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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1998
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. __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 30, 1999
was $137,360,745.
As of March 30, 1999, 23,737,944 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 1999 Annual Meeting of Stockholders and
Proxy Statement.
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CCC 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..................................................................................... 1-12
Item 2. Properties................................................................................... 12
Item 3. Legal Proceedings............................................................................ 13
Item 4. Submission of Matters to a Vote of Security Holders.......................................... 13
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters........................ 13
Item 6. Selected Financial Data...................................................................... 14-15
Item 7. Management's Discussion and Analysis of Results of Operations and Financial Condition........ 15-23
Item 8. Financial Statements and Supplementary Data.................................................. 23
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure......... 24
PART III
Item 10. Directors and Executive Officers of the Registrant........................................... 24
Item 11. Executive Compensation....................................................................... 24
Item 12. Security Ownership of Certain Beneficial Owners and Management............................... 24
Item 13. Certain Relationships and Related Transactions............................................... 24
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.............................. 25-50
Signatures............................................................................................... 51
Directors and Executive Officers......................................................................... 52-53
Corporate Information.................................................................................... 54
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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, automobile dealers and
collision repair facility customers to improve efficiency, manage costs and
increase consumer satisfaction in the management of automobile claims and
restoration.
As of December 31, 1998, White River Ventures Inc. ("White River") held
approximately 30.5% of the total outstanding common stock of the Company. As a
result of White River's substantial equity interest and 51% voting power,
including rights established through its ownership interest in the Company's
Mandatory Redeemable Series E Preferred Stock, the Company is a consolidated
subsidiary of White River.
On June 30, 1998, the White River Corporation, the sole shareholder of White
River, was acquired in a merger with Demeter Holdings Corporation, which is
solely controlled by the President and Fellows of Harvard College, a
Massachusetts educational corporation and title-holding company for the
endowment fund of Harvard University. Charlesbank Capital Partners LLC will act
as investment manager with respect to the investment of White River in the
Company.
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 Consumer Processing Services Division provides
claims outsourcing services and products including ACCESS, a vehicle restoration
and management service, CARS, a car rental management service and complete
outsourced auto claims service. The Company offers a communication services
network, EZNET, which connects insurers, appraisers and collision repair
facilities. 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. In 1999, the Company introduced information and software services to
address the needs of auto casualty claims and underwriting. The Company has also
started to service the claims market in Europe by entering the U.K. market. 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 Automobile insurance companies and collision
repair facilities. The Company's core competencies include collection and
processing of claims and automobile valuation and repair data, the collection
and processing of data related to auto insurance pricing and underwriting,
development of client-server, object-oriented claims and collision repair
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 60% of the Company's
revenue for 1998 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. Of the Company's ten largest customers in the Insurance
Division with multiyear contracts, five are due for renewal in 1999,
representing 19% of the Insurance Division revenue.
OVERVIEW OF THE U.S. 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 U.S. AUTOMOBILE INSURANCE INDUSTRY
Of the companies offering private passenger automobile insurance in the
United States, the twenty largest providers dominate the market for 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.
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
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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
sourced 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 most 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. Seventeen of the top twenty automobile insurers,
including each of the five largest, offer some form of direct repair program.
Based on the Company's interviews with its insurance company customers, the
fastest-growing method for handling automobile claims is through a DRP. The
Company believes that DRPs present significant opportunities to both insurance
companies and collision repair facilities to increase the satisfaction of their
customers. By eliminating several days from the claims process, insurers
utilizing DRPs reduce replacement rental car expense and eliminate the costs
associated with dispatching an adjuster to appraise each vehicle. An automated
DRP ensures accurate estimates, facilitates the use of alternate replacement
parts and increases the productivity of auditors and reinspectors. The Company
estimates that adjusters who formerly completed only three to five estimates per
day under a staff appraisal program can review 20 to 25 claims per day under a
DRP. Participating collision repair facilities gain volume and efficiency and
reduce disputes with consumers and insurance companies.
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 approximately half the
independent adjusters that handle auto claims use automated collision estimating
systems.
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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.
OVERVIEW OF THE EUROPEAN AUTOMOBILE INSURANCE CLAIMS PROCESS
THE EUROPEAN AUTOMOBILE INSURANCE INDUSTRY
The European automobile insurance market continues to consolidate rapidly
with the emergence of a number of pan-European insurance groups with major
operating companies in all European states. Across the market the twin pressures
of price and customer service continue to force major change. There is now a
general acceptance among insurers that they can increase efficiency in many
aspects of claims management and this has led to an increasing focus on the
possibilities of outsourcing claims operations in totality or in part. As a
consequence, there is a rapidly emerging market for claims outsourcing focusing
on utilizing market know how and information technology. The market, in general,
has a very conservative view of technology; the use of effective management
information and decision support tools has historically been very limited and
represents a major opportunity.
The actual size of the market for these providers varies significantly
territory by territory, driven by local market and legal conditions. However, in
1999, there will be over 34 million motor claims across Europe and at today's
level of outsourcing, the Company believes this equates to a $700 million
market. All the Company's forecasts suggest this market will enjoy near double
digit growth per annum over the next five years. The opportunity exists not only
to supply the outsourcing services in totality, but also the individual tool
components of the offer.
THE COLLISION REPAIR INDUSTRY
As in the U.S., the collision repair industry is consolidating rapidly and
moving towards larger more capital intensive units and repairer chains. However,
across Europe there are still over 100,000 repair facilities. The situation in
the United Kingdom market is typical of the major European markets; the number
of repairers has halved in the last 7 years. In the future, the Company believes
the market will be dominated by large, factory repair environments that deliver
consistent customer service at the lowest cost to repair. These repair
facilities will handle increasingly large components of the claims process and
will have direct supply relationships with only one or two insurance companies.
The emergence of these deep relationships will mean that insurance company's
actively deal with fewer and fewer repairers. The Company believes the current
process in which insurance company's are
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downsizing their direct repair networks reflects this trend. In order to service
insurance company relationships, repair facilities are investing heavily in
computer technology.
THE AUTOMOBILE CLAIMS PROCESS
Within the automobile claim, the vehicle inspection/ repair cost audit is
seen as critical in driving down cost for the insurer. Currently, insurers use a
number of methods to manage this process:
PHYSICAL INSPECTION. The insurance company will physically inspect vehicles
to estimate repair costs. These inspections are carried out by the insurance
company's staff, or Independent inspectors. This process is labor intensive and
costly relative to the overall cost of the claim. Most companies operating in
this area will use collision estimating software and some form of network data
capture. The use of approved repairer networks assists in minimizing the number
of inspection nodes. Insurance companies are constantly reviewing the cost of
internal versus third party inspection. There is a discernible trend towards the
use of third party agencies with a fixed price per inspection.
REMOTE INSPECTION. The use of remote video inspections continues to grow as
a low cost alternative to physical inspection. The falling cost of technology
and the cost benefits available to the insurance companies will see further
growth. In essence there are two types: live moving image inspection and still
image inspection offline. The provision of these services represents a rapidly
emerging outsourcing opportunity.
AUDIT. Analysis of repair costs provided by computerized estimating.
Currently the use of this approach is limited and has had only partial success.
There is a clear need for automation and decision support tools to drive this
option forward.
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, large European insurers will need to use technology
solutions to give them access to pan European data. 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. The development of approved repair networks
are key in this area. 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.
PRODUCTS AND SERVICES
The Company is organized into three divisions, Insurance Services,
Automotive Services and Consumer Processing Services, based on the nature of the
products and services and the methods used to distribute these products and
services. The Insurance Services Division offers products and services to its
customers through the use of a direct selling force. These products and services
generally are used by insurance companies to facilitate the processing of
automobile physical damage claims and improve
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decision making in the insurance underwriting processes. The Automotive Services
Division offers products and services to its customers through the use of
independent sales representatives. These products and services are tools used by
collision repair facilities to receive and process automobile damage claims
electronically in conjunction with insurance companies. The Consumer Processing
Services Division offers a suite of products and services for the complete
outsourcing of automobile physical damage claims and bodily injury claims.
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 65% of the Company's consolidated revenue for 1998 was from the
sale of products and services to insurance companies with the remainder sold to
collision repair facilities and other customers. The primary products and
services sold by the Insurance Division include: TOTAL LOSS, PATHWAYS COLLISION
ESTIMATING, PATHWAYS DIGITAL IMAGING, GUIDEPOST, EZNET AND CCC RATINGS SERVICES.
The primary products and services sold by the Automotive Services Division
include: EZEST, PATHWAYS COLLISION ESTIMATING, PATHWAYS DIGITAL IMAGING,
PATHWAYS ENTERPRISE SOLUTION, GUIDELINES AND EZNET. The primary products and
services sold by the Consumer Processing Services Division include: ACCESS, CARS
and complete claims outsourcing.
PATHWAYS WORKSTATION SOFTWARE. PATHWAYS is a windows-based workstation
software platform designed to better serve the overall workflow needs of
insurance field staffs and collision repairers. PATHWAYSoffers 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. PATHWAYSincludes 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 improved functionality when compared to the
predecessor DOS based EZEST product.
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 4,500 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 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 intelligent logic to
automate the process of eliminating repair activity overlaps and automating all
included operations and ancillary repair work in preparing an estimate.
Intelligent logic represents automation of 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. The Company now also offers its
next generation collision estimating product, Pathways Collision Estimating.
Pathways provides automobile insurers and collision repairers with fast and
reliable estimates at a low cost. Pathways 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
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Crash Estimating Guide data from a subsidiary of The Hearst Corporation. A
unique feature of Pathways 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 Pathways software, Motor
Crash Estimating Guide database and other associated databases are updated via a
monthly CD-ROM. Pathways is sold under multi-year contracts on a monthly
subscription basis to both insurers and collision repair facilities.
PATHWAYS DIGITAL IMAGING. PATHWAYS DIGITAL IMAGING, a Pathways workstation
application, allows shops to capture and instantly transmit damage images,
thereby reducing the need for a physical vehicle inspection. The 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. PATHWAYS Digital Imaging is sold under multi-year
contracts on a monthly subscription basis.
GUIDEPOST AND GUIDELINES DECISION SUPPORT. GUIDEPOST AND GUIDELINES are
executive information and data navigation software packages. GUIDEPOST allows
insurance managers to electronically evaluate results, format reports, drill
down for subject or personnel review and compare performance to industry and
regional indices. GUIDELINES provides similar functions for collision repair
managers. GUIDEPOST updates are distributed monthly. GUIDELINES is an Internet
based product which users access via a web browser.
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.
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. CARS is a
computerized rental car reservations service which is most often used in
conjunction with ACCESS services. During the claims reporting process, a rental
car is reserved for the consumer and the useage of the rental car is monitored
against the vehicle restoration date, thus improving consumer satisfaction aond
reducing car rental expense. CARS is sold on a per transaction basis and under
multi-year agreements. The Company offers third party claims administration
(TPA), a complete claims outsourcing service that manages all aspects of the
claim process. Using a proprietary, state-of-the-art, paperless claims
management system, the outsourcing service takes the initial loss notification
and manages the file through settlement.
CCC RATINGS SERVICES--Through a relationship with InsurQuote Systems Inc.
("InsurQuote"), the Company offers services to insurance underwriters that
assist in the process of rate filing for new products, as well as services that
help underwriters better analyze the competitive rate environment.
PATHWAYS ENTERPRISE SOLUTION--The Company offers a computerized management
information system for collision repair operations. PATHWAYS ENTERPRISE SOLUTION
is a state of the art product based on the latest
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Microsoft development tools which allows for centralized management of
consolidated collision repair operations.
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 13,000 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 repair facilities business growth.
Over 60% of the Company's revenue for 1998 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. Of the Company's ten largest customers in the Insurance Division with
multiyear contracts five are due for renewal in 1999, representing 19% of the
Insurance Division revenue.
SALES AND MARKETING
Including Collision Repair Representatives, the Company utilizes
approximately 350 sales and service professionals across five different sales
organizations and certain other sales and marketing functions to market and sell
its services and products. Employee counts below for each of the five sales
organization are as of December 31, 1998.
NATIONAL SALES ORGANIZATION. The National Sales Organization comprises
national account managers ("NAMs") who focus on the Company's overall
relationships with the home and regional offices of insurance companies. NAMs
are experienced sales professionals charged with meeting customers' business
needs with a consultative approach.
TECHNICAL ACCOUNT MANAGEMENT GROUP. The Technical Account Management Group
consists of Technical Account Managers ("TAMs") who identify opportunities to
better integrate CCC products and services with our clients' internal systems,
resulting in the development of custom and standards-based user interfaces. The
TAMs also play a critical role in reviewing customer business practices to
benchmark current operations and to identify opportunities for improvement. TAMs
often work closely with customer system staffs to assure smooth implementation
of more technically complicated and customized service offerings.
FIELD SALES & SERVICE GROUP. Claims office territory managers 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 territory managers assist claim managers with the training of high
turnover personnel, program result analysis and problem resolution.
Increasingly, territory managers are functioning as claim settlement
consultants.
PRODUCT SALES AND DELIVERY ORGANIZATION. The Product Sales and Delivery
Organization ("PSDO") is focused on the quality sale and delivery of the
Company's products and services into the insurance market. A team of product
specialists, who are industry experts in specific client process segments are
responsible
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for growing the Company's market share. They work closely with other sales
organizations to bring specific product expertise to our customers.
COLLISION REPAIR REPRESENTATIVES. The Company contracts 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 has recently converted a portion of its
collision repair independent representative sales force to full time employees
focused on servicing and cross-selling current collision repair customers.
The Company's marketing efforts for the automobile insurance industry are
conducted as follows: development of professional collateral materials used by
the sales force, an annual company sponsored industry conference for senior
claims executives and collision repair industry leaders and publication of
articles in industry and national print media.
The Company's marketing efforts for the automobile repair market are
conducted through participation in national and regional trade shows, lead
generating direct marketing programs, collateral materials and trade
advertising.
TRAINING AND SUPPORT
Field appraisers, claim representatives and collision repair facility owners
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 450 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. The support stafff also includes individuals that process the bodily
injury and physical damage claims.
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 PRODUCTS AND SERVICES. The Company's proprietary database
of valuation data used in connection with its TOTAL LOSS products and services
is built through the Company's own data collection network. This network
includes detailed used car inventory and sales data from more than 4,500
automobile dealers throughout the United States and Canada, as well as data from
local newspaper advertisements and prior transactions. The database includes
more than 18 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 PRODUCTS AND SERVICES. The Company offers its
collision estimating products and services 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 a contract which was extended in 1998 for a term of 20
years, that grants to the Company a license to publish the database
electronically. This contract includes the exclusive license for intelligent
logic to the insurance industry, the integral component of collision estimating
software. See further discussion of this contract under "Intellectual Property."
9
<PAGE>
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. The Company has built and completed class libraries
consisting of approximately 1,000 business and system objects that serve as the
foundation of its PATHWAYS product line. These objects were designed with a work
flow orientation and are used in a framework to manage databases, maintain model
persistence, create electronic workfiles, and facilitate communications. These
elements are used in conjunction with a common graphical user interface for all
applications. This approach is intended to offer many advantages to the
Company's customers, including ease of 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.
EUROPEAN MARKET PRODUCTS AND SERVICES. The Company entered into a joint
venture agreement with Hearst Communications Inc. for the purpose of assisting
Hearst in the development and implementation of the Company's technology and
tools for the European market. As part of the joint venture, the Company intends
to deliver its collision estimating products and services which include a
European version of the Motors database as well as an enhanced communications
network. The Company will also leverage its Pathways architecture to create the
next generation of appraisal and reinspection workstations for the insurance
industry.
CCC RATINGS SERVICES. The Company, through its investment in InsurQuote,
has an opportunity to market services to insurance underwriters which utilize
proprietary rating data and software developed by InsurQuote.
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 applications, and database design and enhancement.
Product engineering activities focus on improving speed to market of new
products, services, and enhancements, adding new business functions without
affecting existing products and services, 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 $25.8 million, $20.2 million and $17.0
million for the years ended December 31, 1998, 1997 and 1996, 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
10
<PAGE>
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 products and services.
These marks are used by the Company in the advertising and marketing of the
Company's products and services. EZEST, PATHWAYS and CCC are well-known marks
within the automobile insurance and collision repair industries. The Company has
patents for its collision estimation product pertaining to the comparison and
analysis of the "repair or replace" and the "new or used" parts decisions. While
the TOTAL LOSS calculation process is not patented, the methodology and
processes are trade secrets of the Company and are essential to the Company's
TOTAL LOSS business. Despite these precautions, the Company believes that
existing laws provide only limited protection for the Company's technology and
that it may be possible for a third party to misappropriate the Company's
technology or to independently develop similar technology.
Certain data used in the Company's services and products is licensed from
third parties for which they receive royalties. The Company does not believe
that the Company's services and products are significantly dependent upon
licensed data, other than the Motor Crash Estimating Guide data, because the
Company believes it can find alternative sources for such data. The Company does
not believe that it has access to an alternative database that would provide
comparable information to the Motor Crash Estimating Guide. The Motor Crash
Estimating Guide is licensed from the Hearst Corporation through a scheduled
expiration of April 1, 2018. 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 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 intelligent logic. In
addition, the claims outsourcing business competes with various outsourcing
service providers and third party administration (TPA) entities. 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
11
<PAGE>
expects that the PATHWAYS workflow manager will provide the necessary position
with its insurance and collision repair customers to effectively compete against
competitive price pressures.
At times, insurance companies have entered into agreements with service
providers (including ADP, Thomson and CCC) wherein the agreement provides, in
part, that the insurance company will either use the product or service of that
vendor on an exclusive basis or designate the vendor as a preferred provider of
that product or service. If it is an exclusive agreement, the insurance company
mandates that collision repair facilities, independent appraisers and regional
offices use the particular product or service. If the vendor is a preferred
provider, the collision repair facilities, appraisers and regional offices, are
encouraged to use the preferred product, but may still choose another vendor's
product or service. Additionally, some insurance companies mandate that all
products be tested and approved at the companies' national level before regional
levels can purchase such products. The benefits of being an endorsed product or
on the approved list of an insurance company include immediate customer
availability and a head start over competitors who may not be so approved. With
respect to those insurance companies that have endorsed ADP or Thomson, but not
CCC, the Company will be at a competitive disadvantage.
In 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, 1998, the Company had approximately 1,500 full-time
employees of whom approximately 350 were employed in sales and marketing
functions (excluding independent collision repair representatives),
approximately 450 were employed in customer support functions, approximately 315
in product development and quality assurance functions, approximately 265 in
operations and approximately 120 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.
ITEM 2. PROPERTIES
The Company's corporate office is located in Chicago, Illinois where the
Company leases approximately 141,000 square feet of a multi-tenant facility
under several leases, the last of which expires in November 2008. The Company
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 also leases 26,000 square feet in Placenta,
California where Professional Claims Services, Inc. provides claims adjusting
and third party administration in the western United States, under a lease
expiring in November 2001. The Company purchased a 50,000 square foot facility
in Sioux Falls, South Dakota in 1998 in connection with relocating certain
customer service and claims processing operations. 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.
12
<PAGE>
ITEM 3. LEGAL PROCEEDINGS
In March 1999, the Company completed settlement of a lawsuit filed in late
1998 involving a former independent sales representative. This settlement
resulted in a charge of $1.7 million including, among other things, payment for
past earned commissions, resolution of disputed commissions, and other costs
associated with the resolution of the dispute.
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) is traded on the Nasdaq National Market
("Nasdaq"). Low and high sales prices of the Common Stock were as follows:
<TABLE>
<CAPTION>
1998 1997
-------------------------------------------------- -------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
FOURTH THIRD SECOND FIRST FOURTH THIRD SECOND
QUARTER QUARTER QUARTER QUARTER QUARTER QUARTER QUARTER
----------- ----------- ----------- ----------- ----------- ----------- -----------
Low............................... $ 9.50 $ 11.13 $ 16.31 $ 18.88 $ 17.38 $ 14.70 $ 11.75
High.............................. $ 17.25 $ 17.75 $ 28.13 $ 28.75 $ 23.88 $ 21.00 $ 19.50
<CAPTION>
<S> <C>
FIRST
QUARTER
-----------
Low............................... $ 12.50
High.............................. $ 19.50
</TABLE>
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 30, 1999, there were 23,737,944
shares of Common Stock issued and outstanding. There were 98 stockholders of
record on March 30, 1999, plus an indeterminate number of stockholders that hold
shares of Common Stock in the names of nominees.
13
<PAGE>
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------
<S> <C> <C> <C> <C> <C>
1998 1997 1996 1995 1994(*)
--------- --------- --------- --------- ---------
<CAPTION>
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Revenues........................................................... $ 188,169 $ 159,106 $ 130,977 $ 115,519 $ 91,917
Expenses:
Operating expenses............................................... 164,813 133,401 110,846 104,697 84,094
Purchased research and development............................... -- -- -- -- 13,791
Litigation settlements........................................... 1,650 -- -- 4,500 1,750
Relocation of claims settlement function......................... 1,707 -- -- -- --
--------- --------- --------- --------- ---------
Operating income (loss)............................................ 19,999 25,705 20,131 6,322 (7,718)
Equity in loss of CCCDC Joint Venture.............................. -- -- -- -- (615)
Interest expense................................................... (258) (139) (2,562) (5,809) (7,830)
Other income, net.................................................. 697 1,505 636 482 316
--------- --------- --------- --------- ---------
Income (loss) from operations before income taxes.................. 20,438 27,071 18,205 995 (15,847)
Income tax (provision) benefit..................................... (8,860) (11,239) (2,683) 291 2,688
--------- --------- --------- --------- ---------
Income (loss) before equity losses, minority interest and
extraordinary item............................................... 11,578 15,832 15,522 1,286 (13,159)
Equity in net losses of affiliates................................. (11,658) -- -- -- --
Minority share in earnings of subsidiaries......................... (1) -- -- -- --
--------- --------- --------- --------- ---------
Income (loss) from continuing operations........................... (81) 15,832 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).................................................. (81) 15,832 14,844 1,286 (12,153)
Dividends and accretion on mandatorily redeemable preferred
stock............................................................ 43 (365) (6,694) (3,003) (1,518)
--------- --------- --------- --------- ---------
Net income (loss) applicable to common stock....................... $ (38) $ 15,467 $ 8,150 $ (1,717) $ (13,671)
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
PER SHARE DATA:
INCOME (LOSS) PER COMMON SHARE--BASIC
Income (loss) applicable to common stock from:
Continuing operations............................................ $ - $ 0.65 $ 0.46 $ (0.11) $ (1.12)
Income from discontinued operations, net of tax.................. -- -- -- -- 0.08
Extraordinary loss on early retirement of debt, net of income
taxes.......................................................... -- -- (0.03) -- --
--------- --------- --------- --------- ---------
Net income (loss) applicable to common stock....................... $ - $ 0.65 $ 0.43 $ (0.11) $ (1.04)
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
INCOME (LOSS) PER COMMON SHARE--DILUTED
Income (loss) applicable to common stock from:
Continuing operations............................................ $ - $ 0.62 $ 0.43 $ (0.11) $ (1.12)
Income from discontinued operations, net of tax.................. -- -- -- -- 0.08
Extraordinary loss on early retirement of debt, net of income
taxes.......................................................... -- -- (0.03) -- --
--------- --------- --------- --------- ---------
Net income (loss) applicable to common stock....................... $ - $ 0.62 $ 0.40 $ (0.11) $ (1.04)
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Weighted average shares outstanding:
Basic............................................................ 24,616 23,807 19,056 16,300 13,090
Diluted.......................................................... 25,188 24,959 20,367 16,300 13,090
</TABLE>
- ------------------------
(*) The Company accounted for its interest in the CCC Development Company
("CCCDC") Joint Venture under the equity method of accounting prior to
acquiring the remaining interest in the CCCDC Joint Venture, effective March
30, 1994.
14
<PAGE>
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------------------------
1998 1997 1996 1995 1994
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
(IN THOUSANDS)
CONSOLIDATED BALANCE SHEET DATA:
Cash and marketable securities........................ $ 1,526 $ 32,118 $ 18,404 $ 3,895 $ 5,702
Working capital....................................... 3,281 28,735 8,093 (17,953) (15,549)
Total assets.......................................... 79,018 83,494 58,268 44,093 52,232
Current portion of long-term debt..................... -- 111 120 7,660 5,340
Long-term debt, excluding current maturities.......... 11,000 -- 111 27,220 35,753
Mandatorily redeemable preferred stock................ 688 5,054 4,688 34,125 31,122
Stockholders' equity (deficit)........................ 35,303 45,827 24,293 (56,420) (54,729)
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
RESULTS OF OPERATIONS
The Company's net income (loss) for the periods indicated, are set forth
below:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1998 1997 1996
---------- ---------- ----------
<S> <C> <C> <C>
(IN THOUSANDS)
Revenues.................................................................... $ 188,169 $ 159,106 $ 130,977
Expenses:
Operating Expenses:
Production and customer support........................................... 48,242 35,657 31,828
Commissions, royalties and licenses....................................... 21,495 18,939 14,009
Selling, general and administrative....................................... 60,053 50,914 40,653
Depreciation and amortization............................................. 9,210 7,688 7,330
Product development and programming....................................... 25,813 20,203 17,026
Litigation settlement....................................................... 1,650 -- --
Relocation of claims settlement function 1,707 -- --
---------- ---------- ----------
Operating income............................................................ 19,999 25,705 20,131
Interest expense............................................................ (258) (139) (2,562)
Other income, net........................................................... 697 1,505 636
---------- ---------- ----------
Income from operations before income taxes.................................. 20,438 27,071 18,205
Income tax provision........................................................ (8,860) (11,239) (2,683)
---------- ---------- ----------
Income before equity losses, minority interest and extraordinary items...... 11,578 15,832 15,522
Equity in net losses of affiliates.......................................... (11,658) -- --
Minority share in earnings of subsidiaries.................................. (1) -- --
---------- ---------- ----------
Income (loss) before extraordinary item..................................... (81) 15,832 15,522
Extraordinary loss on early retirement of debt, net of income taxes......... -- -- (678)
---------- ---------- ----------
Net income (loss)........................................................... $ (81) $ 15,832 $ 14,844
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
15
<PAGE>
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
OVERVIEW
The Company is a supplier of automobile claims information and processing,
claims management software and communication services. The Company's customers
include insurance companies and collision repair facilities. The Company's
products and services are designed to improve efficiency, manage costs and
increase consumer satisfaction in the management of automobile claims and
restoration.
The Company is organized into three divisions, Insurance Services,
Automotive Services and Consumer Processing Services, based on the nature of the
products and services and the methods used to distribute these products and
services. The Insurance Services Division offers products and services to its
customers through the use of a direct selling force. These products and services
generally are used by insurance companies to facilitate the processing of
automobile physical damage claims and improve decision making in the insurance
underwriting processes. The Automotive Services Division offers products and
services to its customers through the use of independent sales representatives.
These products and services are tools used by collision repair facilities to
receive and process automobile damage claims electronically in conjunction with
insurance companies. The Consumer Processing Services Division offers a suite of
products and services for the complete outsourcing of automobile physical damage
claims and bodily injury claims The Company sells its products to two primary
customer groups: insurance companies (approximately 65% of revenue in 1998) 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 PATHWAYS collision estimating software,
used to estimate the cost of repairing vehicles. The Company also offers
PATHWAYS DIGITAL IMAGING, GUIDEPOST, EZNET and CCC RATINGS SERVICES. In addition
to claims processing tools, the Company offers insurers ACCESS, an integrated
appraisal and restoration management service, CARS, a car rental management
service and TPA, a complete claims outsourcing service. The Company also offers
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 products for collision
repair facilities is its EZEST, PATHWAYS and PATHWAYS DIGITAL IMAGING.
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. Collision Estimating
software subscriptions are billed monthly in advance. EZNET communication
services are generally priced on a per transaction basis. ACCESS and CARS
services are billed monthly on a per transaction basis. The TPA services are
sold on a per claim and performance sharing basis under multi-year contracts.
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
16
<PAGE>
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
borrowings. The Company formed CCCDC to develop the EZEST collision estimating
software. In June 1994, 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. In 1995, the
Company consolidated this investment with its other operations.
The Preferred Stock includes certain rights set forth in detail in Notes 14
and 15 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 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. This Stockholders Agreement
expires in June 1999, at which time White River will no longer hold Series E
Preferred Stock which provides WR 51% voting power as a condition of the
Agreement of the votes.
Depreciation/amortization expense through March 1996 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, $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 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
significant.
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, 1998
the Company expended approximately $63.0 million for product development and
programming.
17
<PAGE>
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
NET INCOME (LOSS) AS A PERCENTAGE OF REVENUE
The Company's net income (loss), as a percentage of revenue for the periods
indicated, are set forth below:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
<S> <C> <C> <C>
1998 1997 1996
--------- --------- ---------
Revenues........................................................................... 100.0% 100.0% 100.0%
Expenses:
Operating Expenses:
Production and customer support................................................ 25.7 22.4 24.3
Commissions, royalties and licenses............................................ 11.4 11.9 10.7
Selling, general and administrative............................................ 31.9 32.0 31.0
Depreciation and amortization.................................................. 4.9 4.8 5.6
Product development and programming............................................ 13.7 12.7 13.0
Litigation settlement.......................................................... 0.9 -- --
Relocation of claims settlement function....................................... 0.9 -- --
--------- --------- ---------
Operating income................................................................... 10.6 16.2 15.4
Interest expense................................................................... (0.1) (0.1) (2.0)
Other income, net.................................................................. 0.4 0.9 0.5
--------- --------- ---------
Income from operations before income taxes......................................... 10.9 17.0 13.9
Income tax provision............................................................... (4.7) (7.1) (2.0)
--------- --------- ---------
Income before equity losses, minority interest and extraordinary items............. 6.2 9.9 11.9
Equity in net losses of affiliates................................................. (6.2) -- --
Minority share in earnings of subsidiaries......................................... -- -- --
--------- --------- ---------
Income (loss) before extraordinary item............................................ -- 9.9 11.9
Extraordinary loss on early retirement of debt, net of income taxes................ -- -- 0.5
--------- --------- ---------
Net income (loss).................................................................. --% 9.9% 11.4%
--------- --------- ---------
--------- --------- ---------
</TABLE>
1998 COMPARED WITH 1997
For the year ended December 31, 1998, the Company reported a net loss
applicable to common stock of $38 thousand, or $0.00 per share on a diluted
basis, versus net income applicable to common stock of $15.5 million, or $0.62
per share on a diluted basis, for the same period last year. The change in
income per share on a diluted basis was the result of recording the equity in
net losses of affiliates of $11.7 million, or $0.46 per share, a litigation
settlement of $0.04 per share, relocation of claims settlement function of $0.04
per share, as well as other increases in expenses ahead of revenue growth as
described below. Operating income for the year ended December 31, 1998 of $20.0
million was also $5.7 million less than the same period last year reflecting
increased spending on new and enhanced products and customer support activities.
