. DIVIDENDS. (a)GENERAL. Commencing on the first Dividend
Payment Date (as defined below) to occur following the fourth anniversary of
the Original Issue Date (the "Dividend Rate Adjustment Date"), the holders of
shares of the Series E Preferred Stock shall be entitled to receive cash
dividends, when and as declared by the Board of Directors or by a duly
authorized committee of said Board of Directors, out of assets legally
available for such purpose, at the Dividend Rate set forth below in Section 3
applied to the Stated Value. Such dividends shall be cumulative from the date
of original issue of such shares (the "Original Issue Date"), whether or not
there shall have been net profits or net assets of the Corporation legally
available for the payment of
<PAGE>
dividends at the time such dividends were payable, and shall be payable
quarterly, when and as declared by the Board of Directors of the Corporation
or by a duly authorized committee of said Board of Directors, on November 30,
February 28, May 31 and August 31 of each year (each such date being
hereinafter referred to as a "Dividend Payment Date"), commencing on the
Dividend Rate Adjustment Date; PROVIDED, HOWEVER, in the event the
Corporation shall fail to redeem shares of the Series E Preferred Stock in
accordance with Section 7(b)(ii), dividends shall be payable commencing on
the first Dividend Payment Date following the 90th day after the consummation
of the IPO (as defined in Section 9). Each such dividend shall be payable to
the holders of record of shares of the Series E Preferred Stock as they
appear on the stock register of the Corporation on such record date, not more
than 60 days preceding the payment date thereof, as shall be fixed by the
Board of Directors or by a duly authorized committee of said Board of
Directors, PROVIDED THAT such record date shall not precede the date upon
which the resolution fixing the record date is adopted. Dividends on account
of arrears for any past Dividend Periods (as defined in subsection (b) of
this Section 2) may be declared and paid at any time, without reference to
any regular Dividend Payment Date, to holders of record on such record date,
not exceeding 60 days preceding the payment date thereof, as may be fixed by
the Board of Directors or a duly authorized committee of said Board of
Directors.
(b) DIVIDEND PERIODS. Dividend periods (hereinafter called
"Dividend Periods") shall commence on December 1, March 1, June 1 and
September 1 of each year and shall end on and include the calendar day next
preceding the first day of the next Dividend Period (other than the initial
Dividend Period which shall commence on the Original Issue Date and shall end
on and include the Dividend Rate Adjustment Date). The amount of dividends
payable for each Dividend Period or portion thereof for the Series E
Preferred Stock shall be computed by multiplying the Stated Value by a
fraction, (i) the numerator of which is (A) the applicable Dividend Rate
multiplied by (B) the number of calendar days elapsed during such Dividend
Period or portion thereof and (ii) the denominator of which is 365. If more
than one Dividend Rate applies to any Dividend Period or portion thereof, the
calculation in the preceding sentence shall be applied for each period of
time during which a given Dividend Rate is applicable. The dividend payable
to each holder of Series E Preferred Stock shall be rounded to the nearest
one cent with $.005 being rounded upward.
(c) DIVIDENDS ON PARITY STOCK. So long as any shares of the Series
E Preferred Stock are outstanding, no full dividends shall be declared on any
Parity Stock for any period unless full cumulative dividends have been or
contemporaneously are declared on the Series E Preferred Stock for all
Dividend Periods terminating on or prior to the date of payment of such full
cumulative dividends. When dividends are not declared to be paid in full, as
described above, upon the shares of the Series E Preferred Stock and any
Parity Stock, all dividends declared upon shares of the Series E Preferred
Stock and any Parity Stock shall be declared pro rata so that the amount of
dividends declared per share on the Series E Preferred Stock and such Parity
Stock shall in all cases bear to each other the same ratio that accrued
dividends per share on the shares of the Series E Preferred Stock and such
Parity Stock of the Corporation bear to each other.
(d) DIVIDENDS ON JUNIOR STOCK. So long as any shares of the Series
E Preferred Stock are outstanding, no dividend (other than dividends or
distributions paid in shares of, or options,
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warrants or rights to subscribe for or purchase shares of Junior Stock) shall
be declared or paid or set aside for payment or other distribution declared
or made upon any Junior Stock, or upon any Parity Stock except as provided in
subsection (c) of this Section 2, nor shall any Junior Stock or Parity Stock
(other than the Series C Preferred Stock and the Series D Preferred Stock) be
redeemed, purchased or otherwise acquired for any consideration (or any
monies be paid to or made available for a sinking fund for the redemption of
any shares of any such stock) by the Corporation (except by conversion into
or exchange for Junior Stock).
(e) NO ADDITIONAL DIVIDENDS. Holders of shares of the Series E
Preferred Stock shall not be entitled to any dividends, whether payable in
cash, property or stock, in excess of full cumulative dividends, as herein
provided, on the Series E Preferred Stock. No interest, or sum of money in
lieu of interest, shall be payable in respect to any dividend payment or
payments on the Series E Preferred Stock.
Section 3. DIVIDEND RATE. The Dividend Rate on the shares of Series
E Preferred Stock shall be 2.75% per annum for the period from the Original
Issue Date to and including the EARLIER of the (i) date of the consummation
of the IPO or (ii) the Dividend Rate Adjustment Date and shall be 8.0% per
annum for each Dividend Period or portion thereof thereafter occurring,
subject to adjustment as follows:
(a) If the Corporation completes an IPO prior to the Dividend Rate
Adjustment Date and redeems the Series E Preferred Stock, in accordance with
the terms set forth in Section 7(b)(i) or (b)(ii), then the Dividend Rate
shall be 0% per annum from the date of consummation of the IPO to the
Dividend Rate Adjustment Date.
(b) If, prior to the date for mandatory redemption of all
outstanding shares of Series E Preferred Stock established pursuant to Section
7(a), 7(b)(i) or 7(b)(ii), the Corporation offers in good faith to repurchase
on a pro rata basis all or a portion of the outstanding shares of each of the
Series C Preferred Stock, the Series D Preferred Stock and the Series E
Preferred Stock at a repurchase price per share equal to at least the Stated
Value, together with accrued and unpaid dividends thereon to (and including)
the date fixed for such repurchase, the Dividend Rate applicable to the
shares of Series E Preferred Stock which the Corporation offered to
repurchase and which the holders thereof refused such offer to repurchase
shall, after the date fixed for such repurchase of the Series E Preferred
Stock, be the LESSER of 1% and any Dividend Rate calculated pursuant to
subsection (a) of this Section 3.
Section 4. VOTING RIGHTS. In addition to any voting rights
provided by law, the holders of shares of the Series E Preferred Stock shall
have the following voting rights:
(a) So long as any shares of the Series E Preferred Stock are
outstanding, each share of Series E Preferred Stock beneficially owned by
White River Ventures, Inc., a Delaware corporation ("White River") or any
Affiliate thereof, shall entitle the holder thereof to vote together with the
holders of Common Stock and all other securities entitled to vote on all
matters voted on
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by holders of Common Stock at all meetings of the stockholders of the
Corporation. With respect to any such vote, each share of Series E Preferred
Stock beneficially owned by White River or any Affiliate thereof shall
entitle the holder thereof to cast the number of votes determined pursuant to
the following formula:
Votes per share = A/B
and
A = [(C-(C*D))/(1-(E+D))] - C
and
E = (B/F * .51) - G
and
G = [(B/F * .51) + D] - .51
Where:
A is equal to: The total number of votes the Series E Preferred Stock may
exercise in any vote with the Common Stock.
B is equal to: The number of shares of Series E Preferred Stock beneficially
owned by White River and its Affiliates on a particular record
date.
C is equal to: The total number of shares of Common Stock outstanding on a
particular record date.
D is equal to: The percentage (expressed as a fraction) of the Corporation's
outstanding shares of Common Stock beneficially owned by White
River and its Affiliates on a particular record date.
E is equal to: The percentage (expressed as a fraction which cannot be
greater than .51 or less than 0) of the Company's total voting
power attributable to the aggregate number of shares of the
Series E Preferred Stock beneficially owned by White River and
its Affiliates on a particular record date; PROVIDED, HOWEVER,
such voting percentage shall automatically be 0% if White River
together with its Affiliates already beneficially owns at least
51% of the outstanding shares of Common Stock on such record
date.
F is equal to: The total number of shares of Series E Preferred Stock
originally issued.
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G is equal to: The automatic voting reduction percentage (expressed as a
fraction which cannot be less than 0) necessary if White River
an its Affiliates beneficially own shares of Common Stock.
(b) In addition to any class votes required by law, the
affirmative vote of the holders of at least 66-2/3% of the outstanding shares
of the Series E Preferred Stock, voting separately as a class, in person or
by proxy, at a special or annual meeting of stockholders called for the
purpose, shall be necessary to (i) authorize, create, increase the authorized
or issued number of shares of, or issue (including on conversion or exchange
of any convertible or exchangeable securities or by reclassification), any
shares of any class or classes or series of Parity Stock or the Corporation's
capital stock having rights senior to or on a parity with the Series E
Preferred Stock with respect to dividend rights and with respect to the
distribution of assets upon the liquidation, dissolution or winding up,
whether voluntary or involuntary, or the Corporation ("Senior Stock") or
(ii) amend, alter or repeal (whether by merger, consolidation or otherwise) any
of the provisions of the Certificate of Incorporation of the Corporation or
the Certificate of Designations of the Series E Preferred Stock which would
materially and adversely affect any right, preference, privilege or voting
power of the Series E Preferred Stock or the holders thereof; PROVIDED,
HOWEVER, that the creation and issuance of any Junior Stock, shall not be
deemed to materially and adversely affect such rights, preferences or voting
powers. For the taking of any action as provided in this paragraph (b) by the
holders of shares of the Series E Preferred Stock, each such holder shall have
one vote for each share of Series E Preferred Stock standing in his or her
name on the transfer books of the Corporation as of any record date fixed for
such purpose or, if no such date has been fixed, at the close of business on
the Business Day (as defined in Section 9) next preceding the day on which
notice is given, or if notice is waived, at the close of business on the
Business Day next preceding the day on which the meeting is held. At each
meeting of stockholders at which the holders of shares of the Series E
Preferred Stock shall have the right, voting separately as a single class, to
take any action pursuant to this paragraph (b), the presence in person or by
proxy of the holders of record of 50% of the total number of shares of the
Series E Preferred Stock then outstanding and entitled to vote on the matter
shall be necessary and sufficient to constitute a quorum. At any such meeting
or at any adjournment thereof, (i) the absence of a quorum of the holders of
shares of any other class or series of capital stock of the Corporation shall
not prevent the taking of any action as provided in this paragraph (b) and
(ii) in the absence of a quorum of the holders of shares of the Series E
Preferred Stock, the holders of a majority of such shares present in person or
by proxy shall have the power to adjourn the meeting as to the actions to be
taken by the holders of shares of the Series E Preferred Stock from time to
time and place to place without notice other than announcement at the meeting
until a quorum shall be present.
(c) The foregoing rights of holders of shares of the Series E
Preferred Stock to take any actions as provided in this Section 4 may be
exercised at any annual meeting of stockholders or at a special meeting of
stockholders held for such purpose or at any adjournment thereof, or by the
written consent, delivered to the Secretary of the Corporation, of the holders
of the minimum number of shares required to take such action.
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<PAGE>
Section 5. REACQUIRED SHARES. Any shares of Series E Preferred
Stock redeemed, purchased or otherwise acquired by the Corporation in any
manner whatsoever shall be retired and canceled promptly after the
acquisition thereof. All such shares shall upon their cancellation become
authorized but unissued shares of preferred stock, par value $1.00 per share,
of the Corporation and may be reissued as part of another series of preferred
stock, par value $1.00 per share, of the Corporation subject to the
conditions or restrictions on authorizing or creating any class or series, or
any shares of any class or series as set forth herein.
Section 6. LIQUIDATION, DISSOLUTION, WINDING UP. (a) In the
event of any liquidation, dissolution or winding up of the Corporation, whether
voluntary or involuntary and subject to the rights of the holders of shares of
any series or class or classes of Senior Stock, before any payment or
distribution of the assets of the Corporation (whether capital or surplus)
shall be made to or set apart for the holders of shares of any series or class
or classes of Junior Stock, the holders of the shares of the Series E
Preferred Stock shall be entitled to receive the Stated Value per share plus
an amount equal to all dividends (whether or not earned or declared) accrued
and unpaid thereon to the date of final distribution to such holders; but such
holders shall not be entitled to any further payment. If, upon any
liquidation, dissolution or winding up of the Corporation, the assets of the
Corporation, or proceeds thereof, distributable among the holders of the
shares of the Series E Preferred Stock shall be insufficient to pay in full the
preferential amount aforesaid and liquidating payment on any Parity Stock,
then such assets, or the proceeds thereof, shall be distributed among the
holders of shares of Series E Preferred Stock and any Parity Stock ratably in
accordance with the respective amounts which would be payable on such shares
of Series E Preferred Stock and any Parity Stock if all amounts payable
thereon were paid in full. For the purposes of this Section 6, a consolidation
or merger of the Corporation with one or more corporations shall not be
deemed to be a liquidation, dissolution or winding up, voluntary or
involuntary.
(b) Subject to the rights of the holders of shares of any series
or class or classes of Parity Stock or Senior Stock, upon any liquidation,
dissolution or winding up of the Corporation, after payment shall have been
made in full to the holders of the Series E Preferred Stock as provided in
this Section 6, but not prior thereto, any other series or class or classes of
Junior Stock shall, subject to the respective terms and provisions (if any)
applying thereto, be entitled to receive any and all assets remaining to be
paid or distributed, and the holders of the Series E Preferred Stock shall
not be entitled to share therein.
Section 7. REDEMPTION.
(a) MANDATORY FIVE YEAR REDEMPTION. Unless redeemed pursuant to
Sections 7(b), 7(c) and 7(d) prior to June 16, 1999, the Corporation shall,
on such date and to the extent the Corporation has funds legally available
therefor, redeem all shares of Series E Preferred Stock then outstanding at a
redemption price per share equal to the Stated Value, together with accrued
and unpaid dividends thereon to (and including) such redemption date, without
interest.
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<PAGE>
(b) MANDATORY REDEMPTION EVENTS. (i) Concurrent with the
consummation of an IPO having net proceeds to the Corporation less than or
equal to $40,000,000, the Corporation shall, to the extent the Corporation
has funds legally available therefor redeem the LESSER of (A) the number of
shares of Series E Preferred Stock then outstanding and (B) that number of
shares of Series E Preferred Stock having an aggregate Stated Value and
accrued and unpaid dividends equal to $256,410 at a redemption price per
share equal to the Stated Value, together with accrued and unpaid dividends
thereon to (and including) such redemption date, without interest, employing
a Dividend Rate of 8.0% on the portion to be so redeemed for the period from
the date of the consummation of such IPO to (and including) such redemption
date; PROVIDED, HOWEVER, that to the extent that the Corporation after making
any required payments under the Loan Agreement (as defined in Section 9) from
the net proceeds of the IPO shall not have sufficient funds available to so
redeem shares of Series E Preferred Stock in accordance with this subsection
(b)(i) and any Parity Stock entitled to redemption in accordance with the
terms of such Parity Stock, the Corporation shall redeem concurrent with the
consummation of the IPO that number of shares of Series E Preferred Stock and
Parity Stock entitled to redemption having an aggregate Stated Value equal
to the balance of the net proceeds of the IPO remaining after any such
payments under the Loan Agreement and shall redeem the remaining shares of
Series E Preferred Stock to be redeemed pursuant to this subsection (b)(i)
and Parity Stock entitled to redemption within 120 calendar days after the
consummation of the IPO; PROVIDED, FURTHER, that to the extent that all
shares of Series E Preferred Stock to be redeemed pursuant to this subsection
(b)(i) have not been redeemed within such 120 calendar day period, the
Corporation shall, to the extent the Corporation has funds legally available
therefor, redeem all shares of Series E Preferred Stock then outstanding at a
redemption price per share equal to the Stated Value, together with accrued
and unpaid dividends thereon to (and including) such redemption date, without
interest, employing a Dividend Rate of 8.0% for the period from the date of
the consummation of the IPO to (and including) such redemption date.
(ii) Concurrent with the consummation of an IPO having net
proceeds to the Corporation in excess of $40,000,000, the Corporation shall,
to the extent the Corporation has funds legally, available therefor, redeem
the LESSER of (1) the number of shares of Series E Preferred Stock then
outstanding and (2) the number of shares of Series E preferred Stock having
an aggregate Stated Value and accrued and unpaid dividends at least equal to
.64% of the net proceeds to the Corporation from the IPO, at a redemption
price per share equal to the Stated Value, together with accrued and unpaid
dividends thereon to (and including) such redemption date, without interest,
employing a Dividend Rate of 8.0% for the period from the date of the
consummation of such IPO to (and including) such redemption date; PROVIDED,
HOWEVER, that to the extent that the Corporation after giving effect to any
required payments under the Loan Agreement would not have sufficient funds
available to so redeem shares of Series E Preferred Stock in accordance with
this subsection (b)(ii) and any Parity Stock entitled to redemption in
accordance with the terms of such Parity Stock, the Corporation shall redeem
concurrent with the consummation of the IPO that number of shares of Series E
Preferred Stock and Parity Stock entitled to redemption having an aggregate
stated value equal to the balance of the net proceeds of the IPO remaining
after any such payments under the Loan Agreement and shall redeem the
remaining shares of Series E Preferred Stock to be redeemed pursuant to this
subsection (b)(ii) and Parity Stock entitled to redemption within 90 calendar
days
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<PAGE>
after the consummation of the IPO; PROVIDED, FURTHER, that to the extent that
shares of the Series E Preferred Stock to be redeemed pursuant to this
subsection (b)(ii) having an aggregate Stated Value and accrued and unpaid
dividends of at least $256,410 have not been redeemed within such 90 calendar
day period, the Corporation shall, to the extent the Corporation has funds
legally available therefor redeem all shares of Series E Preferred Stock then
outstanding at a redemption price per share equal to the Stated Value,
together with accrued and unpaid dividends thereon to (and including) such
redemption date, without interest, employing a Dividend Rate of 8.0% for the
period from the date of the consummation of the IPO to (and including) such
redemption date and; PROVIDED, FURTHER, to the extent that the Corporation
has redeemed shares of the Series E Preferred Stock to be redeemed pursuant
to this subsection (b)(ii) having an aggregate Stated Value and accrued and
unpaid dividends of at least $256,410, but less than the full amount of
shares of Series E Preferred Stock required by this subsection (b)(ii), the
Corporation shall on June 15, 1998, to the extent the Corporation has funds
legally available therefor, redeem all shares of Series E Preferred Stock
then outstanding at a redemption price per share equal to the Stated Value
together with accrued and unpaid dividends thereon to (and including) such
redemption date, without interest.
(iii) In the event that the Corporation fails to use at least .64%
of the net proceeds received by the Corporation from any Subsequent Offering
(as defined in Section 9) to redeem any outstanding shares of Series E
Preferred Stock on the date of the consummation of such Subsequent Offering,
the Series E Preferred Stock shall be subject to redemption, in whole or in
part, in cash, as determined by the holders of a majority of the outstanding
shares of the Series C Preferred Stock at a redemption price per share equal
to the Stated Value, together with accrued and unpaid dividends thereon to
(and including) the redemption date, without interest. On the redemption date,
the Corporation shall redeem all shares of Series E Preferred Stock tendered
for redemption pursuant to this subsection (b)(iii).
(c) REDEMPTION IN THE EVENT OF ACCELERATION OF INDEBTEDNESS. In
the event that the Corporation or any Subsidiary shall fail to perform or
observe any term, covenant or condition related to any Indebtedness (as
defined in Section 9) of the Corporation or any Subsidiary (other than any
Indebtedness of Phone Bass Systems, Inc. ("Phone Base") which is non-recourse
to the Corporation or any Subsidiary, other than Phone Base) and the effect
of such failure to perform or observe is (i) a failure by the Corporation or
any Subsidiary to pay any principal or interest on any Indebtedness when due
or during any applicable grace period therefor or (ii) receipt of notice by
the Corporation or any Subsidiary of the acceleration of the maturity or
required prepayment (other than by a regularly scheduled required prepayment)
prior to the stated maturity of any Indebtedness and demand for payment with
respect therefor, in respect to Indebtedness in an aggregate amount in excess
of $500,000 (the "Accelerated Redemption Date"), the Series E Preferred Stock
shall be subject to redemption, in whole or in part, in cash, as determined
by the holders of a majority of the outstanding shares of the Series C
Preferred Stock after the Accelerated Redemption Date at a redemption price
per share equal to the Stated Value, together with accrued and unpaid
dividends thereon to (and including) the redemption date, without interest.
On the redemption date, the Corporation shall redeem all shares of Series E
Preferred Stock tendered for redemption pursuant to this subsection (c).
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(d) REDEMPTION IN THE EVENT OF CERTAIN BUSINESS COMBINATION. For
so long as White River or any of its Affiliates shall own any shares of
Series E Preferred Stock (A) neither the Corporation nor its Material
Subsidiaries (as defined in Section 9) shall engage in any merger,
reorganization or consolidation (other than transactions involving the
merger, reorganization or consolidation of a Subsidiary of the Corporation
with or into the Corporation or with or into a wholly owned Subsidiary of the
Corporation) and (B) the Corporation shall not sell or otherwise transfer, in
a single transaction or series of transactions, all or substantially all or a
material part of the assets or shares of the Common Sock of the Corporation
to or with any Person (as defined in Section 9) other than in connection with
the sale of the Faneuil Group or to or with the Corporation or a wholly owned
Subsidiary of the Corporation unless on or prior to the consummation of the
transactions described in clauses (A) and (B) all shares of the Series E
Preferred Stock shall have been redeemed at a redemption price per share
equal to the Stated Value, together with accrued and unpaid dividends thereon
to (and including) such redemption date, without interest.
(e) RIGHTS OF SERIES E PREFERRED STOCK FOLLOWING REDEMPTION. On
and after any date fixed for redemption, PROVIDED THAT the redemption price
(including any accrued and unpaid dividends to (and including) the date fixed
for redemption) has been duly paid or segregated and held in trust by a duly
authorized independent paying agent for the benefit of the Persons entitled
thereto, dividends shall cease to accrue on the Series E Preferred Stock
called for redemption, such shares shall no longer be deemed to be
outstanding and all rights of the holders of such shares as stockholders of
the Corporation shall cease and the right to receive the moneys payable upon
such redemption, without interest thereon, upon surrender of the certificates
evidencing such shares.
(f) NOTICE OF ANY REDEMPTION. Notice of any redemption pursuant to
Section 7(e) shall be given to the holders of shares of Series E Preferred
Stock not less than 30 nor more than 60 days prior to the redemption. Notice
of redemption shall be given by first class mail to such holders' respective
addresses as shown on the stock books of the Corporation and will specify (A)
the date fixed for redemption, (B) the applicable redemption price and (C) in
the case of a partial redemption, the number of shares of Series E Preferred
Stock to be redeemed and the aggregate number of shares of Series E Preferred
Stock which will be outstanding after such redemption. If less than all
shares of Series E Preferred Stock then outstanding are to be redeemed, the
shares of Series E Preferred Stock will be redeemed pro rata from among the
holders of shares of Series E Preferred Stock then outstanding.
(g) FINAL REDEMPTION OBLIGATIONS. If the Corporation shall fail
at any time to discharge its obligation to redeem shares of Series E
Preferred Stock pursuant to this Section 7 (the "Final Redemption
Obligation"), such Final Redemption Obligation shall be discharged as soon as
the Corporation is able to discharge such Final Redemption Obligation using
funds legally available therefor.
(h) REDEMPTION OF PARITY STOCK PRO-RATA. If, upon the occurrence
of any event requiring redemption of the shares of Series E Preferred Stock
pursuant to this Section 7, the assets of the Corporation, or net proceeds
thereof, shall be insufficient to redeem in full the applicable
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amount of Series E Preferred Stock and any Parity Stock required to be
redeemed by the Corporation, then the Corporation shall redeem shares of
Series E Preferred Stock and any Parity Stock ratably in accordance with the
respective amounts which would be redeemable if the Series E Preferred Stock
and the Parity Stock required to be redeemed by the Corporation were redeemed
in full.
(i) REDEMPTION EXCEPTION. Notwithstanding anything in this Certificate
of Designation to the contrary, at least one share of the Series E Preferred
Stock shall remain issued and outstanding until such time as no shares of the
Series C Preferred Stock remain issued and outstanding.
Section 8. CERTAIN COVENANTS. Any registered holder of the Series E
Preferred Stock may proceed to protect and enforce its rights and the rights
of such holders by any available remedy by proceeding at law or in equity to
protect and enforce any such rights, whether for the specific enforcement of
any provision or in aid of the exercise of any power granted herein, or to
enforce any other proper remedy.
Section 9. DEFINITION. For the purposes of this Certificate of
Designations of Series E Redeemable Preferred Stock, the following terms
shall have the meanings indicated:
"Affiliate" means a Person that directly, or indirectly through one or
more intermediaries, controls, or is controlled by, or is under common
control with, another Person.
"Business Day" means any day other than a Saturday, Sunday or a day on
which banking institutions in the State of New York are authorized or
obligated by law or executive order to close.
"Capital Lease" means any lease of any property (whether real, personal
or mixed) by the Corporation or any of the Subsidiaries as lessee which, in
conformity with generally accepted accounting principles, is accounted for as
a capital lease on the balance sheet of the Corporation or any of the
Subsidiaries; PROVIDED, HOWEVER, any such lease which is nonrecourse to the
Corporation or any of the Subsidiaries shall not constitute a Capital Lease.
"Common Stock Equivalents" means all options, warrants and other rights
to acquire Common Stock or securities convertible into or exchangeable for
Common Stock.
"Contingent Obligation" means 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,
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assets, level of income, or other financial condition, and agreements to make
payment other than for value received.
"Faneuil Group" means GIS Information Systems, Inc., an Illinois
corporation, Equitel Corp., a Virginia corporation, Original Research II
Corporation, a Delaware corporation, and Credit Card Service Corporation, a
Delaware corporation, collectively.
"Indebtedness" means, with respect to the Corporation or any of the
Subsidiaries, at any time, (a) all indebtedness, obligations or other
liabilities of the Corporation or any of the Subsidiaries (i) for borrowed
money or evidenced by debt securities, debentures, acceptances, notes or
other similar instruments, (ii) with respect to letters of credit issued for
the Corporation's or any of the Subsidiaries' account, (iii) in respect of
Capital Leases and (iv) which are contingent obligations, (b) all
indebtedness, obligations or other liabilities of the Corporation or any of
the Subsidiaries or others secured by a Lien on any property of the
Corporation or any of the Subsidiaries, whether or not such indebtedness,
obligations or liabilities are assumed by the Corporation or any of the
Subsidiaries, all as of such time, (c) all indebtedness, obligations or other
liabilities or the Corporation or any of its subsidiaries in respect of
Interest Rate Contracts and currency hedging agreements, net of liabilities
owed to the Corporation or any of the Subsidiaries by the counterparties
thereon, and (d) all preferred stock subject (upon the occurrence of any
contingency or otherwise) to mandatory redemption, other than the Series C
Preferred Stock, Series D Preferred Stock and Series E Preferred Stock.
"Interest Rate Contracts" means interest rate exchange, collar or cap or
similar agreements providing interest rate protection.
"IPO" means the initial public offering of Common Stock on a firm
commitment basis pursuant to an effective registration statement under the
Securities Act.
"Lien" means any mortgage, deed of trust, pledge, security interest,
encumbrancer 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 filling of or agreement to give any
financing statement under the Uniform Commercial Code of any jurisdiction in
connection with any of the foregoing).
"Loan Agreement" means (i) the Loan Agreement, dated as of April 29,
1994, among CCC Information Services Inc. and CCC Development Company, as
Borrowers, the financial institutions party thereto, as Lenders and Canadian
Imperial Bank of Commerce, as Agent, (ii) the Security Agreement, dated as of
April 29, 1994, among CCC Information Services Inc., Canadian Imperial Bank
of Commerce, as Agent and Canadian Imperial Bank of Commerce, as Collateral
Agent, (iii) the Guaranty, dated as of April 29, 1994, made by the Corporation
in favor of the Lenders party to the Loan Agreement and Canadian Imperial
Bank of Commerce, as Agent, (iv) the Pledge and Security Agreement, dated as
of April 29, 1994, among the Corporation, Canadian Imperial Bank
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of Commerce, as Agent and Canadian Imperial Bank of Commerce, as Collateral
Agent and (v) each other agreement, document or instrument delivered in
connection with the foregoing.
"Material Subsidiary" means any subsidiary which produces or represents
20% or more of (i) consolidated net assets of the Corporation, (ii)
consolidated gross revenues of the Corporation or (iii) consolidated net
income of the Corporation.
"Person" means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, joint venture, joint stock
company or any other entity or organization, including a government or
political subdivision or agency or instrumetality thereof.
"Public Offering" means a sale of any of the Corporation's securities
pursuant to an effective registration statement under the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended.
"Subsequent Offering" means a sale of Common Stock or any Common Stock
Equivalent of the Corporation in a Public Offering after an IPO.
"Subsidiary" means (i) any Person of which 50% or more of the securities
having ordinary voting power for the election of directors are at the time
owned directly or indirectly by the Corporation or any Subsidiary thereof
(ii) any Person of which 50% or more of the joint venture, limited
partnership or partnership interests are at the time owned directly or
indirectly by the Corporation or any Subsidiary thereof or (iii) any Person
which is a limited partnership in which the Corporation or any Subsidiary in
at the time the general partner or at the time owns 50% or more of the
general partner of such Person.
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EXHIBIT B
SECOND AMENDED AND RESTATED BY-LAWS
OF
CCC INFORMATION SERVICES GROUP INC.
(A Delaware Corporation)
ARTICLE I
OFFICES
The registered office of the Corporation shall be in the City of Dover,
County of Kent, State of Delaware. The Corporation may also have offices at
such other places both within and without the State of Delaware as the Board
of Directors may from time to time determine or the business of the
Corporation may require.
ARTICLE II
STOCKHOLDERS
Section 1. TIME AND PLACE OF MEETINGS. All meetings of the
stockholders for the election of directors or for any other purpose shall be
held at such time and place, within or without the State of Delaware, as
shall be designated by the Board of Directors. In the absence of a
designation of a place for any such meeting by the Board of Directors, each
such meeting shall be held at the principal office of the Corporation.
Section 2. ANNUAL MEETINGS. An annual meeting of stockholders shall
be held for the purpose of electing directors and transacting such other
business as may properly be brought before the meeting. The date of the
annual meeting shall be determined by the Board of Directors.
Section 3. SPECIAL MEETINGS. Special meetings of the stockholders,
for any purpose or purposes, unless otherwise prescribed by the Amended and
Restated Certificate of Incorporation, as amended from time to time (the
"CERTIFICATE OF INCORPORATION"), or by law, may be called by the Chairman of
the Board or the President and shall be called by the Secretary at the
direction either of a majority of the Board of Directors or stockholders
holding not less than twenty-five percent of the stock issued and outstanding
and entitled to vote at such meeting.
Section 4. NOTICE OF MEETINGS. Written notice of each meeting of the
stockholders stating the place, date and time of the meeting shall be given
not less than ten (10) nor more than sixty (60) days before the date of the
meeting, to each stockholder entitled to vote at such meeting. The notice of
any special meeting of stockholders shall state the purpose or purposes for
which the meeting is called. Business transacted at any special meeting of
stockholders shall be limited to the purposes stated in the notice. Neither
the business to be transacted at, nor the purpose of, an annual or special
meeting of stockholders need be specified in any written waiver of notice.
Section 5. QUORUM: ADJOURNMENTS. The holders of a majority of the
stock issued and outstanding and entitled to vote thereat, present in person
or represented by proxy, shall constitute
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a quorum at all meetings of the stockholders for the transaction of business,
except as otherwise required by these By-laws, the Certificate of
Incorporation, or the Delaware General Corporation Law as from time to time
in effect (the "DELAWARE LAW"). If a quorum is not represented, the holders
of the stock present in person or represented by proxy at the meeting and
entitled to vote thereat shall have power, by the affirmative vote of the
holders of a majority of such stock, to adjourn the meeting to another time
and/or place, without notice other than announcement at the meeting, except
as hereinafter provided, until a quorum shall be present or represented. At
such adjourned meeting, at which a quorum shall be present or represented,
any business may be transacted which might have been transacted at the
original meeting. If the adjournment is for more than thirty (30) days, or if
after the adjournment a new record date is fixed for the adjourned meeting, a
notice of the adjourned meeting shall be given to each stockholder of record
entitled to vote at the meeting. Withdrawal of stockholders from any meeting
shall not cause the failure of a duly constituted quorum at such meeting.
Section 6. VOTING. (a) At all meetings of the stockholders, each
stockholder shall be entitled to vote, in person, or by proxy appointed in an
instrument in writing subscribed by the stockholder or otherwise appointed in
accordance with Section 212 of the Delaware Law, each share of voting stock
owned by such stockholder of record on the record date for the meeting. Each
stockholder shall be entitled to one vote for each share of voting stock held
by such stockholder, unless otherwise provided in the Delaware Law or the
Certificate of Incorporation (including, without limitation, in any
certificate of designations setting forth the terms of any preferred stock of
the Corporation outstanding at any time).
(b) When a quorum is present at any meeting, the affirmative vote of the
holders of at least fifty percent (50%) of the total voting power of all
shares of stock of the Corporation entitled to vote in the election of
directors present in person or represented by proxy and voting shall decide
any question brought before such meeting, unless the question is one upon
which, by express provision of law or of the Certificate of Incorporation, a
different vote is required, in which case such express provision shall govern
and control the decision of such question. Any stockholder who is in
attendance at a meeting of stockholders either in person or by proxy, but who
abstains from the vote on any matter, shall not be deemed present or
represented at such meeting for purposes of the preceding sentence with
respected to such vote, but shall be deemed present or represented at such
meeting for all other purposes.
Section 7. ORGANIZATION. At every meeting of the stockholders, the
Chairman of the Board, if there be one, or in the case of a vacancy in the
office or absence of the Chairman of the Board, one of the following persons
present in the order stated: the Vice Chairman, if one has been appointed,
the President, the Vice Presidents in their order or rank, a chairman
designated by the Board of Directors or a chairman chosen by the stockholders
entitled to cast a majority of the votes which all stockholders present in
person or by proxy are entitled to cast, shall act as chairman, and the
Secretary, or, in his absence, an Assistant Secretary, or in the absence of
the Secretary and the Assistant Secretaries, a person appointed by the
chairman, shall act as secretary of the meeting.
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Section 8. STOCKHOLDERS ACTION WITHOUT MEETINGS. Any action required
to be taken, or any action which may be taken, at any annual or special
meeting of stockholders, may be taken without a meeting, without prior notice
and without a vote, if a consent in writing, setting forth the action so
taken, shall be signed by the holders of the outstanding stock having not
less than the minimum number of votes that would be necessary to authorize or
take such action at a meeting at which all shares entitled to vote thereon
were present and voted. Prompt notice of the taking of the corporate action
without a meeting by less than unanimous written consent shall be given to
those stockholders who have not consented in writing.
ARTICLE III
DIRECTORS
Section 1. GENERAL POWERS. The business and affairs of the
Corporation shall be managed and controlled by or under the direction of its
Board of Directors, which may exercise all such powers of, and do all such
acts and things as may be done by, the Corporation and do all such lawful
acts and things as are not by law or by the Certificate of Incorporation or
by these By-laws directed or required to be exercised or done by the
stockholders.
Section 2. NUMBER, QUALIFICATION AND TENURE. The number of directors
shall be determined from time to time by resolution of the Board of Directors
adopted by a majority of the total number of authorized directors (whether or
not there exist any vacancies in the previously authorized directorships at
the time any such resolution is presented to the Board of Directors for
adoption), subject to the provisions of the Certificate of Incorporation. The
directors shall be elected at the annual meeting of the stockholders, except
as provided in the Certificate of Incorporation or SECTION 3 of this Article,
and each director elected shall hold office until his or her successor is
elected and qualified or until his or her earlier death, termination,
resignation or removal from office. Directors need not be stockholders.
Section 3. VACANCIES AND NEWLY-CREATED DIRECTORSHIPS. Vacancies and
newly-created directorships resulting from any increase in the number of
directors may be filled by a majority of the directors then in office,
although less than a quorum, or by a sole remaining director, and each
director so chosen shall hold office until his or her successor is elected
and qualified or until his or her earlier death, termination, resignation,
retirement, disqualification or removal from office. If there are no
directors in office, then an election of directors may be held in the manner
provided by law.
Section 4. REMOVAL. Any director may be removed from the Board of
Directors for or without cause by the holders of shares of stock having a
majority of the voting power of the Corporation, and the office of such
director shall forthwith become vacant.
Section 5. PLACE OF MEETINGS. The Board of Directors may hold
meetings, both regular and special, either within or without the State of
Delaware.
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Section 6. MEETINGS. The Board of Directors shall hold a regular
meeting, to be known as the annual meeting, immediately following each annual
meeting of the stockholders. Other regular meetings of the Board of Directors
shall be held at such time and place as shall from time to time be determined
by the Board. No notice of regular meetings need be given, other than by
announcement at the immediately preceding regular meeting. Special meetings
of the Board may be called by the President or by the Secretary on the
written request of a majority of the Board of Directors. Notice of any
special meeting of the Board shall be given at least two (2) days prior
thereto, either in writing, or telephonically if confirmed promptly in
writing, to each director at the address shown for such director on the
records of the Corporation.
Section 7. WAIVER OF NOTICE: BUSINESS AND PURPOSE. Notice of any
meeting of the Board of Directors may be waived in a writing signed by the
person or persons entitled to such notice either before or after the time of
the meeting. The attendance of a director at any meeting shall constitute a
waiver of notice of such meeting, except where a director attends a meeting
for the express purpose of objecting to the transaction of any business
because the meeting is not lawfully called or convened and at the beginning
of the meeting records such objection with the person acting as secretary of
the meeting and does not thereafter vote on any action taken at the meeting.
Neither the business to be transacted at, nor the purpose of, any regular or
special meeting of the Board of Directors need be specified in the notice or
waiver of notice of such meeting, unless specifically required by the
Delaware Law.
Section 8. QUORUM AND MANNER OF ACTING. At all meetings of the Board
of Directors a majority of the total number of directors shall constitute a
quorum for the transaction of business. If a quorum shall not be present at
any meeting of the Board of Directors, the directors present thereat may
adjourn the meeting from time to time, without notice other than announcement
at the meeting, until a quorum shall be present. The act of a majority of the
directors present at any meeting at which there is a quorum shall be the act
of the Board of Directors, except as may be otherwise specifically provided
by the Delaware Law or by the Certificate of Incorporation.
Section 9. ORGANIZATION. The Chairman of the Board, if elected,
shall act as chairman at all meetings of the Board of Directors. If the
Chairman of the Board is not elected or, if elected, is not present, a
director chosen by a majority of the directors present shall act as chairman
at such meeting of the Board of Directors.