The equity in net losses of affiliates of $11.7 million is principally the
result of the Company's investment in InsurQuote, which resulted in the
recording of an $11.4 million loss for the year.
REVENUES. Revenues for the year ended December 31, 1998 of $188.2 million
were $29.1 million, or 18.3% higher than the same period last year. The increase
in revenues was due primarily to continued growth in the Company's Consumer
Processing Services Division. Revenues for the Consumer Processing Services
Division for the year ended December 31, 1998 of $22.7 million were $13.1
million or 136% higher
18
<PAGE>
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
than the same period last year. In addition, revenues for the Automotive
Services Division for the year ended December 31, 1998 of $63.5 million were
$12.4 million or 24.3% higher than the same period last year. The revenues for
the Insurance Services Division for the year ended December 31, 1998 of $101.4
million were $5.0 million or 5.2% higher than the same period last year. The
increase in both the Automotive Services and the Insurance Services Divisions
were due to growth in the digital imaging product and collision estimating
software seats.
PRODUCTION AND CUSTOMER SUPPORT.
Production and customer support increased from $35.7 million or 22.4% of
revenue to $48.2 million or 25.7% of revenue. The year over year variance was
due primarily to additional production and customer support related to Consumer
Processing Services, Pathways workflow/collision estimating seats and the
introduction of Pathways Enterprise Solutions.
COMMISSIONS, ROYALTIES AND LICENSES. Commission, royalties and licenses
increased from $18.9 million or 11.9% of revenues to $21.5 or 11.4% of revenues.
The increase was due primarily to higher revenues from autobody collision
estimating licensing which generates both a commission and a data royalty.
SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative
increased from $50.9 million or 32.0% of revenues to $60.0 million or 31.9% of
revenues. Headcount increases as well as higher average wages necessary to
recruit and retain key employees were the principal reasons for the increase,
along with additional bad debt provisions associated with the expansion of the
Automotive Services Division customer base.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization increased from
$7.7 million to $9.2 million. The increase in depreciation year over year was
principally the result of higher internal capital expenditures for the Consumer
Processing Services Division and depreciation and amortization associated with
the acquisitions.
PRODUCT DEVELOPMENT AND PROGRAMMING. Product development and programming
increased from $20.2 million or 12.7% of revenue to $25.8 million or 13.7% or
revenue. The increase in costs over prior year mainly related to the growth in
the Consumer Processing Services Division, Year 2000 compliance spending and
other new product development.
LITIGATION SETTLEMENT. Litigation settlement costs of $1.7 million related
to a claim filed in the fourth quarter of 1998 by an independent sales
representative settled in early 1999.
RELOCATION OF CLAIMS SETTLEMENT FUNCTION. Relocation of the claims
settlement function of $1.7 million related to relocating certain customer
service and claims processing operations to South Dakota was incurred in 1998.
OTHER INCOME/INTEREST EXPENSE AND INCOME TAXES. Net other income/interest
decreased from $1.4 million to $0.4 million. The effective income tax rate
increased from 41.5% to 43.4%.
EQUITY IN LOSSES OF AFFILIATES: 1998 results include an $11.4 million loss
in InsurQuote and $0.2 million loss from Enterstand Joint Venture.
19
<PAGE>
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
1997 COMPARED WITH 1996
For the year ended December 31, 1997, the Company reported net income
applicable to common stock of $15.5 million, or $0.62 per share on a diluted
basis, versus net income applicable to common stock of $8.2 million, or $0.40
per share on a diluted basis, for the same period last year. Operating income
for the year ended December 31, 1997 of $25.7 million was $5.6 million higher
than the same period last year.
REVENUES Revenues for the year ended December 31, 1997 of $159.1 million
were $28.1 million, or 21.5% higher than the same period last year. Revenues for
the Insurance Services Division for the year ended December 31, 1997 of $96.3
million were $13.2 million or 15.8% higher than the same period last year
primarily due to the growth in collision estimatings software seats and increase
in the VEHICLE VALUATION SERVICES due to higher transaction volumes. In
addition, revenues for the Automotive Services Division for the year ended
December 31, 1997 of $51.0 million were $12.6 million or 32.6% higher than the
same period last year also due to growth in collision estimating seats. Revenues
for the Consumer Processing Services Division for the year ended December 31,
1997 of $9.6 million were $2.4 million or 33.7% higher than the same period last
year due to the introduction of the TPA business and incremental transaction
volume in ACCESS and CARS.
PRODUCTION AND CUSTOMER SUPPORT. Production and customer support increased
from $31.8 million to $35.7 million. Due to leverage on a higher revenue base
and continued efforts to reduce production costs, production and customer
support decreased on a percent of revenue basis from 24.3% to 22.4%.
COMMISSIONS, ROYALTIES AND LICENSES. Commission, royalties and licenses
increased from $14.0 million or 10.7% of revenues to $18.9 or 11.9% of revenues.
The increase as a percent of revenues was due primarily to higher revenues from
autobody collision estimating licensing which generates both a commission and a
data royalty.
SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative
increased from $40.7 million or 31% of revenues to $50.9 million or 32% of
revenues. Headcount increases as well as higher average wages necessary to
recruit and retain key employees were the principal reasons for the increase.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization increased from
$7.3 million to $7.7 million.
PRODUCT DEVELOPMENT AND PROGRAMMING. Product development and programming
increased from $17.0 million to $20.2 million. Due to leverage on a higher
revenue base, product development and programming costs declined from 13.0% of
revenues to 12.7%.
OTHER INCOME/INTEREST EXPENSE AND INCOME TAXES. Net other income/interest
expense changed from a net expense of $1.9 million last year to net other income
of $1.4 million. The change in net other income was a combination of the full
year impact of a change in the capital structure subsequent to the public
offering of common stock in 1996, as well as a significant increase in invested
cash in 1997 generated from operations. The effective income tax rate increased
from 14.7% to 41.5% due primarily to the release of deferred income tax
valuation allowances in 1996. Adjusting the 1996 tax rate for the release of
valuation allowances would have resulted in an effective tax rate of 40.4%.
LIQUIDITY AND CAPITAL RESOURCES
During the year ended December 31, 1998, net cash provided by operating
activities was $15.9 million. The Company applied $11.0 million, to purchase
equipment and software, and $1.8 million to the purchase of land and building in
Sioux Falls, South Dakota associated with the relocation of certain customer
service
20
<PAGE>
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
and claims processing operations. The Company invested $20 million in
InsurQuote, which is developing services to manage insurance rating information.
The Company purchased two subsidiaries for $4.5 million to expand its Consumer
Processing Services operations domestically and in Europe and invested $2.0
million in an Enterstand, an international joint venture to develop products for
the European marketplace. The Company also repurchased 1.4 million of the
Company's outstanding shares for $15.7 million.
On October 28, 1998, the credit facility between CCC and the commercial bank
was amended and restated, from the original revolving credit agreement entered
into on August 22, 1996. Under the amended credit facility, CCC increased its
ability to borrow under the revolving line of credit to $50 million. In
addition, the maturity date of the credit facility was extended to October 31,
2003. The interest rate under the amended bank credit facility is the London
Interbank Offering Rate (LIBOR) plus 1.0% or the prime rate in effect from time
to time, as selected by CCC. The Company's principal liquidity requirements
include its operating activities, including product development, and its
investments in internal and customer capital equipment.
Under the 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 bank credit facility requires CCC to maintain
certain levels of operating cash flow and debt coverage, and limits CCC's
ability to make investments and declare dividends.
During the year ended December 31, 1997, net cash provided by operating
activities was $20.1 million. The Company applied $8.1 million to purchase
equipment and software and invested the rest of the excess cash 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 $28.0 million were used to make principal
repayments on long-term debt.
The Company has over the past three years been able to fund all of its
working capital needs and capital expenditures from cash generated from
operations. Management believes that cash flows from operations and available
credit line 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.
YEAR 2000 ISSUE
BACKGROUND. Some computers, software and other equipment include
programming code in which calendar year data is abbreviated to only two digits.
As a result of this design decision, some of these systems could fail to operate
or fail to produce correct results if "00" is interpreted to mean 1900, rather
than 2000 ("Year 2000 Problem"). These problems are widely expected to increase
in frequency and severity as the year 2000 approaches. The Company defines an
application to be Year 2000 compliant if it can accurately process date data
(including calculating, comparing and sequencing) from, into and between 1999
and 2000, including leap year calculations.
ASSESSMENT. The Year 2000 Problem could affect computers, software, and
other equipment used, operated, or maintained by the Company. Accordingly, the
Company is reviewing its internal computer programs and systems to ensure that
the programs and systems will be Year 2000 compliant. The Company presently
believes that its computer systems will be Year 2000 compliant in a timely
manner. However,
21
<PAGE>
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
while the estimated cost of these efforts are not expected to be material to the
Company's financial position or any year's results of operations, there can be
no assurance to this effect.
SOFTWARE SOLD TO CUSTOMERS. The Company believes that it has substantially
identified all potential Year 2000 Problems with any of the software products,
which it develops and markets. As a key supplier to insurance companies and
collision repair facilities, the Company has identified a significant exposure
for Year 2000 problems regarding the effect of its legacy collision estimating
software on some customers' ability to complete an estimate. A major undertaking
is currently in process to convert those customers impacted to the Year 2000
compliant version of the software. While lost revenues from such an event are a
concern for the Company, the greater risks are the monetary damages for which
the Company could be liable if it in fact is found responsible for the shutdown
of one of its customer's facilities. Such a finding could have a material
adverse impact on the Company's results of operations.
INTERNAL INFRASTRUCTURE. The Company believes that it has identified
substantially all of the major computers, software applications, and related
equipment, with the exception of desktop hardware and software applications,
used in connection with its internal operations that must be modified, upgraded
or replaced to minimize the possibility of a material disruption to its
business. The Company has commenced the process of modifying, upgrading, and
replacing major systems that have been identified as adversely affected, and
expects to complete this process before the middle of 1999. The Company expects
to complete testing of desktop hardware and software applications by the second
quarter of 1999 and upgrades will be scheduled as needed.
SYSTEMS OTHER THAN INFORMATION TECHNOLOGY SYSTEMS. In addition to computers
and related systems, the operation of office and facilities equipment, such as
fax machines, photocopiers, telephone switches, security systems, elevators, and
other common devices may be affected by the Year 2000 Problem. The Company has
nearly completed its assessment and expects that most facility and office
equipment will be compliant by June 1999.
The Company estimates the total cost to the Company of completing any
required modifications, upgrades, or replacements of these internal systems will
not have a material adverse effect on the Company's business or results of
operations. Currently, the Company is expensing approximately $600 thousand per
quarter associated with this effort. It is expected that this cost will continue
through the fourth quarter of 1999. This estimate is being monitored and will be
revised as additional information becomes available.
SUPPLIERS. The Company has initiated communications with third party
suppliers of the major computers, software, and other equipment used, operated,
or maintained by the Company to identify and, to the extent possible, to resolve
issues involving the Year 2000 Problem. However, the Company has limited or no
control over the actions of these third party suppliers. Thus, while the Company
expects that it will be able to resolve any significant Year 2000 Problems with
these systems, there can be no assurance that these suppliers will resolve any
or all Year 2000 Problems with these systems before the occurrence of a material
disruption to the business of the Company or any of its customers. Any failure
of these third parties to resolve Year 2000 Problems with their systems in a
timely manner could have a material adverse effect on the Company's business,
financial condition, and results of operation.
MOST LIKELY CONSEQUENCES OF YEAR 2000 PROBLEMS. The Company expects to
identify and resolve all Year 2000 Problems that could materially adversely
affect its business operations. However, management believes that it is not
possible to determine with complete certainty that all Year 2000 Problems
affecting the Company have been identified or corrected. The number of devices
that could be affected and the interactions among these devices are simply too
numerous. In addition, one cannot accurately predict how
22
<PAGE>
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
many Year 2000 Problem-related failures will occur or the severity, duration, or
financial consequences of these perhaps inevitable failures. As a result,
management expects that the Company could likely suffer the following
consequences:
1. a significant number of operational inconveniences and inefficiencies
for the Company and its customers that may divert management's time and
attention and financial and human resources from its ordinary business
activities; and
2. a lesser number of serious failures that may require significant efforts
by the Company or its customers to prevent or alleviate material business
disruptions.
Although the Company expects its critical systems to be compliant by mid
1999, there is no guarantee that these results will be achieved. Specific
factors that give rise to this uncertainty include a possible loss of technical
resources to perform the work, failure to identify all susceptible systems,
non-compliance by third parties whose systems and operations impact the Company,
and other similar uncertainties. A possible worst case scenario might include
one or more of the Company's software products sold to customers being
non-compliant. Such an event could result in a material disruption to the
Company's or customers operations. For example, the software could experience an
interruption in its ability to properly calculate or access the data required to
complete a collision estimate. Should the worst case scenario occur it could,
depending on its duration, have a material impact on the Company's results of
operations and financial position.
CONTINGENCY PLANS. The Company is currently developing contingency plans to
be implemented as part of its efforts to identify and correct Year 2000 Problems
that may occur. The Company expects to complete its contingency plans by April
1999. Depending on the systems affected, these plans could include accelerated
replacement of affected equipment or software, short to medium use of backup
equipment and software, increased work hours for Company personnel or use of
contract personnel to correct on an accelerated schedule any Year 2000 Problems
that arise or to provide manual workarounds for information systems, and similar
approaches. If the Company is required to implement any of these contingency
plans, it could have a material adverse effect on the Company's financial
condition and results of operations.
Based on the activities described above, Management believes the Company is
devoting the necessary resources to identify and resolve Year 2000 Problems. The
success of this effort and a favorable outcome to the various potential
situations described herein will determine the impact the Year 2000 Problem has
on the Company's business or results of operations
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.
23
<PAGE>
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
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 1999 Annual Meeting of
Stockholders and Proxy Statement, which was filed with the Securities and
Exchange Commission and provided to Stockholders on or about March 31, 1999.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item is hereby incorporated by reference to
CCC Information Services Group Inc.'s Notice of 1999 Annual Meeting of
Stockholders and Proxy Statement, which was filed with the Securities and
Exchange Commission and provided to Stockholders on or about March 31, 1999.
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 1999 Annual Meeting of
Stockholders and Proxy Statement, which was filed with the Securities and
Exchange Commission and provided to Stockholders on or about March 31, 1999.
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 1999 Annual Meeting of
Stockholders and Proxy Statement, which was filed with the Securities and
Exchange Commission and provided to Stockholders on or about March 31, 1999.
24
<PAGE>
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
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............................................... 26
Consolidated Financial Statements:
Consolidated Statement of Operations.......................................... 27
Consolidated Balance Sheet.................................................... 28
Consolidated Statement of Cash Flow........................................... 29
Consolidated Statement of Stockholders' Equity (Deficit)...................... 30
Notes to Consolidated Financial Statements.................................... 31-48
</TABLE>
2. Financial Statement Schedule
<TABLE>
<S> <C>
Schedule II--Valuation and Qualifying Accounts.................. 49
</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............................................... 50
</TABLE>
(b) Reports on Form 8-K
No reports on Form 8-K were filed by CCC Information Services Group Inc.
during 1998.
25
<PAGE>
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
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 present fairly, in all
material respects, the financial position of CCC Information Services Group Inc.
(a subsidiary of White River Ventures, Inc.) and its subsidiaries at December
31, 1998 and 1997, and the results of their operations and their cash flows for
each of the three years in the period ended December 31, 1998, 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.
PRICEWATERHOUSECOOPERS LLP
March 31, 1999
Chicago, Illinois
26
<PAGE>
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
<S> <C> <C> <C>
1998 1997 1996
---------- ---------- ----------
Revenues..................................................................... $ 188,169 $ 159,106 $ 130,977
Expenses:
Production and customer support............................................ 48,242 35,657 31,828
Commissions, royalties and licenses........................................ 21,495 18,939 14,009
Selling, general and administrative........................................ 60,053 50,914 40,653
Depreciation and amortization.............................................. 9,210 7,688 7,330
Product development and programming........................................ 25,813 20,203 17,026
Litigation settlement...................................................... 1,650 -- --
Relocation of claims settlement function................................... 1,707 -- --
---------- ---------- ----------
Operating income............................................................. 19,999 25,705 20,131
Interest expense............................................................. (258) (139) (2,562)
Other income, net............................................................ 697 1,505 636
---------- ---------- ----------
Income from operations before income taxes................................... 20,438 27,071 18,205
Income tax provision......................................................... (8,860) (11,239) (2,683)
Income before equity losses, minority interest and extraordinary item........ 11,578 15,832 15,522
Equity in net losses of affiliates........................................... (11,658) -- --
Minority share in earnings of subsidiaries................................... (1) -- --
---------- ---------- ----------
Income (loss) before extraordinary item...................................... (81) 15,832 15,522
Extraordinary loss on early retirement of debt, net of income taxes.......... -- -- (678)
---------- ---------- ----------
Net income (loss)............................................................ (81) 15,832 14,844
Dividends and accretion on mandatorily redeemable preferred stock............ 43 (365) (6,694)
---------- ---------- ----------
Net income (loss) applicable to common stock................................. $ (38) $ 15,467 $ 8,150
---------- ---------- ----------
---------- ---------- ----------
PER SHARE DATA:
INCOME (LOSS) PER COMMON SHARE--BASIC
Income (loss) applicable to common stock before extraordinary item......... $ -- $ 0.65 $ 0.46
Extraordinary loss on early retirement of debt, net of income taxes........ -- -- (0.03)
---------- ---------- ----------
Net income (loss) applicable to common stock............................... $ -- $ 0.65 $ 0.43
---------- ---------- ----------
---------- ---------- ----------
INCOME (LOSS) PER COMMON SHARE--DILUTED
Income (loss) applicable to common stock before extraordinary item......... $ -- $ 0.62 $ 0.43
Extraordinary loss on early retirement of debt, net of income taxes........ -- -- (0.03)
---------- ---------- ----------
Net income (loss) applicable to common stock................................. $ -- $ 0.62 $ 0.40
---------- ---------- ----------
---------- ---------- ----------
Weighted average shares outstanding
Basic...................................................................... 24,616 23,807 19,056
Diluted.................................................................... 25,188 24,959 20,367
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
27
<PAGE>
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
<S> <C> <C>
1998 1997
--------- ---------
ASSETS
Cash.......................................................................................... $ 1,526 $ 2,064
Investments in marketable securities.......................................................... -- 30,054
Accounts receivable, net...................................................................... 23,212 18,302
Income taxes receivable....................................................................... 272 --
Other current assets.......................................................................... 5,726 5,270
--------- ---------
Total current assets.................................................................... 30,736 55,690
Property and equipment, net of accumulated depreciation of $34,494 and $26,793 at December 31,
1998 and 1997, respectively................................................................. 14,951 9,700
Goodwill, net of accumulated amortization of $11,845 and $10,238 at December 31, 1998 and
1997, respectively.......................................................................... 12,799 9,885
Deferred income taxes......................................................................... 7,371 7,237
Investments in affiliates..................................................................... 9,843 --
Other assets.................................................................................. 3,318 982
--------- ---------
Total Assets............................................................................ $ 79,018 $ 83,494
--------- ---------
--------- ---------
LIABILITIES, MANDATORILY REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses......................................................... $ 23,128 $ 18,383
Income taxes payable.......................................................................... -- 2,637
Current portion of long-term debt............................................................. -- 111
Deferred revenues............................................................................. 4,327 5,824
--------- ---------
Total current liabilities............................................................... 27,455 26,955
Long-term debt................................................................................ 11,000 --
Deferred revenues............................................................................. 956 1,728
Other liabilities............................................................................. 3,611 3,930
Minority interest............................................................................. 5 --
Commitments and contingencies (Note 19).......................................................
--------- ---------
Total liabilities....................................................................... 43,027 32,613
Mandatorily redeemable preferred stock ($1.00 par value, 100,000 shares authorized, 684 shares
and 4,915 shares designated and outstanding at December 31, 1998 and 1997, respectively).... 688 5,054
--------- ---------
--------- ---------
Common stock ($0.10 par value, 30,000,000 shares authorized, 23,700,165 and 24,577,910 shares
issued and outstanding at December 31, 1998 and 1997, respectively)......................... 2,510 2,458
Additional paid-in capital.................................................................... 95,573 90,273
Accumulated deficit........................................................................... (46,469) (46,431)
Accumulated other comprehensive income........................................................ (26) --
Treasury stock, at cost ($0.10 par value, 1,521,925 and 117,618 shares in treasury at December
31, 1998 and 1997, respectively)............................................................ (16,285) (473)
--------- ---------
Total stockholders' equity.............................................................. 35,303 45,827
--------- ---------
Total Liabilities, Mandatorily Redeemable Preferred Stock and Stockholders' Equity.... $ 79,018 $ 83,494
--------- ---------
--------- ---------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
28
<PAGE>
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
<S> <C> <C> <C>
1998 1997 1996
--------- --------- ---------
<CAPTION>
YEAR ENDED DECEMBER 31,
<S> <C> <C> <C>
Operating Activities:
Net income (loss)................................................................... $ (81) $ 15,832 $ 14,844
Adjustments to reconcile net income to net cash provided by (used for) operating
activities:
Extraordinary loss on early retirement of debt, net of income taxes............... -- -- 678
Equity in net losses of affiliates................................................ 11,658 -- --
Depreciation and amortization of property and equipment........................... 7,566 6,307 5,948
Amortization of goodwill.......................................................... 1,604 1,345 1,345
Deferred income tax benefit....................................................... (296) (827) (2,600)
Other, net........................................................................ 536 (12) (2,889)
Changes in:
Accounts receivable, net........................................................ (4,119) (8,530) 127
Other current assets............................................................ (438) (2,063) (330)
Other assets.................................................................... (2,324) 175 (58)
Accounts payable and accrued expenses........................................... 4,370 2,562 (3,831)
Current income taxes............................................................ 253 5,394 3,371
Deferred revenues............................................................... (2,289) (154) 2,046
Other liabilities............................................................... (527) 41 1,604
--------- --------- ---------
Net cash provided by operating activities..................................... 15,913 20,070 20,255
--------- --------- ---------
Investing Activities:
Capital expenditures................................................................ (12,788) (8,051) (5,568)
Purchase of investment securities................................................... (12,778) (75,164) (9,001)
Purchase of subsidiaries, net of cash received...................................... (4,485) -- --
Investment in affiliates............................................................ (22,000) -- --
Proceeds from sales of investment securities........................................ 42,832 54,111 --
Other, net.......................................................................... (15) 21 25
--------- --------- ---------
Net cash used for investing activities........................................ (9,234) (29,083) (14,544)
--------- --------- ---------
Financing Activities:
Principal payments on long-term debt................................................ (5,111) (120) (46,740)
Proceeds from issuance of long-term debt............................................ 16,000 -- 10,750
Public offering of common stock, net of underwriters' discounts..................... -- -- 73,795
Redemption of preferred stock, including accrued dividends.......................... (4,323) -- (36,131)
Payment of equity and debt issue costs.............................................. -- -- (2,053)
Proceeds from exercise of stock options............................................. 1,202 1,794 --
Proceeds from employee stock purchase plan.......................................... 712 -- --
Payments to acquire treasury stock.................................................. (15,697) -- --
Other, net.......................................................................... -- -- 176
--------- --------- ---------
Net cash provided by (used for) financing activities.......................... (7,217) 1,674 (203)
--------- --------- ---------
Net increase (decrease) in cash....................................................... (538) (7,339) 5,508
Cash:
Beginning of period................................................................. 2,064 9,403 3,895
--------- --------- ---------
End of period....................................................................... $ 1,526 $ 2,064 $ 9,403
--------- --------- ---------
--------- --------- ---------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
29
<PAGE>
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT NUMBER OF SHARES)
<TABLE>
<CAPTION>
OUTSTANDING
COMMON STOCK ACCUMULATED TREASURY STOCK
---------------------- ADDITIONAL OTHER ---------------------- TOTAL
NUMBER OF PAID-IN ACCUMULATED COMPREHENSIVE NUMBER OF STOCKHOLDERS'
SHARES PAR VALUE CAPITAL (DEFICIT) INCOME SHARES COST EQUITY
----------- --------- ----------- ------------ ----------------- ----------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
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
Preferred stock
accretion.......... -- -- -- (365) -- -- -- (365)
Stock options
exercised including
income tax
benefit............ 1,105,555 111 6,050 -- -- -- -- 6,161
Other................ -- -- -- -- -- 5,113 (94) (94)
Net income........... -- -- -- 15,832 -- -- -- 15,832
----------- --------- ----------- ------------ --- ----------- --------- -------------
December 31, 1997...... 24,577,910 $ 2,458 $ 90,273 $ (46,431) 117,618 $ (473) $ 45,827
Preferred stock
accretion.......... -- -- -- 70 -- -- -- 70
Preferred stock
dividends
accrued............ -- -- -- (27) -- -- -- (27)
Stock options
exercised including
income tax
benefit............ 464,337 47 4,593 -- -- 4,307 (115) 4,525
Employee stock
purchase plan...... 57,918 5 707 -- -- -- -- 712
Treasury stock
purchases.......... (1,400,000) -- -- -- -- 1,400,000 (15,697) (15,697)
Cumulative
translation
adjustment......... -- -- -- -- (26) -- -- (26)
Net (loss)........... -- -- -- (81) -- -- -- (81)
----------- --------- ----------- ------------ --- ----------- --------- -------------
Comprehensive Net
(loss)............. -- -- -- (81) (26) -- -- (107)
----------- --------- ----------- ------------ --- ----------- --------- -------------
December 31, 1998...... 23,700,165 $ 2,510 $ 95,573 $ (46,469) $ (26) 1,521,925 $ (16,285) $ 35,303
----------- --------- ----------- ------------ --- ----------- --------- -------------
----------- --------- ----------- ------------ --- ----------- --------- -------------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
30
<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. (formerly known as InfoVest
Corporation), through its wholly owned subsidiary CCC Information Services Inc.
("CCC") (collectively referred to as the "Company"), 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.
As of December 31, 1998, White River Ventures, Inc. ("White River") held
approximately 30.5% 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 14--Mandatorily Redeemable Preferred Stock and Note 15--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, which are currently wholly owned or majority
owned.
REVENUE RECOGNITION
Revenues are recognized as services are provided. Of total Company revenues
in the years 1998, 1997 and 1996, 65%, 66% and 69%, respectively, were
attributable to revenues from insurance companies.
MARKETABLE SECURITIES
Marketable securities consisted primarily of U.S. treasury bills, which are
stated at cost.
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, 1998 and 1997, $3.3 million, and $2.7 million, respectively, have
been applied as a reduction of accounts receivable. Of total accounts
receivable, net of reserves, at December 31, 1998 and 1997, $20.2 million and
$14.3 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 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
31
<PAGE>
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 2--SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
and, consequently, the amounts that could be capitalized are not significant.
For the years 1998, 1997 and 1996, research and development costs of
approximately $4.9 million, $5.5 million and $4.3 million, respectively, are
reflected in the accompanying consolidated statement of operations.
PROPERTY AND EQUIPMENT
Property and 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 20 years.
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 not to exceed 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, 1998 and 1997, deferred debt issue costs, net of
accumulated amortization, of $0.5 million and $0.3 million, respectively, were
included in other assets.
FOREIGN CURRENCY
The Company has determined that the functional currency of each foreign
operation is the local currency. Assets and liabilities denominated in foreign
currencies are translated into U.S. dollars at the exchange rate on the balance
sheet date, while revenues and expenses are translated at average rates of
exchange prevailing during the period. Translation adjustments are included in
accumulated other comprehensive income as a separate component of stockholders'
equity.
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. See Note 18--Earnings Per Share.
FAIR VALUE OF FINANCIAL INSTRUMENTS
As of December 31, 1998, the carrying amount of the Company's financial
instruments, excluding the Investment in InsurQuote, (See Note 3--Investment in
InsurQuote) 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.
32
<PAGE>
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 2--SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
NEW ACCOUNTING PRONOUNCEMENTS
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."
Effective January 1, 1998, the Company adopted Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income" ("SFAS 130")
which establishes standards for reporting and display of comprehensive income
and its components in the financial statements. Comprehensive income represents
the change in stockholders' equity during a period resulting from transactions
and other events and circumstances from non-owner sources. It includes all
changes in equity during a period except those resulting from investments by
owners and distributions to owners. There were no elements of Comprehensive
Income in 1997 and 1996.
Effective January 1, 1998, the Company adopted SOP 97-2, "Software Revenue
Recognition". SOP 97-2 provided guidance on when revenue should be recognized
and in what amounts for licensing, selling, leasing or otherwise marketing
computer software. The Company previously maintained a policy similar to SOP
97-2 and therefore the adoption of SOP 97-2 did not have a material impact on
the Company's consolidated results of operations or financial position.
In March 1998, the AICPA issued SOP98-1, "Accounting For the Costs of
Computer Software Developed For or Obtained For Internal-Use" (SOP 98-1), which
the Company adopted. SOP 98-1 requires the capitalization of certain costs
incurred in connection with developing or obtaining software for internal-use.
The Company previously maintained a policy similar to SOP 98-1 and, therefore,
the adoption of SOP98-1 did not have a material impact on the Company's
consolidated results of operations or financial position.
Effective December 31, 1998, the Company adopted Statement of Financial
Accounting Standards No. 131, "Disclosures about Segments of an Enterprise and
Related Information." SFAS No. 131 establishes new standards for reporting
information about operating segments in interim and annual financial statements.
NOTE 3--INVESTMENT IN INSURQUOTE
On February 10, 1998, the Company invested $20.0 million in InsurQuote
Systems, Inc. (InsurQuote). InsurQuote, formed in 1989, is a provider of
insurance rating information and the software tools used to manage that
information. The Company's $20.0 million investment included 19.9% of InsurQuote
common stock, an $8.9 million subordinated note, warrants, shares of Series C
redeemable convertible preferred stock and Series D convertible preferred stock.
The warrants provide the Company with the right to acquire additional shares of
InsurQuote common stock and are exercisable by the Company through February 10,
2008, subject to potential early termination provisions. The Series C preferred
stock is redeemable in full at the end of five years, or earlier under certain
conditions, if not converted prior to that time. Each share of Series C and D
preferred stock is initially convertible into one share of common stock at the
option of the Company. Under the terms of the investment agreement, the Company,
subject to certain conditions, can increase its investment through additional
purchases of common and preferred
33
<PAGE>
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 3--INVESTMENT IN INSURQUOTE (CONTINUED)
shares. The Company's ownership percentage, assuming conversion into common
stock all of the securities currently exercisable, would be increased to 37.7%
at December 31, 1998.