Section 10. COMMITTEES. The Board of Directors, by resolution adopted
by a majority of the whole Board of Directors, may create one or more other
committees and appoint one or more directors to serve on such committee or
committees. Each director appointed to serve on any such committee shall
serve, unless the resolution designating the respective committee is sooner
amended or rescinded by the Board of Directors, until the next annual meeting
of the Board of Directors or until their respective successors are
designated. The Board of Directors, by resolution adopted by a majority of
the whole Board of Directors, may also designate additional directors as
alternate members of any committee to serve as members of such committee in
the place and stead of any regular member or members thereof who may be
unable to attend a meeting or otherwise unavailable
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<PAGE>
to act as a member of such committee. In the absence or disqualification of a
member and all alternate members designated to serve in the place and stead
of such member, the member or members thereof present at any meeting and not
disqualified from voting, whether or not such member or members constitute a
quorum, may unanimously appoint another director to act at the meeting in the
place and stead of such absent or disqualified member.
A committee of the Board of Directors may exercise the power and
authority of the Board of Directors to the extent specified by the resolution
establishing such committee, or the Certificate of Incorporation or these
By-laws; PROVIDED, HOWEVER, that no committee may take any action that is
expressly required by the Delaware Law or the Certificate of Incorporation or
these By-laws to be taken by the Board of Directors and not by a committee
thereof. Each committee shall keep a record of its acts and proceedings,
which shall form a part of the records of the Corporation in the custody of
the Secretary, and all actions of each committee shall be reported to the
Board of Directors at the next meeting of the Board.
Meetings of committees may be called at any time by the Chairman of the
Board, if any, the President or the chairman of the respective committee. A
majority of the members of the committee shall constitute a quorum for the
transaction of business and, except as expressly limited by this section, the
act of a majority of the members present at any meeting at which there is a
quorum shall be the act of such committee. Except as expressly provided in
this section or in the resolution designating the committee, a majority of
the members of any such committee may select its chairman, fix its rules of
procedure, fix the time and place of its meetings and specify what notice of
meetings, if any, shall be given.
Section 11. ACTION WITHOUT MEETINGS. Unless otherwise specifically
prohibited by the Certificate of Incorporation of these By-laws, any action
required or permitted to be taken at any meeting of the Board of Directors or
of any committee thereof may be taken without a meeting, if all members of
the Board of Directors or such committee, as the case may be, execute a
consent thereto in writing setting forth the action so taken, and the writing
or writings are filed with the minutes of proceedings of the Board of
Directors or such committee.
Section 12. ATTENDANCE BY TELEPHONE. Members of the Board of Directors,
or any committee thereof, may participate in and act at any meeting of the
Board of Directors, or such committee, as the case may be, through the use of
a conference telephone or other communications equipment by means of which
all persons participating in the meeting can hear each other. Participation
in such meeting shall constitute attendance and presence in person at the
meeting of the person or persons so participating.
Section 13. COMPENSATION. By resolution of the Board of Directors,
irrespective of any personal interest of any of the members, the directors
may be paid their reasonable expenses, if any, of attendance at each meeting
of the Board of Directors and may be paid a fixed sum of attendance at
meetings or a stated salary as directors. These payments shall not preclude
any director from serving the Corporation in any other capacity and
receiving compensation therefor.
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ARTICLE IV
OFFICERS
Section 1. ENUMERATION. The officers of the Corporation shall be chosen
by the Board of Directors and shall include a President, one or more Vice
Presidents, a Treasurer and a Secretary. The Board of Directors may also
elect a Chairman of the Board, a Chief Financial Officer, a Chief Executive
Officer, one or more Assistant Secretaries and Assistant Treasurers, and such
other officers and agents as it may deem appropriate. Any number of offices
may be held by the same person.
Section 2. TERM OF OFFICE. The officers of the Corporation shall be
elected at the annual meeting of the Board of Directors and shall hold office
until their successors are elected and qualified, or until their earlier
death, termination, resignation or removal from office. Any officer or agent
of the Corporation may be removed at any time by the Board of Directors, with
or without cause. Any vacancy in any office because of death, resignation,
termination, removal, disqualification or otherwise, may be filled by the
Board of Directors for the unexpired portion of the term.
Section 3. CHAIRMAN OF THE BOARD. The Chairman of the Board, when and
if elected, shall preside at meetings of the Board of Directors and of
stockholders and shall have such other functions, authority and duties as
customarily appertain to the office of the Chairman of a business corporation
or as may be prescribed by the Board of Directors. The Chairman of the Board,
if any, shall be a member of the Board of Directors of the Corporation.
Section 4. CHIEF EXECUTIVE OFFICER. The Chief Executive Officer, when
and if elected, shall have general supervision, direction and control of the
business and affairs of the Corporation, subject to the control of the Board
of Directors, and shall have such other functions, authority and duties as
customarily appertain to the office of Chief Executive Officer of a business
corporation or as may be prescribed by the Board of Directors.
Section 5. CHIEF FINANCIAL OFFICER. The Chief Financial Officer shall
have general supervision, direction and control over the treasury and the
finances of the Company, including but not limited to the authority over
finance, treasury and accounting personnel and functions of the Company, to
act as agent for the Company in respect of its dealings with creditors and
stockholders on financial matters, and the authority to negotiate all
financial matters of the Company on its behalf, subject to the control of the
Board of Directors. The Chief Financial Officer shall have such other
functions, authority and duties as customarily appertain to the office of
the Chief Financial Officer of a business corporation or as may be prescribed
by the Board of Directors.
Section 6. PRESIDENT. The President shall be the chief operating
officer of the Corporation and shall have such functions, authority and
duties as may be prescribed by the Board of Directors.
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Section 7. VICE PRESIDENT. Each Vice President, if any, shall perform
such duties and have such other powers as may from time to time be prescribed
by the Board of Directors, the Chairman of the Board, or the President.
Section 8. SECRETARY. The Secretary shall: (a) keep a record of all
proceedings of the stockholders, the Board of Directors and any committees
thereof in one of more books provided for that purpose; (b) give, or cause to
be given, all notices that are required by law or these By-laws to be given
by the Secretary; (c) be custodian of the corporate records and, if the
Corporation has a corporate seal, of the seal of the Corporation; (d) have
authority to affix the seal of the Corporation to all instruments the
execution of which requires such seal and to attest such affixing of the
seal; (e) keep a register of the post office address of each stockholder
which shall be furnished to the Secretary by such stockholder; (f) sign, with
the Chairman of the Board, President or any Vice President, or any other
officer thereunto authorized by the Board of Directors, any certificates for
shares of the Corporation, or any deeds, mortgages, bonds, contracts or other
instruments which the Board of Directors has authorized to be executed by the
signature of more than one officer; (g) have general charge of the stock
transfer books of the Corporation; (h) have authority to certify as true and
correct, copies of the By-laws, or resolutions of the stockholders, the Board
of Directors and committees thereof, and of other documents of the
Corporation; and (i) in general, perform the duties incident to the office of
secretary and such other duties as from time to time may be prescribed by the
Board of Directors, the Chairman of the Board or the President. The Board of
Directors may give general authority to any other officer to affix the seal
of the Corporation to attest such affixing of the seal.
Section 9. TREASURER. The Treasurer shall have the care and custody of
the corporate funds, and other valuable effects, including securities, and
shall keep full and accurate accounts of receipts and disbursements in books
belonging to the Corporation and shall deposit all moneys and other valuable
effects in the name and to the credit of the Corporation in such depositories
as may be designated by the Board of Directors. The Treasurer shall disburse
the funds of the Corporation as may be ordered by the Board of Directors,
taking proper vouchers for such disbursements, and shall render to the
President and directors, at the regular meetings of the Board of Directors,
or whenever they may require it, an account of all his transactions as
Treasurer and of the financial condition of the Corporation. If required by
the Board of Directors, the Treasurer shall give the Corporation a bond for
such term in such sum and with such surety or sureties as shall be
satisfactory to the Board for the faithful performance of the duties of his
office and for the restoration to the Corporation, in case of his death,
resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in his possession or
under his control belonging to the Corporation.
Section 10. OTHER OFFICERS AND AGENTS. Any officer or agent who is
elected or appointed from time to time by the Board of Directors and whose
duties are not specified in these By-laws shall perform such duties and have
such powers as may from time to time be prescribed by the Board of Directors,
the Chairman of the Board or the President.
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ARTICLE V
CERTIFICATES OF STOCK AND THEIR TRANSFER
Section 1. FORM. The shares of the Corporation shall be represented by
certificates. Each certificate for shares shall be consecutively numbered or
otherwise identified. Certificates of stock in the Corporation shall be
signed by or in the name of the Corporation by the Chairman of the Board or
the President and by the Secretary of the Corporation. Where a certificate is
countersigned by a transfer agent, other than the Corporation or an employee
of the Corporation, or by a registrar, the signatures of one or more officer
of the Corporation may be facsimiles. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent or registrar
before such certificate is issued, the certificate may be issued by the
Corporation with the same effect as if such officer, transfer agent or
registrar were such officer, transfer agent or registrar at the date of its
issue.
Section 2. TRANSFER. Upon surrender to the Corporation or the transfer
agent of the Corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the Corporation to issue a new certificate
of stock or uncertificated shares in place of any certificate theretofore
issued by the Corporation to the person entitled thereto, cancel the old
certificate and record the transaction in its stock transfer books.
Section 3. REPLACEMENT. In case of the loss, destruction, mutilation or
theft of a certificate for any stock of the Corporation, a new certificate of
stock or uncertificated shares in place of any certificate theretofore issued
by the Corporation may be issued upon the surrender of the mutilated
certificate or, in the case of loss, destruction or theft of a certificate,
upon satisfactory proof of such loss, destruction or theft and upon such
terms as the Board of Directors may prescribe. The Board of Directors may in
its discretion require the owner of the lost, destroyed or stolen
certificate, or his legal representative, to give the Corporation a bond, in
such sum and in such form and with such surety or sureties as it may direct,
to indemnify the Corporation against any claim that may be made against it
with respect to the certificate alleged to have been lost, destroyed or
stolen.
ARTICLE VI
INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS
Section 1. THIRD PARTY ACTIONS. The Corporation shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending, or completed action, suit or proceeding, whether civil,
criminal, administrative, or investigative, including all appeals (other than
an action, suit or proceeding by or in the right of the Corporation) by
reason of the fact that he is or was a director or officer of the Corporation
(and the Corporation, in the discretion of the Board of Directors, may so
indemnify a person by reason of the fact that he is or was an employee or
agent of the Corporation or is or was serving at the request of the
Corporation in any other capacity for or on behalf of the Corporation),
against expenses (including attorneys' fees), judgments, decrees, fines,
penalties, and amounts paid in settlement actually and reasonably incurred by
him in connection with
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such action, suit or proceeding if he acted in good faith and in a manner
which he reasonably believed to be in, or not opposed to, the best interests
of the Corporation and, with respect to any criminal action or proceeding,
had no reasonable cause to believe his conduct was unlawful; PROVIDED,
HOWEVER, the Corporation shall be required to indemnify an officer or
director in connection with an action, suit or proceeding initiated by such
person only if such action, suit or proceeding was authorized by the Board of
Directors. The termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did
not act in good faith or in a manner which he reasonably believed to be in,
or not opposed to, the best interests of the Corporation and, with respect to
any criminal action or proceeding, had reasonable cause to believe that his
conduct was unlawful.
Section 2. ACTIONS BY OR IN THE RIGHT OF THE CORPORATION. The
Corporation shall indemnify any person who was or is a party or is threatened
to be made a party to any threatened, pending, or completed action of suit,
including all appeals, by or in the right of the Corporation to procure a
judgment in its favor by reason of the fact that he is or was a director or
officer of the Corporation (and the Corporation, in the discretion of the
Board of Directors, may so indemnify a person by reason of the fact that he
is or was an employee or agent of the Corporation or is or was serving at the
request of the Corporation in any other capacity for or on behalf of the
Corporation), against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection with the defense or settlement of
such action or suit 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,
except that no indemnification shall be made in respect of any claim, issue
or matter as to which such person shall have been finally adjudged to be
liable for negligence or misconduct in the performance of his duty to the
Corporation unless and only to the extent that the court in which such action
or suit was brought, or any other court of competent jurisdiction, shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses as such court shall deem
proper. Notwithstanding the foregoing, the Corporation shall be required to
indemnify an officer or director in connection with an action, suit or
proceeding initiated by such person only if such action, suit or proceeding
was authorized by the Board of Directors.
Section 3. INDEMNITY IF SUCCESSFUL. To the extent that a director,
officer, employee or agent of the Corporation has been successful on the
merits or otherwise in defense of any action, suit or proceeding referred to
in SECTION 1 or 2 of this Article, or in defense of any claim, issue or
matter therein, he shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection
therewith.
Section 4. STANDARD OF CONDUCT. Any indemnification under SECTION 1
and 2 of this Article (unless ordered by a court) shall be made by the
Corporation only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper in the
circumstances because he has met the applicable standard of conduct set forth
in SECTION 1 or 2, as applicable, of this Article. Such determination shall
be made (i) by a majority vote of the directors who are not parties to such
action, suit or proceeding, even though less than a quorum, or
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(ii) if there are no such directors, or if such directors so direct, by
independent legal counsel in a written opinion, or (iii) by the stockholders.
Section 5. EXPENSES. Expenses (including attorneys' fees) incurred
by an officer or director in defending any civil, criminal, administrative or
investigative action, suit or proceeding or threat thereof shall be paid by
the Corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of such director or
officer to repay such amount if it shall ultimately be determined that he is
not entitled to be indemnified by the Corporation as authorized in this
Article. Such expenses (including attorneys' fees) incurred by other
employees and agents may be so paid upon the receipt of the aforesaid
undertaking and such terms and conditions, if any, as the Board of Directors
deems appropriate.
Section 6. NONEXCLUSIVITY. The indemnification and advancement of
expenses provided by, or granted pursuant to, other Sections of this Article
shall not be deemed exclusive of any other rights to which those seeking
indemnification or advancement of expenses may now or hereafter be entitled
under any law, by-law, agreement, vote of stockholders or directors who are
not parties to the action, suit or proceeding or otherwise, both as to action
in his official capacity and as to action in another capacity while holding
such office.
Section 7. INSURANCE. The Corporation may purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee
or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another Corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against him and incurred by him in any such capacity, or arising out
of his status as such, whether or not the Corporation would have the power to
indemnify him against such liability under the provisions of the Delaware Law.
Section 8. DEFINITIONS. For purposes of this Article, references to
"the Corporation" shall include, in addition to the resulting corporation,
any constituent corporation (including any constituent of a constituent)
absorbed in a consolidation or merger which, if its separate existence had
continued, would have had the power and authority to indemnify any or all of
its directors, officers, employees and agents, so that any person who is or
was a director, officer, employee or agent of such constituent corporation,
or is or was serving at the request of such constituent corporation in any
other capacity, shall stand in the same position under the provisions of this
Article with respect to the resulting or surviving corporation as such person
would have had with respect to such constituent corporation if its separate
existence had continued.
For purposes of this Article, references to "other capacities" shall
include serving as a trustee or agent for any employee benefit plan;
references to "fines" shall include any excise taxes assessed on a person
with respect to an employee benefit plan; and references to "serving at the
request of the Corporation" shall include any service as a director, officer,
employee or agent of the Corporation which imposes duties on, or involves
services by such director, officer, employee, or agent with respect to any
employee benefit plan, its participants, or beneficiaries; and a person who
acted in good
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faith and in a manner he or she reasonably believed to be in
the best interests of the participants and beneficiaries of an employee
benefit plan shall be deemed to have acted in a manner "not opposed to the
best interests of the Corporation" as referred to in this Article.
Section 9. SEVERABILITY. If any provision hereof is invalid or
unenforceable in any jurisdiction, the other provisions hereof shall remain
in full force and effect in such jurisdiction, and the remaining provisions
hereof shall be liberally construed to effectuate the provisions hereof, and
the invalidity of any provision hereof in any jurisdiction shall not affect
the validity or enforceability of such provision in any other jurisdiction.
Section 10. AMENDMENT. The right to indemnification conferred by
this Article shall be deemed to be a contract between the Corporation and
each person referred to therein until amended or repealed, but no amendment
to or repeal of these provisions shall apply to or have any effect on the
right to indemnification of any person with respect to any liability or
alleged liability of such person for or with respect to any act or omission
of such person occurring prior to such amendment or repeal.
ARTICLE VII
GENERAL PROVISIONS
Section 1. FISCAL YEAR. The fiscal year of the Corporation shall be
fixed from time to time by resolution of the Board of Directors.
Section 2. CORPORATION SEAL. The corporate seal, if any, of the
Corporation shall be in such form as may be approved from time to time by the
Board of Directors. The seal may be used by causing it or a facsimile thereof
to be impressed or affixed or in any other manner reproduced.
Section 3. NOTICES AND MAILING. Except as otherwise provided in the
Act, the Certificate of Incorporation or these By-laws, all notices required
to be given by any provision of these By-laws shall be deemed to have been
given (i) when received, if given in person, (ii) on the date of
acknowledgment of receipt, if sent by telex, facsimile or other wire
transmission, (iii) one day after delivery, properly addressed, to a
reputable courier for same day or overnight delivery or (iv) three (3) days
after being deposited, properly addressed, in the U.S. Mail, certified or
registered mail, postage prepaid.
Section 4. WAIVER OF NOTICE. Wherever any notice is required to be
given under the Delaware Law or the provisions of the Certificate of
Incorporation or these By-laws, a waiver thereof in writing, signed by the
person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent to notice.
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Section 5. INTERPRETATION. In these By-laws, unless a clear
contrary intention appears, the singular number includes the plural number
and VICE VERSA, and reference to either gender includes the other gender.
ARTICLE VIII
AMENDMENTS
These By-laws may be altered, amended or repealed or new By-laws may be
adopted by the holders of at least 50% of the total voting power of all
shares of stock of the Corporation entitled to vote in the election of
directors, considered for the purposes of this Article VIII as one class, at
any regular meeting of the stockholders or at any special meeting of the
stockholders if notice of such alteration, amendment, repeal or adoption of
new By-laws be contained in the notice of such special meeting.
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- -------------------------------------------------------------------------------
CREDIT FACILITY AGREEMENT
BY AND AMONG
CCC INFORMATION SERVICES INC.
(AND CERTAIN OF ITS DIRECT AND INDIRECT SUBSIDIARIES)
AND
THE LENDERS THAT ARE PARTIES HERETO
AND
SIGNET BANK
(AS ADMINISTRATIVE AGENT)
Executed as of August 22, 1996
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<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......................................... 2
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.................................. 6
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.................................................. 8
1.2.1. Establishment of Credit Facility.......................... 8
1.2.2. Facility Maturity......................................... 8
1.2.3. Use of Proceeds........................................... 8
1.2.4. Term Loan Note............................................ 8
1.2.5. Interest.................................................. 9
1.2.5.1. Intentionally Blank........................... 9
1.2.5.2. Establishment of Portions..................... 9
1.2.5.3. Interest Rate Determination................... 9
1.2.5.4. Selection of Rate Index....................... 9
1.2.5.5. Applicable Rate Margins....................... 10
1.2.5.6. Calculation of Interest....................... 10
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1.2.5.7. Special LIBO Rate Provisions.................. 10
1.2.6. Repayment and Prepayment.................................. 12
1.2.6.1. Periodic Interest Payments.................... 12
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................................... 13
1.2.6.6. Default Interest Payment...................... 14
1.2.6.7. Application of Payments....................... 14
1.2.6.8. Availability For Reborrowing.................. 14
1.3. Determination of Commitment Amounts................................. 14
1.3.1. Initial Commitments....................................... 14
1.3.2. Mandatory Commitment Reductions for the Line of Credit
Facility.................................................. 14
1.3.3. Voluntary Reduction of Commitment......................... 15
1.4. Advances............................................................ 15
1.4.1. Requesting Advances....................................... 15
1.4.2. Funding Advances.......................................... 15
1.4.3. Automatic Line of Credit Advances......................... 16
1.4.4. Obligation to Advance..................................... 16
1.4.5. Indemnification for Revocation or Failure to Satisfy
Conditions................................................ 16
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......................................... 17
1.5.5. Default Interest.......................................... 17
1.5.6. Usury Savings Provision................................... 17
1.6. Release of Security................................................. 17
1.7. Fees and Other Compensation......................................... 17
1.7.1. Commitment Fee............................................ 17
1.7.2. Periodic Facility Fee..................................... 18
1.8. Issuance of Letters of Credit....................................... 18
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ARTICLE 2: CONDITIONS PRECEDENT.............................................. 18
2.1. Closing Conditions.................................................. 18
2.1.1. Compliance................................................ 18
2.1.1.1. Fees and Expenses............................. 18
2.1.1.2. Representations............................... 18
2.1.1.3. No Default.................................... 18
2.1.1.4. No Material Change............................ 18
2.1.2. Documents................................................. 19
2.1.2.1. Credit Agreement.............................. 19
2.1.2.2. Fee Agreement................................. 19
2.1.2.3. Solvency Certificates......................... 19
2.1.2.4. Compliance Certificates....................... 19
2.1.2.5. Opinions of Counsel........................... 19
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................................................ 20
2.2.1.1. Fees and Expenses............................. 20
2.2.1.2. Representations............................... 20
2.2.1.3. No Default.................................... 20
2.2.1.4. 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............................... 21
2.2.2.4. Promissory Notes.............................. 21
2.2.2.5. Security Agreement and Related Documents...... 21
2.2.2.6. Intellectual Property Security Agreements..... 21
2.2.2.7. Assignment of Material Contracts.............. 21
2.2.2.8. Pledge and Security Agreement (By Top Level
Borrower)..................................... 21
2.2.2.9. Pledge and Security Agreement (By Guarantor).. 22
2.2.2.10. Guaranty Agreement............................ 22
2.2.2.11. Insurance..................................... 22
2.2.2.12. Solvency Certificates......................... 22
2.2.2.13. Compliance Certificates....................... 22
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2.2.2.14. Opinions of Counsel........................... 22
2.2.2.15. Payoff Instructions for Prior Indebtedness.... 23
2.2.2.16. Authorization Documents -- Each Borrower...... 23
2.2.2.17. Authorization Documents -- Guarantor.......... 23
2.2.2.18. Officer's Certificates........................ 23
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........................................ 25
2.3. Line of Credit Advances (After the Initial Advances)................ 25
2.3.1. Advance Request........................................... 25
2.3.2. Cash Flow Leverage........................................ 25
2.3.3. Other Documents........................................... 25
2.3.4. Compliance................................................ 25
2.3.4.1. Fees and Expenses............................. 25
2.3.4.2. Representations............................... 25
2.3.4.3. No Default.................................... 25
2.3.4.4. No Material Change............................ 26
ARTICLE 3: REPRESENTATIONS AND WARRANTIES.................................... 26
3.1. Organization and Good Standing...................................... 26
3.2. Power and Authority................................................. 26
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............................................................ 27
3.6. Capital Structure and Equity Ownership.............................. 27
3.7. Subsidiaries, Affiliates and Investments............................ 27
3.8. Material Contracts.................................................. 28
3.9. Licenses and Authorizations......................................... 28
3.10. Taxes and Assessments............................................... 28
3.11. Litigation and Legal Proceedings.................................... 28
3.12. Accuracy of Financial Information................................... 29
3.13. Accuracy of Other Information....................................... 29
3.14. Compliance with Laws Generally...................................... 29
3.15. ERISA Compliance.................................................... 29
3.16. Environmental Compliance............................................ 30
3.17. Margin Rule Compliance.............................................. 31
3.18. Fees and Commissions................................................ 31
3.19. Solvency............................................................ 31
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ARTICLE 4: AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . 32
4.1. Financial Covenants and Ratios . . . . . . . . . . . . . . . . 32
4.1.1. Total Charge Coverage Ratio . . . . . . . . . . . . 32
4.1.2. Cash Flow Leverage Ratio . . . . . . . . . . . . . . 32
4.2. Periodic Financial Statements . . . . . . . . . . . . . . . . 33
4.2.1. Monthly Financial Statements . . . . . . . . . . . . 33
4.2.2. Quarterly Financial Statements . . . . . . . . . . . 33
4.2.3. Annual Financial Statements . . . . . . . . . . . . 33
4.3. Other Financial and Specialized Reports. . . . . . . . . . . . 34
4.4. Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . 34
4.5. Books and Records . . . . . . . . . . . . . . . . . . . . . . 34
4.6. Existence and Good Standing . . . . . . . . . . . . . . . . . 34
4.7. Deposit Accounts . . . . . . . . . . . . . . . . . . . . . . . 34
4.8. Insurance; Maintenance of Properties; Disaster Contingency . . 35
4.8.1. General Insurance Provisions . . . . . . . . . . . . 35
4.8.2. Disaster Recovery and Contingency Program . . . . . 35
4.9. Loan Purpose . . . . . . . . . . . . . . . . . . . . . . . . . 35
4.10. Litigation; Occurrence of Defaults . . . . . . . . . . . . . . 35
4.11. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
4.12. Management Changes . . . . . . . . . . . . . . . . . . . . . . 36
4.13. Costs and Expenses . . . . . . . . . . . . . . . . . . . . . . 36
4.14. Compliance with Laws . . . . . . . . . . . . . . . . . . . . . 36
4.14.1. General . . . . . . . . . . . . . . . . . . . . . . 36
4.14.2. ERISA . . . . . . . . . . . . . . . . . . . . . . . 36
4.14.3. Environmental . . . . . . . . . . . . . . . . . . . 37
4.15. Further Actions . . . . . . . . . . . . . . . . . . . . . . . 37
4.15.1. Additional Collateral . . . . . . . . . . . . . . . 37
4.15.2. Further Assurances . . . . . . . . . . . . . . . . . 37
4.15.3. Estoppel Certificate . . . . . . . . . . . . . . . . 37
4.15.4. Waivers and Consents . . . . . . . . . . . . . . . . 38
4.15.5. Additional Material Contracts, Licenses and
Authorizations . . . . . . . . . . . . . . . . . . 38
4.16. Post Closing Items . . . . . . . . . . . . . . . . . . . . . . 38
4.17. Other Information . . . . . . . . . . . . . . . . . . . . . . 39
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ARTICLE 5: NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . 39
5.1. Capital Expenditures . . . . . . . . . . . . . . . . . . . . . 39
5.2. Additional Indebtedness . . . . . . . . . . . . . . . . . . . 40
5.3. Guaranties . . . . . . . . . . . . . . . . . . . . . . . . . . 41
5.4. Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
5.5. Liens and Encumbrances; Negative Pledge . . . . . . . . . . . 41
5.6. Transfer of Assets . . . . . . . . . . . . . . . . . . . . . . 43
5.7. Acquisitions and Investments . . . . . . . . . . . . . . . . . 43
5.8. New Ventures; Mergers . . . . . . . . . . . . . . . . . . . . 44
5.9. Transactions with Affiliates . . . . . . . . . . . . . . . . . 44
5.10. Distributions or Dividends . . . . . . . . . . . . . . . . . . 45
5.11. Payment of Subordinated Indebtedness . . . . . . . . . . . . . 45
5.12. Payment of Management Fees . . . . . . . . . . . . . . . . . . 45
5.13. Issuance of Additional Equity . . . . . . . . . . . . . . . . 45
5.14. Removal of Assets . . . . . . . . . . . . . . . . . . . . . . 45
5.15. Modifications to Organic Documents . . . . . . . . . . . . . . 46
5.16. Modifications to Material Relationships and Agreements . . . . 46
5.17. Margin Stock Restrictions; Other Federal Statutes . . . . . . 46
ARTICLE 6: ADDITIONAL COLLATERAL AND RIGHT OF SET OFF . . . . . . . . . . 47
6.1. Additional Collateral . . . . . . . . . . . . . . . . . . . . 47
6.2. Right of Set-Off . . . . . . . . . . . . . . . . . . . . . . . 47
6.3. Additional Rights . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE 7: DEFAULT AND REMEDIES . . . . . . . . . . . . . . . . . . . . . 47
7.1. Events of Default . . . . . . . . . . . . . . . . . . . . . . 47
7.1.1. Payment Obligations . . . . . . . . . . . . . . . . 47
7.1.2. Representations and Warranties . . . . . . . . . . . 47
7.1.3. Financial Covenants . . . . . . . . . . . . . . . . 48
7.1.4. Other Covenants in Loan Documents . . . . . . . . . 48
7.1.5. Default Under Other Agreements with Lenders . . . . 48
7.1.6. Default Under Material Agreements with Other
Parties . . . . . . . . . . . . . . . . . . . . . 48
7.1.7. Security Interest . . . . . . . . . . . . . . . . . 49
7.1.8. Change of Control . . . . . . . . . . . . . . . . . 49
7.1.9. Government Action . . . . . . . . . . . . . . . . . 49
7.1.10. Insolvency . . . . . . . . . . . . . . . . . . . . . 49
7.1.11. Loss or Revocation of Guaranty . . . . . . . . . . . 49
7.1.12. Additional Liabilities . . . . . . . . . . . . . . . 50
7.1.13. Material Adverse Change . . . . . . . . . . . . . . 50
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7.2. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
7.2.1. General; Acceleration . . . . . . . . . . . . . . . 50
7.2.2. Other . . . . . . . . . . . . . . . . . . . . . . . 50
ARTICLE 8: THE ADMINISTRATIVE AGENT . . . . . . . . . . . . . . . . . . . 50
8.1. Appointment, Authorization and Grant of Authority . . . . . . 50
8.2. Acceptance of Appointment . . . . . . . . . . . . . . . . . . 51
8.3. Administrative Agent's Relationship with Borrowers . . . . . . 51
8.4. Non-Reliance on Administrative Agent and Other Lenders . . . . 51
8.5. Reliance by Administrative Agent . . . . . . . . . . . . . . . 52
8.6. Delegation of Duties; Additional Reliance by Administrative
Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
8.7. Acting on Instructions of Lenders . . . . . . . . . . . . . . 52
8.8. Actions Upon Occurrence of Default or Event of Default . . . . 53
8.9. Administrative Agent's Rights as Lender in Individual
Capacity . . . . . . . . . . . . . . . . . . . . . . . . . 53
8.10. Advances By Administrative Agent . . . . . . . . . . . . . . . 53
8.11. Payments to Lenders . . . . . . . . . . . . . . . . . . . . . 54
8.12. Pro-Rata Sharing of Setoff Proceeds . . . . . . . . . . . . . 54
8.13. Limitation on Liability of Administrative Agent . . . . . . . 54
8.14. Indemnification . . . . . . . . . . . . . . . . . . . . . . . 55
8.15. Resignation; Successor Administrative Agent . . . . . . . . . 55
ARTICLE 9: DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 56
9.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . 56
9.2. Rules of Construction . . . . . . . . . . . . . . . . . . . . 68
9.2.1. Plural; Gender . . . . . . . . . . . . . . . . . . . 68
9.2.2. Financial and Accounting Terms . . . . . . . . . . . 68
ARTICLE 10: MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 68
10.1. Indemnification, Reliance and Assumption of Risk
Provisions . . . . . . . . . . . . . . . . . . . . . . . . . 68
10.2. Assignment; Disclosure of Information to Third Parties . . . . 69
10.3. Binding Effect and Governing Law . . . . . . . . . . . . . . . 70
10.4. No Waiver; Delay . . . . . . . . . . . . . . . . . . . . . . . 70
10.5. Modifications and Amendments . . . . . . . . . . . . . . . . . 71
10.6. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
10.7. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
10.8. Time of Day . . . . . . . . . . . . . . . . . . . . . . . . . 73
10.9. Relationship with Prior Agreements . . . . . . . . . . . . . . 73
10.10. Severability . . . . . . . . . . . . . . . . . . . . . . . . . 73
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10.11. Termination and Survival . . . . . . . . . . . . . . . . . . . 74
10.12. Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . 74
10.13. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 74
10.14. Conflict Provision . . . . . . . . . . . . . . . . . . . . . . 74
10.15. Waiver of Suretyship Defenses . . . . . . . . . . . . . . . . 74
10.16. Waiver of Liability . . . . . . . . . . . . . . . . . . . . . 74
10.17. Forum Selection; Consent to Jurisdiction . . . . . . . . . . . 75
10.18. Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . 76
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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
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CREDIT FACILITY AGREEMENT
THIS CREDIT FACILITY AGREEMENT (as defined in Article 9 hereof, along
with all other defined terms, this "Agreement") is made and effective as of
August 22, 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 9 hereof, CCC and each such
Subsidiary are sometimes referred to herein individually as a "Borrower" and
collectively as the "Borrowers"), AND EACH FINANCIAL INSTITUTION THAT FROM
TIME TO TIME IS A "LENDER" HEREUNDER (as more fully defined in Article 9
hereof, individually a "LENDER"; collectively, the "Lenders"), AND SIGNET
BANK (as more fully defined in Article 9 hereof, "Administrative Agent").
R E C I T A L S
- - - - - - - -
WHEREAS, Borrowers desire and have applied to Lenders for a credit
facility (to be administered by the Administrative Agent) 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
bases; AND
WHEREAS, Lenders are 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 Lender and Administrative Agent 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 each
Lender will lend funds to Borrowers on a senior secured basis from time to
tome 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 its Line of Credit Commitment Percentage (on a Pro Rata basis)
of the Available Credit Portion (as determined in accordance with Section 1.3
hereof).
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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 discretion, "Line of Credit Maturity Date").
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 (including, without
limitation, payment of lawful dividends and distributions
permitted under Section 5.10 hereof), AND (iv) for such other
purposes as specifically authorized hereunder or in writing by
Administrative Agent (in the sole and absolute discretion of
the Required Lenders).
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 Lenders with interest in accordance with the terms
hereof will be evidenced by one or more Line of Credit Notes (each, as
amended, restated, replaced, supplemented, extended or renewed hereafter,
"Line of Credit Note"; collectively, the "Line of Credit Notes") payable to
the order of each Lender in accordance with its Line of Credit Commitment
Percentage. The Line of Credit Notes will be due and payable in full on the
Line of Credit Maturity Date. The aggregate stated principal amount of the
Line of Credit Notes 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 Notes 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. Each
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 its Line of Credit Note. Such notations or
endorsements, if made without manifest error, will constitute PRIMA FACIA
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 of 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
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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.
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 the 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
Administrative Agent 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 Administrative Agent 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) OFC (I.E., Operating Cash Flow) for the four consecutive fiscal
quarter period ended on the last
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day of the most recent fiscal quarter reflected on the most recent quarterly
financial statements delivered to Administrative Agent 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 OR EQUAL TO 2.0 but LESS THAN 3.0 1.00% 2.00%
GREATER THAN OR EQUAL TO 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 Administrative Agent with
evidence of such amount in a form acceptable to Administrative Agent, THEN
Administrative Agent may use and rely on the amount of Funded Debt as
reflected on the most recent quarterly financial statements delivered to
Administrative Agent in accordance with Section 4.2 hereof. NOTWITHSTANDING
THE FOREGOING, if Administrative Agent does not timely receive acceptable
quarterly financial statements in accordance with Section 4.2 hereof, THEN
Administrative Agent (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 the Required Lenders) 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 PROVISION. 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 any 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. Such
Lender will give Administrative Agent notice of any such determination and
adjustment within a reasonable period of time thereafter. Upon receipt of any
such notice, Administrative Agent will provide a copy thereof to
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Borrowers, AND (upon Borrowers' written request through Administrative Agent)
such Lender will furnish a statement to Administrative Agent and Borrowers
setting forth the basis for adjusting such Adjusted LIBO Rate and the method
for determining the amount of such adjustment. A determination by any Lender
hereunder will be conclusive absent manifest error. If any Lender provides
any such notice of adjustment under this Subsection, THEN 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
Administrative Agent written notice thereof at any time within the first 10
Business Days after receipt of the notice of adjustment from such Lender
through Administrative Agent (notwithstanding the restriction hereunder
limiting such Rate Index changes to certain dates, BUT subject to the
requirement to pay actual costs incurred by such Lender as described in
Section 1.1.6.5.e hereof). Upon Administrative Agent'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, no Lender shall be entitled to adjust the
Adjusted LIBO Rate under this Clause "A" to account 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 any 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. Such Lender will give Administrative
Agent notice of any such event within a reasonable time thereafter. Upon
receipt of any such notice, Administrative Agent will provide a copy thereof
to Borrowers, AND (upon borrowers' written request through Administrative
Agent) such Lender will furnish a statement to Administrative Agent and
Borrowers setting forth the basis for such determination or reasonable
belief. A determination or belief by any 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 in any 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. Such Lender will give Administrative
Agent notice of any such event within a reasonable time thereafter. Upon
receipt of any such notice, Administrative Agent will provide a copy thereof
to Borrowers, AND (upon Borrowers' written request through Administrative
Agent) such Lender will furnish a statement to Administrative Agent and
Borrowers setting forth the basis for such determination or reasonable
belief. A determination or belief by any Lender hereunder will be conclusive
absent manifest error.
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d. ALTERNATIVE RATE. During the occurrence of an event
contemplated by either Clause "b" of this Subsection or Clause "c" of this
Subsection, each Lender's obligation hereunder to fund or maintain balances
under an Adjusted LIBO Rate will be suspended, and during such period, the
outstanding balances 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 to Administrative Agent (for the benefit of Lenders)
the aggregate indebtedness under the Line of Credit Facility (and other Loan
Document) in accordance with the following provisions:
1.1.6.1. PERIODIC INTEREST PAYMENT. 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 a 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 to Administrative Agent for the Benefit of Lenders (without
necessity of notice or demand by Administrative Agent).
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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 the Administrative Agent
otherwise consents with the concurrence of the Lenders) 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 transactions (as such taxes are
estimated and certified to Administrative Agent by a certified public
accountant or financial officer of such Borrower, in either instance,
acceptable to Administrative Agent).
d. IN GENERAL. Any prepayment under the Line of Credit
Facility mush 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 Administrative Agent for the benefit of Lenders all costs, losses and
expenses (including funding costs) that any arise or be incurred as a result
of or in connection with such prepayment, as such costs, losses and expenses
may be calculated by each such Lender. Upon written request to Lenders
(through Administrative Agent), each such Lender will furnish a statement
setting forth the basis for such calculation. A determination or calculation
by any 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
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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 each
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 its Term Loan Commitment Percentage (on a Pro Rata
basis) of the Term Loan Commitment (as determined in accordance with Section
1.3 hereof).
1.2.2. FACILITY MATURITY. The Term Loan Facility will mature on
October 1, 2001 (as may be extended from time to time in Lenders' 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 the sole and absolute discretion of
the Required Lenders).
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 Lenders with interest in accordance with the terms hereof
will be evidenced by one or more Term Loan Notes (each, as amended, restated,
replaced, supplemented, extended or renewed hereafter, "Term Loan Note";
collectively, the "Term Loan Notes") payable to the order of each Lender in
accordance with its Term Loan Commitment Percentage. The Term Loan Notes will
be due and payable in full on the Term Loan Maturity Date. The aggregate
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 Notes 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.
Each 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 its 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
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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 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 Administrative
Agent 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
Administrative Agent does not timely receive such written notification as to
any Portion, the Prime Rate will be
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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) OFC (I.E., Operating Cash Flow) for the four consecutive fiscal
quarter period ending on the last day of the most recent fiscal quarter
reflected on the most recent quarterly financial statements delivered to
Administrative Agent 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
OR EQUAL TO 2.0
but LESS THAN 3.0 1.00% 2.00%
GREATER THAN
OR EQUAL TO 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 Administrative Agent with
evidence of such amount in a form acceptable to Administrative Agent, THEN
Administrative Agent may use and rely on the amount of Funded Debt as
reflected on the most recent quarterly financial statements delivered to
Administrative Agent in accordance with Section 4.2 hereof. NOTWITHSTANDING
THE FOREGOING, if Administrative Agent does not timely receive acceptable
quarterly financial statements in accordance with Section 4.2 hereof, THEN
Administrative Agent (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 any Lender from time to time on a prospective
basis to account
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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. Such Lender will give Administrative Agent notice of any such
determination and adjustment within a reasonable period of time thereafter.