The Company had accounted for its investment in InsurQuote on the cost
method until the fourth quarter of 1998, when it was determined that the equity
method should be applied. Accordingly, prior quarters have been restated to
reflect the investment in InsurQuote on the equity method. As a result, reported
net income for quarters ended March 31, 1998, June 30, 1998 and September 30,
1998 have been adjusted to reflect equity losses of InsurQuote of $1.2 million,
$3.0 million and $3.2 million, respectively and the elimination of interest and
dividend income of $0.1 million, $0.2 million and $0.2 million, respectively.
Notwithstanding the Company's 19.9% common stock equity share, the Company has
recorded 100% of InsurQuote's net losses for the period from the Company's
ownership, February 10, 1998 to December 31, 1998. The recording of 100% of
InsurQuote's losses was the result of the Company's $20.0 million investment
being the primary source of funding for InsurQuote's operating losses during the
year. The Company has not recorded any income tax benefit on the InsurQuote
losses. At December 31, 1998, the Company's remaining investment in InsurQuote
was approximately $8.1 million. The market value of the investment in InsurQuote
at December 31, 1998 is not readily determinable.
InsurQuote's fiscal year ended June 30, 1998. While the Company included
InsurQuote's losses from the period of the Company's ownership during 1998
(February 10, 1998 to December 31, 1998). Set forth below is summary InsurQuote
financial information as of its fiscal year ended June 30, 1998 is as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
--------------
<S> <C>
Revenues...................................................................... $ 11,908
Loss from operations.......................................................... $ (8,119)
Net loss...................................................................... $ (8,899)
Current assets................................................................ $ 9,005
Total assets.................................................................. $ 14,259
Current liabilities........................................................... $ 4,569
Preferred stock............................................................... $ 12,523
Notes payable to shareholders................................................. $ 9,100
Shareholder's deficit......................................................... $ 4,777
</TABLE>
On March 31, 1999, InsurQuote received a $20.0 million investment from a new
investor for preferred stock with an 11% voting interest. Upon receipt of this
new investment by InsurQuote the Company will cease recording losses on its
investment, unless it is determined that its remaining investment is impaired.
NOTE 4--ENTERSTAND JOINT VENTURE
On December 30, 1998, the Company and Hearst Communications, Inc. ("Hearst")
established a joint venture, Enterstand Limited (Enterstand), in Europe to
develop and market claims tools to insurers and collision repair facilities.
Under the provision of the Subscription and Stockholders Agreement
("Subscription Agreement"), the Company invested $2.0 million for a 19.9% equity
interest. The Subscription Agreement provides the Company with an option to
purchase 85% of Hearst shares of Enterstand at an agreed upon purchase price.
The option is exercisable by the Company after one year from the date of the
Subscription Agreement. The Company is applying the equity method of accounting
for its investment in
34
<PAGE>
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 4--ENTERSTAND JOINT VENTURE (CONTINUED)
the joint venture and recorded a charge of $0.2 million for it's 19.9% share of
the joint venture losses during 1998.
CCC and Enterstand entered into an agreement whereby CCC would develop for
the benefit of Enterstand certain claims processing tools. During 1998, CCC
charged Enterstand $0.6 million for the development work performed in 1998.
CCC International and Enterstand entered into an agreement where CCC
International would provide Enterstand with certain administrative and operating
services and office space. For the year ended December 31, 1998 CCC
International charged Enterstand $0.5 million for these services.
NOTE 5--ACQUISITIONS
On July 1, 1998, the Company acquired 93.75% of CCC International, for $1.9
million. CCC International's business included claims consulting and expertise
for insurance companies in the United Kingdom.
On August 31, 1998, the Company acquired 99.2% of Professional Claims
Services, Inc. (PCSI) for $2.9 million. PCSI provides claims adjusting and
third-party administration to the insurance industry and self-insured entities
in the western United States. The PCSI purchase agreement provides for a
contingent purchase price between $1.8 million and $7.0 million and is based on
certain performance measures of PCSI through December 31, 2002.
The above acquisitions were accounted for as purchases and results of
operations were included in the consolidated financial statements from their
respective acquisitions dates. The purchase price for each acquisition was
allocated based on estimated fair values at the date of acquisition.
Substantially all the purchase price was allocated to goodwill amortized over a
straight-line basis over its estimated useful life. Pro forma information has
not been presented as the pro forma results would not be materially different
from the historical results.
NOTE 6--RELOCATION OF CLAIMS SETTLEMENT FUNCTION
In the second quarter of 1998, the Company recorded a relocation charge of
$1.7 million, $1.0 million after-tax or $0.04 per share, related to relocating
certain customer service and claims processing operations to South Dakota. The
charge for the relocation consisted primarily of severance and other incremental
costs directly related to the relocation of 100 employees. The actual
expenditures related to the relocation approximated the amount originally
estimated and all expenditures associated with this relocation were completed by
December 31, 1998. In connection with the relocation, the Company acquired a
building and land at a total cost of $1.8 million.
NOTE 7--NONCASH INVESTING AND FINANCING ACTIVITIES
The Company directly charges accumulated deficit for preferred stock
accretion and preferred stock dividends accrued. During 1998, 1997 and 1996,
these amounts totaled $0.0 million, $0.4 million and $6.7 million, respectively.
35
<PAGE>
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 7--NONCASH INVESTING AND FINANCING ACTIVITIES (CONTINUED)
In conjunction with the exercise of certain stock options, the Company has
reduced current income taxes payable with an offsetting credit to
paid-in-capital for the tax benefit of stock options exercised. During 1998,
1997 and 1996, these amounts totaled $3.3 million, $4.3 million and $0.3
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 these noncash capital expenditures
totaled $1.3 million. There were no noncash capital expenditures in 1998 and
1997.
NOTE 8--INCOME TAXES
Income taxes applicable to income before equity losses, minority interest
and extraordinary item consisted of the following (provision) benefit:
<TABLE>
<CAPTION>
1998 1997 1996
--------- ---------- ---------
<S> <C> <C> <C>
(IN THOUSANDS)
Current:
Federal.................................................... $ (7,837) $ (10,008) $ (4,225)
State...................................................... (1,318) (2,089) (1,057)
International.............................................. -- 31 (1)
--------- ---------- ---------
Total current............................................ (9,155) (12,066) (5,283)
--------- ---------- ---------
Deferred:
Federal.................................................... 600 706 2,098
State...................................................... (305) 121 502
--------- ---------- ---------
Total deferred........................................... 295 827 2,600
--------- ---------- ---------
Total income tax provision............................... $ (8,860) $ (11,239) $ (2,683)
--------- ---------- ---------
--------- ---------- ---------
</TABLE>
The Company's effective income tax rate applicable to continuing operations
differs from the federal statutory rate as follows:
<TABLE>
<CAPTION>
1998 1997 1996
-------------------- --------------------- --------------------
<S> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS, EXCEPT %'S)
Federal income tax provision at
statutory rate...................... $ (7,153) (35.0)% $ (9,475) (35.0)% $ (6,190) (34.0)%
State and local taxes, net of federal
income tax effect and before
valuation allowances................ (1,055) (5.2) (1,279) (4.8) (924) (5.1)
International taxes................... (118) (0.6) (5) -- (21) (0.1)
Goodwill amortization................. (562) (2.7) (471) (1.7) (471) (2.6)
Change in valuation allowance......... -- -- (9) -- 4,679 25.7
Nondeductible expenses................ (225) (1.1) (218) (0.8) (186) (1.0)
InsurQuote............................ (342) (1.7) -- -- -- --
Other, net............................ 595 2.9 218 0.8 430 2.4
--------- --------- ---------- --------- --------- ---------
Income tax provision.................. $ (8,860) (43.4)% $ (11,239) (41.5)% $ (2,683) (14.7)%
--------- --------- ---------- --------- --------- ---------
--------- --------- ---------- --------- --------- ---------
</TABLE>
36
<PAGE>
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 8--INCOME TAXES (CONTINUED)
During 1998, 1997 and 1996, the Company made income tax payments, net of
refunds, of $8.8 million, $6.7 million and $1.9 million, respectively.
The approximate income tax effect of each type of temporary difference
giving rise to deferred income tax assets was as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1998 1997
--------- ---------
<S> <C> <C>
(IN THOUSANDS)
Deferred income tax assets:
Deferred revenue......................................................... $ 1,635 $ 1,993
Depreciation and amortization............................................ 1,549 1,330
Bad debt expense......................................................... 1,493 1,064
Rent..................................................................... 1,271 1,474
Litigation settlement.................................................... 386 --
Accrued compensation..................................................... 295 281
Capital loss carryforward................................................ 293 293
Net operating loss carryforward.......................................... 48 --
Long-term receivable..................................................... -- 143
Other, net............................................................... 918 952
--------- ---------
Subtotal................................................................. 7,888 7,530
Valuation allowance...................................................... (341) (293)
--------- ---------
Total deferred income tax asset............................................ 7,547 7,237
Deferred income tax liabilities............................................ (176) --
--------- ---------
Net deferred income tax asset.............................................. $ 7,371 $ 7,237
--------- ---------
--------- ---------
</TABLE>
NOTE 9--OTHER CURRENT ASSETS
Other current assets consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
<S> <C> <C>
1998 1997
--------- ---------
<CAPTION>
(IN THOUSANDS)
<S> <C> <C>
Prepaid data royalties..................................................... $ 2,505 $ 2,578
Prepaid equipment maintenance.............................................. 828 638
Receivable from affiliate.................................................. 692 --
Prepaid commissions........................................................ 597 730
Computer inventory......................................................... 230 412
Other...................................................................... 874 912
--------- ---------
Total.................................................................. $ 5,726 $ 5,270
--------- ---------
--------- ---------
</TABLE>
37
<PAGE>
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 10--PROPERTY AND EQUIPMENT
Property and equipment consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
<S> <C> <C>
1998 1997
--------- ---------
<CAPTION>
(IN THOUSANDS)
<S> <C> <C>
Computer equipment...................................................... $ 33,141 $ 27,321
Purchased software, licenses and databases.............................. 5,611 4,334
Furniture and other equipment........................................... 6,015 4,255
Leasehold improvements.................................................. 2,882 583
Building and land....................................................... 1,796 --
--------- ---------
Total, gross........................................................ 49,445 36,493
Less accumulated depreciation........................................... (34,494) (26,793)
--------- ---------
Total, net.......................................................... $ 14,951 $ 9,700
--------- ---------
--------- ---------
</TABLE>
As of December 31, 1998 and 1997, computer equipment, net of accumulated
depreciation, that is on lease to certain customers under operating leases of
$1.5 million and $2.4 million, respectively, is included in computer equipment.
Future minimum rentals under noncancelable customer leases aggregate
approximately $1.4 million and $0.5 million in 1999 and 2000, respectively.
NOTE 11--GOODWILL
Goodwill consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
<S> <C> <C>
1998 1997
--------- ---------
<CAPTION>
(IN THOUSANDS)
<S> <C> <C>
CCC acquisition (1988).................................................. $ 16,458 $ 16,458
UCOP acquisition (1994)................................................. 3,665 3,665
CCC International acquisition (1998).................................... 1,910 --
PCSI acquisition (1998)................................................. 2,611 --
--------- ---------
Total, gross........................................................ 24,644 20,123
Less accumulated amortization........................................... (11,845) (10,238)
--------- ---------
Total, net.......................................................... $ 12,799 $ 9,885
--------- ---------
---------
</TABLE>
38
<PAGE>
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 12--ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
<S> <C> <C>
1998 1997
--------- ---------
<CAPTION>
(IN THOUSANDS)
<S> <C> <C>
Accounts payable........................................................ $ 10,365 $ 6,138
Compensation............................................................ 3,849 6,492
Professional fees....................................................... 2,858 1,983
Litigation settlement................................................... 1,650 --
Sales tax............................................................... 1,398 1,237
Health insurance........................................................ 1,149 323
Commissions............................................................. 680 1,521
Other, net.............................................................. 1,179 689
--------- ---------
Total................................................................... $ 23,128 $ 18,383
--------- ---------
--------- ---------
</TABLE>
NOTE 13--LONG-TERM DEBT
On October 28, 1998, the credit facility between CCC and the commercial bank
was amended and restated. Under the amended credit facility, CCC increased its
ability to borrow under the revolving line of credit from $20 million to $50
million. In addition, the maturity date of the credit facility was extended to
October 31, 2003. The interest rate under the amended bank credit facility is
the London Interbank Offering Rate (LIBOR) plus 1.0% or the prime rate in effect
from time to time, as selected by CCC. CCC pays a commitment fee of 0.25% on any
unused portion of the revolving credit facility. When borrowings are
outstanding, interest payments are due quarterly.
Under the 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 bank credit facility requires CCC to maintain
certain levels of operating cash flow and debt coverage, and limits CCC's
ability to make investments and declare dividends.
The Company made cash interest payments of $0.1 million, $0.1 million and
$2.6 million during the year ended December 31, 1998, 1997 and 1996,
respectively.
Long-term debt consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
<S> <C> <C>
1998 1997
--------- ---------
<CAPTION>
(IN THOUSANDS)
<S> <C> <C>
Bank revolving credit facility............................................ $ 11,000 $ --
Capital lease obligations................................................. -- 111
--------- ---------
Total debt............................................................ 11,000 111
Due within one year....................................................... (--) (111)
--------- ---------
Due after one year........................................................ $ 11,000 $ --
--------- ---------
--------- ---------
</TABLE>
39
<PAGE>
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 13--LONG-TERM DEBT (CONTINUED)
The bank revolving credit facility balance of $11.0 million is due on
October 31, 2003, the maturity date of the bank credit facility.
NOTE 14--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 $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
40
<PAGE>
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 14--MANDATORILY REDEEMABLE PREFERRED STOCK (CONTINUED)
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 15--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. On May 29, 1998, the Company made
an offer to White River to redeem all outstanding Preferred Stock. This
redemption offer was declined by White River. Accordingly, under the terms of
the Preferred Stock, the dividend rate on the Preferred Stock subject to the
redemption offer was reduced from 8% to 1%.
On December 31, 1998, the Company redeemed all of the Series C Preferred
stock outstanding and 3,601 Shares of Series D Preferred Stock at a discounted
value of 14% of the future redemption value and stated dividends plus accrued
dividends as of December 31, 1998. As a result of this early redemption
discount, the Company recorded a gain of $0.2 million on early redemption of
Preferred Stock. This amount was included in the dividends and accretion line in
the Company's consolidated statement of operations. At December 31, 1998, 184
Shares of Series D Preferred Stock and 500 Shares of Series E Preferred Stock
are issued and outstanding.
NOTE 15--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.
41
<PAGE>
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 16--BENEFIT PLAN
The Company sponsors a defined contribution savings and investment plan.
Participation in the plan is voluntary, with substantially all employees
eligible to participate. Expenses related to the plan consist primarily of
Company contributions which are based on percentages of certain employees
contributions. Defined contribution expense for 1998, 1997 and 1996 was $0.7
million, $0.5 million and $0.4 million, respectively.
NOTE 17--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. During 1997, the Company's Board of Directors adopted a new
stock option plan that provides for the granting of 675,800 new options to
purchase Company common stock. As under the 1988 Plan, options are generally
exercisable within five years from the date of grant. On August 25, 1998, the
1997 stock option plan was amended to increase the number of shares available to
be granted to 1,500,000 shares. In addition, the term of the option was extended
from 5 years to 10 years on new stock option grants.
On September 23, 1998, the Company's Board of Directors approved a one-time
stock option exchange program, whereby all non-executive management option
holders could exchange their outstanding options for new options at a strike
price of $12.125. The 164,975 stock options that were part of the exchange
program are included in the 1998 option activity below as corresponding grants
and terminations.
42
<PAGE>
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 17--STOCK OPTION PLAN (CONTINUED)
Option activity during 1998, 1997 and 1996 is summarized below:
<TABLE>
<CAPTION>
1998 1997 1996
----------------------- ------------------------ -----------------------
<S> <C> <C> <C> <C> <C> <C>
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
SHARES PRICE SHARES PRICE SHARES PRICE
---------- ----------- ----------- ----------- ---------- -----------
Options Outstanding:
Beginning of year....................... 1,815,603 $ 6.62 2,679,939 $ 3.29 2,956,040 $ 1.93
Granted................................. 901,375 13.95 337,500 16.61 409,280 11.20
Exercised............................... (468,644) 2.24 (1,105,555) 1.59 (256,540) 1.43
Surrendered or terminated............... (273,284) 16.50 (96,281) 5.12 (428,841) 2.47
---------- ----- ----------- ----- ---------- -----
End of year........................... 1,975,050 $ 9.64 1,815,603 $ 6.62 2,679,939 $ 3.29
---------- ----- ----------- ----- ---------- -----
---------- ----- ----------- ----- ---------- -----
Options exercisable at year-end........... 761,653 $ 5.72 959,605 $ 3.51 1,764,774 $ 2.11
---------- ----- ----------- ----- ---------- -----
---------- ----- ----------- ----- ---------- -----
Weighted-average fair value of options
granted during the year................. $ 13.85 $ 15.31 $ 11.20
---------- ----------- ----------
---------- ----------- ----------
</TABLE>
The next table summarizes information about fixed stock options outstanding
at December 31, 1998:
<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............................... 161,480 5.02 $ 1.38 161,480 $ 1.38
$ 1.75 to $ 2.13............................... 287,770 1.26 $ 1.81 197,587 $ 1.81
$ 4.38 to $ 4.38............................... 189,680 1.95 $ 4.38 147,264 $ 4.38
$11.20 to $11.20............................... 353,045 2.50 $ 11.20 206,197 $ 11.20
$12.00 to $12.75............................... 763,225 9.06 $ 12.20 18,500 $ 12.75
$16.50 to $19.75............................... 172,500 5.31 $ 18.32 30,500 $ 19.03
$21.25 to $21.88............................... 47,350 4.08 $ 21.87 125 $ 21.25
----------- -----------
$1.38 to $21.88................................ 1,975,050 5.72 $ 9.64 761,653 $ 5.72
----------- -----------
----------- -----------
</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 were:
expected volatility of 32%, 31% and 30% for 1998, 1997 and 1996, respectively;
and a risk-free interest rate of 4.7%, 6.4% and 6.5% for 1998, 1997 and 1996,
respectively. In addition, the Company assumed an expected option life of 4.5
years to 5.5 years for 1998 and 4.5 years for both 1997 and 1996. No dividend
yield was assumed for all 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,
43
<PAGE>
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 17--STOCK OPTION PLAN (CONTINUED)
the Company's net income applicable to common stock and related per share
amounts would have been reduced as indicated below:
<TABLE>
<CAPTION>
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
(IN THOUSANDS, EXCEPT
PER SHARE DATA)
Net income (loss) applicable to common stock:
As reported................................................... $ (81) $ 15,467 $ 8,150
Pro forma..................................................... $ (836) $ 15,026 $ 7,864
Per share net income (loss) applicable to common stock assuming
dilution:
As reported................................................... $ -- $ 0.62 $ 0.40
Pro forma..................................................... $ (0.03) $ 0.60 $ 0.39
</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
1998, 1997 and 1996 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 18--EARNINGS PER SHARE
The Company adopted Statement of Financial Accounting Standards (SFAS) No.
128, "Earnings Per Share" in the fourth quarter of 1997. SFAS No. 128 requires
the presentation of basic and diluted earnings per share, including the
restatement of prior periods. A summary of the calculation of basic and diluted
earnings per share for the years ended December 31, 1998, 1997 and 1996, is
presented below (in thousands, except per share data):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Income (loss) before extraordinary item........................................... $ (81) $ 15,832 $ 15,522
Extraordinary loss on early retirement of debt, net of income taxes............... -- -- (678)
Less: Dividends and accretion on mandatorily redeemable preferred stock........... 43 (365) (6,694)
--------- --------- ---------
Income (loss) applicable to common stock.......................................... $ (38) $ 15,467 $ 8,150
--------- --------- ---------
--------- --------- ---------
Weighted average common shares.................................................... 24,616 23,807 19,056
--------- --------- ---------
Effect of common stock options.................................................... 572 1,152 1,311
--------- --------- ---------
Weighted average diluted shares................................................... 25,188 24,959 20,367
--------- --------- ---------
--------- --------- ---------
Basic earnings per common share................................................... $ -- $ 0.65 $ 0.43
--------- --------- ---------
--------- --------- ---------
Diluted earnings per common share................................................. $ -- $ 0.62 $ 0.40
--------- --------- ---------
--------- --------- ---------
</TABLE>
Options to purchase a weighted average number of 251,136 shares and 70,528
shares of common stock for 1998 and 1997, respectively, were not included in the
computation of diluted EPS because the options' exercise prices were greater
than the average market price of the common shares. The price of these options
ranged from $18.25 to $27.50 per share. At December 31, 1998, 169,350 of these
options, which expire in the range of 2002 through 2003, were still outstanding.
44
<PAGE>
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 19--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, 1998, future minimum
cash lease payments were as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
--------------
<S> <C>
1999.......................................................................... $ 6,040
2000.......................................................................... 4,386
2001.......................................................................... 2,907
2002.......................................................................... 2,723
2003.......................................................................... 2,792
Thereafter.................................................................... 12,374
-------
Total......................................................................... $ 31,222
-------
-------
</TABLE>
During 1998, 1997 and 1996, operating lease expense was $5.1 million, $3.5
million and $3.2 million, respectively.
The Company has a $0.2 million letter of credit available until October
2003. Under the terms of this agreement, interest rates are determined at the
time of borrowing. There was no amount outstanding under the letter of credit at
December 31, 1998.
During the first quarter of 1999, the Company entered into a settlement with
a service provider for amounts paid in prior years which would result in a
partial refund. Pursuant to the terms of the settlement, the Company expects to
receive credits of approximately $0.8 million in March of 1999.
45
<PAGE>
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 20--BUSINESS SEGMENTS
FASB Statement No. 131, "Disclosures About Segments for Enterprise and
Related Information," requires companies to provide certain information about
their operating segments.
The Company has three reportable segments; Insurance Services, Automotive
Services and Consumer Processing Services. The Insurance Services Division sells
products and services which assist their customers in managing total loss and
repairable auto claims as well as a product to assist in the underwriting of
insurance. The Automotive Services Division sells products and services which
assist their customers in managing repairable auto claims. The Consumer
Processing Services Division sells products and services which provide complete
outsourcing services on all aspects of the claim process.
The Company's reportable segments are based upon the nature of the products
and services within the Company and the methods used to distribute these
products and services. The Company is organized into revenue producing divisions
and support organizations (product development and customer support) tasked with
facilitating the performance of the revenue producing divisions. Division
expenses represent principally salaries and related employee expenses directly
related to the Division's activities. Each revenue division and support
organization is led by a vice president that reports to either the Chief
Operating Officer or the Chief Executive Officer. Management evaluates
performance at the total company profit level and at the product revenue level.
The support organization costs are not currently allocated to the revenue
producing divisions and includes product engineering, management information
systems, customer support and finance and administration costs.
<TABLE>
<CAPTION>
CONSUMER
INSURANCE AUTOMOTIVE PROCESSING
SERVICES SERVICES SERVICES OTHER* TOTAL
---------- ----------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C>
1998
Net Revenue......................................... $ 101,376 $ 63,455 $ 22,710 $ 628 $ 188,169
Expenses............................................ (29,183) (37,009) (21,247) (80,731) (168,170)
---------- ----------- ----------- ---------- -----------
72,193 26,446 1,463 (80,103) 19,999
Equity in loss of affiliates........................ (11,658) -- -- -- (11,658)
---------- ----------- ----------- ---------- -----------
Division operating margin........................... $ 60,535 $ 26,446 $ 1,463 $ (80,103) $ 8,341
---------- ----------- ----------- ---------- -----------
---------- ----------- ----------- ---------- -----------
Accounts receivable................................. $ 13,197 $ 2,183 $ 7,066 $ 766 $ 23,212
---------- ----------- ----------- ---------- -----------
---------- ----------- ----------- ---------- -----------
1997
Net Revenue......................................... $ 96,355 $ 51,060 $ 9,615 $ 2,076 $ 159,106
Expenses............................................ (30,615) (26,806) (7,073) (68,907) (133,401)
---------- ----------- ----------- ---------- -----------
Division operating margin........................... $ 65,740 24,254 2,542 (66,831) 25,705
---------- ----------- ----------- ---------- -----------
---------- ----------- ----------- ---------- -----------
Accounts receivable................................. $ 10,974 2,737 3,415 1,176 18,302
---------- ----------- ----------- ---------- -----------
---------- ----------- ----------- ---------- -----------
1996
Net Revenue......................................... $ 83,188 $ 38,478 $ 7,191 $ 2,120 $ 130,977
Expenses............................................ (25,779) (21,730) (5,010) (58,327) (110,846)
---------- ----------- ----------- ---------- -----------
Division operating margin........................... $ 57,409 $ 16,748 $ 2,181 $ (56,207) $ 20,131
---------- ----------- ----------- ---------- -----------
---------- ----------- ----------- ---------- -----------
Accounts receivable................................. $ 7,443 $ 419 $ 1,720 $ 190 $ 9,772
---------- ----------- ----------- ---------- -----------
---------- ----------- ----------- ---------- -----------
</TABLE>
46
<PAGE>
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 20--BUSINESS SEGMENTS (CONTINUED)
* Other net revenue includes a discontinued product which provided new and
used car pricing to consumers. Other expenses include support costs.
Net revenue by major products include:
<TABLE>
<CAPTION>
1998 1997 1996
---------- ---------- ----------
<S> <C> <C> <C>
Net Revenue
Pathways Workstation/Collision Estimating Services and Products.............. $ 102,381 83,988 64,248
Vehicle Valuation Services and Products...................................... 50,827 50,287 45,542
Claims Outsourcing Services and Products TPA................................. 12,856 1,128 --
ACCESS....................................................................... 7,202 6,636 5,286
Other........................................................................ 14,902 17,067 15,901
---------- ---------- ----------
$ 188,169 $ 159,106 $ 130,977
---------- ---------- ----------
</TABLE>
NOTE 21--LEGAL PROCEEDINGS
In March 1999, the Company completed settlement of a lawsuit involving a
former independent sales representative. The settlement resulted in a charge of
$1.7 million including among other things payment for past earned commissions,
resolution of disputed commissions and other costs associated with the
resolution of the dispute.
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 22--SUMMARIZED QUARTERLY OPERATING RESULTS (UNAUDITED)
The first, second and third quarters of 1998 were restated to reflect the
investment in InsurQuote on the equity method of accounting. A comparison
between as originally reported and as restated follows:
<TABLE>
<CAPTION>
1998
-------------------------------
FIRST SECOND THIRD
--------- --------- ---------
<S> <C> <C> <C>
Net income (loss) as originally reported............................................. $ 4,307 $ 2,886 $ 2,836
Net income (loss) per diluted share as originally reported........................... $ 0.17 $ 0.11 $ 0.11
Net income (loss) as restated........................................................ $ 3,005 (379) (598)
Net income (loss) per diluted share as restated...................................... $ 0.12 $ (0.01) (0.02)
</TABLE>
The following table sets forth unaudited consolidated statements of
operations for the quarters in the years ended December 31, 1998 and 1997. 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.
47
<PAGE>
NOTE 22--SUMMARIZED QUARTERLY OPERATING RESULTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
1998 1997
-------------------------------------------- ------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FIRST SECOND THIRD FOURTH FIRST SECOND THIRD FOURTH
--------- --------- --------- ----------- --------- --------- --------- ---------
Revenues............................ $ 44,691 $ 46,147 48,048 $ 49,283 $ 36,777 $ 38,289 $ 40,457 $ 43,583
Operating expenses.................. 37,535 39,751 43,449 44,078 31,090 31,913 33,938 36,460
Litigation settlement (1)........... -- -- -- 1,650 -- -- -- --
Relocation of claims settlement
function (2)...................... -- 1,707 -- -- -- -- -- --
Operating income.................... 7,156 4,689 4,599 3,555 5,687 6,376 6,519 7,123
Interest expense.................... (64) (1) (61) (132) (37) (35) (34) (33)
Other income, net................... 350 112 172 63 279 350 431 445
--------- --------- --------- ----------- --------- --------- --------- ---------
Income from operations before income
taxes............................. 7,442 4,800 4,710 3,486 5,929 6,691 6,916 7,535
Income tax provision................ (3,162) (2,046) (2,125) (1,527) (2,510) (2,804) (2,908) (3,017)
--------- --------- --------- ----------- --------- --------- --------- ---------
Income from operations before equity
losses and minority interest...... 4,280 2,754 2,585 1,959 3,419 3,887 4,008 4,518
Equity in net losses of affiliates.. (1,181) (3,036) (3,203) (4,238) -- -- -- --
Minority share in earnings of
subsidiaries...................... -- -- 14 (15) -- -- -- --
--------- --------- --------- ----------- --------- --------- --------- ---------
Net income (loss)................... 3,099 (282) (604) (2,294) 3,419 3,887 4,008 4,518
Dividends and accretions on
mandatorily redeemable preferred
stock............................. (94) (97) 6 228 (88) (90) (93) (94)
--------- --------- --------- ----------- --------- --------- --------- ---------
Net income (loss) applicable to
common stock...................... $ 3,005 $ (379) $ (598) $ (2,066) $ 3,331 $ 3,797 $ 3,915 $ 4,424
--------- --------- --------- ----------- --------- --------- --------- ---------
--------- --------- --------- ----------- --------- --------- --------- ---------
PER SHARE DATA:
INCOME (LOSS) PER COMMON
SHARE--BASIC
Net income (loss) applicable to
common stock...................... $ 0.12 $ (0.02) $ (0.02) $ (0.09) $ 0.14 $ 0.16 $ 0.16 $ 0.18
--------- --------- --------- ----------- --------- --------- --------- ---------
--------- --------- --------- ----------- --------- --------- --------- ---------
INCOME (LOSS) PER COMMON
SHARE--DILUTED
Net income (loss) applicable to
common stock.................... $ 0.12 $ (0.01) $ (0.02) $ (0.09) $ 0.13 $ 0.15 $ 0.16 $ 0.18
--------- --------- --------- ----------- --------- --------- --------- ---------
--------- --------- --------- ----------- --------- --------- --------- ---------
Weighted average shares outstanding:
Basic............................. 24,638 24,859 24,998 23,972 23,511 23,661 23,853 24,194
Diluted........................... 25,418 25,493 25,388 24,297 24,802 24,848 24,997 25,182
</TABLE>
- ------------------------
(1) See Note 21--Legal Proceedings
(2) See Note 6--Relocation of Claims Settlement Function
48
<PAGE>
CCC INFORMATION SERVICES GROUP, INC.
AND SUBSIDIARIES
SUPPLEMENTAL FINANCIAL STATEMENT SCHEDULES
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)
<TABLE>
<CAPTION>
BALANCE AT
BEGINNING OF CHARGED TO COSTS CHARGED TO OTHER BALANCE AT END
DESCRIPTION PERIOD AND EXPENSES ACCOUNTS ADDITIONS/DEDUCTIONS OF PERIOD
- ------------------------- ------------- ----------------- --------------------- --------------------- ---------------
<S> <C> <C> <C> <C> <C>
1996 Allowance for
Doubtful Accounts........ 1,465 3,781 -- (3,300 (a) 1,946
1997 Allowance for
Doubtful Accounts........ 1,946 3,472 -- (2,755 (a) 2,663
1998 Allowance for
Doubtful Accounts........ 2,663 8,331 22(b) (7,758 (a) 3,258
1996 Deferred Income Tax
Valuation Allowance...... 4,963 -- -- (4,679 (c) 284
1997 Deferred Income Tax
Valuation Allowance...... 284 -- -- 9 293
1998 Deferred Income Tax
Valuation Allowance...... 293 -- -- 48 341
</TABLE>
- ------------------------
(a) Accounts receivable write-offs, net of recoveries.
(b) Opening reserve balance for Professional Claims Services Inc.
(c) Reversal of deferred tax valuation allowances.
49
<PAGE>
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
EXHIBIT INDEX
<TABLE>
<S> <C>
3.1 Amended and Restated Certificate of Incorporation of the Company filed as Exhibit 3.1
to the Company's Annual Report on Form 10-K (filed with the Commission (file No.
000-28600) on March 14, 1997, (the "Annual Report"), and hereby incorporated by
reference)
3.2 Amended and Restated Bylaws of the Company (filed as Exhibit 3.2 to the Annual Report
and hereby incorporated by reference)
4.1 Amended and Restated Stockholders' Agreement
4.2 Series C Preferred Designations (incorporated herein by reference to Exhibit 4.4 of
the Company's Registration Statement on Form S-1, Commission File No. 333-07287
4.3 Series D Preferred Designations (incorporated herein by reference to Exhibit 4.5 of
the Company's Registration Statement on Form S-1, Commission File No. 333-07287
4.4 Series E Preferred Designations (incorporated herein by reference to Exhibit 4.6 of
the Company's Registration Statement on Form S-1, Commission File No. 333-07287
10.1 Amended and Restated Credit Facility Agreement between CCC Information Services Inc.,
LaSalle National Bank and the other financial institutions party thereto
10.2 Amended and Restated Motor Crash Estimating Guide Data License*
10.3 European Version of Motor Crash Estimating Guide Data License
10.4 Stock Option Plan (incorporated herein by reference to Exhibit 4.03 of the Company's
Registration Statement on Form S-8, Commission File Number 333-15207 filed October
31, 1996)
10.5 1997 Stock Option Plan as amended (incorporated herein by reference to Exhibit 4.05
of the Company's Registration Statement on Form S-8, Commission File Number 333-67645
filed November 20, 1998)
10.6 401(K) Company Retirement Saving & Investment Savings Plan (incorporated herein by
reference to Exhibit 4.4 of the Company's Registration Statement on Form S-8,
Commission Number 333-32139 filed July 25, 1997)
10.7 Employee Stock Purchase Plan (incorporated herein by reference to Exhibit 5.01 of the
Company's Registration Statement on Form S-8, Commission File Number 33-47205 filed
March 2, 1998)
10.8 Securities Purchase Agreement between Company and InsurQuote Systems Inc. dated
February 10, 1998 (incorporated herein by reference to Exhibit 10.7 of the Company's
Quarterly Report on Form 10-Q, Commission File Number 000-28600 filed May 15, 1998)
10.9 Investment Agreement between Company and InsurQuote Systems Inc. dated February 10,
1998 (incorporated herein by reference to Exhibit 10.8 of the Company's Quarterly
Report on Form 10-Q, Commission File Number 000-28600 filed May15, 1998)
10.10 Common Stock Warrant to purchase 440,350 shares of InsurQuote Systems Inc. dated
February 10, 1998 (incorporated herein by reference to Exhibit 10.9 of the Company's
Quarterly Report on Form 10-Q, Commission File Number 000-28600 filed May 15, 1998)
10.11 Sale and Purchase Agreement between the Company and Phillip Carter dated July 1, 1998
11 Statement Re: Computation of Per Share Earnings
13 InsurQuote Systems, Inc. Audited Consolidated Financial Statements for Year Ended
June 30, 1998*
21 List of Subsidiaries
23 Consent of PricewaterhouseCoopers LLP
27.1 Financial Data Schedule for year end 12/31/98
27.2 Financial Data Schedule Restated for 9 months ended 9/30/98
27.3 Financial Data Schedule Restated for 6 months ended 6/30/98
27.4 Financial Data Schedule Restated for 3 months ended 3/31/98
</TABLE>
- ------------------------
* To be filed by Amendment.
50
<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> <C> <C>
Date: March 30, 1999 CCC INFORMATION SERVICES GROUP
By: /s/ DAVID M. PHILLIPS By: /s/ DUDLEY C. MECUM
Name: ----------------------------------- Name: -----------------------------------
Title: David M. Phillips Title: Dudley C. Mecum
Chairman and Chief Executive Officer Director
By: /s/ LEONARD L. CIARROCCHI By: /s/ GITHESH RAMAMURTHY
Name: ----------------------------------- Name: -----------------------------------
Title: Leonard L. Ciarrocchi Title: Githesh Ramamurthy
Executive Vice President and Chief Financial Director
Officer
By: /s/ MICHAEL P. DEVEREUX By: /s/ MARK A. ROSEN
Name: ----------------------------------- Name: -----------------------------------
Title: Michael P. Devereux Title: Mark A. Rosen
Vice President, Controller and Chief Accounting Director
Officer
By: /s/ MORGAN W. DAVIS By: /s/ MICHAEL R. STANFIELD
Name: ----------------------------------- Name: -----------------------------------
Title: Morgan W. Davis Title: Michael R. Stanfield
Director Director
By: /s/ MICHAEL R. EISENSON By: /s/ HERBERT S. WINOKUR
Name: ----------------------------------- Name: -----------------------------------
Title: Michael R. Eisenson Title: Herbert S. Winokur
Director Director
By: /s/ THOMAS L. KEMPNER
Name: -----------------------------------
Title: Thomas L. Kempner
Director
</TABLE>
51
<PAGE>
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
<TABLE>
<S> <C>
Directors Morgan W. Davis
Insurance Operating Officer
White Mountain Holdings Inc.
Michael R. Eisenson
President and Chief Executive Officer
Charlesbank Capital Partners LLC
Thomas L. Kempner
Chairman and Chief Executive Officer
Loeb Partners Corporation
Dudley C. Mecum
General Partner
Capricorn Holdings, LLC
David M. Phillips
Chairman and Chief Executive Officer
CCC Information Services Group Inc.
Githesh Ramamurthy
President and Chief Operating Officer
CCC Information Services Group Inc.
Mark A. Rosen
Managing Director
Charlesbank Capital Partners LLC
Michael R. Stanfield
Managing Director
Loeb Partners Corporation
Herbert S. "Pug" Winokur
Chairman and Chief Executive Officer
Capricorn Holdings LLC
Daniel "Deke" Jackson
Director Emeritus
Jackson LLC
Executive David M. Phillips
Officers Chairman and Chief Executive Officer
J. Laurence Costin Jr.
Vice Chairman
Githesh Ramamurthy
President and Chief Operating Officer
John Buckner
President Automotive Services Division
Blaine R. Ornburg
President CCC Consumer Processing Services Inc.
</TABLE>
52
<PAGE>
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
<TABLE>
<S> <C>
Executive Phillip Carter
Officers President CCC International
(continued)
Richard J. Radi
Executive Vice President Insurance Services Division
Mary Jo Prigge
Executive Vice President Claims Settlement Division
Robert Milburn
Executive Vice President Product Development
Leonard L. Ciarrocchi
Executive Vice President and Chief Financial Officer
Michael P. Devereux
Vice President, Controller and Chief Accounting Officer
</TABLE>
53
<PAGE>
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
CORPORATE INFORMATION
<TABLE>
<S> <C>
CORPORATE OFFICE ANNUAL MEETING
World Trade Center Chicago The 1999 Annual Meeting of Stockholders will
444 Merchandise Mart be held on April 29, 1999 at 10:00 a.m. at
Chicago, Illinois 60654 the Westin River North Hotel, 320 North
(312) 222-4636 Dearborn Avenue, Chicago, Illinois
TRANSFER AGENT REGISTRAR FOR COMMON STOCK INDEPENDENT ACCOUNTANTS
Harris Trust and Savings Bank PricewaterhouseCoopers 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 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>
54
<PAGE>
Exhibit 4.1
- --------------------------------------------------------------------------------
AMENDED AND RESTATED
STOCKHOLDERS AGREEMENT
by and among
CCC INFORMATION SERVICES GROUP INC.
(formerly known as InfoVest Corporation),
WHITE RIVER VENTURES, INC.,
and
THE INSIDE STOCKHOLDERS IDENTIFIED
ON EXHIBIT A HERETO
dated as of
June 30, 1998
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C> <C> <C>
1. DEFINITIONS........................................................... 1
2. REPRESENTATIONS AND WARRANTIES........................................ 3
2.1. AUTHORITY, ETC.......................................... 3
2.2. OWNERSHIP............................................... 4
3. CORPORATE GOVERNANCE.................................................. 4
3.1. BOARD OF DIRECTORS...................................... 4
3.2. VACANCIES............................................... 4
3.3. COVENANT TO VOTE........................................ 5
4. CONTROL OF CERTAIN EXTRAORDINARY TRANSACTIONS; SUBSEQUENT OFFERINGS... 5
4.1. CONTROL OF CERTAIN EXTRAORDINARY TRANSACTIONS........... 5
4.2. CONTROL OF SUBSEQUENT OFFERINGS......................... 6
4.3. CONSENTS................................................ 6
5. RESTRICTIONS ON TRANSFER.............................................. 7
5.1. GENERAL RESTRICTIONS.................................... 7
5.2. PERMITTED TRANSFERS BY OUTSIDE STOCKHOLDERS............. 7
5.3. PERMITTED TRANSFERS BY INSIDE STOCKHOLDERS.............. 7
6. SHARE CERTIFICATES.................................................... 8
6.1. RESTRICTIVE ENDORSEMENT. ............................... 8
7. MISCELLANEOUS......................................................... 9
7.1. TERMINATION............................................. 9
7.2. STOP ORDER.............................................. 9
7.3. NOTICES................................................. 9
7.4. AMENDMENT............................................... 9
7.5. ASSIGNMENT.............................................. 9
7.6. GOVERNING LAW; CONSENT TO JURISDICTION.................. 9
7.7. SEVERABILITY............................................ 10
7.8. ENTIRE AGREEMENT; HEADINGS.............................. 10
7.9. COUNTERPARTS............................................ 10
7.10. FURTHER ASSURANCES...................................... 10
7.11. SPECIFIC PERFORMANCE.................................... 10
7.12. RELATIONSHIP OF THE PARTIES............................. 10
7.13. NATURE OF OBLIGATIONS................................... 10
</TABLE>
<PAGE>
AMENDED AND RESTATED STOCKHOLDERS AGREEMENT
This AMENDED AND RESTATED STOCKHOLDERS AGREEMENT (this "Agreement"),
dated as of June 30, 1998, is by and among CCC Information Services Group Inc.
(formerly InfoVest Corporation), a Delaware corporation (the "Company"), White
River Ventures, Inc., a Delaware corporation ("White River"), and the Inside
Stockholders of the Company identified on Exhibit A hereto (collectively, the
"Initial Inside Stockholders").
This Agreement amends and restates in its entirety that certain
Stockholders' Agreement dated as of June 16, 1994 by and among the parties
hereto (the "Prior Agreement"). In consideration of the foregoing, the mutual
covenants herein and other consideration, the adequacy of which is being
acknowledged, the parties hereto agree as follows:
1. DEFINITIONS. As used herein, unless the context otherwise
requires, the following terms have the following respective meanings:
"AFFILIATE" means, with respect to the Company or any Subsidiary, any
Person that (at the time when the determination is to be made) directly, or
indirectly through one or more intermediaries, controls, or is controlled by, or
is under common control with, that other Person. As used in the foregoing
sentence, the terms "control" (including, with correlative meaning, the terms
"controlling," "controlled by" and "under common control with") means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
"BASE SALARY" means the annual base salary paid on a periodic basis by
the Company to any Person excluding any bonus, stock option, warrant and other
incentive compensation.
"BOARD OF DIRECTORS" means the Company's board of directors.
"COMPENSATION" means any Base Salary, wage, commission, bonus, stock
option, warrant or other consideration extended by the Company to any Person.
"COMMISSION" means the Securities and Exchange Commission or any other
Federal agency at the time administering the Securities Act.
"COMMON STOCK" means the Company's Common Stock, $.10 par value per
share.
"COMMON STOCK EQUIVALENTS" means all options, warrants and other rights
to acquire Common Stock or securities convertible into or exchangeable for
Common Stock without taking into account the exercise price of any such options,
warrants or other rights.
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<PAGE>
"DISABILITY" means a physical or mental condition which, in the opinion
of a physician selected by White River and reasonably satisfactory to the
Company, totally and permanently prevents the Inside Stockholder from engaging
in any gainful employment. An individual shall not be considered to have a
disability unless and until the condition and the incapacity has continued for
at least six continuous months.
"DISPOSE" (including, with correlative meaning, the term "Disposition")
means any sale, assignment, transfer, pledge, encumbrance or other disposition.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
or any similar Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect from time to time. Reference to a
particular section of the Securities Exchange Act of 1934, as amended, shall
include a reference to the comparable section, if any, of such similar Federal
statute.
"INSIDE STOCKHOLDERS" means and includes the Initial Inside
Stockholders and any Permitted Transferees of the Initial Inside Stockholders
who are bound hereby.
"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).
"OUTSIDE STOCKHOLDERS" means and includes White River and any Permitted
Transferees of White River who are bound hereby.
"PERMITTED TRANSFEREE" means, with respect to a Disposition by any
Inside Stockholder of Common Stock or Common Stock Equivalents, any spouse,
parent, child, brother or sister of such Inside Stockholder, issue of any of the
foregoing individuals (including individuals legally adopted into the line of
descent), charitable trust established pursuant to Section 501 of the Internal
Revenue Code of 1986, as amended, trust for the benefit of any of the foregoing
individuals or estate of any of the foregoing individuals.
"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 any agency or instrumentality thereof.
"PREFERRED STOCK" means shares of the Series C Cumulative Redeemable
Preferred Stock, par value $1.00 per share (the "Series C Preferred Stock"),
Series D Cumulative Redeemable Preferred Stock, par value $1.00 per share (the
"Series D Preferred Stock") and the Series E Cumulative Redeemable Preferred
Stock, par value $1.00 per share (the "Series E Preferred Stock").
-2-
<PAGE>
"REDEMPTION DATE" means the first day hereafter on which no shares of
the Preferred Stock are issued and outstanding.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement, dated as of June 16, 1994, between the Company and White River.
"SECURITIES ACT" means the Securities Act of 1933, as amended, or any
similar Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect from time to time. Reference to a
particular section of the Securities Act of 1933, as amended, shall include a
reference to the comparable section, if any, of such similar Federal statute.
"STOCKHOLDER" means any Inside Stockholder or Outside Stockholder.
"SUBSEQUENT OFFERING" means a sale of Common Stock or any Common Stock
Equivalent in a public offering pursuant to an effective registration statement
under the Securities Act.
"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 Company 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
Company or any Subsidiary thereof or (iii) any Person which is a limited
partnership in which the Company 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.
"VOTING STOCK" means (i) the Common Stock and (ii) the Series E
Preferred Stock.
2. REPRESENTATIONS AND WARRANTIES.
2.1. AUTHORITY, ETC. Each of the parties hereto represents and
warrants to the other parties that: (i) it has full right, power and authority
to enter into this Agreement and to perform its obligations hereunder; (ii) this
Agreement has been duly authorized, executed and delivered by it and, assuming
the due authorization, execution and delivery of this Agreement by the other
parties hereto, constitutes the legal, valid and binding obligation of such
party, enforceable against it in accordance with its terms; (iii) no consent,
approval or authorization of any Person is required to be obtained by or with
respect to such party in connection with the execution and delivery by it of
this Agreement or the performance by it of its obligations hereunder; and (iv)
neither the execution nor the delivery of this Agreement by such party nor the
performance by it of its obligations hereunder will conflict with or result in a
breach or violation of (A) its organizational documents (if any), (B) any
contract, agreement or any arrangement to which it is a party or by which it or
any of its properties or assets is bound or (C) any order, decree, law, rule or
regulation applicable to it or any of its properties or assets.
-3-
<PAGE>
2.2. OWNERSHIP. Each of the Stockholders represents and warrants to
each other and to the Company that: (i) it is the legal holder and beneficial
owner of the number of shares of Common Stock set forth opposite its name on
Exhibit A hereto, free and clear of all Liens; and (ii) it has sole voting power
with respect to such shares of Common Stock.
3. CORPORATE GOVERNANCE.
3.1. BOARD OF DIRECTORS. (a) Until the Amendment Date (as defined
below), the Stockholders and the Company hereby agree to take all actions
necessary (i) to cause and maintain the election to the Board of Directors of:
(x) four (4) individuals designated from time to time by White River and (y)
three (3) individuals designated from time to time by the holders of a majority
of the shares of Common Stock held by the Inside Stockholders and (ii) to cause
the Board of Directors to be fixed at seven (7) members and to consist solely of
the seven (7) directors designated pursuant to this Section 3.1(a). The initial
designees of White River are Michael R. Eisenson, Mark A. Rosen, Herbert S.
Winokur, Jr. and Dudley C. Mecum, and the initial designees of the Inside
Stockholders shall be David M. Phillips, Thomas L. Kempner and Michael R.
Stanfield.
(b) From and after the Amendment Date, the Stockholders and the
Company hereby agree to take all actions necessary (i) to cause and maintain the
election to the Board of Directors of: (x) five (5) individuals designated from
time to time by White River and (y) four (4) individuals designated from time to
time by the holders of a majority of the shares of Common Stock held by the
Inside Stockholders and (ii) to cause the Board of Directors to be fixed at nine
(9) members and to consist solely of the nine (9) directors designated pursuant
to this Section 3.1(b). The initial additional designee of White River after the
Amendment Date will be Morgan W. Davis and the initial additional designee of
the Inside Stockholders will be Githesh Ramamurthy, provided, however, that
either White River or the Inside Stockholders, as the case may be, may designate
another individual as such party's initial additional designee.
(c) The Company and the Stockholders hereby agree to take all
actions necessary to maintain as a committee of the Board of Directors a
compensation committee (the "Compensation Committee") which shall be responsible
(i) for establishing guidelines with respect to all compensation matters
involving the Company and its Subsidiaries and (ii) for authorizing all
compensation arrangements between the Company and its Subsidiaries and their
respective directors, officers, employees and consultants involving the payment
by the Company or any of its Subsidiaries to any of such individuals of Base
Salary equal to or greater than $125,000. The Compensation Committee shall
consist of members of the Board of Directors who are not officers or employees
of the Company or any of its Subsidiaries.
3.2. VACANCIES. In the event that a vacancy shall exist or occur on
the Board of Directors at any time by reason of a member's death, disability,
retirement, resignation, removal or otherwise, each Stockholder hereby agrees to
cause the members designated by or on behalf of it
-4-
<PAGE>
to vote for the election to the Board of Directors of any individual designated
to fill such vacancy by whichever of the Stockholder(s) that had designated,
pursuant to Section 3.1(a) or 3.1(b), as the case may be, the member whose
death, disability, retirement, resignation or removal resulted in such vacancy
on the Board of Directors. In the absence of any designation by any party
hereto, the director previously designated by such party and until then serving
shall be reelected if still eligible to serve as a director. Each Stockholder
hereby agrees to cause the members of the Board of Directors designated by or on
behalf of it not to vote for the removal without cause of a member of the Board
of Directors designated pursuant to Section 3.1(a) or 3.1(b), as the case may
be, by another Stockholder without such other Stockholder's prior written
consent. Each Stockholder hereby agrees to cause the members of the Board of
Directors designated by it not to vote for the removal for cause of a member
designated pursuant to Section 3.1(a) or 3.1(b), as the case may be, by another
Stockholder unless (i) such Stockholder has consulted such other Stockholder and
(ii) such member of the Board of Directors has breached his fiduciary duties to
the Company (as determined in good faith by an affirmative vote of a majority of
the Board of Directors). Each Stockholder hereby agrees to cause the members
designated by or on behalf of it to vote for the removal of a member of the
Board of Directors designated pursuant to Section 3.1(a) or 3.1(b), as the case
may be, by another Stockholder if and when so requested by such other
Stockholder.
3.3. COVENANT TO VOTE. (a) Each Stockholder hereby agrees to take
all actions within its power necessary to call, or cause the Company and the
appropriate officers and directors of the Company to call, special or annual
meetings of stockholders of the Company and to vote all shares of Voting Stock
owned or held of record by such Stockholder and all shares of Voting Stock as to
which such Stockholder has the right to vote at any such annual or special
meeting in favor of, or take all actions by written consent in lieu of any such
meeting necessary to cause, the election as members of the Board of Directors of
those individuals so designated in accordance with, to fix the number of members
of the Board of Directors in accordance with, to remove members from the Board
of Directors in accordance with, and to otherwise effect the intent of, this
Article 3.
(b) In addition, each Stockholder agrees to vote the shares of
Voting Stock owned or held of record by such Stockholder and all shares of
Voting Stock as to which such Stockholder has the right to vote upon any other
matter arising under this Agreement submitted to a vote of the Stockholders in a
manner so as to implement the terms of this Agreement.
(c) iAlso, each Stockholder agrees to vote in favor of any proposed
amendment (the "Amendment") to the Company's Certificate of Incorporation, the
sole purpose of which is to fix at nine (9) the maximum number of members of the
Board of Directors of the Company. The date any such Amendment becomes effective
is the "Amendment Date."
4. CONTROL OF CERTAIN EXTRAORDINARY TRANSACTIONS; SUBSEQUENT OFFERINGS.
4.1. GENERAL. The Stockholders and the Company confirm that it is
their
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<PAGE>
intention that the business and affairs of the Company and its Subsidiaries will
continue to be directed by its Board of Directors in the best interests of the
Company and its Subsidiaries, taken as a whole. In furtherance of the foregoing,
each of the Stockholders agrees that, after the date hereof, it will not, nor
will it permit any of its Affiliates to, enter into any written or oral
contract, agreement or arrangement to engage in business or enter into any
transaction with the Company or any of its Subsidiaries unless the terms and
provisions of such contract, agreement or arrangement or the terms on which such
business or transaction is conducted, as the case may be, are fair to the
Company as determined by the Board of Directors after review of each such
transaction.
4.2. CONTROL OF CERTAIN EXTRAORDINARY TRANSACTIONS. Prior to the
voluntary resignation from the Board of Directors, death or Disability of David
M. Phillips, a majority of the directors designed by the Inside Stockholders
pursuant to Section 3.1(a) or 3.1(b) shall, to the extent permitted by
applicable law and subject to the fiduciary duties of the members of the Board
of Directors who were not designated by the Inside Stockholders, be delegated
the authority of the Board of Directors with respect to the timing, price and
other terms of a merger, consolidation or sale of all of the shares of Common
Stock or assets of the Company; PROVIDED, HOWEVER, that the Company shall not
consummate any such merger, consolidation or sale unless (i) if so requested by
the Outside Stockholders, the Board of Directors shall have received an opinion
from a nationally recognized investment banking firm selected by the Outside
Stockholders (and compensated by the Company) that the consideration to be paid
in connection with any such transaction is fair to the holders of shares of the
Common Stock and (ii) the consideration to be paid in connection with such
transactions shall consist solely of cash, cash equivalents or publicly traded
securities. Following the voluntary retirement from the Board of Directors,
death or Disability of David M. Phillips, the Inside Stockholders or the Outside
Stockholders (each a "Recommending Party") shall have the right to recommend to
the Board of Directors the timing, price and other terms of a merger,
consolidation or sale of all shares of Common Stock or assets of the Company,
and, if requested by the party other than the Recommending Party, subject to the
receipt of an opinion, addressed to the Board of Directors, of a nationally
recognized investment banking firm selected by the party other than the
Recommending Party (and compensated by the Company) confirming that the
consideration to be paid in connection with any such transaction is fair to the
holders of shares of Common Stock, the members of the Board of Directors
designated by the parties hereto shall to the extent permitted by applicable law
and subject to their fiduciary duties, approve such merger, consolidation or
sale.
4.3. CONTROL OF SUBSEQUENT OFFERINGS. A majority of the directors
designated by the Inside Stockholders pursuant to Section 3.1(a) or 3.1(b)
shall, to the extent permitted by applicable law and subject to the fiduciary
duties of the members of the Board of Directors who were not designated by the
Inside Stockholders, be delegated the authority of the Board of Directors with
respect to the timing, price and other terms of each Subsequent Offering;
PROVIDED, HOWEVER, the Company shall not consummate a Subsequent Offering (i)
unless the Company can demonstrate to the reasonable satisfaction of White River
that after giving effect to the Subsequent Offering the Company would have funds
legally available to redeem shares of the
-6-
<PAGE>
Preferred Stock in accordance with the terms of the Preferred Stock and (ii)
without the unanimous approval of the members of the Board of Directors in the
event that David M. Phillips shall voluntarily resign from the Board of
Directors, die or become Disabled.
4.4. ADDITIONAL COVENANT TO VOTE. White River agrees that in the
event any of the matters described in Sections 4.2 and 4.3 require the approval
of holders of shares of Common Stock, it will vote the shares of Voting Stock
owned by it in accordance with the recommendation of the Board of Directors.
4.5. EXPENSES. The Company shall pay the fees and expenses of any
investment banking firm retained pursuant to this Section 4.
4.6. CONSENTS. In addition to the limitations set forth in Section
5, from the date hereof to (and including) the Redemption Date, in addition to
any vote of the shares of holders of the Company's capital stock required by
law, the Company and the Stockholders shall not take (or agree to take) any of
the following actions, without the written consent of the holders of a majority
of the issued and outstanding shares of the Series E Preferred Stock:
(a) the sale of shares of Common Stock in a Subsequent Offering by
the Inside Stockholders to the extent that the shares to be so sold by the
Inside Stockholders in the aggregate exceed 10% of the then outstanding shares
of Common Stock; and
(b) the sale of shares in a Subsequent Offering by the Inside
Stockholders to the extent that the shares to be so sold by the Inside
Stockholders in the aggregate exceed 50% of the total shares of Common Stock
being offered in such Subsequent Offering.
5. RESTRICTIONS ON TRANSFER.
5.1. GENERAL RESTRICTIONS. During the term of this Agreement, none
of (i) the Common Stock Equivalents owned as of the date hereof and (ii) the
shares of Common Stock hereafter received upon the conversion or exchange of the
Common Stock Equivalents described in clause (i) by any of the Stockholders may
be Disposed of by any of the Stockholders unless:
(a) such Disposition shall be in accordance with the
requirements of Sections 5.2 and 5.3 of this Agreement;
(b) the proposed recipient of such shares (other than a
recipient in a Subsequent Offering or in a Disposition under Rule 144
under the Securities Act) shall deliver to the Company a written
acknowledgment that the shares to be received in such proposed
Disposition are subject to this Agreement and the proposed recipient and
his or its successors in interest are bound hereby; and
(c) such Disposition shall be made pursuant to an effective
registration
-7-
<PAGE>
statement under the Securities Act and any applicable state securities
laws, or an exemption from such registration, and prior to any such
Disposition the Stockholder proposing to Dispose such shares shall give
the Company (i) notice describing the manner and circumstances of the
proposed Disposition and (ii) if reasonably requested by the Company, a
written opinion of legal counsel, who shall be reasonably satisfactory
to the Company, such opinion to be in form and substance reasonably
satisfactory to the Company, to the effect that the proposed Disposition
may be effected without registration under the Securities Act and any
applicable state securities laws.
Any attempted Disposition of shares of Common Stock or Common Stock Equivalents
referred to in Section 5.1 other than in accordance with this Agreement shall be
null and void and neither the Company nor any transfer agent of such shares
shall give any effect to such attempted Disposition in its stock records.
5.2. PERMITTED TRANSFERS BY OUTSIDE STOCKHOLDERS. Other than as
described in Section 5.1, an Outside Stockholder may Dispose of any shares of
Common Stock or Common Stock Equivalents at any time, including dispositions in
connection with the redemption by the Company of shares of Preferred Stock.
5.3. PERMITTED TRANSFERS BY INSIDE STOCKHOLDERS. (a) No Inside
Stockholder shall Dispose of any shares of Common Stock except for Dispositions
by: (i) such Inside Stockholder to Permitted Transferees who agree in writing to
be bound by the terms hereof; (ii) such Inside Stockholder to White River; (iii)
such Inside Stockholder in connection with any merger, consolidation or sale
effected in accordance with the terms of Section 4.1 and the mandatory
redemption provisions contained in the Certificates of Designations for the
Preferred Stock; and (iv) by any Inside Stockholder pursuant to a Disposition
that meets all of the following requirements: (A) such Disposition is made
pursuant to a Subsequent Offering or in a sale pursuant to Rule 144 under the
Securities Act; (B) such Disposition results in no "person" or "group" (within
the meaning of Section 13(d) of the Exchange Act) becoming the "beneficial
owner" (as defined in Rule 13(d) under the Exchange Act) of more than 10% of the
shares of Common Stock then outstanding; and (C) such Disposition occurs after
the Company's net sales and operating profits for the immediately preceding
fiscal year equal at least 75% of the corresponding amounts shown in the
"Five-Year Projections" of the Company dated July 22, 1993, which projections
have been provided to White River prior to the date hereof.
(b) Notwithstanding anything in Section 5.3(a) to the contrary, in
the event of the death or Disability of an Inside Stockholder who is an officer,
director or employee of the Company, the shares of Common Stock owned by such
Inside Stockholder may be disposed of at any time and from time to time during
each calendar year provided that the aggregate number of shares of Common Stock
disposed of in any calendar year shall not exceed 33-1/3% of the aggregate
number of shares of Common Stock owned by such Inside Stockholder on the date
such Inside Stockholder dies or becomes disabled.
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<PAGE>
6. SHARE CERTIFICATES.
6.1. RESTRICTIVE ENDORSEMENT. Until the termination of this
Agreement pursuant to Section 7.1, in addition to any other legend that the
Company may deem advisable under the Securities Act and certain state securities
laws, the certificates representing all (i) Common Stock Equivalents owned as of
the close of business on June 10, 1994, (ii) the shares of Common Stock and
Preferred Stock received by the Outside Stockholder pursuant to the
Reorganization Agreement (as defined in the Prior Agreement), (iii) the Common
Stock Equivalents acquired after the close of business on June 10, 1994, (iv)
the shares of Common Stock owned as of the close of business on June 10, 1994
and (v) the shares of Common Stock hereafter received upon the conversion or
exchange of the Common Stock Equivalents described in clauses (i) and (iii), by
a Stockholder shall be endorsed substantially as follows:
THIS CERTIFICATE IS SUBJECT TO, AND IS TRANSFERABLE
ONLY UPON COMPLIANCE WITH, THE PROVISIONS OF THE
STOCKHOLDERS' AGREEMENT, DATED AS OF JUNE 30, 1998,
BY AND AMONG CCC INFORMATION SERVICES GROUP INC.