Upon receipt of any such notice, Administrative Agent will provide a copy
thereof to Borrowers, AND (upon Borrowers' written request through
Administrative Agent) such Lender will furnish a statement to Administrative
Agent and Borrowers setting forth the basis for adjusting such Adjusted LIBO
Rate and the method for determining the amount of such adjustment. A
determination by any Lender hereunder will be conclusive absent manifest error.
If any 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 Administrative Agent written notice thereof at any time within the
first 10 Business Days after receipt of the notice of adjustment from such
Lender through Administrative Agent (notwithstanding the restriction hereunder
limiting such Rate Index changes to certain dates, BUT subject to the
requirement to pay actual costs incurred by such Lender as described in Section
1.2.6.5.e hereof). Upon Administrative Agent'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, no Lender shall be entitled to adjust the Adjusted LIBO Rate under
this Clause "a" to account for such additional or increased costs to the extent
that such 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 any
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. Such Lender will give
Administrative Agent notice of any such event within a reasonable time
thereafter. Upon receipt of any such notice, Administrative Agent will provide
a copy thereof to Borrowers, AND (upon Borrowers' written request through
Administrative Agent) such Lender will furnish a statement to Administrative
Agent and Borrowers setting forth the basis for such determination or reasonable
belief. A determination or belief by any 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 any 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. Such Lender will give Administrative Agent notice of any such event
within a reasonable time thereafter. Upon receipt of any such notice,
Administrative Agent will provide a copy thereof to Borrowers, AND (upon
Borrowers' written
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request through Administrative Agent) such Lender will furnish a statement to
Administrative Agent and Borrowers setting forth the basis for such
determination or reasonable belief. A determination or belief by any 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, each 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 to Administrative Agent (for the benefit of
Lenders) 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.
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
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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 Administrative Agent 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 to Administrative Agent for the benefit of Lenders (without
necessity of notice or demand by Administrative Agent).
c. MANDATORY PREPAYMENTS -- EQUITY OFFERINGS AND
ASSET SALES. If any Borrower engages in an offering of its equity securities or
if any Borrowers 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 the Administrative Agent otherwise
consents with the concurrence of the Lenders) a prepayment must be immediately
made on the outstanding indebtedness under the Term Loan Facility. 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 transactions (as such taxes are
estimated and certified to Administrative Agent by a certified public accountant
or financial officer of such Borrower, in either instance, acceptable to
Administrative Agent).
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
Administrative Agent for the benefit of Lenders 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 each such Lender. Upon written request to Lenders (through
Administrative Agent), each such Lender will furnish a statement setting forth
the basis for such calculation. A determination or calculation by any Lender
hereunder will be conclusive absent manifest error.
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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 Commitment established
hereunder will be determined in accordance with the following schedule ("Term
Loan Commitment"):
Gross Proceeds Term Loan
of CCISG IPO Commitment
------------ ----------
LESS THAN $50 million $0.00
GREATER THAN OR EQUAL TO $50 million
but LESS THAN $70 million Up to $15 million
(at Borrowers' election)
GREATER THAN OR EQUAL TO $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 Lenders since the Closing Date under Section
1.1.6.5.c hereof, AND
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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 any 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
Administrative Agent 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 Lenders.
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
Administrative Agent written notice of such request (such notice, an "Advance
Request"). Each Advance Request, together with certain certifications, must be
substantially in the form of Exhibit 1.4.1 hereto or such other forms as
Administrative Agent 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 Administrative
Agent 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 Administrative Agent otherwise consents, an Advance Request will
not be effective if it is delivered to Administrative Agent 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), Administrative Agent will make each
Lender's Pro Rata Portion of each requested Advance (to the extent such funds
are received by Administrative Agent) available (in immediately available funds)
by crediting such amount to the Account with Administrative Agent (or by such
other means as Administrative Agent may consider reasonable). At the written
request and expense of Borrowers, Administrative Agent will wire transfer all or
any portion of an Advance in accordance with such written instructions therefor.
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1.4.3. AUTOMATIC LINE OF CREDIT ADVANCES. [Intentionally Blank]
1.4.4. OBLIGATION TO ADVANCE. No Lender (nor Administrative
Agent) will 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 each Lender
against any loss, cost or expense incurred by such 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 such Lender to fund the
Advance when such Advance, as a result of such failure, is not made on the
requested Settlement Date. Such Lender's calculation of such losses, costs
and expenses will be conclusive absent manifest error. NOTWITHSTANDING THE
FOREGOING, no Lender shall be entitled to indemnification under this Section
with respect to a loss, cost or expense to the extent that such Lender has
already been compensated for such loss, cost or expense pursuant to Section
4.13 hereof.
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
Administrative Agent 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 Administrative Agent set forth in Section 10.7
hereof or at such other place as Administrative Agent 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 Administrative Agent 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 Administrative Agent hereunder (for the benefit of Lenders) will
be applied by Administrative Agent and each 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
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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 Administrative Agent of any 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
each Lender (upon Administrative Agent'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
Administrative Agent.
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 Administrative Agent or any 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 Administrative Agent and each Lender receives payment of
the full amount of each such reduction. To the extent that any prohibited
amount is actually received by Administrative Agent or any Lender, such
amount will be automatically deemed to constitute a repayment of principal
indebtedness hereunder.
1.6. RELEASE OF SECURITY. Under (a) repayment to each Lender in full
(unconditionally and indefeasibly) of the entire indebtedness hereunder and
of all other amounts then due and owing to any Lender or Administrative Agent
under the Loan Documents, AND (b) the termination of the Loan Documents (an
all Facilities thereunder), AND (c) return and cancellation of any effective
letters of credit issued by any Lender or Administrative Agent for the
account of any Borrower (or delivery to Administrative Agent (for the ratable
benefit of Lenders) of cash or readily marketable collateral in an amount and
subject to a pledge agreement that are acceptable to Administrative Agent in
its sole discretion), THEN Administrative Agent and each 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 Administrative Agent (for its own account) 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.
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1.7.2. PERIODIC FACILITY FEE. Borrowers will also pay
Administrative Agent (for the ratable benefit of Lenders) 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 (adjusting by adding, for purpose of this
calculation, any amounts subtracted under Section 1.3.2.d hereof). Such fee
will be calculated by Administrative Agent on the basis of a 360-day year 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. With the prior consent the Lenders,
Administrative Agent or any Lender (or any Affiliate of Administrative Agent
or any Lender) may issue one or more letters of credit on behalf of or for
the account of any Borrower. 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.
ARTICLE 2: CONDITIONS PRECEDENT
2.1. CLOSING CONDITIONS. The obligation of Administrative Agent and
each Lender to execute and perform under this Agreement are subject to the
following conditions precedent (unless and except to the extent expressly
waived by such 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 such 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.
2.1.1.2. 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 such 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 such 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
the Required Lenders.
2.1.1.4. NO MATERIAL CHANGE. There must not have been
(in such Lender's reasonable opinion) any Material Adverse Change between
December 31, 1995 (I.E.,
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the "as of" date for the most recent audited financial statements delivered
to such Lender) and the Closing Date.
2.1.2. DOCUMENTS. Such 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 such 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 such Lender) to such 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 such 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 such Lender and its
counsel and dated as of the Closing Date opining as to such matters under
Delaware, Illinois and Virginia law as such Lender may request.
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. Such Lender must have received
any additional agreements, documents and certificates as such Lender or its
counsel may reasonably request.
2.2. CONDITIONS TO INITIAL ADVANCE. The obligation of Administrative
Agent and each 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 Administrative Agent in its sole and absolute
discretion, but with the concurrence of the Required Lenders):
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2.2.1. COMPLIANCE.
2.2.1.1. FEES AND EXPENSES. Each Borrower must have paid
(or made acceptable arrangements with Administrative Agent 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 Administrative Agent 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 Administrative Agent
(which disclosure will not constitute Lenders' 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 the Required Lenders (which disclosure will not
constitute Lenders' waiver or acceptance thereof).
2.2.1.4. NO MATERIAL CHANGE. There must not have been
(in Administrative Agent's reasonable opinion, but with concurrence of the
Required Lenders) any Material Adverse Change between the Closing Date and
such Settlement Date.
2.2.2. DOCUMENTS. Administrative Agent 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 Administrative Agent and Borrowers and, when
applicable, recorded or filed in the appropriate public office:
2.2.2.1. AMENDMENT TO CREDIT AGREEMENT. If
Administrative Agent 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 Administrative Agent 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 Administrative
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Agent (for the benefit of Lenders) dated as such Settlement Date that updates
the Schedules hereto as of such Settlement Date.
2.2.2.3. ADVANCE REQUEST. Administrative Agent 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(s) as
described in Section 1.1.4 hereof, AND the Term Loan Note(s) 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 Administrative Agent (for the
benefit of Lenders) granting 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 Administrative Agent 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 Administrative Agent (for the benefit of Lenders) 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 financing statements and
termination statements (each as filed), waivers and consents, and any other
documents or recordations required by applicable law or by Administrative Agent
to perfect such interests.
2.2.2.7. ASSIGNMENT OF MATERIAL CONTRACTS. One or more
separate assignments in favor of Administrative Agent (for the benefit of
Lenders) 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 Administrative Agent to perfect
such interests. With respect to obtaining waivers and consents of third parties
requested by Administrative Agent 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 (BY TOP LEVEL
BORROWER). A pledge and security agreement executed by CCC in favor of
Administrative Agent (for the benefit of Lenders) 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
Administrative Agent (for the benefit of
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Lenders), TOGETHER WITH the certificates therefor, powers executed in blank, and
all necessary financing statements.
2.2.2.9. PLEDGE AND SECURITY AGREEMENT (BY GUARANTOR). A
pledge and security agreement executed by CCC INFORMATION SERVICES GROUP INC. in
favor of Administrative Agent (for the benefit of Lenders) 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 under the Loan
Documents, 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 Administrative Agent (for the
benefit of Lenders) 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
Administrative Agent (for the benefit of Lenders) with respect to all of the
insurance coverages required under Section 4.8 hereof. Such proof of insurance
(unless Administrative Agent otherwise agrees) must be indicated pursuant to one
or more certificates on (a) an ACORD 27 from (3/93) for property-related
insurance coverages AND (b) a modified version of an ACORD 25-S form (3/93)
permitting Administrative Agent's 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 Administrative Agent) to
Administrative Agent (for the benefit of Lenders) 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 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 Administrative Agent (for the benefit of
Lenders) 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
Administrative Agent and each Lender 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 Administrative Agent may reasonably request.
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2.2.2.15. PAYOFF INSTRUCTIONS FOR PRIOR INDEBTEDNESS. A
letter from Borrowers to Administrative Agent, consistent with the requirements
of Section 1.1.3 hereof, Section 1.4 hereof and Section 2.2.1 hereof,
instructing Administrative Agent 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 Administrative
Agent with respect to consensual liens, tax liens, judgments
and bankruptcy, listing respectively (a) 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
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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 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. Administrative Agent must have
received any additional agreements, documents and certificates as Administrative
Agent, any Lender or counsel to Administrative Agent 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
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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 Administrative Agent and each 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 Administrative Agent in its
sole and absolute discretion, but with the concurrence of the Required Lenders):
2.3.1. ADVANCE REQUEST. Administrative Agent 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. Administrative Agent must have received any
additional documents, certificates and opinions as Administrative Agent, any
Lender or counsel to Administrative Agent 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 Administrative Agent 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.
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
Administrative Agent 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 Administrative Agent (which disclosure will not
constitute Lenders' 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,
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EXCEPT for such defaults disclosed in writing and in good faith reasonably
acceptable to the Required Lenders (which disclosure will not constitute
Lenders' waiver or acceptance thereof).
2.3.4.4. NO MATERIAL CHANGE. There must not have been (in
Administrative Agent's reasonable opinion, but with concurrence of the Required
Lenders) 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 applicable
law to execute, deliver and perform the obligations under the Loan Documents to
which it is a party. Except as disclosed on Schedule 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
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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 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
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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 Administrative Agent
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.
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
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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 Administrative Agent or any 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 Administrative Agent
or any 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 Administrative Agent or any 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 Administrative Agent or
any 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 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
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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. ENVIRONMENT 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 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.
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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).
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.
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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
(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:
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(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 each Lender and Administrative Agent a
complete set of unaudited consolidated internal monthly financial statements
similar in form and content with the form of monthly financial statements
attached as Exhibit 4.2.1 hereto (which form may be revised by Borrowers from
time to time to reflect changes made to the form of monthly financial
reporting provided by Borrowers to the executives and directors of CCC
Information Services Group, Inc.). TOGETHER WITH the monthly financial
statements, each Lender and Administrative Agent must also receive a
certificate executed by a financial officer of CCC as is acceptable to
Administrative Agent 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 each Lender and Administrative Agent 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 Administrative Agent in its sole and absolute
discretion). TOGETHER WITH the quarterly financial statements, each Lender
and Administrative Agent 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 Administrative Agent (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.
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 each Lender and Administrative Agent 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 Administrative Agent.
TOGETHER WITH the annual
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financial statements, each Lender and Administrative Agent 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 each Lender and Administrative Agent.
4.3.2. SEC FILINGS BY GUARANTOR. Within 15 Business Days of the
date that Guarantor makes any filing with the Securities Exchange Commission
(whether on Form 8-K, Form 10-K, Form 10-Q, or otherwise), Borrowers must
deliver a complete copy thereof to each Lender and Administrative Agent.
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 each Lender and Administrative Agent (or agents or nominees
thereof) 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
Administrative Agent 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 balance at any time within the preceding thirty (30)
calendar days), are listed on Schedule 4.7 hereto.
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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 Administrative Agent). 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
Administrative Agent). Each such policy must name Administrative Agent (for
the benefit of Lenders) as loss payee and as additional insured. Each such
policy must also require the insurer to furnish Administrative Agent with
written notice at least 25 calendar days prior to any termination of coverage
and must provide Administrative Agent (on behalf of Lenders) with the right
(but not the obligation) to cure any non-payment of premium. Upon
Administrative Agent's request, each Borrower will furnish Administrative
Agent with proof of such insurance (in form and substance acceptable to
Administrative Agent) and will cause Administrative Agent (for the benefit of
Lenders) 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 or access to 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 or access to such Borrower's other
material computer systems, material information databases and records, and
primary operations facility. Such contingency plan and any material changes
thereto must be in form and substance reasonably acceptable to Administrative
Agent. Upon request, each Borrower will provide Administrative Agent 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
Administrative Agent and each 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) Administrative Agent 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
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expected to have or cause a 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 Administrative Agent's reasonable judgement).
4.12. MANAGEMENT CHANGES. Borrowers will notify Administrative Agent 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 Administrative Agent and each Lender for all protective advances made
by Administrative Agent or any Lender under the Loan Documents. Borrower
(jointly and severally) will also pay or reimburse Administrative Agent and each
Lender for all other out-of-pocket costs and expenses (including, without
limitation, all reasonable attorneys' fees and disbursements) that
Administrative Agent or such 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)
Administrative Agent'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 Administrative Agent with a copy of nay
receipt or other evidence reflecting such payments if so requested in writing by
Administrative Agent. 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 Administrative
Agent 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 (without 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
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reasonably be expected to result in the imposition of a Lien on its properties
or assets. Each Borrower will notify Administrative Agent 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 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 be reasonably be expected to have or cause a
Material Adverse Effect. Each Borrower (a) will notify Administrative Agent
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 Administrative Agent 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 Administrative Agent's request and in form and substance
reasonably satisfactory to Administrative Agent, any of the following
instruments in favor of Administrative Agent (for the benefit of Lenders) 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 Administrative
Agent.
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 Administrative Agent'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 Administrative Agent 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 (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
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knowledge. Unless CCC otherwise consents (which consent will not be
unreasonably withheld delayed or conditioned), Administrative Agent must give
CCC at lease 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 Administrative Agent,
each Lender and, if any different, by the recipient thereof.
4.15.4. WAIVERS AND CONSENTS. Upon Administrative Agent's request,
each Borrower will use its best efforts to obtain and deliver (in form and
substance reasonably satisfactory to Administrative Agent) a waiver or consent
to the assignment to Administrative Agent (for the benefit of Lenders) 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 Administrative Agent 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 Administrative Agent 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. POST CLOSING ITEMS. Borrowers must accomplish, perform and (as
appropriate) deliver to Administrative Agent the following items on or before
the designated dates:
a. On or before October 1, 1996, Borrowers must use their best
efforts to obtain a landlord estoppel and consent in form and
substance reasonably acceptable to Administrative Agent with
respect to Borrowers' office space in Illinois, California and
Texas.
b. On or before December 1, 1996, Borrowers EITHER
(1) Must deliver to Administrative Agent a legal opinion of
Canadian counsel (in form and substance reasonably
acceptable to Administrative Agent) addressing (a) the due
authorization and enforceability of the Loan Documents by
and against Certified Collateral Corporation of Canada, Ltd.
("CCC Canada") and (b) the attachment and perfection of
Administrative Agent's lien for the benefit of Lenders on
the equity of CCC Canada and the other Collateral in which
CCC Canada has an interest (and must promptly thereafter
assist Administrative Agent in perfecting such liens in
accordance with such opinion), OR
(2) Execute an amendment to the Loan Documents (which shall be
negotiated in good faith by Borrowers, Administrative Agent
and the
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Required Lenders) that will either remove CCC Canada as a
Borrower or will appropriately restrict transactions with
CCC Canada.
The only effect of Borrowers' failure to satisfy the provisions
of either clause (1) or (2) above by December 1, 1996, is that
CCC Canada will be deemed automatically thereafter not to be a
Borrower. After the Closing Date and prior to satisfying the
requirements of this clause "b" of this Section, the operations
of CCC Canada will not materially change, and no other Borrower
will engage in any material transaction with CCC Canada.
c. On or before March 1, 1997, Borrowers must prepare and deliver to
Administrative Agent a written disaster recovery and contingency
plan in accordance with Section 4.8.2 hereof.
4.17. OTHER INFORMATION. Each Borrower will provide Administrative Agent
with any other documents and information (financial or otherwise) reasonably
requested by Administrative Agent 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 the Required Lenders otherwise consent 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) 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 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 Lenders hereunder; AND
b. Trade indebtedness and indebtedness in respect of endorsement 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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filed naming Administrative Agent (for the benefit of Lenders) 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
Administrative Agent 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.
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 Administrative Agent 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 STATUES. 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.
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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 Administrative
Agent and/or any Lender (whether matured or unmatured, and whether now existing
or hereafter incurred or created hereunder or otherwise), each Borrower hereby
grants Administrative Agent and each 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
Administrative Agent or such Lender or any Affiliate of Administrative Agent or
such Lender, OTHER THAN Excluded Assets.
6.2. RIGHT OF SET-OFF. Administrative Agent and each Lender are 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 Administrative Agent or any Lender (or any of Affiliate of
Administrative Agent or any Lender) 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
Administrative Agent or any Lender, irrespective of whether Administrative Agent
or such Lender shall have made any demand under the Loan Documents or other
indebtedness and although such obligations may be unmatured. Administrative
Agent and each Lender agree to notify Borrowers within a commercially reasonable
time after any such set-off and application made by Administrative Agent or such
Lender (as applicable); 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 Administrative Agent and each Lender
under this Article 6 are in addition to the other rights and remedies
(including, without limitation, other rights of set-off) that Administrative
Agent and Lenders 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 Administrative Agent or any Lender under any Loan
Document (including any Note) is not received by Administrative Agent 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
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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 Administrative Agent or any 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 LENDERS. 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
Administrative Agent or any Lender (or any Affiliate of Administrative Agent
or any Lender), UNLESS such default is waived by Lenders or cured to Lenders'
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 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) Administrative Agent 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
Required Lenders' 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 Administrative Agent.