AND CERTAIN OF ITS STOCKHOLDERS. A COPY OF THE ABOVE
REFERENCED AGREEMENT IS ON FILE AT THE OFFICES OF CCC
INFORMATION SERVICES GROUP INC.
7. MISCELLANEOUS.
7.1. TERMINATION. This Agreement shall terminate upon the first to
occur of: (i) the mutual written agreement of the parties hereto or their
respective successors, assigns, heirs and administrators; (ii) the liquidation
or dissolution of the Company; (iii) the Redemption Date and (iv) June 16, 1999.
7.2. STOP ORDER. Each Stockholder and the Company agree that a stop
order shall be placed in the stock transfer records of the Company against the
transfer of shares of Voting Stock and Common Stock Equivalents subject to this
Agreement.
7.3. NOTICES. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified by hand or
professional courier service, upon confirmation of telex or telecopy, five days
after deposit with the United States Post Office, by registered or certified
mail postage prepaid or upon the next day following deposit with a nationally
recognized overnight air courier, addressed as follows:
(a) if to a Stockholder, to the address set forth in the record
books of the Company; or
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<PAGE>
(b) if to the Company, to 444 Merchandise Mart, Chicago, IL 60654,
Attn: David M. Phillips, copy to Legal Department, or at such other
address as the Company shall have furnished to each Stockholder at the
time outstanding.
Any party may by notice given in accordance with this Section
7.3 to the other party to this Agreement designate another address or
person for receipt of notice hereunder.
7.4. AMENDMENT. This Agreement may not be amended except by an
instrument in writing signed by all of the parties hereto.
7.5. ASSIGNMENT. Neither this Agreement, nor any right, remedy,
obligation or liability arising hereunder or by reason hereof shall be
assignable by the Company or any Stockholder except concurrently with a transfer
of the Voting Stock and Common Stock Equivalents in accordance with the
provisions hereof. Subject to the foregoing, this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors, assigns, heirs and administrators.
7.6. GOVERNING LAW; CONSENT TO JURISDICTION. THIS AGREEMENT SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE
STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAWS PRINCIPLES
THEREOF. IF ANY ACTION OR PROCEEDING SHALL BE BROUGHT BY ANY PARTY IN ORDER TO
ENFORCE ANY RIGHT OR REMEDY UNDER THIS AGREEMENT, EACH OTHER PARTY HEREBY
CONSENTS AND WILL SUBMIT TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT OF
COMPETENT JURISDICTION SITTING WITHIN THE AREA COMPRISING THE SOUTHERN DISTRICT
OF NEW YORK ON THE DATE OF THIS AGREEMENT.
7.7. SEVERABILITY. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law, or public
policy, all other provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party.
7.8. ENTIRE AGREEMENT; HEADINGS. This Agreement contains the entire
understanding of the parties hereto with respect to its subject matter and
supersedes all prior agreements and understandings, oral or written, with
respect thereto. The headings in this Agreement are for reference purposes only
and shall not limit or otherwise affect the meaning or interpretation of this
Agreement.
7.9. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one instrument.
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<PAGE>
7.10. FURTHER ASSURANCES. Each party hereto shall do and perform or
cause to be done and performed all further acts and things and shall execute and
deliver all other agreements, certificates, instruments, and documents as any
other party hereto reasonably may request in order to carry out the intent and
accomplish the purposes of this Agreement.
7.11. SPECIFIC PERFORMANCE. The parties hereto agree that money
damages or other remedy at law would not be sufficient or adequate remedy for
any breach or violation of, or a default under, this Agreement by them and that,
in addition to all other remedies available to them, each of them shall be
entitled to an injunction restraining such breach, violation or default or
threatened breach, violation or default and to any other equitable relief,
including without limitation specific performance, without bond or other
security being required.
7.12. RELATIONSHIP OF THE PARTIES. This Agreement relates to the
governance of the Company, restrictions and/or conditions of share transfers by
the Inside Stockholders and the Outside Stockholder and certain other matters
expressed herein. The relationship of the Inside Stockholders and the Outside
Stockholders herein is limited to that of respective stockholders. Nothing in
this Agreement shall be construed as permitting or obligating the Outside
Stockholders to act as financial or business advisors or consultants to the
Inside Stockholders or the Company, as creating any fiduciary obligation on the
outside Stockholders to the Inside Stockholders or the Company or as creating
any joint venture, agency or other relationship between or among the parties
other than as expressly specified in this Agreement.
7.13. NATURE OF OBLIGATIONS. The obligations and rights of each
Stockholder under this Agreement are several and not joint.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement as of the date first above written.
CCC INFORMATION SERVICES GROUP INC.
By:
--------------------------------
Name:
Title:
WHITE RIVER VENTURES, INC.
By:
--------------------------------
Name:
Title:
LOEB INVESTORS CO. XV
By:
--------------------------------
Name:
Title:
LOEB INVESTORS CO. XIII
By:
--------------------------------
Name:
Title:
LOEB INVESTORS CO. 108
By:
--------------------------------
Name:
Title:
-----------------------------------
David M. Phillips
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<PAGE>
EXHIBIT A
STOCKHOLDERS
<TABLE>
<CAPTION>
Shares of
Inside Stockholders Common Stock
------------------- ------------
<S> <C>
David M. Phillips.......................... 715,680
Loeb Investors Co. XV...................... 3,069,600
Loeb Investors Co. XIII.................... 86,760
Loeb Investors Co. 108..................... 300,955
<CAPTION>
Shares of
Outside Stockholder Common Stock
------------------- ------------
<S> <C>
White River Ventures, Inc.................. 8,584,564
</TABLE>
- ----------
* Includes 187,920 shares held by Ruth Ann Phillips subject to this
Agreement.
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<PAGE>
Exhibit 10.1
================================================================================
AMENDED AND RESTATED
CREDIT FACILITY AGREEMENT
BY AND AMONG
CCC INFORMATION SERVICES INC.
AND
THE LENDERS THAT ARE PARTIES HERETO
AND
LASALLE NATIONAL BANK
(AS ADMINISTRATIVE AGENT AND ISSUING BANK)
EXECUTED AS OF OCTOBER 29, 1998
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C> <C> <C> <C>
ARTICLE 1: THE CREDIT FACILITY........................................... 1
1.1. Line of Credit Facility....................................... 1
1.1.1. Establishment of Credit Facility.................... 1
1.1.2. Facility Maturity................................... 1
1.1.3. Use of Proceeds..................................... 2
1.1.4. Line of Credit Note................................. 2
1.1.5. Interest............................................ 2
1.1.6. Repayment and Prepayment............................ 6
1.2 Letter of Credit Subfacility.................................. 9
1.2.1 The Letter of Credit Subfacility Commitment......... 9
1.2.2 Issuance, Amendment and Renewal of Letters
of Credit......................................... 10
1.2.3 Risk Participations, Drawings and Reimbursements.... 12
1.2.4 Repayment of Participations......................... 14
1.2.5 Role of the Issuing Bank............................ 14
1.2.6 Obligations Absolute................................ 15
1.2.7 Letter of Credit Fees............................... 16
1.2.8 Uniform Customs and Practice........................ 17
1.3. Determination of Commitment Amounts........................... 17
1.3.1. Initial Commitment.................................. 17
1.3.2. Availability Under the Line of Credit Facility...... 17
1.4. Advances...................................................... 18
1.4.1. Requesting Advances................................. 18
1.4.2. Funding Advances.................................... 18
1.4.3. [Intentionally Blank]............................... 18
1.4.4. Obligation to Advance............................... 18
1.4.5. Indemnification for Revocation or Failure to
Satisfy Conditions................................ 18
1.5. Payments in General........................................... 19
1.5.1. Manner and Place.................................... 19
1.5.2. Special Payment Timing Issues....................... 19
1.5.3. Application of Payments............................. 19
1.5.4. Taxes............................................... 20
1.5.5. Default Interest.................................... 21
1.5.6. Usury Savings Provision............................. 21
1.6. Release of Security........................................... 22
1.7. Fees and Other Compensation................................... 22
1.7.1. Fees to Administrative Agent........................ 22
1.7.2. Periodic Facility Fee............................... 22
1.8 Substitution of Lenders....................................... 22
</TABLE>
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<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
ARTICLE 2: CONDITIONS PRECEDENT.......................................... 22
2.1. Closing Conditions............................................ 22
2.1.1. Compliance.......................................... 22
2.1.2. Documents........................................... 23
2.1.3 Assignment.......................................... 25
2.2. Conditions to All Advances or Issuances of Letters of
Credit.............................................. 25
2.2.1. Compliance.......................................... 26
2.2.2. Documents........................................... 26
2.2.3. Leverage............................................ 26
ARTICLE 3: REPRESENTATIONS AND WARRANTIES................................ 27
3.1. Organization and Good Standing................................ 27
3.2. Power and Authority........................................... 27
3.3. Validity and Legal Effect..................................... 27
3.4. No Violation of Laws or Agreements............................ 27
3.5. Title to Assets, Existing Encumbrances........................ 28
3.6. Capital Structure and Equity Ownership........................ 28
3.7. Subsidiaries, Affiliates and Investments...................... 28
3.8. Material Contracts............................................ 28
3.9. Licenses and Authorizations................................... 29
3.10. Taxes and Assessments......................................... 29
3.11. Litigation and Legal Proceedings.............................. 29
3.12. Accuracy of Financial Information............................. 29
3.13. Accuracy of Other Information................................. 30
3.14. Compliance with Laws Generally................................ 30
3.15. ERISA Compliance.............................................. 30
3.16. Environmental Compliance...................................... 31
3.17. Margin Rule Compliance........................................ 31
3.18. [Intentionally Blank]......................................... 31
3.19. Solvency...................................................... 32
3.20. Year 2000..................................................... 32
ARTICLE 4: AFFIRMATIVE COVENANTS......................................... 33
4.1. Financial Covenants and Ratios................................ 33
4.1.1. Total Charge Coverage Ratio......................... 33
4.1.2. Leverage Ratio...................................... 33
4.1.3. Minimum Net Worth................................... 33
4.2. Periodic Financial Statements................................. 33
4.2.1. [Intentionally Blank]............................... 33
4.2.2. Quarterly Financial Statements...................... 33
4.2.3. Annual Financial Statements......................... 34
4.3. Other Financial and Specialized Reports....................... 34
4.3.1. Financial Forecasts................................. 34
4.3.2. Information Relating to Guarantor................... 34
4.3.3 Information Contained on Schedules. ............... 35
</TABLE>
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<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
4.4. Fiscal Year................................................... 35
4.5. Books and Records............................................. 35
4.6. Existence and Good Standing................................... 36
4.7. Notice in the Event of Subsidiary Insolvency.................. 36
4.8. Insurance; Maintenance of Properties Disaster Contingency..... 36
4.8.1. General Insurance Provisions........................ 36
4.8.2. Disaster Recovery and Contingency Program........... 36
4.9. Loan Purpose.................................................. 36
4.10. Litigation; Occurrence of Defaults............................ 36
4.11. Taxes......................................................... 37
4.12. Management Changes............................................ 37
4.13. Costs and Expenses............................................ 37
4.14. Compliance with Laws.......................................... 37
4.14.1. General............................................. 37
4.14.2. ERISA............................................... 37
4.14.3. Environmental....................................... 38
4.15. Further Actions............................................... 38
4.15.1. Additional Pledged Shares........................... 38
4.15.2. Further Assurances.................................. 38
4.15.3. Estoppel Certificate................................ 38
4.15.4. Subsidiary Guaranties............................... 39
4.16. [Intentionally Blank]......................................... 39
4.17. Other Information............................................. 39
ARTICLE 5: NEGATIVE COVENANTS............................................ 39
5.1. [Intentionally Blank]......................................... 39
5.2. Additional Indebtedness. ..................................... 40
5.3. Guaranties.................................................... 40
5.4. Loans......................................................... 41
5.5. Liens and Encumbrances; Negative Pledge....................... 41
5.6. Transfer of Assets............................................ 42
5.7. Acquisitions and Investments.................................. 42
5.8. New Ventures; Mergers......................................... 44
5.9. Transactions with Affiliates.................................. 44
5.10. Distributions or Dividends.................................... 45
5.11. [Intentionally Blank]......................................... 45
5.12. Payment of Management Fees.................................... 45
5.13. [Intentionally Blank]......................................... 45
5.14. [Intentionally Blank]......................................... 45
5.15. Modifications to Organic Documents............................ 45
5.16. Modifications to Material Relationships and Agreements........ 45
ARTICLE 6: RIGHT OF SET OFF.............................................. 46
6.1. Right of Set-Off.............................................. 46
6.2. Additional Rights............................................. 46
</TABLE>
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<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
ARTICLE 7: DEFAULT AND REMEDIES.......................................... 46
7.1. Events of Default............................................. 46
7.1.1. Payment Obligations................................. 46
7.1.2. Representations and Warranties...................... 46
7.1.3. Certain Covenants................................... 46
7.1.4. Other Covenants in Loan Documents................... 46
7.1.5. Default Under Other Agreements...................... 47
7.1.6. Default Under Material Agreements with Other
Parties........................................... 47
7.1.7. Guarantor Investments............................... 47
7.1.8. Change of Control................................... 47
7.1.9. Government Action................................... 48
7.1.10. Insolvency.......................................... 48
7.1.11. Loss or Revocation of Guaranty...................... 49
7.1.12. Additional Liabilities.............................. 49
7.1.13. Material Adverse Change. ........................... 49
7.2. Remedies...................................................... 49
7.2.1. General; Acceleration............................... 49
7.2.2. Other............................................... 49
ARTICLE 8: THE ADMINISTRATIVE AGENT...................................... 50
8.1. Appointment, Authorization and Grant of Authority............ 50
8.2. Acceptance of Appointment.................................... 50
8.3. Administrative Agent's Relationship with Borrower............ 50
8.4. Non-Reliance on Administrative Agent and Other Lenders....... 52
8.5. Reliance by Administrative Agent............................. 52
8.6. Delegation of Duties; Additional Reliance by
Administrative Agent....................................... 51
8.7. Acting on Instructions of Lenders............................ 52
8.8. Actions Upon Occurrence of Default or Event of Default....... 52
8.9. Administrative Agent's Rights as Lender in Individual
Capacity................................................... 52
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.............. 55
8.14. Indemnification.............................................. 55
8.15. Resignation; Successor Administrative Agent.................. 56
ARTICLE 9: DEFINITIONS................................................... 56
9.1. Definitions................................................... 56
9.2. Rules of Construction......................................... 70
9.2.1. Plural; Gender...................................... 70
9.2.2. Financial and Accounting Terms...................... 70
</TABLE>
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<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
ARTICLE 10: MISCELLANEOUS................................................. 70
10.1. Indemnification, Reliance and Assumption of Risk
Provisions.................................................. 70
10.2. Assignment; Disclosure of Information to Third Parties........ 71
10.2.1. Assignments......................................... 71
10.2.2. Disclosure of Information........................... 73
10.3. Binding Effect and Governing Law.............................. 74
10.4. No Waiver; Delay.............................................. 74
10.5. Modifications and Amendments.................................. 74
10.6. Headings...................................................... 76
10.7. Notices....................................................... 76
10.8. Time of Day................................................... 77
10.9. Relationship with Prior Agreements............................ 77
10.10. Severability.................................................. 78
10.11. Termination and Survival...................................... 78
10.12. Reinstatement................................................. 78
10.13. Notification of Addresses, Lending Offices, Etc............... 78
10.14. Counterparts.................................................. 78
10.15. Conflict Provision............................................ 79
10.16. Waiver of Liability........................................... 79
10.17. Forum Selection, Consent to Jurisdiction...................... 79
10.18. Waiver of Jury Trial.......................................... 80
</TABLE>
SCHEDULES AND EXHIBITS:
SCHEDULES:
<TABLE>
<S> <C>
Schedule A Pricing Grid
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 3.18 Fees and Commissions
Schedule 4.7 Existing Deposit Accounts
Schedule 4.12 Executive Management Group
Schedule 5.2 Permitted Additional Indebtedness
Schedule 5.5 Permitted Additional Liens
</TABLE>
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<PAGE>
EXHIBITS:
<TABLE>
<S> <C>
Exhibit 1.1.4 Form of Line of Credit Note
Exhibit 1.1.5.3 Form of Conversion/Continuation Notice
Exhibit 1.3 Form of Joinder
Exhibit 1.4.1 Form of Advance Request
Exhibit 4.2 Form of Periodic Compliance Certificate
Exhibit 4.15.4 Form of Subsidiary Guaranty
Exhibit 10.2.1 Form of Assignment and Acceptance
</TABLE>
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<PAGE>
Exhibit 10.1
AMENDED AND RESTATED
CREDIT FACILITY AGREEMENT
This AMENDED AND RESTATED CREDIT FACILITY AGREEMENT is entered into as of
October 29, 1998, among CCC Information Services Inc., a Delaware corporation
"CCC" or the "Borrower"), the several financial institutions from time to time
party to this Agreement (collectively, the "Lenders"; individually, a "Lender")
and LaSalle National Bank, as Administrative Agent (the "Administrative Agent")
and Issuing Bank ("Issuing Bank").
R E C I T A L S:
1. CCC, certain of its subsidiaries, the lenders parties thereto (together
with their respective successors and assigns, the "Original Lenders ") and
Signet Bank (now known as First Union National Bank) entered into that certain
Credit Facility Agreement dated as of August 22, 1996, which provided for a five
year line of credit and a term loan (as amended, the "Original Credit Facility
Agreement").
2. CCC has requested an increase in the amount available for borrowing
under the Original Credit Facility Agreement.
3. The Original Lenders are willing to amend and restate the Original
Credit Facility Agreement, to add additional lenders as Lenders and to extend
loans to CCC in accordance with the terms and conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained herein, CCC, the Lenders and the Administrative Agent hereby
amend and restate the Original Credit Facility Agreement in its entirety as of
the date hereof as follows:
ARTICLE 1: THE CREDIT FACILITY
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, each Lender will lend funds to Borrower from time to time
prior to the Line of Credit Maturity Date (as determined in accordance with
Section 1.1.2 hereof) in an aggregate amount at any time outstanding not to
exceed its Commitment Percentage (on a Pro Rata basis) of the Available Credit
Portion at such time (as determined in accordance with Section 1.3 hereof).
1.1.2. FACILITY MATURITY. The Line of Credit Facility will mature on
October 31, 2003 (as may be extended from time to time in Lenders' sole and
absolute discretion or as may be earlier terminated pursuant to the terms
hereof, "Line of Credit Maturity Date").
1.1.3. USE OF PROCEEDS. The funds advanced under this Line of Credit
Facility
-1-
<PAGE>
may be used exclusively 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,
Permitted Investments and 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 Borrower to repay Lenders with
interest in accordance with the terms hereof will be evidenced by one or more
Line of Credit Notes substantially in the form of Exhibit 1.1.4 attached hereto
(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 Note 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 from
time to time 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 FACIE evidence of the information noted or endorsed on
such schedule, but the absence of any such notation or endorsement will not
limit or otherwise affect the obligations and liabilities of Borrower thereunder
or hereunder.
1.1.5. INTEREST. Interest under the Line of Credit Facility (and with
respect to any other amounts advanced to or on behalf of Borrower 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, Borrower may designate and subdivide the aggregate outstanding balance
under the Line of Credit Facility (including any other amounts advanced to or on
behalf of Borrower under the Loan Documents) into a maximum of five (5)
Portions. No Portion may be less than $1,000,000 if interest accrues thereon
with reference to the Prime Rate and $2,000,000 if interest accrues thereon with
reference to the Adjusted LIBO Rate (unless it is designated as $0.00), AND all
Portions collectively must total the aggregate outstanding balance under the
Line of Credit Facility.
1.1.5.2. INTEREST RATE DETERMINATION. The aggregate outstanding
principal balance of all Advances included 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 (which shall be the Prime Rate or
the Adjusted LIBO Rate as elected by the Borrower pursuant to
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any Advance Request or 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 the 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.
a. The Borrower may, upon irrevocable written notice to the
Administrative Agent in the form of Exhibit 1.1.5.3 attached hereto
("Conversion/Continuation Notice"):
(1) elect, as of any Business Day, in the case of Portions
consisting of Prime Rate Advances, to convert any such Portion (or any
part thereof in an amount not less than $2,000,000 or an integral
multiple of $1,000,000 in excess thereof) into Portions consisting of
Adjusted LIBO Rate Advances; or
(2) elect, as of the last day of the applicable Interest Period,
in the case of Portions consisting of Adjusted LIBO Rate Advances, to
convert any such Portion (or any part thereof in an amount not less
than $1,000,000 or an integral multiple of $1,000,000 in excess
thereof) into Portions consisting of Prime Rate Advances; or
(3) elect, as of the last day of the applicable Interest Period,
in the case of any Portion consisting of an Adjusted LIBO Rate
Advance, to continue such Portion (or any part thereof in an amount
not less than $2,000,000 or an integral multiple of $1,000,000 in
excess thereof);
PROVIDED, that if at any time a Portion is reduced, by payment, prepayment, or
conversion of part thereof to be less than $2,000,000, such Portion shall
automatically convert into a Portion consisting of a Prime Rate Advance, and on
and after such date the right of the Borrower to continue such Portion as, or
convert such Portion into a Portion consisting of Adjusted LIBO Rate Advances
shall terminate.
b. Borrower shall deliver a Conversion/Continuation Notice to
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be received by the Administrative Agent not later than Noon (Central Time) at
least (i) three Business Days in advance of the proposed date of the conversion
or continuation (the "Conversion/Continuation Date"), if a Portion is to be
converted into or continued as a Portion consisting of an Adjusted LIBO Rate
Advance; and (ii) on the Business Day before the Conversion/Continuation Date,
if the Portion is to be converted into a Portion consisting of a Prime Rate
Advance, specifying:
(1) the proposed Conversion/Continuation Date;
(2) the aggregate amount of the Portion to be continued or
converted;
(3) the Rate Index of such Portion resulting from the
proposed conversion or continuation; and
(4) other than in the case of conversions into a Portion
consisting of Prime Rate Advances, the duration of the requested
Interest Period.
c. If upon the expiration of any Interest Period applicable to a
Portion consisting of Adjusted LIBO Rate Advances, Borrower has failed to select
timely a new Interest Period to be applicable to such Portion, or if any Default
or Event of Default then exists, the Borrower shall be deemed to have elected to
convert such Portion into a Portion consisting of Prime Rate Advances as
effective as of the expiration date of such Interest Period.
d. The Administrative Agent will promptly notify each Lender of
its receipt of a Conversion/Continuation Notice, or, if no timely notice is
provided by Borrower, the Administrative Agent will promptly notify each Lender
of the details of any automatic conversion.
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 day of the calendar month occurring after the Lenders'
receipt of each Periodic Compliance Certificate required to be delivered by the
Borrower under Section 4.2 and will be based upon the Leverage Ratio on the last
day of the most recent fiscal quarter reflected on the most recent quarterly or
annual financial statements delivered to Administrative Agent and each Lender in
accordance with Section 4.2 hereof, AND will be determined according to the
pricing grid set forth on SCHEDULE A attached hereto. In determining the amount
of Funded Debt for purposes of establishing such Rate Margin, unless Borrower
otherwise provides Administrative Agent with evidence of such amount in a form
reasonably acceptable to Administrative Agent, then Administrative Agent may use
and rely on the amount of Funded Debt as reflected on the most recent quarterly
or annual financial statements delivered to Administrative Agent and each Lender
in accordance with Section 4.2 hereof. NOTWITHSTANDING THE FOREGOING, if
Administrative Agent does not timely receive acceptable quarterly or annual
financial statements in accordance with Section 4.2 hereof, THEN Administrative
Agent (in its sole and absolute discretion) may deem the applicable Rate
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Margin to be the highest Rate Margin for the applicable Rate Index reflected in
SCHEDULE A. 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 determination
of the Rate Margin by $5,000,000 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 Borrower under the Loan
Documents) on and as of the date such funds are advanced.
1.1.5.6. SPECIAL LIBO RATE PROVISIONS. The following provisions will
apply with respect to the Adjusted LIBO Rate, notwithstanding any other
provision hereof:
a. CHANGE IN ADJUSTED LIBO RATE. The Adjusted LIBO Rate may be
automatically adjusted by any Lender from time to time on a prospective basis to
account for any additional or increased cost of maintaining any necessary
reserves for 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 Borrower, AND such Lender will furnish a statement to Administrative
Agent and Borrower 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 Borrower 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 ten
(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 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
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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 Borrower, AND such Lender will furnish a statement to
Administrative Agent and Borrower 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 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 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 Borrower, AND such Lender
will furnish a statement to Administrative Agent and Borrower 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 existence of any Event of Default
or an event contemplated by either Clause "b" of this Subsection or Clause "c"
of this Subsection, each Lender's obligation hereunder to fund Advances at an
Adjusted LIBO Rate will be suspended, and during such period, the outstanding
balance under the Line of Credit Facility will bear interest at the Prime Rate
plus the appropriate Rate Margin (determined in accordance with Section 1.1.5.4
hereof) and, if applicable, with additional interest as provided under Section
1.5.5.
1.1.6. REPAYMENT AND PREPAYMENT. Borrower hereby promises to pay to
Administrative Agent (for the benefit of Lenders) the aggregate indebtedness
under the Line of Credit Facility (and other Loan Documents) in accordance with
the following provisions:
1.1.6.1. PERIODIC INTEREST PAYMENTS. Interest accrued under the Line
of Credit Facility will be due and payable quarterly in arrears on the first
Business Day following the end of each calendar quarter with respect to any
Portion consisting of Prime Rate Advances and on the last day of each Interest
Period for any Portion consisting of Adjusted LIBO Rate Advances; provided,
however, that if any Interest Period for an Adjusted LIBO Rate Advance exceeds
three months, interest on such advance shall also be paid on the date that falls
three months after the beginning of such Interest Period, in each case,
commencing on the first such date after the Closing Date.
1.1.6.2. COMMITMENT REDUCTIONS.
a. VOLUNTARY TERMINATION OR REDUCTION OF COMMITMENTS. The
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Borrower may, upon not less than five Business Days' prior notice to the
Administrative Agent and all the Lenders, terminate the Line of Credit
Commitment, or permanently reduce the Line of Credit Commitment by an aggregate
minimum amount of $5,000,000 or any multiple of $1,000,000 in excess thereof;
UNLESS, after giving effect thereto and to any prepayments of Advances made upon
the effective date thereof, the amount of all Advances and L/C Obligations then
outstanding would exceed the aggregate amount of the Commitments of all Lenders
then in effect.
b. MANDATORY REDUCTION OF COMMITMENTS. The Line of Credit
Commitment shall automatically be reduced by (i) $10,000,000 on October 31,
2001, (ii) $15,000,000 on October 31, 2002 and (iii) $75,000,000 (or to zero) on
October 31, 2003.
c. NO INCREASES; APPLICATION. Once reduced in accordance with
this Section, the Line of Credit Commitment may not be increased. Any reduction
of the Line of Credit Commitment shall be applied to each Lender's Commitment,
according to its Pro Rata share. All accrued Periodic Facility Fees to, but not
including, the effective date of any reduction or termination of Line of Credit
Commitment shall be paid on the effective date of such reduction or termination.
1.1.6.3. [INTENTIONALLY BLANK].
1.1.6.4. AT MATURITY OR TERMINATION. The entire aggregate outstanding
indebtedness under the Line of Credit Facility (including principal, interest,
L/C Obligations, 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, L/C Obligations, 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 PAYMENTS. 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 upon not less than one Business Day's notice to the
Administrative Agent, EXCEPT as provided in Clause "e" of this Subsection.
b. MANDATORY PREPAYMENTS -- EXCESSIVE BALANCE. If the aggregate
amount of Advances and L/C Obligations outstanding under the Line of Credit
Facility at any time exceeds the Line of Credit Commitment at such time, 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. [INTENTIONALLY BLANK].
d. IN GENERAL. Any prepayment under the Line of Credit
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Facility must include all accrued but unpaid interest under the Line of Credit
Facility allocable to the amount prepaid through the date of such prepayment.
e. ADJUSTED LIBO RATE PREPAYMENTS. In connection with any
prepayment of all or any portion of the outstanding balance under the Line of
Credit Facility upon which an Adjusted LIBO Rate is then applicable on any day
other than the last day of an Interest Period -- whether such prepayment is
voluntary, by demand, acceleration or otherwise -- Borrower 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.
1.1.6.6. [INTENTIONALLY BLANK].
1.1.6.7. [INTENTIONALLY BLANK].
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, if Borrower does not otherwise direct and as
long as no Default or Event of Default exists, payments and prepayments
allocable to principal under the Line of Credit Facility shall 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);
provided, however that during the existence of a Default or an Event of Default,
the Administrative Agent shall apply funds received from Borrower in any manner
in which the Required Lenders direct.
1.1.6.9. AVAILABILITY FOR REBORROWING. Principal amounts repaid or
prepaid under the Line of Credit Facility prior to the Line of Credit Maturity
Date will be available for reborrowing at any time pursuant to and in accordance
with the terms hereof up to the Available Credit Portion.
1.2 LETTER OF CREDIT SUBFACILITY.
1.2.1 THE LETTER OF CREDIT SUBFACILITY COMMITMENT.
a. On the terms and conditions set forth herein (i) the Issuing
Bank agrees, (A) from time to time upon the Borrower's request received at least
three Business Days prior to the date of any requested issuance, during the
period from the Closing Date to the Line of Credit Maturity Date, to issue
Letters of Credit for the account of the Borrower (or any of its Restricted
Subsidiaries), and to amend or renew Letters of Credit previously issued by it,
in accordance with subsections 1.2.2.c. and 1.2.2.d., and (B) to honor drafts
under the Letters of Credit; and (ii) the Lenders severally agree to participate
in Letters of Credit Issued hereunder; PROVIDED, that the Issuing Bank shall not
be obligated to Issue, and no Lender shall be obligated
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to participate in, any Letter of Credit if as of the date of Issuance of such
Letter of Credit (the "Issuance Date") (1) the amount of all L/C Obligations
plus the outstanding amount of all Advances exceeds the Line of Credit
Commitment at such time, (2) the participation of any Lender in the amount of
all L/C Obligations plus the amount of all outstanding Advances of such Lender
exceeds such Lender's Commitment, or (3) the amount of L/C Obligations exceeds
the L/C Commitment. Within the foregoing limits, and subject to the other terms
and conditions hereof, the Borrower's ability to obtain Letters of Credit shall
be fully revolving, and, accordingly, the Borrower may, during the foregoing
period, obtain Letters of Credit to replace Letters of Credit which have expired
or which have been drawn upon and reimbursed.
b. The Issuing Bank is under no obligation to Issue any Letter of
Credit if:
(i) any order, judgment or decree of any governmental authority
or arbitrator shall by its terms purport to enjoin or restrain the Issuing
Bank from Issuing such Letter of Credit, or any requirement of law
applicable to the Issuing Bank or any request or directive (whether or not
having the force of law) from any governmental authority with jurisdiction
over the Issuing Bank shall prohibit, or request that the Issuing Bank
refrain from, the Issuance of letters of credit generally or such Letter of
Credit in particular or shall impose upon the Issuing Bank with respect to
such Letter of Credit any restriction, reserve or capital requirement (for
which the Issuing Bank is not otherwise compensated hereunder) not in
effect on the Closing Date, or shall impose upon the Issuing Bank any
unreimbursed loss, cost or expense which was not applicable on the Closing
Date and which the Issuing Bank in good faith deems material to it;
(ii) the Issuing Bank has received written notice from any
Lender, the Administrative Agent or the Borrower, on or prior to the
Business Day prior to the requested date of Issuance of such Letter of
Credit, that one or more of the applicable conditions contained in Article
2 is not then satisfied;
(iii) the expiry date of any requested Letter of Credit is (A)
more than 360 days after the date of Issuance, unless the Required Lenders
have approved such expiry date in writing, or (B) after the Line of Credit
Maturity Date, unless all of the Lenders have approved such expiry date in
writing;
(iv) any requested Letter of Credit does not provide for drafts,
or is not otherwise in form and substance acceptable to the Issuing Bank,
or the Issuance of a Letter of Credit shall violate any applicable policies
of the Issuing Bank;
(v) any Letter of Credit is for the purpose of supporting the
issuance of any letter of credit by any other Person; or
(vi) such Letter of Credit is to be denominated in a currency
other than Dollars.
1.2.2 ISSUANCE, AMENDMENT AND RENEWAL OF LETTERS OF CREDIT.
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a. Each Letter of Credit shall be issued upon the irrevocable
written request of Borrower received by the Issuing Bank (with a copy sent by
Borrower to the Administrative Agent) at least three (3) Business Days (or such
shorter time as the Issuing Bank may agree in a particular instance in its sole
discretion) prior to the proposed date of issuance. The language of each Letter
of Credit shall be acceptable to the Issuing Bank. Each such request for
issuance of a Letter of Credit shall be by facsimile, confirmed immediately in
an original writing, in the form of an L/C Application, and shall specify in
form and detail satisfactory to the Issuing Bank: (i) the proposed date of
issuance of the Letter of Credit (which shall be a Business Day); (ii) the face
amount of the Letter of Credit; (iii) the expiry date of the Letter of Credit;
(iv) the name and address of the beneficiary thereof; (v) the documents to be
presented by the beneficiary of the Letter of Credit in case of any drawing
thereunder; (vi) the full text of any certificate to be presented by the
beneficiary in case of any drawing thereunder; and (vii) such other matters as
the Issuing Bank may require.
b. Prior to the Issuance of any Letter of Credit, the Issuing
Bank will confirm with the Administrative Agent (by telephone or in writing)
that the Administrative Agent has received a copy of the L/C Application or L/C
Amendment Application from the Borrower and, if not, the Issuing Bank will
provide the Administrative Agent with a copy thereof. Unless the Issuing Bank
has received notice on or before the Business Day immediately preceding the date
the Issuing Bank is to issue a requested Letter of Credit from the
Administrative Agent (A) directing the Issuing Bank not to issue such Letter of
Credit because such issuance is not then permitted under subsection 1.2.1.a. as
a result of the limitations set forth in clauses (1) through (3) thereof or
subsection 1.2.1.b.(ii); or (B) that one or more conditions specified in Article
2 are not then satisfied; then, subject to the terms and conditions hereof, the
Issuing Bank shall, on the requested date, issue a Letter of Credit for the
account of the Borrower or as otherwise designated by Borrower in accordance
with the Issuing Bank's usual and customary business practices.
c. From time to time while a Letter of Credit is outstanding and
prior to the Line of Credit Maturity Date, the Issuing Bank will, upon the
written request of Borrower received by the Issuing Bank (with a copy sent by
Borrower to the Administrative Agent) at least one day (or such shorter time as
the Issuing Bank may agree in a particular instance in its sole discretion)
prior to the proposed date of amendment, amend any Letter of Credit issued by
it, provided, that the language thereof shall be acceptable to the Issuing Bank.
Each such request for amendment of a Letter of Credit shall be made by
facsimile, confirmed immediately in an original writing, made in the form of an
L/C Amendment Application and shall specify in form and detail satisfactory to
the Issuing Bank: (i) the Letter of Credit to be amended; (ii) the proposed date
of amendment of the Letter of Credit (which shall be a Business Day); (iii) the
nature of the proposed amendment; and (iv) such other matters as the Issuing
Bank may require. The Issuing Bank shall be under no obligation to amend any
Letter of Credit if: (A) the Issuing Bank would have no obligation at such time
to issue such Letter of Credit in its amended form under the terms of this
Agreement; or (B) the beneficiary of any such Letter of Credit does not accept
the proposed amendment to the Letter of Credit.
d. The Issuing Bank and the Lenders agree that, while a Letter of
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Credit is outstanding and prior to the Line of Credit Maturity Date, at the
option of the Borrower and upon the written request of Borrower received by
the Issuing Bank (with a copy sent by Borrower to the Administrative Agent)
at least one day (or such shorter time as the Issuing Bank may agree in a
particular instance in its sole discretion) prior to the proposed date of
notification of renewal, the Issuing Bank shall be entitled to authorize the
automatic renewal of any Letter of Credit issued by it. Each such request for
renewal of a Letter of Credit shall be made by facsimile, confirmed
immediately in an original writing, in the form of an L/C Amendment
Application, and shall specify in form and detail satisfactory to the Issuing
Bank: (i) the Letter of Credit to be renewed; (ii) the proposed date of
notification of renewal of the Letter of Credit (which shall be a Business
Day); (iii) the revised expiry date of the Letter of Credit; and (iv) such
other matters as the Issuing Bank may require. The Issuing Bank shall be
under no obligation to renew any Letter of Credit if: (A) the Issuing Bank
would have no obligation at such time to issue or amend such Letter of Credit
in its renewed form under the terms of this Agreement; or (B) the beneficiary
of any such Letter of Credit does not accept the proposed renewal of the
Letter of Credit. If any outstanding Letter of Credit shall provide that it
shall be automatically renewed unless the beneficiary thereof receives notice
from the Issuing Bank that such Letter of Credit shall not be renewed, and if
at the time of renewal the Issuing Bank would be entitled to authorize the
automatic renewal of such Letter of Credit in accordance with this subsection
upon the request of the Borrower but the Issuing Bank shall not have received
any L/C Amendment Application from the Borrower with respect to such renewal
or other written direction by the Borrower with respect thereto, the Issuing
Bank shall nonetheless be permitted to allow such Letter of Credit to renew,
and the Borrower and the Lenders hereby authorize such renewal, and,
accordingly, the Issuing Bank shall be deemed to have received an L/C
Amendment Application from the Borrower requesting such renewal.
e. The Issuing Bank may, at its election (or as required by the
Administrative Agent at the direction of the Required Lenders), deliver any
notices of termination or other communications to any Letter of Credit
beneficiary or transferee, and take any other action as necessary or
appropriate, at any time and from time to time, in order to cause the expiry
date of such Letter of Credit to be a date not later than the Line of Credit
Maturity Date.
f. This Agreement shall control in the event of any conflict with
any L/C-Related Document (other than any Letter of Credit).
g. The Issuing Bank will also deliver to the Administrative
Agent, concurrently or promptly following its delivery of a Letter of Credit, or
amendment to or renewal of a Letter of Credit, to an advising bank or a
beneficiary, a true and complete copy of each such Letter of Credit or amendment
to or renewal of a Letter of Credit.
1.2.3 RISK PARTICIPATIONS, DRAWINGS AND REIMBURSEMENTS.
a. Each Lender shall be deemed to, and hereby irrevocably and
unconditionally agrees to, purchase from the Issuing Bank a participation in
each such Letter of Credit and each drawing thereunder in an amount equal to the
product of (i) such Lender's Commitment Percentage at such time, times (ii) the
maximum amount available to be drawn under
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such Letter of Credit and the amount of such drawing, respectively.
b. Immediately upon the Issuance of each Letter of Credit in
addition to those described in subsection 1.2.3.a., each Lender shall be deemed
to, and hereby irrevocably and unconditionally agrees to, purchase from the
Issuing Bank a participation in such Letter of Credit and each drawing
thereunder in an amount equal to the product of (i) the Commitment Percentage of
such Lender at such time, times (ii) the maximum amount available to be drawn
under such Letter of Credit and the amount of such drawing, respectively. For
purposes of subsection 1.7.2, each Issuance of a Letter of Credit shall be
deemed to utilize the Commitment of each Lender by an amount equal to the amount
of such participation.
c. In the event of any request for a drawing under a Letter of
Credit by the beneficiary or transferee thereof, the Issuing Bank will notify
Borrower within two (2) Business Days, provided, however, that the failure to so
notify Borrower will not effect the Borrower's obligation hereunder. The
Borrower shall reimburse the Issuing Bank prior to Noon (Central Time), on each
date that any amount is paid by the Issuing Bank under any Letter of Credit
(each such date, an "Honor Date"), in an amount equal to the amount so paid by
the Issuing Bank. In the event the Borrower fails to reimburse the Issuing Bank
for the full amount of any drawing under any Letter of Credit by Noon (Central
Time) on the Honor Date, the Issuing Bank will promptly notify the
Administrative Agent and the Administrative Agent will promptly notify each
Lender thereof, and the Borrower shall be deemed to have requested that Advances
be made by the Lenders to be disbursed on the Honor Date under such Letter of
Credit, subject to the amount of the unutilized portion of the Line of Credit
Commitment and subject to the conditions set forth in Section 2. Any notice
given by the Issuing Bank or the Administrative Agent pursuant to this
subsection may be oral if immediately confirmed in writing (including by
facsimile); provided that the lack of such an immediate confirmation shall not
affect the conclusiveness or binding effect of such notice.
d. Each Lender shall upon any notice pursuant to subsection
1.2.3.c. make available to the Administrative Agent for the account of the
Issuing Bank an amount in Dollars and in immediately available funds equal to
its Commitment Percentage of the amount of the drawing, whereupon the
participating Lenders shall (subject to subsection 1.2.3.e.) each be deemed to
have made an Advance bearing interest with reference to the Prime Rate to the
Borrower in that amount. If any Lender so notified fails to make available to
the Administrative Agent for the account of the Issuing Bank the amount of such
Lender's Pro Rata share of the amount of the drawing by no later than 1:00 p.m.
(Central Time) on the Honor Date, then interest shall accrue on such Lender's
obligation to make such payment, from the Honor Date to the date such Lender
makes such payment, at a rate per annum equal to the Federal Funds Rate in
effect from time to time during such period. The Administrative Agent will
promptly give notice of the occurrence of the Honor Date, but failure of the
Administrative Agent to give any such notice on the Honor Date or in sufficient
time to enable any Lender to effect such payment on such date shall not relieve
such Lender from its obligations under this Section.
e. With respect to any unreimbursed drawing that is not converted
into Advances consisting of Prime Rate Advances to the Borrower in whole or in
part, because of
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the Borrower's failure to satisfy the conditions set forth in Section 2.2 or for
any other reason, the Borrower shall be deemed to have incurred from the Issuing
Bank an L/C Borrowing in the amount of such drawing, which L/C Borrowing shall
be due and payable on demand (together with interest) and shall bear interest at
a rate per annum equal to the Prime Rate plus the applicable Rate Margin at such
time plus 2% per annum, and each Lender's payment to the Issuing Bank pursuant
to subsection 1.2.3.d. shall be deemed payment in respect of its participation
in such L/C Borrowing and shall constitute an L/C Advance from such Lender in
satisfaction of its participation obligation under this Section.
f. Each Lender's obligation in accordance with this Agreement to
make the Advances or L/C Advances, as contemplated by this Section, as a result
of a drawing under a Letter of Credit, shall be absolute and unconditional and
without recourse to the Issuing Bank and shall not be affected by any
circumstance, including (i) any set-off, counterclaim, recoupment, defense or
other right which such Lender may have against the Issuing Bank, the Borrower or
any other Person for any reason whatsoever; (ii) the occurrence or continuance
of a Default, an Event of Default or a Material Adverse Effect; or (iii) any
other circumstance, happening or event whatsoever, whether or not similar to any
of the foregoing; PROVIDED, however, that each Lender's obligation to make
Advances under this Section is subject to the conditions set forth in Section
2.2.
1.2.4 REPAYMENT OF PARTICIPATIONS.
a. Upon (and only upon) receipt by the Administrative Agent for
the account of the Issuing Bank of immediately available funds from the Borrower
(i) in reimbursement of any payment made by the Issuing Bank under the Letter of
Credit with respect to which any Lender has paid the Administrative Agent for
the account of the Issuing Bank for such Lender's participation in the Letter of
Credit pursuant to Section 1.2.3 or (ii) in payment of interest thereon, the
Administrative Agent will pay to each Lender, in the same funds as those
received by the Administrative Agent for the account of the Issuing Bank, the
amount of such Lender's Commitment Percentage of such funds, and the Issuing
Bank shall receive the amount of the Commitment Percentage of such funds of any
Lender that did not so pay the Administrative Agent for the account of the
Issuing Bank.
b. If the Administrative Agent or the Issuing Bank is required at
any time to return to the Borrower, or to a trustee, receiver, liquidator,
custodian, or any official in any proceeding described in Section 7.1.10, any
portion of the payments made by the Borrower to the Administrative Agent for the
account of the Issuing Bank pursuant to subsection 1.2.4.a. in reimbursement of
a payment made under the Letter of Credit or interest or fee thereon, each
Lender shall, on demand of the Administrative Agent, forthwith return to the
Administrative Agent or the Issuing Bank the amount of its Commitment Percentage
of any amounts so returned by the Administrative Agent or the Issuing Bank plus
interest thereon from the date such demand is made to the date such amounts are
returned by such Lender to the Administrative Agent or the Issuing Bank, at a
rate per annum equal to the Federal Funds Rate in effect from time to time.
1.2.5 ROLE OF THE ISSUING BANK.
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a. Each Lender and the Borrower agrees that, in paying any
drawing under a Letter of Credit, the Issuing Bank shall not have any
responsibility to obtain any document (other than any sight draft and
certificates expressly required by the Letter of Credit) or to ascertain or
inquire as to the validity or accuracy of any such document or the authority of
the Person executing or delivering any such document.
b. No Agent-Related Person nor any of the respective
correspondents, participants or assignees of the Issuing Bank shall be liable to
any Lender for: (i) any action taken or omitted in connection herewith at the
request or with the approval of the Lenders; (ii) any action taken or omitted in
the absence of gross negligence or willful misconduct; or (iii) the due
execution, effectiveness, validity or enforceability of any L/C-Related
Document.
c. The Borrower hereby assumes all risks of the acts or omissions
of any beneficiary or transferee with respect to its use of any Letter of
Credit; PROVIDED, however, that this assumption is not intended to, and shall
not, preclude the Borrower's pursuing such rights and remedies as it may have
against the beneficiary or transferee at law or under any other agreement. No
Agent-Related Person, nor any of the respective correspondents, participants or
assignees of the Issuing Bank, shall be liable or responsible for any of the
matters described in clauses (i) through (vii) of Section 1.2.6; PROVIDED,
however, anything in such clauses to the contrary notwithstanding, that the
Borrower may have a claim against the Issuing Bank, and the Issuing Bank may be
liable to the Borrower, to the extent, but only to the extent, of any direct, as
opposed to consequential or exemplary, damages suffered by the Borrower which
the Borrower proves were caused by the Issuing Bank's willful misconduct or
gross negligence or the Issuing Bank's willful failure to pay under any Letter
of Credit after the presentation to it by the beneficiary of a sight draft and
certificate(s) substantially complying with the terms and conditions of a Letter
of Credit. In furtherance and not in limitation of the foregoing: (i) the
Issuing Bank may accept documents that reasonably appear on their face to be in
order, without responsibility for further investigation, regardless of any
notice or information to the contrary; and (ii) the Issuing Bank shall not be
responsible for the validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign a Letter of Credit or the rights
or benefits thereunder or proceeds thereof, in whole or in part, which may prove
to be invalid or ineffective for any reason.
1.2.6 OBLIGATIONS ABSOLUTE. The obligations of the Borrower under this
Agreement and any L/C-Related Document to reimburse the Issuing Bank for a
drawing under a Letter of Credit, and to repay any L/C Borrowing and any drawing
under a Letter of Credit converted into Advances, shall be unconditional and
irrevocable, and shall be paid strictly in accordance with the terms of this
Agreement and each such other L/C-Related Document under all circumstances,
including the following:
(i) any lack of validity or enforceability of this Agreement or
any L/C-Related Document;
(ii) any change in the time, manner or place of payment of, or in
any other term of, all or any of the obligations of the Borrower in respect
of any Letter of Credit or
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any other amendment or waiver of or any consent to departure from all or
any of the L/C-Related Documents;
(iii) the existence of any claim, set-off, defense or other right
that the Borrower may have at any time against any beneficiary or any
transferee of any Letter of Credit (or any Person for whom any such
beneficiary or any such transferee may be acting), the Issuing Bank or any
other Person, whether in connection with this Agreement, the transactions
contemplated hereby or by the L/C-Related Documents or any unrelated
transaction;
(iv) any draft, demand, certificate or other document presented
under any Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect; or any loss or delay in the transmission or
otherwise of any document required in order to make a drawing under any
Letter of Credit; provided, however, the Borrower shall not be obligated to
reimburse the Issuing Bank for any wrongful payment or disbursements made
under any Letter of Credit as a result of acts or omissions constituting
gross negligence or willful misconduct on the part of the Issuing Bank;
(v) any payment by the Issuing Bank under any Letter of Credit
against presentation of a draft or certificate that does not substantially
comply with the terms of any Letter of Credit; or any payment made by the
Issuing Bank under any Letter of Credit to any Person purporting to be a
trustee in bankruptcy, debtor-in-possession, assignee for the benefit of
creditors, liquidator, receiver or other representative of or successor to
any beneficiary or any transferee of any Letter of Credit, including any
arising in connection with any proceeding described in Section 7.1.10;
provided, however, the Borrower shall not be obligated to reimburse the
Issuing Bank for any wrongful payment or disbursements made under any
Letter of Credit as a result of acts or omissions constituting gross
negligence or willful misconduct on the part of the Issuing Bank;
(vi) any exchange, release or non-perfection of any collateral,
or any release or amendment or waiver of or consent to departure from any
other guarantee, for all or any of the obligations of the Borrower in
respect of any Letter of Credit; or
(vii) any other circumstance or happening whatsoever, whether or
not similar to any of the foregoing, including any other circumstance that
might otherwise constitute a defense available to, or a discharge of, the
Borrower or a guarantor; provided, however, the Borrower shall not be
obligated to reimburse the Issuing Bank for any wrongful payment or
disbursements made under any Letter of Credit as a result of acts or
omissions constituting gross negligence or willful misconduct on the part
of the Issuing Bank.
1.2.7 LETTER OF CREDIT FEES.
a. The Borrower shall pay to the Administrative Agent for the
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account of each of the Lenders a letter of credit fee with respect to the
outstanding Letters of Credit equal to a per annum rate equal to the applicable
Rate Margin for Letter of Credit Fees multiplied by the average daily maximum
amount available to be drawn thereunder, computed on a quarterly basis in
arrears on the first Business Day following the end of each calendar quarter
based on the Letters of Credit outstanding during such quarter as calculated by
the Administrative Agent. The Rate Margin applicable to the Letter of Credit
Fees from time to time will be determined based on the Borrower's Leverage Ratio
as and when set forth in Section 1.1.5.4 according to the pricing grid set forth
on SCHEDULE A. Such letter of credit fees shall be due and payable, quarterly,
in arrears, on the first Business Day following the end of each calendar quarter
during which Letters of Credit are outstanding, commencing on the first such
date to occur after the Closing Date, through the Line of Credit Maturity Date
with the final payment to be made on the Line of Credit Maturity Date.
b. The Borrower shall pay to the Issuing Bank a letter of credit
fronting fee for each Letter of Credit Issued by the Issuing Bank equal to 0.15%
of the original face amount of each Letter of Credit or such other amount to be
negotiated from time to time between Borrower and the Issuing Bank. Such Letter
of Credit fronting fee shall be due and payable on each date of Issuance of a
Letter of Credit.
c. The Borrower shall pay to the Issuing Bank from time to time
on demand the normal issuance, presentation, amendment and other processing
fees, and other standard costs and charges, of the Issuing Bank relating to the
documentation, amendment and payment/negotiation of letters of credit as from
time to time in effect.
1.2.8 UNIFORM CUSTOMS AND PRACTICE. The most recent Uniform Customs
and Practice for Documentary Credits as published by the International Chamber
of Commerce at the time of issuance of any Letter of Credit shall (unless
otherwise expressly provided in the Letters of Credit) apply to the Letters of
Credit.
1.3. DETERMINATION OF COMMITMENT AMOUNTS.
1.3.1. INITIAL COMMITMENT. Upon the execution of this Agreement and
satisfaction of each condition precedent set forth in Section 2.1 hereof,
LaSalle National Bank shall be the only Lender with an initial Commitment of
$50,000,000. After the Closing Date, the Administrative Agent shall use its best
efforts to arrange for additional financial institutions to become "Lenders"
hereunder from time to time by executing a Joinder to this Agreement in the form
of Exhibit 1.3 attached hereto (which Joinder shall constitute such Lender's
signature page hereto); provided, however, that the maximum aggregate amount of
the Commitments established hereunder shall not exceed $100,000,000.
1.3.2. AVAILABILITY UNDER 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 aggregate amount of the Lenders' Commitments at such time,
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b. MINUS the then outstanding Advances (including requested, but not
yet drawn Advances) at such time,
c. MINUS the aggregate amount of the outstanding L/C Obligations at
such time.
(COLLECTIVELY, the amount resulting from the equation under categories "a"
through "c" above is sometimes referred to herein as the "Available Credit
Portion".)
1.4. ADVANCES.
1.4.1. REQUESTING ADVANCES. To request an Advance, Borrower (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 form 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 Noon (Central Time) (a) on the
Business Day immediately prior to the requested Settlement Date with respect to
any Advance of funds that will accrue interest based on the Prime Rate AND (b)
at least three (3) 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 which bears
interest with reference to the Prime Rate must be at least $1,000,000 and in
multiples of $1,000,000 in excess thereof and each Advance which bears interest
with reference to the Adjusted LIBO Rate must be at least $2,000,000 and in
multiples of $1,000,000 in excess thereof.
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 unless the
Administrative Agent and Borrower shall otherwise agree.
1.4.3. [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 requested Advance at such time, would exceed the
Available Credit Portion, 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 Date, OR (e) prior
to satisfaction of each condition precedent under Section 2 hereof.
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1.4.5. INDEMNIFICATION FOR REVOCATION OR FAILURE TO SATISFY
CONDITIONS. Borrower will indemnify each Lender against any loss, cost or
expense incurred by such Lender as a result of any revocation of any Advance
Request or any failure to fulfill the applicable conditions precedent to such
Advance on or before the requested Settlement Date specified in such 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 Dollars on or before Noon (Central Time)
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. For purposes of facilitating the funding of the
Advances and payments of amounts due hereunder, the Borrower has established the
Account with the Administrative Agent. With respect to any principal, interest,
periodic facility fee or other fee, or any other cost or expense due and payable
to the Administrative Agent or any Lender under the Loan Documents, the Borrower
hereby irrevocably authorizes the Administrative Agent to debit the Account
maintained with the Administrative Agent in an amount such that the aggregate
amount debited from such Account does not exceed such principal, interest, fee
or other cost or expense. If there are insufficient funds in the Account to
cover the amount of the fee or other cost or expense then due, such debits will
be reversed (in whole or in part, in the Administrative Agent's sole discretion)
and such amount not debited shall be deemed to be unpaid. No such debit under
this Section shall be deemed a set-off.
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 Noon (Central Time) on any day will be
deemed to be received on the next succeeding Business Day.
1.5.3. APPLICATION OF PAYMENTS. Unless a Default or Event of Default
exists and unless the Borrower otherwise directs, 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 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
any other indebtedness of Borrower or other Obligor then due and owing to
Administrative Agent, any Lender or Issuing Bank; provided, however,
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that during the existence of a Default or an Event of Default, the
Administrative Agent shall apply payments and other amounts received from
Borrower (or otherwise on account of the Obligations) as the Required Lenders
shall direct.
1.5.4. TAXES. All payments of principal of, and interest on, the
Advances and all other amounts payable hereunder shall be made free and clear
without deduction for any present or future income, excise, stamp or franchise
taxes and other taxes, fees, duties, withholdings or other charges of any nature
whatsoever imposed by any taxing authority, excluding franchise taxes and taxes
imposed on or measured by any Lender's net income or receipts (all non-excluded
items being called "Taxes"). If any withholding or deduction from any payment to
be made by the Borrower hereunder is required in respect of any Taxes pursuant
to any applicable law, rule or regulation, then the Borrower will:
a. pay directly to the relevant authority the full amount required to
be so withheld or deducted;
b. promptly forward to the Administrative Agent an official receipt or
other documentation satisfactory to the Administrative Agent evidencing such
payment to such authority; and
c. pay to the Administrative Agent for the account of the Lender such
additional amount or amounts as is necessary to ensure that the net amount
actually received by each Lender will equal the full amount such Lender would
have received had no such withholding or deduction been required.
Moreover, if any Taxes are directly asserted against the Administrative Agent or
any Lender with respect to any payment received by the Administrative Agent or
such Lender hereunder, the Administrative Agent or such Lender may pay such
Taxes and the Borrower will promptly pay such additional amounts (including any
penalty, interest or expense) as is necessary in order that the net amount
received by such Person after the payment of such Taxes (including any Taxes on
such additional amount) shall equal the amount such Person would have received
had such Taxes not been asserted.
If the Borrower fails to pay any Taxes when due to the appropriate taxing
authority or fails to remit to the Administrative Agent, for the account of the
respective Lender, the required receipts or other required documentary evidence,
the Borrower shall indemnify the Lender for any incremental Taxes, interest or
penalties that may become payable by any Lender as a result of any such failure.
For purposes of this Section 1.5.4, a distribution hereunder by the
Administrative Agent or any Lender to or for the account of any Lender shall be
deemed a payment by the Borrower.
Each Lender and the Administrative Agent agree that if such Lender or the
Administrative Agent subsequently recovers, or receives a net tax benefit
(including, without limitation, a refund, credit or allowance) as determined in
good faith by each Lender in its sole discretion, with respect to, any amount of
withholding taxes or other taxes previously paid for the account of such Lender
or Administrative Agent, the Borrower shall be reimbursed by such Lender or the
Administrative
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Agent up to the amount that it has previously paid with respect to any
withholding taxes or other taxes for the account of such Lender or the
Administrative Agent but only to the extent of the amount of any such recovery
or net tax benefit, including, without limitation, any tax benefit obtained by
such Lender or the Administrative Agent as a result of such reimbursement. Each
Lender also agrees to give the Borrower prompt notice upon becoming aware that
its exemption from withholding taxes or other taxes is no longer in effect. If
the Borrower is or would be required to pay any amount to any Lender or the
Administrative Agent pursuant to this Section, then such Lender shall use
reasonable efforts (consistent with its policies and legal and regulatory
restrictions) to change the jurisdiction of its lending office so as to
eliminate any such additional payment by the Borrower which may thereafter
accrue, if such change in the sole judgment of such Lender is not otherwise
disadvantageous to such Lender.
Each Lender that (a) is organized under the laws of a jurisdiction other
than the United States of America and (b) either (i) is a party hereto on the
Closing Date or (ii) becomes an assignee of an interest under this Agreement
under Section 10.5 after the Closing Date (unless such Lender was already a
Lender hereunder immediately prior to such assignment) shall execute and deliver
to the Borrower and the Administrative Agent one or more (as the Borrower or the
Administrative Agent may reasonably request) United States Internal Revenue
Service Forms 4224 or Forms 1001 or such other forms or documents, appropriately
completed, as may be applicable to establish that such Lender is exempt from
withholding or deduction of Taxes. The Borrower shall not be required to pay
additional amounts to any Lender pursuant to this Section to the extent that the
obligation to pay such additional amounts would not have arisen but for the
failure of such Lender to comply with this paragraph.
1.5.5. DEFAULT INTEREST. During the existence of a Default or an Event
of Default hereunder, Borrower 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 and the fee otherwise payable by Borrower under Section 1.2.7.A
shall be increased by two percent (2%) per annum. NOTWITHSTANDING THE foregoing,
if the relevant Event of 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, Borrower is not and will not 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.
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1.6. RELEASE OF SECURITY. On the Closing Date, the property serving as
Collateral under and in connection with the Original Credit Facility Agreement
will be released except for the capital stock of the Borrower which shall
continue to secure the obligations of the Guarantor under the Parent Guaranty.
1.7. FEES AND OTHER COMPENSATION.
1.7.1. FEES TO ADMINISTRATIVE AGENT. Borrower shall pay to the
Administrative Agent (for its own account) in immediately available funds the
fees described in that certain Fee Letter dated October 9, 1998 in the amounts
and at the times provided therein.
1.7.2. PERIODIC FACILITY FEE. Borrower will also pay Administrative
Agent (for the ratable benefit of Lenders) a fee equal to the rate per annum, as
in effect from time to time based on the Borrower's Leverage Ratio as and when
determined in accordance with Section 1.1.5.4 and as set forth on the pricing
grid on SCHEDULE A, on the average daily amount of the Available Credit Portion.
Such fee (the "Periodic Facility Fee") shall accrue from the date hereof until
the Line of Credit Maturity Date, 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 Business Day of each January, April,
July and October.
1.8 SUBSTITUTION OF LENDERS. Upon the receipt by the Borrower from any
Lender (an "Affected Lender") of a claim for compensation under Section 1.1.5.6
or in the case any withholding liability arises under Section 1.5.4, the
Borrower may: (i) request the Affected Lender to use its best efforts to obtain
a replacement bank or financial institution satisfactory to the Borrower to
acquire and assume all or a ratable part of such Affected Lender's Advances and
Commitment (a "Replacement Lender"); (ii) request one or more of the other
Lenders to acquire and assume all or part of such Affected Lender's Advances and
Commitment; or (iii) designate a Replacement Lender. Any such designation of a
Replacement Lender under clause (i) or (iii) shall be subject to the prior
written consent of the Administrative Agent (which consent shall not be
unreasonably withheld).