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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 Administrative Agent (for the benefit of
Lenders).
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 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 Administrative Agent or Lenders), 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.
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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 Lenders for the
fiscal year ended immediately prior to the Closing Date, or from the condition
of Borrowers most recently disclosed to Lenders 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 Required Lenders, 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), Lenders 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 Lenders (hereunder or
otherwise, but including the unpaid balance of principal, interest and fees
hereunder) to be immediately due and payable. Upon any such declaration,
Lenders and Administrative Agent (for the benefit of Lenders) 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 the Required
Lenders or Administrative Agent (at the direction of Required Lenders) deem
expedient without regard to any equitable principles of marshalling or
otherwise.
7.2.2. OTHER. In addition to any rights granted hereunder or in
any other Loan Document, each Lender and Administrative Agent 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: THE ADMINISTRATIVE AGENT
8.1. APPOINTMENT, AUTHORIZATION AND GRANT OF AUTHORITY. Each Lender hereby
irrevocably designates and appoints Signet Bank as the Administrative Agent of
such Lender to act as specified in this Agreement and the other Loan Documents,
AND each such Lender hereby irrevocably authorizes Signet Bank (in its capacity
as Administrative Agent) to take actions on behalf of such Lender, to exercise
such powers and to perform such other duties as are expressly delegated to the
Administrative Agent by the terms of this Agreement and the other Loan
Documents, TOGETHER WITH all such other powers and authority as are reasonably
incidental thereto. Without limiting the generality of the foregoing, the
Administrative Agent (on behalf of each Lender) is authorized (a) to execute
each Loan Document (other than this Agreement, but including, without
limitation, all financing statements, continuation statements and other
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collateral agreements and documents) for and on behalf of each Lender, AND
(b) to accept each Loan Document and all other agreements, documents,
instruments, certificates and opinions reasonably required to implement the
intent of the parties to this Agreement, AND (c) to file and record all
financing statements, continuation statements and other collateral agreements
and documents, AND (d) to receive and deliver communications and
notifications to Lenders and to Borrowers, AND (e) to receive and distribute
payments and Advances between Lenders and Borrowers. The duties and
responsibilities of the Administrative Agent shall be ministerial and
administrative in nature. NOTWITHSTANDING any provision to the contrary in
any Loan Document, the Administrative Agent (a) shall not have any duties or
responsibilities OTHER THAN those expressly set forth in the Loan Documents
(which duties and responsibilities shall be subject to the limitations and
qualifications set forth in this Article), AND (b) shall not have any
fiduciary relationship with any Lender; AND no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into the
Loan Documents or otherwise exist against the Administrative Agent.
8.2. ACCEPTANCE OF APPOINTMENT. Signet Bank hereby accepts such
appointment and agrees to act as such Administrative Agent upon the express
terms and conditions (but subject to the limitations and qualifications) set
forth in this Article.
8.3. ADMINISTRATIVE AGENT'S RELATIONSHIP WITH BORROWERS. The provisions
of this Article are solely for the benefit of the Administrative Agent and
Lenders, AND no Borrower shall have any rights as a third party beneficiary
(or otherwise) under this Article. In performing its functions and duties
under the Loan Documents, the Administrative Agent shall act solely as an
agent of the Lenders, AND the Administrative Agent does not assume (and shall
not be deemed to have assumed) any obligation or relationship of agency or
trust with or for any Borrower.
8.4. NON-RELIANCE ON ADMINISTRATIVE AGENT AND OTHER LENDERS. Each Lender
expressly acknowledges and agrees (a) that the Administrative Agent (and its
directors, officers, employees, agents, attorneys-in-fact and Affiliates)
have not made any representations or warranties to such Lender AND (b) that
no act by the Administrative Agent hereinafter taken (including, without
limitation, any review of the affairs of any Borrower or other Obligor) shall
be deemed to constitute any representation or warranty by the Administrative
Agent to any Lender. Each Lender represents to the Administrative Agent that
it (independently and without any reliance upon the Administrative Agent or
any other Lender, and based upon such documents and information as it has
deemed necessary or appropriate) has made its own appraisal, investigation
and credit analysis of the business, assets, operations, properties,
financial and other condition, prospects and creditworthiness of each
Borrower and other Obligor and has made its own decision to make its Loans
hereunder and to enter into this Agreement. Each Lender also covenants and
represents that it (independently and without any reliance upon the
Administrative Agent or any other Lender, and based upon such documents and
information as it shall deem necessary or appropriate) will continue to make
its own credit analysis, appraisals and decisions in taking or not taking
action under this Agreement, and will continue to make such investigations as
it deems necessary or appropriate to inform itself as to the business,
assets, operations, properties, financial and other condition, prospects and
creditworthiness of each Borrower and other Obligor. Except as otherwise
expressly provided in the Loan Documents, the Administrative Agent shall not
have any duty or responsibility (a) to keep any
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Lender informed as to the performance or observance by any Borrower or other
Obligor of its obligations under the Loan Documents, OR (b) to inspect the
books or properties of any Borrower or other Obligor, OR (c) to provide any
Lender with any credit or other information concerning the business,
operations, assets, properties, financial and other condition, prospects or
creditworthiness of any Borrower which may come into the possession of the
Administrative Agent (or any of its officers, directors, employees, agents,
attorneys-in-fact or Affiliates). The Administrative Agent will make
reasonable efforts to furnish to the Lenders material information concerning
Borrowers of which the Administrative Agent has actual knowledge; HOWEVER, in
the absence of gross negligence, willful misconduct or fraud, the
Administrative Agent shall not be liable to any Lender for any failure to
relay or furnish to such Lender any such information.
8.5. RELIANCE BY ADMINISTRATIVE AGENT. The Administrative Agent shall be
entitled to rely and act (and shall be fully protected in relying and acting)
upon any note, writing, resolution, instrument, report, notice, consent,
certificate, affidavit, letter, request, telecopy or other electronic
facsimile transmission, telex, telegram, cable, teletype, electronic
transmission by modem, computer disk or any other message, statement, order
or other writing, conversation or communication believed by Administrative
Agent in good faith to be genuine and correct and to have been signed, sent
or made by the proper Person or Persons. The Administrative Agent shall not
be bound to ascertain or inquire as to the satisfaction, performance or
observance of any of the terms, provisions, covenants or conditions of or the
accuracy of any statements or representations in any Loan Document on the
part of any Borrower. The Administrative Agent may deem and treat the stated
payee of any Note as the holder thereof for all purposes under the Loan
Documents UNLESS AND UNTIL Administrative Agent has received and accepted an
assignment and assumption agreement relating thereto in form and substance
acceptable to the Administrative Agent.
8.6. DELEGATION OF DUTIES; ADDITIONAL RELIANCE BY ADMINISTRATIVE AGENT.
The Administrative Agent may consult with, employ and perform any of its
duties under the Loan Document by or through agents, attorneys-in-fact, legal
counsel, independent public accountants and other experts. The Administrative
Agent shall not be responsible for the negligence or misconduct of any such
Persons selected by Administrative Agent with reasonable care, AND the
Administrative Agent shall be fully protected in any action or inaction taken
by it in good faith in reliance upon or in accordance with the advice or
statements of legal counsel (including, without limitation, counsel to
Borrowers), independent accountants and other experts selected by
Administrative Agent.
8.7. ACTING ON INSTRUCTION OF LENDERS. The Administrative Agent shall
be entitled to act or refrain from acting (and shall be fully protected in
acting or refraining from acting) under the Loan Documents in accordance with
a written request of or written instructions from the Required Lenders. The
Administrative Agent shall also be entitled to refrain from acting (and shall
be fully protected in refraining from acting) under the Loan Documents UNLESS
Administrative Agent first (a) receives such advice or concurrence of the
Required Lenders as Administrative Agent deems appropriate OR (b) is
indemnified to its satisfaction by the Lenders against any and all liability
and expense which it may incur by reason of taking or continuing to take any
such action. Except as otherwise expressly stated in the Loan Documents, all
determinations by, requests by and other references to "Lenders" means the
Required Lenders,
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AND any requests or instructions by the Required Lenders (and any action or
inaction by Administrative Agent pursuant thereto) shall be binding upon all
the Lenders.
8.8. ACTIONS UPON OCCURRENCE OF DEFAULT OR EVENT OF DEFAULT. Each
Lender will use its best efforts to notify the Administrative Agent
immediately in writing upon becoming aware of the occurrence of any Default
or Event of Default. The Administrative Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Administrative Agent has received notice from a Lender
or a Borrower referring to this Agreement, describing such Default or Event
of Default, and stating that such notice is a "notice of default". If the
Administrative Agent receives any such notice of default, THEN the
Administrative Agent shall use its best efforts to give notice thereof to
each Lender as soon as reasonably practical. Upon the occurrence of any
Default or Event of Default, the Lenders shall promptly consult with one
another in an attempt to agree upon a mutually acceptable course of conduct.
In the absence of unanimous agreement among the Lenders as to the appropriate
course of conduct, the Administrative Agent shall exercise rights and take
such other action on behalf of all Lenders with respect to such Default or
Event of Default as directed by the Required Lenders. Unless and until the
Administrative Agent shall have received such directions from the Lenders
(or, as applicable, the Required Lenders), the Administrative Agent may (but
shall not be obligated to) take such action (or refrain from taking such
action) with respect to such Default or Event of Default as Administrative
Agent shall deem advisable in the best interests of the Lenders.
8.9. ADMINISTRATIVE AGENT'S RIGHTS AS LENDER IN INDIVIDUAL CAPACITY.
The Administrative Agent (and its Affiliates) may make loans to, may accept
deposits from, may issue letters of credit on behalf of, and may otherwise
generally engage (and continue to engage) in any kind of business with any
Borrower or other Obligor as though the Administrative Agent were not the
Administrative Agent under the Loan Documents. With respect to any Loans made
by Administrative Agent as a Lender hereunder and all obligations owing to it
as a Lender under the Loan Documents, the Administrative Agent shall have the
same rights, powers duties and obligations under the Loan Documents as any
other Lender and may exercise such rights, powers duties and obligations as
though it were not the Administrative Agent hereunder. To the extent that the
Administrative Agent is a Lender hereunder, the terms "Lender", "Lenders" and
"Required Lenders" shall include the Administrative Agent in its individual
capacity.
8.10. ADVANCES BY ADMINISTRATIVE AGENT. Unless the Administrative Agent
has been notified in writing by a Lender prior to the Settlement Date for any
Advance or Loan that such Lender will not make the amount constituting its
Pro Rata share of such Advance or Loan available to the Administrative Agent
on or prior to such applicable Settlement Date, THEN the Administrative Agent
may (but shall not be required to) assume that such Lender will make such
amount available to the Administrative Agent in immediately available funds
on or before such Settlement Date, AND in reliance upon such assumption, the
Administrative Agent may make available to Borrowers a corresponding amount
on behalf of such Lender. If the amount of such Pro Rata share is not made
available to the Administrative Agent in immediately available funds by a
Lender until after the applicable Settlement Date, THEN such Lender shall pay
to the Administrative Agent on demand and in immediately available funds an
amount equal to the result of the following equation (which shall be in
addition to the amount of such Lender's Pro
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Rata share of such Advance or Loan): the PRODUCT OF (a) the average (computed
for the period determined under clause (c) below) of the weighted average
interest rate for Federal Funds as determined by the Administrative Agent
during each day included in such period, MULTIPLIED BY (b) the amount of such
Lender's Pro Rata share of such Advance or Loan, MULTIPLIED BY (c) a fraction
(i) the numerator of which is the number of days that elapsed from and
including such Settlement Date to and including the date on which such
Lender's Pro Rata share of such Advance or Loan is actually received by the
Administrative Agent in immediately available funds AND (ii) the denominator
of which is 360. A statement from the Administrative Agent submitted to any
Lender with respect to any amounts owing under this Section shall be
conclusive (absent manifest error) as to the amount owed to the
Administrative Agent by such Lender. If such Lender's Pro Rata share is not
actually received by the Administrative Agent in immediately available funds
within three (3) Business Days after the applicable Settlement Date for such
Advance or Loan, THEN the Administrative Agent shall be entitled to recover
from such Lender, on demand, the amount of such Pro Rata share with interest
thereon for the entire such period since the Settlement Date at the highest
interest rate per annum (including the applicable Rate Margin) then
applicable under the Facilities.
8.11. PAYMENTS TO LENDERS. Promptly after receipt in immediately
available funds from Borrowers of any payment of principal, interest or any
fees or other amounts due to any Lender under the Loan Documents, the
Administrative Agent shall distribute to each Lender that Lender's Pro Rata
share of such funds so received.
8.12. PRO-RATA SHARING OF SETOFF PROCEEDS. Any sums obtained by the
Administrative Agent or any Lender from any Borrower or other Obligor by
reason of any exercise of a right of setoff or banker's lien shall be shared
Pro Rata among Lenders. NOTWITHSTANDING THE FOREGOING, neither the
Administrative Agent nor any Lender shall be required to so share with any
other Lender collections from any Borrower or other Obligor specifically
relating to (or the proceeds of any item of collateral that is not subject to
the Loan Documents) any other Indebtedness of such Borrower or other Obligor
to the Administrative Agent or such Lender.
8.13. LIMITATION ON LIABILITY OF ADMINISTRATIVE AGENT. The
Administrative Agent (and its directors, officers, employees, agents,
attorneys-in-fact and Affiliates) shall not be liable to any Lender for any
action taken or inaction by Administrative Agent or such Person under or in
connection with any Loan Document, EXCEPT to the extent of foreseeable actual
loses resulting directly and exclusively from Administrative Agent's own
gross negligence, willful misconduct or fraud. Without limiting the
generality of the foregoing, the Administrative Agent (and its directors,
officers, employees, agents, attorneys-in-fact and Affiliates) shall not be
liable, responsible or have any duty with respect to any of the following:
(a) the genuineness, execution, authorization, validity, effectiveness,
enforceability, collectibility, value or sufficiency of any Loan Document, OR
(b) the collectibility of any amount owed by any Obligor to any Lender, OR
(c) the accuracy, completeness or truthfulness of any recital, statement,
representation or warranty made to the Administrative Agent or to any Lender
in connection with any Loan Document or other certificate, affidavit, report,
opinion, financial statement, document or instrument executed or furnished
pursuant to or in connection with any Loan Document, OR (d) any failure of
any Person to receive any notice or communication due such Person under any
Loan Document or applicable law, OR (e) the assets, liabilities, financial
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condition, results of operations, business, prospects or creditworthiness of
any Borrower or other Obligor, OR (f) ascertaining or inquiring into the
satisfaction, observance or performance of any condition, covenant or
agreement in any Loan Document (including, without limitation, the use or
proceeds by any Borrower), OR (g) the inspection of any books, records or
properties of any Obligor, OR (h) the existence or possible existence of any
Default or Event of Default.
8.14. INDEMNIFICATION. To the extent that Borrowers do not actually
reimburse, indemnify or hold harmless Administrative Agent (in accordance
with Section 10.16 hereof), THEN each Lender hereby agrees on a Pro Rata
basis to indemnify and hold harmless the Administrative Agent (acting in its
capacity as Administrative Agent) from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
reasonable expenses or disbursements of any kind whatsoever that at any time
(including, without limitation, at any time following the payment of the
Obligations of Borrowers hereunder) may be imposed upon, incurred by or
asserted against the Administrative Agent in its capacity as such in any way
relating to or arising out of any Loan Document, or the transactions
contemplated hereby or any action or inaction taken by the Administrative
Agent under or in connection with any of the foregoing; PROVIDED that no
Lender shall be liable to the Administrative Agent for the payment of any
portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting
directly and exclusively from the gross negligence, willful misconduct or
fraud of the Administrative Agent. If any indemnity furnished to the
Administrative Agent for any purpose (in the opinion of the Administrative
Agent) shall be insufficient or become impaired, THEN the Administrative
Agent may require additional indemnity and cease (or not commence) to do the
acts indemnified against until such additional indemnity is furnished to the
satisfaction of the Administrative Agent. The agreement in this Section shall
survive the payment of all Advances, Loans, fees and other Obligations of
each Borrower arising hereunder.
8.15. RESIGNATION; SUCCESSOR ADMINISTRATIVE AGENT. The Administrative
Agent at any time may resign as the Administrative Agent under the Loan
Documents by giving the Lenders and Borrowers written notice thereof at least
20 calendar days prior to the effective date of such resignation. During such
notice period, the Required lenders shall appoint (from among the Lenders) a
successor Administrative Agent for the Lenders, SUBJECT TO the prior approval
by Borrowers and the consent of each Lender (such approval or consent, as the
case may be, not to be unreasonably withheld, delayed or conditioned). Upon
acceptance of such appointment by such successor agent, (a) such successor
agent shall succeed to the rights, powers and duties of the Administrative
Agent, AND (b) the term "Administrative Agent" shall include such successor
agent effective upon its appointment, AND (c) the resigning Administrative
Agent's rights, powers and duties as the Administrative Agent shall be
terminated, all without any other or further act or deed on the part of such
former Administrative Agent or any of the parties to the Loan Documents.
NOTWITHSTANDING THE FOREGOING, after the effectiveness of the resigning
Administrative Agent's resignation hereunder as the Administrative Agent, the
provisions of this Article shall continue to inure to its benefit as to any
actions taken or omitted to be taken by it while it was Administrative Agent
under the Loan Documents.
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ARTICLE 9: DEFINITIONS
9.1. DEFINITIONS. When used in this Agreement, the following terms
shall have the respective meanings set forth below:
9.1.1. "ACCOUNT" means, at any relevant time, the designated or
principal deposit account of Borrowers at Administrative Agent for purposes
of effecting transactions hereunder.
9.1.2. "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 any Lender is subject)
for determining the reserve requirements (including, without limitation, any
basic, supplemental, marginal or emergency reserves) for (a) such 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 such Lender used to fund loans.
9.1.3. "ADMINISTRATIVE AGENT" means Signet Bank or any successor,
assignee or other transferee of Administrative Agent.
9.1.4. "ADVANCE" means any advance of funds under any Facility.
9.1.5. "ADVANCE REQUEST" has the meaning set forth in
Section 1.4.1 hereof.
9.1.6. "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.
9.1.7. "AGENT" means Signet Bank, or any successor thereof, or any
assignee, or other transferee or Agent hereunder.
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9.1.8. "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.
9.1.9. "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 Administrative Agent.
9.1.10. "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.
9.1.11. "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.
9.1.12. "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 10.7 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.
9.1.13. "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.
9.1.14. "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.
9.1.15. "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).
9.1.16. "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 Required Lenders.
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9.1.17. "CODE" means the Internal Revenue Code of 1986, as amended.
9.1.18. "COLLATERAL" means the collateral security committed to
Lenders or Administrative Agent (for the benefit of Lenders) under the
Collateral Security Documents executed by any Borrower or any other Obligor
in favor of Lenders or Administrative Agent (for the benefit of Lenders)
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.
9.1.19. "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 Lenders or Administrative Agent (for the benefit of Lenders), all as
amended from time to time.
9.1.20. "COMMITMENT" means any commitment for credit pursuant to a
Facility established hereunder.
9.1.21. "COMMITMENT PERCENTAGE" means, with respect to each Lender,
that portion of the total Commitments as to which such Lender is obligated
(I.E., the aggregate of such Lender's Line of Credit Commitment Percentage
and Term Loan Commitment Percentage).
9.1.22. "CREDIT COMMITMENT FEE" means the fee due and payable to
Administrative Agent in accordance with Section 1.7.1 hereof.
9.1.23. "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.
9.1.24. "DEFAULT" means any event or circumstance that with the
giving of notice or the passage of time would constitute an Event of Default.
9.1.25. "DOLLAR" or "$" means U.S. dollars.
9.1.26. "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
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d. PLUS depreciation permitted under GAAP during such
period, AND
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.