ARTICLE 2: CONDITIONS PRECEDENT
2.1. CLOSING CONDITIONS. The effectiveness of this Agreement and 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 the Administrative Agent and each
Lender in its sole and absolute discretion):
2.1.1. COMPLIANCE.
2.1.1.1. FEES AND EXPENSES. Borrower must have paid all fees and
expenses due to First Union National Bank in its capacity as administrative
agent under the Original Credit Facility Agreement, all accrued but unpaid
Periodic Facility Fees and other fees and expenses due to the Original Lenders
under the Original Credit Facility Agreement and all reasonable fees, costs,
expenses and taxes due and payable hereunder, including without
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limitation, any fees due and payable pursuant to Section 1.7 hereof and the
reasonable fees, costs and expenses of the law firm of Sonnenschein Nath &
Rosenthal 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, the other Loan Documents and in each
certificate or other writing delivered 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 each Lender.
2.1.1.3. NO DEFAULT. There must not be any Default or Event of
Default hereunder.
2.1.1.4. NO MATERIAL CHANGE. There must not have been any
Material Adverse Change between December 31, 1997 (I.E., the "as of" date for
the most recent audited financial statements delivered to the Administrative
Agent) and the Closing Date.
2.1.2. DOCUMENTS. The 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
satisfactory to the Administrative Agent and, when applicable, recorded or filed
in the appropriate public office:
2.1.2.1. CREDIT AGREEMENT. This Agreement.
2.1.2.2. PROMISSORY NOTES. The Line of Credit Note(s) as
described in Section 1.1.4 hereof.
2.1.2.3. PLEDGE AGREEMENT (BY GUARANTOR). A pledge 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 now owned or hereafter acquired,
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.
2.1.2.4. 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.
2.1.2.5. [INTENTIONALLY BLANK].
2.1.2.6. OPINIONS OF COUNSEL. One or more written opinions from
legal counsel to Borrower addressed to the Administrative Agent and the Lenders
and dated as of the
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Closing Date opining as to such matters as the Administrative Agent may
reasonably request.
2.1.2.7. AUTHORIZATION DOCUMENTS -- BORROWER. A certificate of an
Authorized Officer of Borrower delivering true, accurate and complete versions
of (a) its certificate 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 where it is authorized to do business.
2.1.2.8. 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 where it is
authorized to do business.
2.1.2.9. OFFICER'S CERTIFICATES. One or more certificates of an
Authorized Officer of 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 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).
b. FINANCIAL STATEMENTS -- A set of (a) the quarterly financial
statements covering Borrower for fiscal quarter ending June 30,
1998 (or, if prepared, September 30, 1998) (and otherwise
consistent with the requirements of Section 4.2 hereof) AND (b)
the audited financial statements covering Borrower for fiscal
year ending December 31, 1997 (as otherwise consistent with the
requirements of Section 4.2 hereto).
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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 Borrower either (a) between
Borrower AND any holder or prospective holder of any equity
interest of 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 Borrower and any director or executive officer
of Borrower, AND each non-compete agreement between Borrower AND
former owner of Borrower.
e. INTER-AFFILIATE AGREEMENTS. Each written agreement (not otherwise
delivered under this Section) between Borrower AND any Affiliate
of Borrower (other than officers or directors of Borrower),
including the stock purchase or similar agreements relating to
and describing the Borrower's Investment in Professional Claims
Services Inc. and InsurQuote Systems, Inc.
f. DISASTER RECOVERY AND CONTINGENCY PROGRAM. A description of the
currently effective disaster recovery and contingency program of
Borrower, as required to be delivered under Section 4.8 hereof.
2.1.2.10 COMPLIANCE CERTIFICATE. A certificate from an Authorized
Officer of Borrower certifying as to compliance with the matters contained in
Section 2.1.1 hereof.
2.1.2.11 SUBORDINATION AGREEMENT. A Subordination Agreement
between the Guarantor and the Administrative Agent covering the indebtedness
owing from the Borrower, in a form reasonably satisfactory to the Lenders.
2.1.3 ASSIGNMENT. First Union National Bank ("First Union") shall have
assigned all of its rights under the Original Credit Facility Agreement to
LaSalle National Bank, and LaSalle National Bank shall have assumed all of First
Union's obligations under and in connection with the Original Credit Facility
Agreement.
2.2. CONDITIONS TO ALL ADVANCES OR ISSUANCES OF LETTERS OF CREDIT. The
obligation of the Issuing Bank to issue any Letter of Credit and each Lender to
fund any Advance, including the initial Advance hereunder, are subject to the
prior satisfaction of the following conditions precedent:
2.2.1. COMPLIANCE.
2.2.1.1. REPRESENTATIONS. Each, and all, representations and
warranties
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contained in this Agreement and in each other Loan Document, certificate or
other writing delivered to Administrative Agent pursuant hereto or thereto ON or
prior to the requested Settlement Date must be true, correct and complete in all
material respects on and as of such Settlement Date.
2.2.1.2. 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.
2.2.1.3. NO MATERIAL CHANGE. There must not have been any
Material Adverse Change between the Closing Date and such Settlement Date.
2.2.2. DOCUMENTS. Administrative Agent must have received the
following:
2.2.2.1. ADVANCE REQUEST. In the case of an Advance,
Administrative Agent must have received an Advance Request under and in
accordance with Section 1.4.1 hereof that includes amounts and wiring
instructions for each payment requested on such Settlement Date.
2.2.2.2. L/C DOCUMENTS. In the case of a requested Letter of
Credit, an L/C Application and such other L/C Documents as the Issuing Bank
shall request.
2.2.2.3. 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. LEVERAGE RATIO. As of such Settlement Date, Borrower 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, inclusive of the
proposed Advance.
ARTICLE 3: REPRESENTATIONS AND WARRANTIES
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. Borrower and each of its Subsidiaries
(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
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Adverse Effect). Guarantor is duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization. As of the date
hereof, each state and jurisdiction in which 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. Borrower has all requisite power and authority
under applicable law and under its Organic Documents, Authorizations and
Licenses to execute, deliver and perform the obligations under the Loan
Documents to which it is a party. Guarantor has all requisite power and
authority under applicable law to execute, deliver and perform the obligations
under the Loan Documents to which it is a party. Except as disclosed on Schedule
3.2 hereto, all actions, waivers and consents (corporate, regulatory and
otherwise) necessary or appropriate for 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 Borrower or Guarantor is a party constitute (or will
constitute when executed and delivered), the legal, valid and binding
obligations of Borrower and Guarantor 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 Borrower or Guarantor, and
(c) will not result in any material breach or violation of (or constitute a
material default under) any agreement or instrument by which 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
Borrower or Guarantor, whether such properties are now owned or hereafter
acquired.
3.5. TITLE TO ASSETS, EXISTING ENCUMBRANCES. Borrower and each of its
Subsidiaries (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, 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. 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 of its Subsidiaries (to the extent disclosed on Schedule 3.6 hereto, as
supplemented from time to time in accordance with Section 4.3.3). 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.
3.6. CAPITAL STRUCTURE AND EQUITY OWNERSHIP. As of the date hereof,
Schedule 3.6 hereto accurately and completely discloses (a) the number of shares
and classes of equity ownership rights and interests of Borrower (whether
existing as common or preferred stock, or
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warrants, options or other instruments convertible into such equity), AND (b)
the ownership thereof. As of the date hereof, 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 with respect to any shareholder
which owns in excess of 5% of the outstanding and issued common stock of the
Guarantor. All such shares and interests are validly existing, fully paid and
non-assessable.
3.7. SUBSIDIARIES, AFFILIATES AND INVESTMENTS. As of the date hereof,
Schedule 3.7 hereto accurately and completely discloses (a) each Subsidiary and
Affiliate of Borrower (other than its respective officers and directors) AND (b)
each Investment in or loan to any other Person by Borrower (to the extent that
such Investment or loan exceeds $50,000).
3.8. MATERIAL CONTRACTS. As of the date hereof, Schedule 3.8 hereto
accurately and completely discloses each material contract (as defined below) of
Borrower and its Subsidiaries. As of the date hereof, Subsection "a" of Schedule
3.8 hereto lists those material contracts of Borrower and its Subsidiaries that
Administrative Agent and Borrower have mutually agreed in good faith to be
required and essential in the operation of Borrower, and Subsection "b" of
Schedule 3.8 hereto lists all other material contracts. As of the date hereof,
Borrower has not 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, Borrower has no 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 Borrower includes
the following types of agreements to which Borrower or one of its Subsidiaries
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. Borrower and each of its Subsidiaries
possess all Licenses and other Authorizations necessary or required in the
conduct of its businesses and/or the operation of its properties. Each such
material Authorization is valid, binding and enforceable on, against and by
Borrower or its Subsidiary, as the case may be. Each material Authorization is
subsisting without any defaults thereunder or enforceable adverse limitations
thereon, and (to the best of 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. As of the date hereof, Schedule 3.9 hereto accurately and completely
lists each material Authorization, TOGETHER WITH relevant identifying
information describing such Authorizations.
3.10. TAXES AND ASSESSMENTS. Except as disclosed on Schedule 3.10 hereto,
Borrower and each of its Subsidiaries 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
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the extent that the failure to so timely file could not reasonably be expected
to have or cause a Material Adverse Effect. As of the date hereof, Borrower has
no 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 Borrower and each of its Subsidiaries or any of
their respective 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 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. There is no litigation, claim,
investigation, administrative proceeding, labor controversy or similar action
that is pending or, to the best of Borrower's knowledge and information after
due inquiry, threatened against Borrower or any of its Subsidiaries or their
respective 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 Borrower and Guarantor 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 Borrower and its Subsidiaries 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 Borrower or Guarantor and their
respective Subsidiaries 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 Borrower or any other Person
on behalf of Borrower have been prepared in good faith based upon estimates and
assumptions believed by 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. Borrower and each of its Subsidiaries
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. Borrower and each of its Subsidiaries is in
compliance in all respects with all applicable provisions of the Employee
Retirement Income Security Act of 1974,
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as amended ("ERISA"), and all rules, regulations and orders implementing ERISA,
EXCEPT to the extent that failure to be in such compliance could not reasonably
be expected to have or cause a Material Adverse Effect.
3.15.1 Neither Borrower nor any of its ERISA Affiliates maintains or
contributes to (or has maintained or contributed to) any multiemployer plan (as
defined in Section 4001 of ERISA) under which Borrower or any ERISA Affiliate
could reasonably be expected to have any withdrawal liability.
3.15.2 Neither Borrower nor any of its ERISA Affiliates 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 Borrower or any of its ERISA
Affiliates (determined on the basis of the actuarial assumptions utilized by the
PBGC does not exceed the aggregate fair market value of the assets under each
such defined benefit pension plan.
3.15.4 The aggregate liability of Borrower and each of its ERISA
Affiliates 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 Borrower or any of its ERISA Affiliates 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
Borrower or any of its Subsidiaries is associated to the extent that such event
could reasonably be expected to have or cause a Material Adverse Effect.
3.16. ENVIRONMENTAL COMPLIANCE.
3.16.1 Borrower and each of its Subsidiaries has received all permits
and filed all notifications necessary under and is otherwise in compliance in
all respects 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,
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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 Neither Borrower nor any of its Subsidiaries 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 Borrower or any of its Subsidiaries OR (b) otherwise in connection
with the conduct of its business and operations.
3.16.3 Neither Borrower nor any of its Subsidiaries has received
notice that it is potentially responsible for costs of clean-up of any actual or
imminently threatened spill, release or discharge of hazardous or toxic wastes
or substances or petroleum products pursuant to any Environmental Control
Statute.
3.17. MARGIN RULE COMPLIANCE. No Advances shall be used for purposes which
will violate any of the FRB's Margin Regulations. Not more than 25% of the value
of all Borrower's assets shall be attributable to its ownership of "Margin
Stock" as defined in the Margin Regulations.
3.18. [INTENTIONALLY BLANK].
3.19. SOLVENCY. Immediately prior to and upon the execution of this
Agreement and the funding of each Advance hereunder, CCC was, is and will be
solvent such that:
3.19.1 The fair saleable value of its assets (including, without
limitation, the fair saleable value of its goodwill and other intangible
property) is greater than the total amount of its liabilities, including without
limitation, all contingent liabilities; and 3.19.2 The present fair saleable
value of its assets (including, without limitation, the fair saleable value of
its goodwill and other intangible property) is not less than the amount that
will be required to pay the probable liability on its debts as such debts become
absolute and matured; and
3.19.3 It will be able to realize upon its assets and will have
sufficient cash flow from operations to enable it to pay its 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 debts is not greater than all of its
property at a fair valuation (including, without limitation, the fair valuation
of its goodwill and other intangible property).
CCC does not intend to incur debts or liabilities beyond its ability to pay such
debts and liabilities
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as such debts and liabilities become due and mature. Borrower is not engaged in
a business or transaction, or about to engage in a business or transaction, for
which the property of CCC would constitute unreasonably small capital or assets
after giving due consideration to the prevailing practice and industry in which
it is engaged. Borrower has not 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.
3.20. YEAR 2000. The Borrower and its Subsidiaries are in the process of
reviewing and accessing the areas within their business and operations which
could be materially adversely affected by, and have developed or are developing
a program to address on a timely basis, the "Year 2000 Problem" (that is, the
risk that computer applications used by the Borrower and its Subsidiaries may be
unable to recognize and perform properly date-sensitive functions involving
certain dates prior to and any date on or after December 31, 1999), and are
making related reasonable inquiry of material suppliers and vendors. Based on
such review and program, the Borrower believes that the "Year 2000 Problem" will
not have a Material Adverse Effect. From time to time, at the reasonable request
of the Administrative Agent, the Borrower and its Subsidiaries shall provide to
the Administrative Agent, such updated information or documentation as is
reasonably requested regarding the status of their efforts to address the "Year
2000 Problem."
ARTICLE 4: AFFIRMATIVE COVENANTS
Borrower hereby covenants and agrees that, so long as any
indebtedness remains outstanding hereunder or any Commitment is in effect,
Borrower will comply with the following affirmative covenants:
4.1. FINANCIAL COVENANTS AND RATIOS. As of the end of each fiscal quarter,
Borrower (on a consolidated basis, although not including the operations of
InsurQuote Systems, Inc. unless and until it becomes a Subsidiary) 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 Total Charge Coverage Ratio of
NOT LESS than 1.25-to-1.0.
4.1.2. LEVERAGE RATIO. A Leverage Ratio of NOT MORE THAN 3.00-to-1.0.
4.1.3. MINIMUM NET WORTH. A minimum net worth equal to 75% of the
Borrower's net worth as of June 30, 1998, PLUS 50% of the Borrower's aggregate
positive consolidated net income MINUS, the aggregate amount of Permitted
Dividends made by the Borrower, in each case, during the period commencing on
July 1, 1998 through the date of
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calculation, but in no event less than $1.00.
4.2. PERIODIC FINANCIAL STATEMENTS.
4.2.1. [INTENTIONALLY BLANK].
4.2.2. QUARTERLY FINANCIAL STATEMENTS. Within forty-five (45) calendar
days of the end of each of the first three fiscal quarters, Borrower 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, a cash flow
statement and a reconciliation of consolidated net worth and capital accounts
(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 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 of
the Available Credit Portion and the year-to-date amounts under Sections 5.7(E)
and 5.10(A) hereof, AND (d) certifying the amount of any Subordinated
Indebtedness paid during such fiscal period AND (e) a description (by amount and
payee) of all outstanding Funded Debt as at the end of such fiscal period AND
(f) 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 ninety (90) calendar days
after the close of each fiscal year, Borrower must prepare and deliver to each
Lender and Administrative Agent a complete set of audited annual consolidated
financial statements of each of the Borrower and the 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 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 pursuant to a reliance letter from such accountants
for the benefit of the Lenders reasonably satisfactory to the Administrative
Agent stating that the financial statements fairly present the consolidated
financial condition of the Borrower or the Guarantor, as the case may be, as of
the date thereof and for the periods covered thereby and 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
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
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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 of the Available Credit Portion and the year-to-date amounts under
Sections 5.7(E) and 5.10(A) hereof, and (d) certifying the amount of any
Subordinated Indebtedness paid during such fiscal period AND (e) a description
(by amount and payee) of all outstanding Funded Debt as at the end of such
fiscal period AND (f) certifying that as of the date of such certificate there
is not any existing Default or Event of Default.
4.3. OTHER FINANCIAL AND SPECIALIZED REPORTS.
4.3.1. FINANCIAL FORECASTS. On or before the 15th day after the Board
of Directors shall review and approve the same, but in any case not later than
March 31 of each year, Borrower must deliver to each Lender and Administrative
Agent consolidated and consolidating projected balance sheets, statements of
income and expenses, and statements of cash flow for the Guarantor and its
Subsidiaries for such year.
4.3.2. INFORMATION RELATING TO 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, any proxy statement or otherwise),
Borrower must deliver a complete copy thereof to each Lender and Administrative
Agent. In addition, the Borrower also shall deliver, and cause the Guarantor to
deliver, to the Administrative Agent, copies of material press releases and
other information and reports provided to its shareholders generally, in each
case promptly upon distribution thereof.
4.3.3 INFORMATION CONTAINED ON SCHEDULES. Together with the financial
statements required to be delivered under Sections 4.2.2 and 4.2.3, the Borrower
shall deliver to the Administrative Agent and the Lenders a report of the
following since the last such report;
a. new Subsidiaries of the Borrower; and
b. changes to Schedule 3.6 which would be necessary if the
representations in Section 3.6 were made as of the date of such
report.
4.4. FISCAL YEAR. CCC will maintain a fiscal year that has a December 31st
year end.
4.5. BOOKS AND RECORDS. Borrower and each of its Subsidiaries (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. The Borrower shall permit, and shall cause each
Subsidiary to permit, the Administrative Agent, any Lender or any of their
representatives or independent contractors:
a. if no Event of Default then exists, at the expense of the
Administrative Agent or such Lender and upon reasonable prior notice to the
Borrower, to visit and inspect, under the Borrower's guidance, any of their
respective properties, to examine their
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respective corporate, financial and operating records, and make copies thereof
or abstracts therefrom, and to discuss their respective affairs, finances and
accounts with Borrower's and its Subsidiaries' respective directors, officers
and independent public accountants, at such reasonable times during normal
business hours as may be reasonably requested but, in any event, no more often
than twice in any consecutive twelve-month period; and
b. if an Event of Default then exists, at the reasonable expense
of the Borrower and upon reasonable prior notice to the Borrower, to visit and
inspect, under the Borrower's guidance, any of their respective properties, to
examine their respective corporate, financial and operating records, and make
copies thereof or abstracts therefrom, and to discuss their respective affairs,
finances and accounts with Borrower's and its Subsidiaries' respective
directors, officers and independent public accountants, at such reasonable times
during normal business hours as may be reasonably requested.
4.6. EXISTENCE AND GOOD STANDING. Borrower and each of its Subsidiaries
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. NOTICE IN THE EVENT OF SUBSIDIARY INSOLVENCY. Borrower shall notify
the Administrative Agent at least five Business Days prior to filing a voluntary
petition in bankruptcy on behalf of any Subsidiary together with the necessary
information and calculations demonstrating that such filing will not cause an
Event of Default under Section 7.1.10.
4.8. INSURANCE; MAINTENANCE OF PROPERTIES DISASTER CONTINGENCY.
4.8.1. GENERAL INSURANCE PROVISIONS. Borrower will, and will cause
each of its Subsidiaries to keep, maintain and preserve all of its property and
assets in good order and repair (ordinary wear and tear excepted). The Borrower
shall maintain, and shall cause each Subsidiary to maintain, with financially
sound and reputable insurers, insurance with respect to its properties and
business against loss or damage of the kinds customarily insured against by
Persons engaged in the same or similar business, of such types and in such
amounts as are customarily carried under similar circumstances by such other
Persons; provided, however, that nothing in this Section 4.8.1 shall be deemed
to prevent the Borrower from self insuring such risks as are customarily self
insured by other corporations in the same business and similarly situated in
accordance with sound business practices.
4.8.2. DISASTER RECOVERY AND CONTINGENCY PROGRAM. Borrower will, and
will cause each of its Subsidiaries to maintain (and at least annually review
the sufficiency of) a disaster recovery and contingency plan that addresses such
entity'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
entity's primary mainframe computer systems. Such contingency plan and any
material changes thereto must be in form and substance reasonably acceptable to
Administrative
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Agent. Upon request, Borrower will provide Administrative Agent with a current
copy of such plan.
4.9. LOAN PURPOSE. Borrower will use the proceeds of each Advance under the
Line of Credit Facility exclusively as set forth in Section 1.1.3 hereof.
4.10. LITIGATION; OCCURRENCE OF DEFAULTS. 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. Borrower will, and will cause each of its Subsidiaries to 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) consequences of such non-payment could not reasonably be
expected to have or cause a Material Adverse Effect.
4.12. MANAGEMENT CHANGES. Borrower will notify Administrative Agent in
writing within ten (10) Business Days after any change (including, without
limitation, any dismissal or material change in title or status) in the
executive management group of Borrower, which group, as of the date hereof is
identified on Schedule 4.12.
4.13. COSTS AND EXPENSES. Borrower will pay or reimburse Administrative
Agent for all out-of-pocket costs and expenses (including, without limitation,
all reasonable attorneys' fees and disbursements) that Administrative Agent 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 syndication and 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 Borrower
and its Subsidiaries 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 hereof and the other Loan Documents. Borrower 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 any 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. Borrower will, and will cause each of its
Subsidiaries to, comply in all material respects (a) with all material laws,
rules, regulations and orders (federal, state, local
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and otherwise) applicable to its business, AND (b) with the provisions and
requirements of all Authorizations. 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. Borrower will, and will cause each of its Subsidiaries
to, 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. Borrower will not and will
not permit any of its Subsidiaries to, (a) incur any material accumulated
funding deficiency (within the meaning of ERISA and the regulations thereunder),
or any material liability to the PBGC established by, ERISA OR (b) permit any
reportable event (as defined in ERISA) to occur or the occurrence of any other
event which could reasonably be expected to be the basis for PBGC to assert a
material liability against it or which could reasonably be expected to result in
the imposition of a Lien on its properties or assets. 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 or its Subsidiaries
properties or assets.
4.14.3. ENVIRONMENTAL. Borrower will, and will cause each of its
Subsidiaries to, comply in all respects with the Environmental Control Statutes,
EXCEPT to the extent that the failure to be in such compliance could not
reasonably be expected to have or cause a Material Adverse Effect. 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 PLEDGED SHARES. Borrower will cause the Guarantor
to execute, deliver and record amendments or supplements to its Pledge Agreement
or other similar agreements to effect a pledge to the Administrative Agent for
the benefit of the Lenders of all of the Guarantor's now owned or hereafter
acquired capital stock of the Borrower and at any time upon Administrative
Agent's request and in form and substance reasonably satisfactory to
Administrative Agent, any financing or continuation statements.
4.15.2. FURTHER ASSURANCES. From time to time, Borrower will execute
and deliver (or will cause to be executed and delivered) such supplements and
amendments to the
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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 (b) that the payments under the
Loan Documents required to be paid by Borrower have been paid, AND (c) the then
unpaid principal balance of Obligations, AND (d) whether or not any Default is
then occurring under any of the Loan Documents and, if so, specifying each such
Default of which the signer may have knowledge. Unless CCC otherwise consents
(which consent will not be unreasonably withheld, delayed or conditioned),
Administrative Agent must give CCC at least ten (10) Business Days to complete
and deliver any such certificate. Borrower understands and agrees that any such
certificate delivered pursuant to this Section may be relied upon by
Administrative Agent, each Lender and, if different, by the recipient thereof.
4.15.4. SUBSIDIARY GUARANTIES. The Borrower shall use its best efforts
to cause each of its Subsidiaries, other than Professional Claims Services Inc.
and its Subsidiaries, to execute and deliver a guaranty in the form of EXHIBIT
4.15.4 attached hereto pursuant to which such Subsidiary shall guaranty the
payment of all of the Obligations ("Subsidiary Guaranty").
4.16. [INTENTIONALLY BLANK].
4.17. OTHER INFORMATION. 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
Borrower hereby covenants and agrees, that, so long as any
indebtedness remains outstanding hereunder or any Commitment remains in effect,
Borrower will comply with the following negative covenants:
5.1. [INTENTIONALLY BLANK].
5.2. ADDITIONAL INDEBTEDNESS. Neither Borrower nor any of its Subsidiaries
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. The Obligations hereunder; AND
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b. Trade indebtedness and indebtedness in respect of endorsements of
negotiable instruments for collection, each in the normal and ordinary course of
business for value received; AND
c. Indebtedness and obligations incurred to purchase fixed or capital
assets (other than Customer Equipment), consistent with the restrictions in
Section 5.5 hereof, PROVIDED, HOWEVER, that (1) the aggregate amount of such
asset acquisition indebtedness outstanding at any time, together with any other
indebtedness outstanding under subsections "d." and "e." below may not exceed
$8,000,000 in the aggregate, 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 5.5 hereof, PROVIDED, HOWEVER, that
(1) no such transaction otherwise causes a Default hereunder, AND (2) the
aggregate principal amount of such indebtedness outstanding at any time,
together with the any indebtedness outstanding under subsection "c." above and
subsection "e." below, may not exceed $8,000,000 in the aggregate, AND (3) such
indebtedness is immediately included in the calculation of Funded Debt, AND (4)
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 (3) the aggregate
principal amount of such outstanding indebtedness at any time, together with any
indebtedness outstanding under subsections "c." and "d." above does not exceed
$8,000,000 in the aggregate; AND
f. Indebtedness in favor of Borrower or a Subsidiary of Borrower if
and to the extent permitted under Section 5.4(B) hereof; AND
g. Such indebtedness listed on Schedule 5.2 hereto. Unless the
Required Lenders through Administrative Agent otherwise expressly consent in
writing (or unless otherwise specified on Schedule 5.2 hereto), all indebtedness
listed on Schedule 5.2 hereto must be included in the calculation of Funded
Debt; AND
h. Obligations to LaSalle National Bank under a line of credit not to
exceed $3,000,000; AND
i. Non-recourse indebtedness up to $5,000,000 at any time outstanding
secured only by real property owned by the Borrower or any of its Subsidiaries;
and
j. Subordinated Indebtedness.
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5.3. GUARANTIES. Borrower will not, and will not permit any Subsidiary to,
guarantee, assume or otherwise agree to become liable in any way, either
directly or indirectly, for any additional indebtedness or liability of any
other Person, EXCEPT AS FOLLOWS (collectively, the "Permitted Guaranties"): (a)
in favor of Lenders (or in favor of Administrative Agent for the benefit of
Lenders) on account of the Obligations or any other Permitted Indebtedness, OR
(b) to endorse checks or drafts in the ordinary course of business, OR (c)
guarantees or other contingent obligations to secure on behalf of Borrower or
any other Subsidiary of Borrower, performance or payment bonds, bids, tenders,
contracts, leases, franchises or public and statutory obligations in the
ordinary course of such entity's business, OR (d) to the extent that the
Required Lenders through Administrative Agent otherwise consent in writing.
NOTWITHSTANDING THE FOREGOING EXCEPTIONS, Borrower may not, and shall not permit
any of its Subsidiaries to, become so liable in a manner that otherwise violates
any covenant hereunder or that otherwise causes a Default hereunder.
5.4. LOANS. Borrower will not, and shall not permit any of its Subsidiaries
to, make any loans or advances to any other Person, EXCEPT as follows: (a) loans
to employees and sales representative that do not at any time in the aggregate
outstanding exceed $300,000 among all such loans to all such employees and sales
representatives, AND (b) loans to other Restricted Subsidiaries of Borrower that
are appropriately reflected on Borrower's financial records AND (c) security
deposits and advance payments or prepayments for products, services and
expenses, in each instance described in this Clause "c", in the ordinary course
of Borrower's business and (d) loans that are otherwise permitted under Section
5.7.
5.5. LIENS AND ENCUMBRANCES; NEGATIVE PLEDGE. Borrower will not, and shall
not permit any of its Subsidiaries to, create, permit or suffer the creation or
existence of any Liens on any of its property or assets (real or personal,
tangible or intangible), EXCEPT in favor of Administrative Agent (for the
benefit of Lenders) as security for the Obligations hereunder, and EXCEPT AS
FOLLOWS (collectively, the "Permitted Liens"):
a. Liens arising in favor of sellers or lessors for indebtedness and
obligations incurred to purchase or lease fixed or capital assets as permitted
under Subsection 5.2.C hereof or Subsection 5.2.D hereof or Subsection 5.2.E,
PROVIDED, THAT (1) such Liens secure only the indebtedness and obligations
created thereunder (but not any related monetary obligations under non-compete
arrangements) and are limited to the assets purchased or leased pursuant
thereto, AND (2) such fixed or capital assets do not constitute customized
application software or systems integration software or any asset the loss of
which could reasonably be expected to have or cause a Material Adverse Effect;
AND
b. Liens for taxes, assessments or other governmental charges
(federal, state or local) that are not yet delinquent or that are then being
currently contested in good faith by appropriate proceedings diligently
prosecuted, adequate reserves therefor in accordance with GAAP have been
established and a stay of enforcement of any such Lien is in effect; AND
c. Pledges or deposits in the ordinary course of business to secure
obligations under workmen's compensation, unemployment insurance or social
security laws or similar
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legislation; AND
d. Deposits to secure performance or payment bonds, bids, tenders,
contracts, leases, franchises or public and statutory obligations required in
the ordinary course of business; AND
e. Deposits to secure surety, appeal or custom bonds required in the
ordinary course of business; AND
f. Liens of carriers, warehousemen, mechanics, materialmen and
landlords incurred in the ordinary course of business for sums not past due or
for sums being currently contested in good faith by appropriate proceedings
diligently prosecuted, adequate reserves therefor in accordance with GAAP have
been established, AND such Liens could not reasonably be expected to have or
cause a Material Adverse Effect; AND
g. Easements, rights-of-way, restrictions and other similar
encumbrances on real property of Borrower or any of its Subsidiaries that,
independently and in the aggregate, do not (1) materially interfere with the
occupation, use or enjoyment by such entity of the property or assets encumbered
thereby in the normal course of business OR (2) materially impair the value of
the property subject thereto; AND
h. Liens listed on Schedule 5.5 hereof; AND
i. Liens securing indebtedness permitted under Section 5.2.I.
Borrower will not, and will not permit any of its Subsidiaries to, similarly
covenant to or in favor of any other Person that it will not create, permit or
suffer the creation or existence of any Liens on any of its property or assets.