9.1.27. "ENVIRONMENTAL CONTROL STATUTES" has the meaning set forth
in Section 3.16 hereof.
9.1.28. "EPA" means the United States Environmental Protection
Agency or any other entity that succeeds to its responsibilities and powers.
9.1.29. "ERISA" means the Employee Retirement Income Security Act
of 1974, as amended, and as implemented and interpreted.
9.1.30. "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.
9.1.31. "EVENT OF DEFAULT" means each of the events described in
Section 7.1 hereof.
9.1.32. "EXCLUDED ASSETS" means Customer Equipment and permissible
Capital Leases.
9.1.33. "FACILITY" means any credit facility established under
Article 1 hereof.
9.1.34. "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,
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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.
9.1.35. "FRB" means the Board of Governors of the Federal Reserve
System or any other entity or agency that succeeds to its responsibilities
and powers.
9.1.36. "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.
9.1.37. "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 Administrative Agent 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.
9.1.38. "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).
9.1.39. "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
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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 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.
9.1.40. "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.
9.1.41. "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.
9.1.42. "LENDER" means, individually and collectively, the following:
a. Signet Bank or any successor, assignee, participant or
other transferee of such Lender hereunder, AND
b. Any other entity subsequently added hereto as a Lender
hereunder, or any successor, assignee, participant or
other transferee thereof.
9.1.43. "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).
9.1.44. "LIBO RATE" has the meaning set forth in the definition of
"Adjusted LIBO Rate".
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9.1.45. "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.
9.1.46. "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 performance of an
obligation or other priority or preferential arrangement of any kind or
nature whatsoever.
9.1.47. "LINE OF CREDIT COMMITMENT" means the Commitment established
pursuant to Section 1.1. hereof and Section 1.3 hereof.
9.1.48. "LINE OF CREDIT COMMITMENT PERCENTAGE" means, with respect
to each Lender, that portion of the total Line of Credit Commitment as to
which such Lender is obligated.
9.1.49. "LINE OF CREDIT FACILITY" means the line of credit Facility
as described in Article 1 hereof.
9.1.50. "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 Lenders' sole
and absolute discretion.
9.1.51. "LINE OF CREDIT NOTE" means that certain Note (or Notes)
payable to the order of each Lender (for its Line of Credit Commitment
Percentage) 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.
9.1.52. "LOAN" means any loan or Advance of funds under any Facility
as well as any other credit extended by Administrative Agent or any Lender
to any Borrower under this Agreement.
9.1.53. "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.
9.1.54. "LOCAL AUTHORITIES" means, individually and collectively,
the state and local governmental authorities that govern the activities of
any Borrower.
9.1.55. "MARGIN REGULATION" has the meaning set forth in Section
3.17 hereof.
9.1.56. "MARGIN STOCK" has the meaning set forth in Section 3.17
hereof.
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9.1.57. "MATERIAL ADVERSE CHANGE" means any change that has or causes
a Material Adverse Effect.
9.1.58. "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
c. Any right, remedy or benefit of Administrative Agent
or any Lender under any Loan Document in any way
relating to (i) Administrative Agent's or any Lender's
ability or collect or entitlement to receive (or be
reimbursed for) payments of principal, interest, fees,
costs or expenses under the Loan Documents or (ii)
Administrative Agent's or any Lender's protection of,
realization upon or other rights or interest in any
Collateral.
9.1.59. "NOTES" means, individually and collectively, each promissory
note delivered to Administrative Agent or any Lender pursuant to any Loan
Document and evidencing any indebtedness to Administrative Agent or any
Lender under the Loan Documents (each as may be amended, modified,
supplemented, restated, extended, renewed or replaced from time to time).
9.1.60. "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 Administrative Agent or any Lender (or any Affiliate of
Administrative Agent or any Lender).
9.1.61. "OBLIGOR" means any Borrower or any other Person (other than
Administrative Agent and Lenders) obligated under any Loan Document.
9.1.62. "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 a period, AND
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b. PLUS reasonable non-recurring acquisition expenses
acceptable to or approved by the Required Lenders during
such period (which acceptance or approval by such Lenders
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
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.
9.1.63. "OFFICIAL BODY" means any federal, state, local, or other
government of 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.
9.1.64. "OPERATING AGREEMENT" means any consulting agreement,
management agreement, employment agreement, cost allocation agreement, or
other similar agreement relating to the operations of any Borrower.
9.1.65. "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
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arrangements relating to the control or management of any such entity
(whether existing as a corporation, a partnership, an LLC or otherwise).
9.1.66. "PBGC" means the Pension Benefits Guaranty Corporation or
any other entity that succeeds to its responsibilities and powers under ERISA.
9.1.67. "PERIODIC FACILITY FEE" means the fee due and payable to
Administrative Agent (for the benefit of Lenders) in accordance with Section
1.7.2 hereof.
9.1.68. "PERMITTED INDEBTEDNESS" has the meaning set forth in
Section 5.2 hereof.
9.1.69. "PERMITTED INVESTMENTS" has the meaning set forth in Section
5.7 hereof.
9.1.70. "PERMITTED LIENS" has the meaning set forth in Section 5.5
hereof.
9.1.71. "PERMITTED LOANS" has the meaning set forth in Section 5.4
hereof.
9.1.72. "PERMITTED TRANSFERS" has the meaning set forth in
Section 5.6 hereof.
9.1.73. "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.
9.1.74. "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.
9.1.75. "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 Administrative Agent (for the benefit of Lenders) pursuant to the
Loan Documents.
9.1.76. "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.
9.1.77. "PRIME RATE" means the rate of interest per annum publicly
announced by Administrative Agent form 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
Administrative Agent's best or lowest rate available.
9.1.78. "PRO RATA" means from or to each Lender in proportion to its
Commitment Percentage.
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9.1.79. "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).
9.1.80. "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).
9.1.81. "REQUIRED LENDER" means Lenders holding at least 66% of the
aggregate outstanding principal amount of the Loans (or, if no Loans at the
time of such determination are outstanding, then Lenders obligated with
respect to at least 66% of the Commitments).
9.1.82. "RESERVE PERCENTAGE" has the meaning set forth in the
definition of "Adjusted LIBO Rate".
9.1.83. "SEC" means the Securities and Exchange Commission or any
other entity that succeeds to its responsibilities and powers.
9.1.84. "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.
9.1.85. "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 Administrative Agent (for
the benefit of Lenders) 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.
9.1.86. "SETTLEMENT DATE" means, with respect to any Advance
hereunder, the date on which funds are advanced by Administrative Agent (on
behalf of Lenders).
9.1.87. "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 10.7 hereof, and which is the
Administrative Agent and a Lender hereunder at the time of execution hereof.
9.1.88. "SUBORDINATED INDEBTEDNESS" means all indebtedness and
monetary obligations of Borrowers (other than indebtedness in favor of
Lenders or indebtedness and obligations expressly excluded therefrom by the
Required Lenders), including, without limitation, all indebtedness treated or
defined as "Subordinated Indebtedness" under any separate Subordination
Agreement by and among any Borrower, Administrative Agent (on behalf of
Lenders) and another Person. NOTWITHSTANDING THE FOREGOING, the term
"Subordinated Indebtedness" (unless the Required Lenders 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
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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.
9.1.89. "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.
9.1.90. "TERM LOAN COMMITMENT" means the Commitment established
pursuant to Section 1.2 hereof and Section 1.3 hereof.
9.1.91. "TERM LOAN COMMITMENT PERCENTAGE" means, with respect to each
Lender, that portion of the total Term Loan Commitment as to which such
Lender is obligated.
9.1.92. "TERM LOAN FACILITY" means the term loan Facility as described
in Article 1 hereof.
9.1.93. "TERM LOAN MATURITY DATE" has the meaning set forth in Section
1.2.2 hereof, as may be extended from time to time in Lenders' sole and
absolute discretion.
9.1.94. "TERM LOAN NOTE" means that certain Note (or Notes) payable to
the order of each Lender (for its Line of Credit Commitment Percentage)
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.
9.1.95. "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 (other than Redemption Dividends
thereunder) 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, Total Charges shall also include
the Total Charges of joint ventures that are consolidated with Borrowers for
financial reporting purposes in accordance with GAAP.
9.1.96. "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).
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9.1.97. "UCC" means the Uniform Commercial Code as in effect in the
applicable jurisdiction.
9.2. RULES OF CONSTRUCTION.
9.2.1. 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.
9.2.2. 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 10: MISCELLANEOUS
10.1. 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 Administrative Agent and each
Lender (and the directors, officers, employees, agents and Affiliates
Administrative Agent and each Lender) 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 Administrative Agent and each 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 Administrative Agent or any Lender to liquidate any Collateral in
the event of any Event of Default and/or any attempt by Administrative Agent
or any 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 Administrative Agent or
Lenders hereunder and all other matters and transactions in connection
therewith, each Borrower (jointly and severally) hereby irrevocably
authorizes Administrative Agent and each 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, Administrative Agent and each Lender each acknowledges that the
transmissions of any such instruction, request, confirmation, order or other
communication involves the possibility of errors, omissions, mistakes and
discrepancies, and each Borrower, Administrative Agent and each 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
Administrative Agent and each Lender from any and all risk of loss and
responsibility for, and agrees to indemnify, reimburse on demand and hold
Administrative Agent and each Lender harmless from -- any and all claims,
actions, damages, losses, liability and expenses by reason
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of or in any way related to (a) Administrative Agent's or any 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 Administrative Agent's or any
Lender's own gross negligence, fraud or willful misconduct. Each Borrower's
obligations provided for in this Section 10.1 will survive any termination of
this Agreement, and the repayment of the outstanding balances hereunder.
10.2. ASSIGNMENT; DISCLOSURE OF INFORMATION TO THIRD PARTIES.
10.2.1. ASSIGNMENTS. No Loan Document may be assigned (in whole or
in part) by any Borrower without the prior written consent of Lenders.
Notwithstanding any other provision of any Loan Document, without receiving
any consent of any Borrower, each 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 such 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 any Lender to syndicate, participate or
otherwise transfer or assign all or any portion of its interest in excess of
75%. Administrative Agent 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 Administrative Agent or any Lender or any participant, transferee or
assignee thereof. Upon execution and delivery of an appropriate instrument
between any such participant, transferee or assignee and such assigning
Lender, at such 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 Administrative
Agent'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.
10.2.2. DISCLOSURE OF INFORMATION. Administrative Agent and each
Lender will employ reasonable procedures to treat as confidential all
written, non-public information delivered to Administrative Agent or such
Lender (as applicable) 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
Administrative Agent or any Lender, such procedures will be at least as
protective of such confidential information of Borrowers as those established
procedures of Administrative Agent or such Lender (respectively) applicable
to and known by such employee for protecting Administrative Agent's or such
Lender's own confidential information. NOTWITHSTANDING THE
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FOREGOING, Administrative Agent and each Lender may furnish or disclose any
information concerning any Borrower (or any of its properties or operations)
in Administrative Agent's or such 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, Administrative Agent and each Lender
may also furnish or disclose any such information (a) to any federal or state
regulator of Administrative Agent or such Lender, AND (b) to Administrative
Agent's or such 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. Administrative Agent and each Lender may also
include operational and performance information and data relating to any
Borrower in compilations, reports and data bases assembled by Administrative
Agent or such Lender (or Affiliates of Administrative Agent or such Lender)
and used to conduct, support, assist in and validate portfolio, industry and
credit analysis; PROVIDED, HOWEVER, that neither Administrative Agent nor
any Lender may 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).
10.3. 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).
10.4. NO WAIVER; DELAY. To be effective, any waiver by Lenders must be
expressed in a writing executed by Administrative Agent with the approval of
the Required Lenders (OTHER THAN Defaults under Section 7.1.1. hereof
(payment-related Defaults) or Section 7.1.3. hereof (Financial Covenant
Defaults), which must be approved by each Lender). Once an Event of Default
occurs hereunder, such Event of Default will continue to exist until
expressly waived by Lenders (in their sole and absolute discretion). If
Administrative Agent or any Lender waives any power, right or remedy arising
hereunder or under any applicable law, THEN 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 Administrative Agent or any 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 Administrative Agent or any 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, neither Administrative Agent nor any Lender will 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
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provided herein are cumulative and not exclusive of each other, the remedies
provided by law, and the remedies provided by the other Loan Documents.
10.5. MODIFICATIONS AND AMENDMENTS. Except as otherwise expressly
provided in this Agreement, no modification or amendment to any Loan Document
will be effective unless made in a writing signed by appropriate officers of
Administrative Agent (with the consent of the Required Lenders) and each
Borrower that is a party to such Loan Document. NOTWITHSTANDING THE
FOREGOING, to the extent that any such modification or amendment attempts to
implement any of the following, THEN such amendment or modification must
approved by all Lenders:
a. Increase the Commitments or the Commitment Percentage of
any Lender, OR
b. Add any additional Rate Index, alter any threshold for any
Rate Margin category, reduce the amount of any Rate Margin,
or otherwise alter any provision that effectively reduces
that interest rate applicable to the Loans, OR
c. Reduce the amount of any fees due to Lenders under any Loan
Document (other than fees payable to the Administrative
Agent for its own account), OR
d. Reduce the amount of any payment (whether for principal,
interest or any fee, other than a fee payable to the
Administrative Agent for its own account), OR
e. Postpone or extend the Maturity Date for any Facility or
any scheduled payment date (whether for principal, interest
or any fee, other than a fee payable to the Administrative
Agent for its own account), OR
f. Modify the definition of "Pro Rata" or "Required Lenders"
or otherwise change the number or percentage of Lenders
that are required to take or approve (or direct the
Administrative Agent to take) any action under the Loan
Documents, OR
g. Modify the thresholds or time periods for any of the
Financial Covenants under Section 4.1 hereof or modify any
of the component definitions used in calculating such
Financial Covenants, OR
h. Release or discharge any Borrower as a "Borrower" under the
Loan Documents or permit any Borrower to assign to another
Person any of its rights or obligations under the Loan
Documents, OR
i. Release all or any part of any guaranty of any part of the
Indebtedness under the Loan Documents or any security
interest in or pledge of any Collateral (except as
otherwise already expressly authorized under the Loan
Documents), OR
j. Amend this Section.
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In addition, no provision of any Loan Document relating to the rights or
obligations of the Administrative Agent may be modified or amended without
the consent of the Administrative Agent.
10.6. 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.
10.7. 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: Treasurer
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 Signet Bank
ADMINISTRATIVE AGENT: 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
IF TO ANY LENDER: Such Lender's address and facsimile set
forth on the signature pages hereof
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 Administrative
Agent or any Lender under any Loan Document, each Borrower hereby irrevocably
appoints CCC's President as its agent to whom Administrative Agent and
Lenders may give and from whom Administrative Agent and Lenders may receive
all such notices and communications.
10.8. TIME OF DAY. All time of day restrictions imposed herein shall be
calculated using Eastern Time.
10.9. 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, Administrative Agent and any Lender
concerning the terms and conditions of this credit arrangement (other than the
Fee Agreement).
10.10. 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.
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10.11. 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 10.1 hereof, this Agreement will terminate upon
satisfaction of each of the following events: (i) payment to Administrative
Agent and each 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 Administrative Agent or any Lender for the account of any Borrower (or
delivery to Administrative Agent of cash or readily marketable collateral in
an amount and subject to a pledge agreement that are acceptable to
Administrative Agent in its sole and absolute discretion). This Agreement
(and Administrative Agent's and each Lender's obligations hereunder) will
also terminate if the conditions precedent under Section 2.2 hereof are not
satisfied or waived by Lenders on or before October 31, 1996.
10.12. 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 Administrative Agent or any Lender in respect of any Loan
Document is rescinded or must otherwise be restored or returned by
Administrative Agent or such 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.
10.13. 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.
10.14. 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 Administrative Agent or any Lender), the terms and conditions of
this Agreement shall govern.
10.15. 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 Administrative Agent or any 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 Administrative Agent or any
Lender.
10.16. WAIVER OF LIABILITY. EACH BORROWER (a) AGREES THAT NEITHER
ADMINISTRATIVE AGENT NOR ANY LENDER (NOR ANY DIRECTORS, OFFICERS, EMPLOYEES
AND AGENTS OF ADMINISTRATIVE AGENT OR ANY LENDER) SHALL HAVE ANY LIABILITY TO
ANY BORROWER (WHETHER SOUNDING IN TORT,
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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
ADMINISTRATIVE AGENT'S OR SUCH LENDER'S OWN GROSS NEGLIGENCE, WILLFUL
MISCONDUCT OR FRAUD AND (b) WAIVES, RELEASES AND AGREES NOT TO SUE UPON ANY
CLAIM AGAINST ADMINISTRATIVE AGENT OR ANY LENDER (OR THEIR DIRECTORS,
OFFICERS, EMPLOYEES OR AGENTS) WHETHER SOUNDING IN TORT, CONTRACT OR
OTHERWISE, EXCEPT FOR CLAIMS FOR FORESEEABLE ACTUAL LOSSES RESULTING DIRECTLY
AND EXCLUSIVELY FROM ADMINISTRATIVE AGENT'S OR SUCH LENDER'S OWN GROSS
NEGLIGENCE, WILLFUL 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 ADMINISTRATIVE AGENT OR
ANY LENDER IS ADJUDGED TO BE GUILTY OF CRIMINAL CONDUCT THAT CAUSED SUCH
DAMAGES, THEN NEITHER ADMINISTRATIVE AGENT NOR ANY LENDER (NOR ANY DIRECTORS,
OFFICERS, EMPLOYEES AND AGENTS OF ADMINISTRATIVE AGENT OR ANY LENDER) SHALL
HAVE ANY 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 ADMINISTRATIVE
AGENT OR ANY 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.
10.17. 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 ADMINISTRATIVE AGENT OR ANY 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
ADMINISTRATIVE AGENT'S OR SUCH LENDER'S OPTION) IN THE COURTS OF ANY OTHER
JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND OR WHERE
ADMINISTRATIVE AGENT OR SUCH 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
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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 ADMINISTRATIVE AGENT OR ANY 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 NEITHER ADMINISTRATIVE AGENT NOR ANY LENDER
WILL CONTEST OR OBJECT TO A TIMELY MOTION BY BORROWERS TO TRANSFER SUCH
ACTION TO SUCH FEDERAL COURT PROVIDED THAT SUCH ACTION CAN AT THE TIME OF
SUCH TRANSFER BE MAINTAINED WITH RESPECT TO ALL PARTIES AND ALL CAUSES OF
ACTION IDENTIFIED BY ADMINISTRATIVE AGENT OR SUCH LENDER.
10.18. WAIVER OF JURY TRIAL. ADMINISTRATIVE AGENT, EACH 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 ADMINISTRATIVE AGENT, ANY 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 ADMINISTRATIVE AGENT AND EACH 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: /s/ Gerald P. Kenney By: /s/ Leonard Ciarrocchi
----------------------- ---------------------------
Name: Gerald P. Kenney Name: Leonard Ciarrocchi
---------------- --------------------
Title: Secretary Title: CEO
---------------- --------------------
[CORPORATE SEAL]
ATTEST: CCC VEHICLE DAMAGE
ESTIMATORS, INC.
By: /s/ Gerald P. Kenney By: /s/ Michael J. D'Onofro
----------------------- ---------------------------
Name: Gerald P. Kenney Name: Michael J. D'Onofro
---------------- --------------------
Title: Secretary Title: Treasurer
---------------- --------------------
[CORPORATE SEAL]
ATTEST: CERTIFIED COLLATERAL
CORPORATION OF CANADA, LTD.
By: /s/ Gerald P. Kenney By: /s/ Michael J. D'Onofro
----------------------- ---------------------------
Name: Gerald P. Kenney Name: Michael J. D'Onofro
---------------- --------------------
Title: Secretary Title: Treasurer
---------------- --------------------
[CORPORATE SEAL]
<PAGE>
WITNESS: SIGNET BANK (AS ADMINISTRATIVE AGENT)
By: /s/ Phyllis T. Fergonon By: /s/ Bryan J. Mitchell
-------------------------- ----------------------------------
Bryan J. Mitchell, Sr. Vice President
WITNESS: SIGNET BANK (AS LENDER)
By: /s/ Phyllis T. Fergonon By: /s/ Bryan J. Mitchell
-------------------------- ----------------------------------
Bryan J. Mitchell, Sr. Vice President
Address: 7799 Leesburg Pike
Suite 500
Falls Church, Virginia 22043
Facsimile: (703) 506-9712
COMMITMENT PERCENTAGES:
Line of Credit: %
---
Term Loan: %
---
<PAGE>
EXHIBIT 10.3
CCC INFORMATION SERVICES GROUP INC.
STOCK OPTION PLAN
1. PURPOSE
The purpose of this Stock Option Plan (the "Plan") is to promote the growth
and general prosperity of CCC Information Services Group Inc., a Delaware
corporation ("CCCISG") and its direct and indirect subsidiaries, including CCC
Information Services Inc., a Delaware corporation ("CCC"), and subsidiaries of
CCC (collectively the "CCCISG Companies"). Under the Plan, certain employees of
the CCCISG Companies will be eligible to receive grants of options to purchase
shares of CCCISG common stock as an incentive to contribute to the success of
the CCCISG Companies.
2. DEFINITIONS
Unless the context clearly indicates otherwise, the following terms, when
used in the Plan, shall have the meanings set forth in this Section 2. Wherever
used in the Plan, words in the masculine gender shall be deemed to refer to
females as well as males, and unless the context clearly indicates otherwise,
words in the singular shall be deemed to refer also to the plural.
(a) "Commencement Date" shall mean the date on which an Option is granted.
(b) "Committee" means the Compensation Committee of the Board of Directors
of CCCISG or such other committee as the Board by resolution shall designate.
The Committee shall not include members who are officers or otherwise employed
by CCCISG, or its subsidiaries.
(c) "Common Stock" means the $.10 par value per share common stock of
CCCISG.
(d) "Disabled" shall have the following meaning: An individual is
permanently and totally disabled if he is unable to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment which can be expected to result in death or which has lasted or can
be expected to last for a continuous period of not less than 12 months. An
individual shall not be considered to be permanently and totally disabled unless
he furnishes proof of the existence thereof in such form and manner, and at such
times, as the Committee may require. The Committee shall have the final decision
in determining if a party is disabled as defined herein.
(e) "Employee" means an employee of at least one of the CCCISG Companies.
(f) "Exercise Price" means either, as the context requires, the price per
Share (not less than the greater of the stock price as quoted on NASDAQ National
Market, or such other public exchange or market as designated by the Committee,
as of the close of business on the Commencement Date or the fair market value as
of the Commencement Date as determined by the Committee) that shall be tendered
to CCCISG upon exercise of the Option, or the aggregate price that shall be
tendered to CCCISG in payment for Shares upon exercise of an Option or a portion
of the Option.
(g) "Grantee" means an individual to whom an Option is granted under the
Plan.
(h) "Option" means a right granted to purchase Shares under the Plan.
(i) "Stock Option Agreement" means the written instrument embodying an
agreement between CCCISG and a Grantee, as provided in the Plan, evidencing the
grant of an Option to the Grantee.
(j) "Plan" means the CCC Information Services Group Inc. Stock Option Plan
as set forth herein, as may be amended from time to time.
A-1
<PAGE>
(k) "Shares" means shares of Common Stock.
3. ADMINISTRATION
The Plan shall be administered by the Committee. Subject to the provisions
of the Plan, the Committee shall have authority to do everything necessary or
appropriate to administer the Plan including, without limitation, interpreting
the Plan. The Committee may take action only upon the agreement of a majority of
its members then in office. Any action taken by the Committee through a written
instrument signed by a majority of its members then in office shall be effective
as though taken at a meeting duly called and held. All decisions,
determinations, and interpretations of the Committee shall be final and binding
on all concerned.
4. SHARES OF COMMON STOCK ELIGIBLE FOR ISSUANCE UNDER THE PLAN
Subject to the provisions of Section 9, the aggregate number of Shares that
may be issued upon the exercise of Options granted under the Plan shall be
675,800 Shares. Such Shares may be either authorized, but unissued Shares, or
Shares issued and thereafter reacquired by CCCISG.
5. ELIGIBILITY
Options shall be granted for Shares in the amounts, at the Exercise Price,
and to the Employees as determined in the sole discretion of the Committee.
Subject to all of the other terms and conditions hereinafter set forth, an
Option may be exercised by Grantee after the respective dates of the grant, but
no later than five (5) years from the date of the Option Agreement, namely:
(a) One (1) year after the Commencement Date the Option may be exercised in
respect of twenty five percent (25%) of the aggregate number of shares granted.
(b) On or after the second (2nd) anniversary of the Commencement Date, the
Option may be exercised in respect of an additional twenty five percent (25%) of
the aggregate number of shares granted. Each succeeding anniversary date
thereafter the option may be exercised in respect of an additional twenty five
percent (25%) of the aggregate number of shares granted until all options have
been fully vested.
(c) If the Grantee's employment with the CCCISG Companies terminates for any
reason, the Option shall not become exercisable with respect to any additional
shares that the Grantee would have been entitled to purchase upon the occurrence
of any anniversary date subsequent to the date of termination.
(d) The maximum number of Options a Grantee can receive in any calendar year
is 75,000 Options.
6. EFFECTIVE DATE AND DURATION OF THE PLAN
The Plan shall become effective upon its adoption by resolution of the
majority of the Board of Directors of CCCISG entitled to vote and shall continue
in full force and effect until terminated. Such termination shall be no later
than the day that the last option available to be exercised hereunder expires
unless sooner terminated pursuant to Section 12 hereof.
7. DURATION OF OPTION
(a) The proper officers of CCCISG shall execute and deliver to each Grantee
a written Stock Option Agreement which shall be executed by the Grantee and
which shall state the Commencement Date, the total number of Shares subject to
the Option, the Exercise Price for such Shares, any provisions relating to
vesting of the Option and such other provisions as the Committee in each
instance shall deem appropriate and not inconsistent with any of the provisions
of the Plan.
(b) The maximum term of each Option granted under the Plan shall be the term
set forth in the Stock Option Agreement which shall not exceed 10 years from the
Commencement Date set forth in the
A-2
<PAGE>
Stock Option Agreement. Notwithstanding the maximum 10-year term, all Options
granted under the Plan shall expire sooner as follows:
(i) If the employment of a Grantee is terminated for any reason other
than as specified in subparagraphs (ii), (iii) or (iv) hereof, then the
Option will expire on the thirtieth (30th) day after the date of such
termination.
(ii) Subject to subparagraphs (iii) and (iv) hereof, if the Grantee
retires from the CCCISG Companies at an age at which such Grantee would be
eligible to receive benefits under the Federal Social Security Act or
retires with the consent of the Board of Directors of CCCISG, the Option
will expire three (3) months after the date of termination.
(iii) Subject to subparagraph (iv) hereof, if a Grantee becomes Disabled
while serving in his capacity as an Employee, the Option will expire twelve
(12) months after the date of termination of the Employee's employment as
the result of having become Disabled.
(iv) If a Grantee dies while serving as an Employee, or if the Grantee
dies within twelve (12) months after termination of service in accordance
with subparagraph (iii) hereof, or if the Grantee shall die within three (3)
months after termination of service in accordance with subparagraph (ii)
hereof, the Option will expire twelve (12) months after the date of death.
Following termination of employment for any reason, no Option shall become
exercisable except to the extent such Option was exercisable on the date of such
termination.
8. EXERCISE OF OPTION
(a) Options shall be exercised by delivering or mailing at the time of
exercise to the Secretary of CCCISG or his/her designee:
(i) A notice, in the form and manner prescribed by the Committee,
specifying the number of shares to be purchased under an Option, and
(ii) Payment in full of the Exercise Price, and any associated
withholding tax, for the Shares so purchased by (1) a money order, cashiers
check or certified check payable to CCCISG, (2) shares of Common Stock owned
by the Grantee (duly endorsed), or (3) such other form of payment as shall
be determined by the Committee to be acceptable. Any shares delivered to
CCCISG as payment for Shares upon exercise of the Option shall be valued at
their fair market value as of the date of exercise of the Option as
determined by (A) reference to prices quoted on NASDAQ National Market, or
such other public exchange or market designated by the Committee, for the
Common Stock or, (B) if no such quotation exists, as determined by the
Committee in its sole discretion.
(b) All Options granted under the Plan shall be subject to a vesting
schedule, which shall be determined in the discretion of the Committee.
(c) No Option shall be exercisable in whole or in part and no certificates
representing Shares subject to the Option shall be delivered at any time that
CCCISG shall determine that the satisfaction of withholding tax or other
withholding liabilities is necessary or desirable, unless and until such
withholding shall have been effected.
(d) Options shall be exercisable only with respect to whole Shares and shall
not be exercisable with respect to fractional Shares.
9. ADJUSTMENT OF AND CHANGES IN THE STOCK
(a) In the event that the shares of Common Stock of CCCISG shall be changed
into or exchanged for a different number or kind of shares of stock or other
securities of CCCISG or of another corporation (whether by reason of merger,
consolidation, recapitalization, reclassification, split-up, combination of
A-3
<PAGE>
shares, or otherwise), or if the number of shares of Common Stock of CCCISG
shall be increased through a stock split or the payment of a stock dividend,
then there shall be substituted for or added to each share of Common Stock of
CCCISG theretofore appropriated or thereafter subject or which may become
subject to an Option under the Plan, the number and kind of shares of stock or
other securities into which each outstanding share of Common Stock of CCCISG
shall so be changed, or for which each such share shall be exchanged, or to
which each such share shall be entitled, as the case may be. Outstanding Options
shall also be amended as to price and other terms if necessary to reflect the
foregoing events. In the event there shall be any other change in the number or
kind of the outstanding shares of Common Stock of CCCISG or any stock or other
securities into which such Common Stock shall have been changed, or for which it
shall have been exchanged, then if the Committee shall, in its sole discretion,
determine that such change equitably requires an adjustment in any Option
theretofore granted or which may be granted under the Plan, such adjustment
shall be made in accordance with such determination.
(b) No right to purchase fractional shares shall result from any adjustment
in Options pursuant to this Section 9. In case of any such adjustment, the
shares subject to the option shall be rounded down to the nearest whole share.
Notice of any adjustment shall be given by CCCISG to each Grantee which shall
have been so adjusted and such adjustment (whether or not notice is given) shall
be effective and binding for all purposes of the Plan.
(c) In the event CCCISG is a party to a merger or other reorganization,
outstanding options shall not be affected if CCCISG is the surviving
corporation. If CCCISG is not the surviving corporation, outstanding options
subject to the agreement of merger or reorganization shall either be continued
by the surviving corporation at a comparable economic value, or a cash
settlement shall be provided to optionholders for all vested and unvested
options.
10. ISSUANCE OF SHARES OF COMMON STOCK
Upon receipt of the notice of exercise and payment of the Exercise Price,
CCCISG shall, subject to the provisions of Section 8(c), issue to the Grantee a
certificate or certificates for the Shares purchased, without charge to him for
issue or transfer tax. Until the issuance of such certificates, no right to vote
or receive dividends or other distributions nor any other rights as a
stockholder of CCCISG shall exist with respect to Shares receivable
notwithstanding the exercise of the Option. Except as provided in Section 9, no
adjustment shall be made for distribution or other rights for which the record
date is prior to the date a Common Stock certificate is issued.
11. TRANSFERABILITY OF OPTION
Each Option shall be transferable only by will or the laws of descent and
distribution and shall only be exercisable by the Grantee during his or her
lifetime.
12. AMENDMENT OR TERMINATION OF THE PLAN
(a) The Committee may amend the Plan from time to time in such respects as
the Committee may deem advisable. Any such amendment may apply to any Options
that were granted before the date such amendment is adopted, but that have not
been exercised as of the date such amendment is adopted, provided that no such
amendment shall change the number of Shares subject to, or the Exercise Price
of, any such Option. No such amendment shall affect any Option that has been
exercised before the date such amendment is adopted.
(b) The Committee may at any time terminate the Plan. Any such termination
of the Plan shall not affect Options previously granted and such Options shall
remain in full force and effect as if the Plan had not been terminated.
A-4
<PAGE>
13. AGREEMENT AND REPRESENTATIONS OF GRANTEE
As a condition to the exercise of any portion of an Option, CCCISG may
require the person exercising such Option to represent and warrant at the time
of any such exercise that the Shares are being purchased only for investment and
without any present intention to sell or otherwise distribute such Shares. The
Shares shall not be offered, sold, transferred, pledged or otherwise disposed of
by the person exercising the Option in the absence of registration, or the
availability of an exemption from registration, under the Securities Act of
1933. No such offer, sale, transfer, pledge or other disposition may be made
without prior written opinion of counsel for CCCISG that such offer, sale,
transfer, pledge or other disposition will not violate the Securities Act of
1933 or other applicable securities law, rule or regulation of any jurisdiction.
14. TAX CONSIDERATIONS
All options granted under the Plan are not intended to qualify, and shall
not be treated as, "incentive stock options" as such term is defined in Section
422 of the Internal Revenue Code of 1986.
15. RESERVATION OF SHARES
CCCISG, during the term of this Plan, shall at all times reserve and keep
available, and shall seek or obtain from any regulatory body having jurisdiction
any requisite authority in order to sell, such number of Shares as shall be
sufficient to satisfy the requirements of the Plan. Inability of CCCISG to
obtain from any regulatory body having jurisdiction the authority deemed by
CCCISG's counsel to be necessary for the lawful sale of any Shares hereunder
shall relieve CCCISG of any liability in respect of the failure to sell such
Shares as to which such requisite authority shall not have been obtained.
16. NOTICE
All notices delivered pursuant to the Plan shall be in writing, delivered by
hand or by first class certified mail, return receipt requested, postage prepaid
as specified in the Stock Option Agreement.
17. GOVERNING LAW
The Plan shall be construed and its provisions enforced and administered in
accordance with the laws of the State of Delaware, except to the extent that
such laws may be superseded by any Federal law.
A-5
<PAGE>
EXHIBIT 11
CCC INFORMATION SERVICES GROUP INC.
STATEMENT RE: COMPUTATION OF NET INCOME (LOSS) PER SHARE
(In Thousands)
<TABLE>
ACTUAL YEAR ENDED
----------------------------------------------------
12/31/96 12/31/95 12/31/94 12/31/93 12/31/92
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Income (loss) per share from continuing operations:
Income (loss) from continuing operations 15,522 1,286 (13,159) (5,774) (7,260)
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Weighted average common shares outstanding:
Shares attributable to common stock outstanding 19,061 16,300 13,090 9,245 9,080
Shares attributable to common stock equivalents outstanding 1,306 577 -- -- --
Shares attributable to options pursuant to Staff Accounting
Bulletin No. 8 -- 151 151 151 151
-------- -------- -------- -------- --------
20,367 17,028 13,241 9,396 9,231
-------- -------- -------- -------- --------
Income (loss) per share from continuing operations $ 0.76 $ 0.08 $ (0.99) $ (0.61) $ (0.78)
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Income (loss) per share from discontinued operations:
Income (loss) from discontinued operations -- -- 1,006 (4,357) 409
-------- -------- -------- -------- --------
Weighted average common shares outstanding:
Shares attributable to common stock outstanding 19,061 16,300 13,090 9,245 9,080
Shares attributable to common stock equivalents outstanding 1,306 577 -- -- --
Shares attributable to options pursuant to Staff Accounting
Bulletin No. 8 -- 151 151 151 151
-------- -------- -------- -------- --------
20,367 17,028 13,241 9,396 9,231
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Income (loss) per share from discontinued operations $ -- $ -- $ 0.07 $ (0.47) $ 0.04
-------- -------- -------- -------- --------
Extraordinary loss on early retirement of debt, net of taxes per share:
Extraordinary loss on early retirement of debt, net of taxes: (678) -- -- -- --
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Weighted average common shares outstanding:
Shares attributable to common stock outstanding 19,061 16,300 13,090 9,245 9,080
Shares attributable to common stock equivalents outstanding 1,306 577 -- -- --
Shares attributable to options pursuant to Staff Accounting
Bulletin No. 8 -- 151 151 151 151
-------- -------- -------- -------- --------
20,367 17,028 13,241 9,396 9,231
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Extraordinary loss on early retirement of debt, net of taxes per share $ (0.03) $ -- $ -- $ -- $ --
-------- -------- -------- -------- --------
Dividends and accretion on mandatorily redeemable preferred
stock per share:
Dividends and accretion on mandatorily redeemable preferred stock (6,694) (3,003) (1,518) -- --
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Weighted average common shares outstanding:
Shares attributable to common stock outstanding 19,061 16,300 13,090 9,245 9,080
Shares attributable to common stock equivalents outstanding 1,306 577 -- -- --
Shares attributable to options pursuant to Staff Accounting
Bulletin No. 8 -- 151 151 151 151
-------- -------- -------- -------- --------
20,367 17,028 13,241 9,396 9,231
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Dividends and accretion on mandatorily redeemable
preferred stock per share $ (0.33) $ (0.18) $ (0.11) $ -- $ --
-------- -------- -------- -------- --------
Net income (loss) per share applicable to common stock:
Net income (loss) applicable to common stock 8,150 (1,717) (13,671) (10,131) (6,851)
-------- -------- -------- -------- --------
Weighted average common shares outstanding:
Shares attributable to common stock outstanding 19,061 16,300 13,090 9,245 9,080
Shares attributable to common stock equivalents outstanding 1,306 577 -- -- --
Shares attributable to options pursuant to Staff Accounting
Bulletin No. 8 -- 151 151 151 151
-------- -------- -------- -------- --------
20,367 17,028 13,241 9,396 9,231
-------- -------- -------- -------- --------
Net income (loss) per share applicable to common stock $ 0.40 $ (0.10) $ (1.03) $ (1.08) $ (0.74)
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
</TABLE>
<PAGE>
Exhibit 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 333-15207) of CCC Information Services Group Inc. of
our report dated January 22, 1997 appearing on page 22 of this Form 10-K
PRICE WATERHOUSE LLP
April 3, 1997
Chicago, Illinois
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE AUDITIED
CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED DECEMBER 31, 1996
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH CONSOLIDATED STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 9,403
<SECURITIES> 9,001
<RECEIVABLES> 11,714
<ALLOWANCES> 1,942
<INVENTORY> 0
<CURRENT-ASSETS> 31,383
<PP&E> 28,449
<DEPRECIATION> 20,361
<TOTAL-ASSETS> 58,268
<CURRENT-LIABILITIES> 23,290
<BONDS> 111
4,688
0
<COMMON> 86,191
<OTHER-SE> (61,898)<F1>
<TOTAL-LIABILITY-AND-EQUITY> 58,268
<SALES> 0
<TOTAL-REVENUES> 130,977
<CGS> 0
<TOTAL-COSTS> 110,846
<OTHER-EXPENSES> 636<F2>
<LOSS-PROVISION> 1,005
<INTEREST-EXPENSE> 2,562
<INCOME-PRETAX> 18,205
<INCOME-TAX> 2,683
<INCOME-CONTINUING> 15,522
<DISCONTINUED> 0
<EXTRAORDINARY> (678)<F3>
<CHANGES> 0
<NET-INCOME> 14,844
<EPS-PRIMARY> .40<F4>
<EPS-DILUTED> 0
<FN>
<F1>Accumulated deficit
<F2>Other income, net of expenses
<F3>Loss on early retirement of debt, net of income taxes
<F4>Includes dividends and accretion on mandatorily redeemable preferred stock
</FN>
</TABLE>