5.6. TRANSFER OF ASSETS. Borrower will not, and will not permit any of its
Subsidiaries to, sell, lease, transfer or otherwise dispose of all or
substantially all of its assets except in the case of a Subsidiary to another
Restricted Subsidiary of the Borrower and from any Subsidiary to the Borrower.
In addition, Borrower will not, and will not permit any of its Subsidiaries to,
sell, lease, transfer or otherwise dispose of any of its assets OTHER THAN as
follows: (a) obsolete equipment that is no longer useful in operations, AND (b)
transfers of inventory in the normal and ordinary course of business for value
received and (c) transfers to unrelated third parties for at least fair market
value (as determined by the Board of Directors) so long as the value of all
assets sold or otherwise disposed of during any fiscal year does not exceed
$5,000,000, and is otherwise in accordance with the terms hereof and (d) the
sale or lease of Customer Equipment in the ordinary course of business.
NOTWITHSTANDING THE FOREGOING EXCEPTIONS, Borrower may not, and shall not permit
any of its Subsidiaries to, dispose of any assets in a manner that otherwise
violates any covenant hereunder or that otherwise causes a Default hereunder.
5.7. ACQUISITIONS AND INVESTMENTS. Borrower will not, and will not permit
any of its Subsidiaries to, lend money or credit or make advances to any Person,
or purchase or acquire any
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stock, obligations or securities of, or any other interest in, or make any
capital contribution to, any Person, including any Acquisition (each of the
foregoing an "Investment" and collectively, "Investments"), other than the
following (collectively, the "Permitted Investments"):
a. government and agency securities backed by the full faith and
credit of the U.S. federal government, AND
b. commercial paper issued by any Lender or any other commercial paper
rated A-1+ or A-1 by Standard & Poor's Ratings Group or P-1 by Moody's Investor
Services, Inc., AND
c. certificates of deposit, time deposits, other deposits and bankers'
acceptances issued by any Lender or established with any other federally insured
commercial bank rated as "well capitalized" by their primary federal regulators,
and having unimpaired capital and unimpaired surplus (collectively) of at least
$250,000,000, and whose commercial paper (or commercial paper that is supported
by such bank's letter of credit or commitment to lend) is rated as A-1+ or A-1
by Standard & Poor's Ratings Group or P-1 by Moody's Investor Services, Inc.,
AND
d. capital assets for use in the ordinary course of business acquired
pursuant to transactions that are otherwise consistent with the terms hereof,
AND
e. Investments in any Person other than Professional Claims Services
Inc., PROVIDED:
(i) no Default or Event of Default then exists or would result
therefrom; and
(ii) such Investment is undertaken in accordance with all applicable
requirements of law; and
(iii) Borrower has obtained the prior, effective written consent or
approval of the board of directors or equivalent governing body
of the subject Person for such Investment, if such consent or
approval is required by law, for any Investment that constitutes
an Acquisition; and
(iv) Borrower has given the Administrative Agent and the Lenders prior
written notice of such Investment; and
(v) Borrower has provided the Lenders with historical financial
statements of the subject Person for the three most recent fiscal
years for any single Investment in excess of $3,000,000
(including in the case of Acquisitions, assumption of liabilities
and obligations to make non-compete or similar payments); and
(vi) Borrower has provided the Lenders with projected financial
statements of the subject Person for the next three years for any
single Investment in excess of $10,000,000 (including in the case
of Acquisitions, assumptions
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of liabilities and obligations to make non-compete or similar
payments); and
(vii) Borrower has obtained prior approval from the Required Lenders
for (a) any single Investment in excess of $10,000,000, which
when combined with all other Investments under this subsection
"e" during the preceding 12 months (including in the case of
Acquisitions, assumption of liabilities and obligations to make
non-compete or similar payments), equals or exceeds $35,000,000
or (b) any single Investment in excess of $20,000,000 (including
in the case of Acquisitions, assumption of liabilities and
obligations to make non-compete or similar payments; and
f. Investments in or loans to Professional Claims Services Inc. and
its subsidiaries up to $4,000,000 in the aggregate through October 31, 1999 and
up to $2,500,000 in the aggregate during each subsequent twelve consecutive
month period thereafter, and
g. Investments in Restricted Subsidiaries.
5.8. NEW VENTURES; MERGERS. Borrower will not, and will not permit any of
its Subsidiaries to (a) enter into any new business activities or ventures not
in a similar line to its current business, OR (b) merge or consolidate with or
into any other corporation, partnership, limited liability company or other
organization, OR (c) create or acquire (or cause or permit the creation or
acquisition of) any Subsidiary. NOTWITHSTANDING THE FOREGOING, Borrower or any
of its Subsidiaries may create or acquire (or cause or permit the creation or
acquisition of) one or more Subsidiaries PROVIDED THAT the creation or
acquisition thereof does not otherwise violate any covenant hereunder or
otherwise cause a Default hereunder (including, without limitation, under
Section 5.7 hereof) and Borrower complies with Section 4.15.4.
5.9. TRANSACTIONS WITH AFFILIATES. Borrower will not and will not permit
any of its Subsidiaries to enter into any transaction or agreement with any
Subsidiary, Affiliate or other related enterprise EXCEPT AS FOLLOWS: (a)
compensation arrangements in the ordinary course of business with its officers
and directors, AND (b) employee loans (if any) to the extent permitted under
Section 5.4 hereof, AND (c) reasonable and customary asset transfers among
Borrower and its Subsidiaries (if any) to the extent permitted under Section 5.6
hereof, and (d) reasonable dividends and distributions (if any) to the extent
permitted by Section 5.10 hereof, AND (e) reasonable and customary management or
service fees and expenses (if any) to the extent permitted under Section 5.12
hereof, AND (f) tax sharing agreements reasonably satisfactory to the Lenders,
AND (g) Investments to the extent permitted under Sections 5.4 and 5.7 AND (h)
guaranties, if any, to the extent permitted by Section 5.4 hereof.
5.10. DISTRIBUTIONS OR DIVIDENDS. Borrower will not, and will not permit
any of its Subsidiaries to, declare or make (directly or indirectly) any payment
or distribution with respect to, or incur any liability for the purchase,
acquisition, redemption or retirement of, any of its equity interests (including
warrants therefor) or as a dividend, return of capital or other payment or
distribution of any kind to any holder of any such equity interest.
NOTWITHSTANDING THE
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FOREGOING, each wholly-owned Subsidiary of Borrower may declare and make lawful
dividends on its common stock that is owned by Borrower or another Subsidiary of
Borrower, AND CCC may declare and make lawful dividends on its common stock
PROVIDED THAT (a) such dividends do not exceed $40,000,000 during the term of
the Line of Credit Facility, AND (b) no Default or Event of Default hereunder is
occurring at the time of such dividend and no Default or Event of Default would
otherwise be caused thereby (including, without limitation, under Section 4.1
hereof, after accounting for the payment of such dividend), AND (c) the
Guarantor uses the proceeds of such dividends to repurchase its stock on the
open market AND (d) after giving effect to such dividend or distribution, the
Borrower shall have Liquidity of at least $25,000,000 (dividends or
distributions satisfying clauses (a) through (d) above, collectively, "Permitted
Dividends").
5.11. [INTENTIONALLY BLANK].
5.12. PAYMENT OF MANAGEMENT FEES. Borrower will not, and will permit any of
its Subsidiaries to, pay any funds or otherwise incur or accrue any liabilities
for any management or related services EXCEPT (a) reasonable and customary
compensation to bona fide employees of such entity, AND (b) pursuant to a
written management or services agreement with Borrower or another wholly-owned
Subsidiary of Borrower, AND (c) pursuant to a written management, services,
expense-sharing, and/or tax-sharing agreement with CCC Information Services
Group Inc. ("Manager") that is in form and substance reasonably acceptable to
Administrative Agent ("Management Agreement").
5.13. [INTENTIONALLY BLANK].
5.14. [INTENTIONALLY BLANK].
5.15. MODIFICATIONS TO ORGANIC DOCUMENTS. Borrower will not and will not
permit any of its Subsidiaries, without prior written notice to the
Administrative Agent and the Lenders, to (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. Borrower will
not, and will not permit any of its Subsidiaries 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 Borrower or any such Subsidiary by a Person who is not
Borrower or any Subsidiary of Borrower (including, without limitation, the
Management Agreement, once executed).
ARTICLE 6: RIGHT OF SET OFF
6.1. 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
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any Lender) to or for the credit or the account of Borrower against any and all
of the indebtedness and monetary obligations of 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 Borrower 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.
6.2. 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 amount remains unpaid for three Business
Days.
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 Borrower or any other Obligor (or otherwise furnished in connection
herewith) when made was misleading or incorrect in any material respect.
7.1.3. CERTAIN COVENANTS. If Borrower defaults in or fails to observe
any of the covenants set forth in Section 4.1 hereof.
7.1.4. OTHER COVENANTS IN LOAN DOCUMENTS. If Borrower or any other
Obligor, defaults in the full and timely performance when due of any other
covenant or agreement (other than those referenced in Section 7.1.3) 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 Borrower thereof or the date that
Borrower otherwise acquires knowledge or should have acquired knowledge thereof.
7.1.5. DEFAULT UNDER OTHER AGREEMENTS. Borrower or any of its
Subsidiaries (A) fails to make any payment in respect of any indebtedness,
having an aggregate principal
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amount (including undrawn committed or available amounts and including amounts
owing to all creditors under any combined or syndicated credit arrangement) of
more than $2,000,000 (or its equivalent in any other currency) when due (whether
by scheduled maturity, required prepayment, acceleration, demand, or otherwise)
and such failure continues after the applicable grace or notice period, if any,
specified in the relevant document on the date of such failure; or (B) fails to
perform or observe any other condition or covenant, or any other event shall
occur or condition exist, under any agreement or instrument relating to any such
indebtedness or obligations, and such failure continues after the applicable
grace or notice period, if any, specified in the relevant document on the date
of such failure and a waiver has not been given by the requisite holder (or
holders) of such indebtedness with respect to such failure, if the effect of
such failure, event or condition is to cause, or to permit the holder or holders
of such Indebtedness or beneficiary or beneficiaries of such indebtedness (or a
trustee or agent on behalf of such holder or holders or beneficiary or
beneficiaries) to cause such indebtedness to be declared to be due and payable
prior to its stated maturity, or such obligation to become payable; provided,
however, that there shall not be an Event of Default under this Section 7.1.5 so
long as at the time of such occurrence, (i) the holder of any such defaulted
indebtedness is not actively pursuing its remedies or (ii) the Borrower or any
of its Subsidiaries, as the case may be, is disputing the payment of such
indebtedness in good faith.
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 agreement to which Borrower or any of its Subsidiaries is a
party and such default is reasonably likely to have a Material Adverse Effect.
7.1.7. GUARANTOR INVESTMENTS. If Guarantor shall make any Acquisition
at any time that Guarantor's ratio of Funded Debt to shareholders' equity
(without taking into account the assets, liabilities and equity of the Borrower)
exceeds 1.0 to 1.0 after giving effect to such Acquisition or Guarantor shall
make any Acquisition (or a series of Acquisitions) involving an aggregate equity
Investment of more than $20,000,000.
7.1.8. CHANGE OF CONTROL. If (i) CCC Information Services Group Inc.
ceases to own and control 100% of each class of equity securities of CCC; or
(ii) any Person or group of Persons within the meaning of Section 13(d)(3) of
the 1934 Act and the rules and regulations promulgated thereunder shall, after
the Closing Date, acquire beneficial ownership, directly or indirectly, of
securities of the Guarantor representing fifty percent (50%) of the combined
outstanding voting power of all securities of the Guarantor entitled to vote in
the election of directors, other than securities having such power only by
reason of the happening of a contingency (hereinafter called a "Controlling
Person") unless the Administrative Agent shall receive notice from the Borrower
and the Guarantor, within ten (10) days of such acquisition, that the Board of
Directors of the Guarantor has no objection to such acquisition; or (iii) a
majority of the Board of Directors of the Guarantor shall cease for any reason
to consist of (A) individuals who on the Closing Date were serving as directors
of the Guarantor and (B) individuals who subsequently become members of the
Board if such individuals' nomination for election or re-election to the Board
of Directors is recommended or approved by a majority of the Board of
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Directors of the Guarantor. For purposes of clause (ii) above, a Person or group
shall not be a Controlling Person if such Person or group holds voting power in
good faith and not for the purpose of circumventing this Section as an agent,
bank, broker, nominee, trustee, or holder of revocable proxies given in response
to a solicitation, for one or more beneficial owners who do not individually,
or, if they are a group acting in concert, as a group, have the voting power
specified in clause (ii).
7.1.9. GOVERNMENT ACTION.
a. If custody or control of any substantial part of the property
of 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 Guarantor, Borrower or any of its Subsidiaries
becomes insolvent, bankrupt or generally fails to pay its debts as such debts
become due; OR if Guarantor, Borrower or any of its Subsidiaries (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; provided, however, that an Event of Default under this Section
7.1.10 shall not be deemed to occur if any event described above occurs and
involves (i) a Subsidiary of Borrower that has a gross asset value less than
$5,000,000 or (ii) a Subsidiary of Borrower that at the time of such event has
probable liabilities which do not exceed its gross asset value by more than
$5,000,000.
7.1.11. LOSS OR REVOCATION OF GUARANTY. If Guarantor at any time
revokes (or attempts to revoke) the Guaranty or its continuing obligations
thereunder, OR if the Guaranty at any time does not constitute a legal, valid,
binding and enforceable obligation of Guarantor.
7.1.12. ADDITIONAL LIABILITIES. If any judgment, writ, warrant,
attachment or execution or similar process that calls for payment or presents
liability in excess of $1,000,000 is rendered, issued or levied against
Borrower, any of its Subsidiaries or any of their respective 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.
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7.1.13. MATERIAL ADVERSE CHANGE. If a Material Adverse Change has
occurred with respect to the Borrower and its Subsidiaries taken as a whole or
the Guarantor 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 Borrower and its Subsidiaries (taken as a whole) or the
Guarantor 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 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 may declare all or any portion of the indebtedness of Borrower
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 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 LaSalle National 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 LaSalle National
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
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
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notifications to Lenders and to Borrower, AND (e) to receive and distribute
payments and Advances between Lenders and Borrower. 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. LaSalle National 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 BORROWER. The provisions of
this Article are solely for the benefit of the Administrative Agent and Lenders,
AND Borrower shall not 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
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 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 Borrower and other Obligor and has
made its own decision to make its Advances 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 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 Lender informed as to
the performance or observance by Borrower or other Obligor of its obligations
under the Loan Documents, OR (b) to inspect the books or properties of 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 Borrower which may come
into the possession of the
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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 Borrower 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 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 Borrower), independent accountants
and other experts selected by Administrative Agent.
8.7. ACTING ON INSTRUCTIONS 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,
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
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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 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 Borrower or other
Obligor as though the Administrative Agent were not the Administrative Agent
under the Loan Documents. With respect to any Advances 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. The Administrative Agent will
promptly notify each Lender of its receipt of any Advance Request and of the
amount of such Lender's Pro Rata share of the requested Advance. Each Lender
will make the amount of its Pro Rata share of each Advance available to the
Administrative Agent for the account of the Borrower at the Administrative
Agent's Payment Office by 11:00 a.m. (Central Time) on the Settlement Date
requested by the Borrower in funds immediately available to the Administrative
Agent. The proceeds of all such Advances will then be made available to the
Borrower by the Administrative Agent in accordance with this Agreement. The
failure of any Lender to make any Advance on any Settlement Date shall not
relieve any other Lender of any obligation hereunder to make an Advance on such
Settlement Date, but no Lender shall be responsible for the failure of any other
Lender to make the Advance to be made by such other Lender on any Settlement
Date. Unless the Administrative Agent has been notified in writing by a Lender
prior to the Settlement Date for any Advance that such Lender will not make the
amount constituting its Pro Rata share of such Advance 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
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before such Settlement Date, AND in reliance upon such assumption, the
Administrative Agent may make available to Borrower 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 Rata share of such Advance): the PRODUCT OF (a) the
average (computed for the period determined under clause (c) below) of the
weighted average Federal Funds Rate 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, 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 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, 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
Line of Credit Facility.
8.11. PAYMENTS TO LENDERS. Promptly after receipt in immediately available
funds from Borrower 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. Unless the Administrative Agent receives notice from the Borrower
prior to the date on which any payment is due to the Lenders that the Borrower
will not make such payment in full as and when required, the Administrative
Agent may assume that the Borrower has made such payment in full to the
Administrative Agent on such date in immediately available funds and the
Administrative Agent may (but shall not be so required), in reliance upon such
assumption, distribute to each Lender on such due date an amount equal to the
amount then due such Lender. If and to the extent the Borrower has not made such
payment in full to the Administrative Agent, each Lender shall repay to the
Administrative Agent on demand such amount distributed to such Lender, together
with interest thereon at the Federal Funds Rate for each day from the date such
amount is distributed to such Lender until the date repaid.
8.12. PRO-RATA SHARING OF SETOFF PROCEEDS. If, other than as expressly
provided elsewhere herein, any Lender shall obtain on account of the Advances
made by it any payment (whether voluntary, involuntary, through the exercise of
any right of set-off, or otherwise) in excess of its Pro Rata share, such Lender
shall immediately (a) notify the Administrative Agent of such fact, and (b)
purchase from the other Lenders such participations in the Advances made by them
as shall be necessary to cause such purchasing Lender to share the excess
payment pro rata with each of them; PROVIDED, HOWEVER, that if all or any
portion of such excess payment is thereafter recovered from the purchasing
Lender, such purchase shall to that extent be rescinded and each other Lender
shall repay to the purchasing Lender the purchase price paid therefor, together
with an amount equal to such paying Lender's ratable share (according to the
proportion
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of (i) the amount of such paying Lender's required repayment to (ii) the total
amount so recovered from the purchasing Lender) of any interest or other amount
paid or payable by the purchasing Lender in respect of the total amount so
recovered. The Borrower agrees that any Lender so purchasing a participation
from another Lender may, to the fullest extent permitted by law, exercise all
its rights of payment (including the right of set-off) with respect to such
participation as fully as if such Lender were the direct creditor of the
Borrower in the amount of such participation. The Administrative Agent will keep
records (which shall be conclusive and binding in the absence of manifest error)
of participations purchased under this Section and will in each case notify the
Lenders following any such purchases or repayments. Any Lender having
outstanding both Advances and other indebtedness owing from the Borrower at any
time a right of set-off is exercised by such Lender, such Lender shall apply the
proceeds of such set-off first to such Advances until its Advances are reduced
to zero, and thereafter to its other indebtedness.
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 losses 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 condition, results of operations, business,
prospects or creditworthiness of 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 of proceeds by 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 Borrower does 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
Borrower 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;
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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, fees and other Obligations of 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 Borrower 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 Borrower
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.
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 Borrower at Administrative Agent for purposes of
effecting transactions hereunder.
9.1.2. "ACQUISITION" means, with respect to any Person, any
transaction or series of related transactions for the purpose of or resulting,
directly or indirectly, in (a) the acquisition of all or substantially all of
the assets of another Person, or of any business or division of another Person,
(b) the acquisition of the capital stock, partnership interests, membership
interests or equity of any other Person (whether or not a controlling interest),
or causing any other Person to become a Subsidiary, or (c) a merger or
consolidation or any other combination with another Person (other than a Person
that is a Subsidiary) provided that the Borrower is the surviving entity.
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9.1.3. "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 with respect to any Advance
for any Interest Period a rate per annum equal to the offered rate for deposits
in Dollars for a period equal or comparable to such Interest Period which
appears on Telerate page 3750 as of 11:00 A.M. (London time) two Business Days
prior to the first day of such Interest Period. "Telerate Page 3750" means the
display designated as "Page 3750" on the Telerate Service (or such other page as
may replace page 3750 on that service or such other service as may be nominated
by the British Bankers' Association as the information vendor for the purpose of
displaying British Bankers' Association Interest Settlement Rates for Dollar
deposits). 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 Dollars with maturities of comparable duration, OR
(b) deposits of Dollars in a non-U.S. or an international banking office of such
Lender used to fund loans.
9.1.4. "ADJUSTED LIBO RATE ADVANCES" means Advances bearing interest
with reference to the Adjusted LIBO Rate as a Rate Index.
9.1.5. "ADMINISTRATIVE AGENT" means LaSalle National Bank or any
successor, assignee or other transferee of Administrative Agent.
9.1.6. "ADVANCE" means any advance of funds under the Line of Credit
Facility.
9.1.7. "ADVANCE REQUEST" has the meaning set forth in Section 1.4.1
hereof.
9.1.8 "AFFECTED LENDER" has the meaning specified in Section 1.8.
9.1.9. "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.
9.1.10. [INTENTIONALLY BLANK].
9.1.11. "AGENT-RELATED PERSONS" means LaSalle National Bank and any
successor agent, together with their respective Affiliates, and the officers,
directors, employees, agents and attorneys-in-fact of such Persons and
Affiliates.
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9.1.12. "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.
9.1.13. "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.
9.1.14. "AUTHORIZATION" means any License or other governmental
permit, certificate and/or approval issued by an Official Body that is necessary
or required with the conduct of Borrower's or any of its Subsidiaries business
or operations.
9.1.15. "AVAILABLE CREDIT PORTION" means at any time of determination,
that portion of the Line of Credit Commitment that is available at such time
under the Line of Credit Facility, as such amount is determined in accordance
with Section 1.3 hereof.
9.1.16. "BORROWER" means 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.
9.1.17. "BUSINESS DAY" means any day that is not a Saturday, a Sunday
or a day on which banks under the laws of the State of Illinois (or, with
respect to certain LIBO Rate matters, banks in London, England) are authorized
or required to be closed.
9.1.18. "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, OR (3) permitted transactions under Section 5.8
hereof.
9.1.19. "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).
9.1.20. "CENTRAL TIME" means central standard or daylight savings time
as in effect in Chicago, Illinois.
9.1.21. "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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9.1.22. "CODE" means the Internal Revenue Code of 1986, as amended.
9.1.23. "COLLATERAL" means the collateral security for the repayment
of the Obligations committed to Lenders or Administrative Agent (for the benefit
of Lenders) under the Collateral Security Documents executed by 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.
9.1.24. "COLLATERAL SECURITY DOCUMENTS" means, individually and
collectively, (a) the Pledge Agreement and the financing statements filed
pursuant thereto, AND (b) any additional documents 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.
9.1.25. "COMMITMENT" means, as to any Lender, at any time of
determination, the amount specified as such Lender's "Commitment" on such
Lender's signature page hereto as such amount may be reduced from time to time
in accordance with Section 1.1.6.2 or as increased or reduced pursuant to an
assignment in accordance with Section 10.2.
9.1.26. "COMMITMENT PERCENTAGE" means, at any time of determination,
with respect to each Lender, that portion of the Line of Credit Commitment as to
which such Lender is obligated in an amount equal to a fraction, expressed as a
percentage, where the numerator is equal to the amount of such Lender's
Commitment at such time and the denominator is equal to the aggregate amount of
all Lenders' Commitments at such time.
9.1.27. "CUSTOMER EQUIPMENT" means computers and related peripheral
equipment that either are purchased or leased by Borrower or any of its
Subsidiaries for use by its customers or are leased directly to such entity's
customers.
9.1.28. "DEFAULT" means any event or circumstance that with the giving
of notice or the passage of time would constitute an Event of Default.
9.1.29. "DOLLAR" or "$" means U.S. dollars.
9.1.30. "EBITDA" means, at the time of any determination, the sum of
the following items for Borrower and its Subsidiaries on a consolidated basis
during the four consecutive fiscal quarter period most recently ended:
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
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c. PLUS all charges in accordance with GAAP for federal and
state income taxes during such period, AND
d. PLUS depreciation permitted under GAAP during such period,
AND
e. PLUS amortization expense permitted under GAAP during such
period.
For purposes of this calculation, Interest Expense shall include interest
accrued under Capital Leases, determined in accordance with GAAP.
Notwithstanding any of the foregoing, the calculation of EBITDA shall not
include the operations of InsurQuote Systems, Inc. unless and until it becomes a
Subsidiary.
9.1.31 "ELIGIBLE ASSIGNEE" means either (a) a commercial bank
organized under the laws of the United States, or any state thereof, and having
a combined capital and surplus of at least $100,000,000; (b) a commercial bank
organized under the laws of any other country or a political subdivision of any
such country, and having a combined capital and surplus of at least
$100,000,000, provided that such bank is acting through a branch or agency
located in the United States provided that such bank delivers to the
Administrative Agent at the time of an assignment to it of an interest
hereunder, evidence that amounts payable to such bank hereunder are exempt from
United States withholding tax; or (c) a Person that is primarily engaged in the
business of commercial banking and that is (i) a subsidiary of a Lender, (ii) a
subsidiary of a Person of which a Lender is a subsidiary, or (iii) a Person of
which a Lender is a subsidiary.
9.1.32. "ENVIRONMENTAL CONTROL STATUTES" has the meaning set forth in
Section 3.16.
9.1.33. "EPA" means the United States Environmental Protection Agency
or any other entity that succeeds to its responsibilities and powers.
9.1.34. "ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and as implemented and interpreted.
9.1.35. "ERISA AFFILIATE" means any company, whether or not
incorporated, which is considered a single employer with Borrower or any of its
Subsidiaries under Titles I, II and IV of ERISA.
9.1.36. "EVENT OF DEFAULT" means each of the events described in
Section 7.1.
9.1.37. "FEDERAL FUNDS RATE" means, for any day, the rate set forth in
the weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Bank of New York (including any
such successor, "H.15(519)") on the preceding Business Day opposite the caption
"Federal Funds (Effective)"; or, if for any relevant day such rate is not so
published on any such preceding Business Day, the rate for such day will be the
arithmetic mean as determined by the Administrative Agent of the rates for the
last transaction in
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overnight Federal funds arranged prior to 9:00 a.m. (New York City time) on that
day by each of three leading brokers of Federal funds transactions in New York
City selected by the Administrative Agent.
9.1.38. "FIXED CHARGES" means, at the time of any determination, the
sum of the following items for Borrower and its Subsidiaries on a consolidated
basis during the four consecutive fiscal quarter period most recently ended:
a. The amount of payments of principal required under this
Agreement during such period, AND
b. 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,
AND
c. Interest Expense during such period, AND
d. The amount of Capital Expenditures during such period.
For purposes of this calculation, Interest Expense includes interest accrued
under Capital Leases, and principal includes principal obligations under Capital
Leases. For purposes of this calculation, Capital Expenditures will exclude
Customer Equipment.
9.1.39. "FRB" means the Board of Governors of the Federal Reserve
System or any other entity or agency that succeeds to its responsibilities and
powers.
9.1.40. "FUNDED DEBT" of any Person means, without duplication, (a)
all indebtedness for borrowed money; (b) all obligations issued, undertaken or
assumed as the deferred purchase price of property or services (other than trade
payables entered into in the ordinary course of business on ordinary terms); (c)
all non-contingent reimbursement or payment obligations with respect to surety
instruments; (d) all obligations evidenced by notes, bonds, debentures or
similar instruments, including obligations so evidenced incurred in connection
with the acquisition of property, assets or businesses and other indebtedness
required to be included in "Funded Debt" under Section 5.2 hereof; (e) all
indebtedness created or arising under any conditional sale or other title
retention agreement, or incurred as financing, in either case with respect to
property acquired by the Person (even though the rights and remedies of the
seller or bank under such agreement in the event of default are limited to
repossession or sale of such property); (f) all obligations with respect to
capital leases; (g) all indebtedness referred to in clauses (a) through (f)
above secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien upon or in property
(including accounts and contracts rights) owed by such Person, even though such
Person has not assumed or become liable for the payment of such Indebtedness;
(h) the present value of the unpaid amount of all non-compete payments due in
connection with any Acquisition by using a discount rate equal to the Prime Rate
at the time of determination; (i) all Hedging Obligations; and (j) all guaranty
obligations in respect of indebtedness or obligations of others of the kinds
referred to in clauses
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(a) through (i) above. For all purposes of this Agreement, the Indebtedness of
any Person shall include all recourse Indebtedness of any partnership or joint
venture or limited liability company in which such Person is a general partner
or a joint venturer or a member and all Indebtedness of any Subsidiary.
NOTWITHSTANDING THE FOREGOING, the term "Funded Debt" includes all Subordinated
Indebtedness but shall not include Funded Debt of InsurQuote Systems, Inc.
unless and until it becomes a Subsidiary of the Borrower.
9.1.41. "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.
9.1.42. "GUARANTOR" means CCC Information Services Group Inc., and its
successors and assigns.
9.1.43. "HAZARDOUS MATERIALS" includes (a) any "hazardous waste" as
defined by the Resource Conservation and Recovery Act of 1976 (42 U.S.C. Section
6901 ET. SEQ.), as amended from time to time, and regulations promulgated
thereunder; OR (b) any "hazardous substance" as defined by the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C.
Section 9601 ET SEQ.), as amended from time to time, and regulations promulgated
hereunder; 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 Borrower (or any of
its Subsidiaries) 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.
9.1.44. "HEDGING AGREEMENT" means any interest rate, currency or
commodity swap agreement, cap agreement or collar agreement, and any other
agreement or arrangement designed to protect a Person against fluctuations in
interest rates, currency exchange rates or commodity prices.
9.1.45. "HEDGING OBLIGATION" means, at any time of determination, in
respect of any one or more Hedging Agreements, after taking into account the
effect of any legally enforceable netting agreement relating to such Hedging
Agreements, (a) for any date on or after the date such Hedging Agreements have
been closed out and termination value(s) determined in accordance therewith,
such termination value(s), and (b) for any date prior to the date referenced in
clause (a), the amount(s) determined as the mark-to-market value(s) for such
Hedging Agreements, as determined based upon one or more mid-market or other
readily available quotations provided by any recognized dealer in such Hedging
Agreements (which may include any Lender).
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9.1.46. "HONOR DATE" has the meaning specified in subsection 1.2.3.c.
9.1.47. "INTEREST EXPENSE" means, at the time of any determination,
the amount of interest and other finance charges of Borrower and its
Subsidiaries 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.
9.1.48. "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 Borrower) of 1, 2, 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.
9.1.49 "INVESTMENTS" shall have the meaning set forth in Section 5.7
hereof.
9.1.50. "ISSUANCE DATE" has the meaning specified in subsection
1.2.1.a.
9.1.51. "ISSUE" means, with respect to any Letter of Credit, to issue
or to extend the expiry of, or to renew or increase the amount of, such Letter
of Credit; and the terms "ISSUED," "ISSUING" and "ISSUANCE" have corresponding
meanings.
9.1.52. "ISSUING BANK" means LaSalle National Bank in its capacity as
issuer of one or more Letters of Credit hereunder, together with any replacement
letter of credit issuer approved by the Borrower and Required Lenders.
9.1.53. "L/C ADVANCE" means each Lender's participation in any L/C
Borrowing in accordance with its Pro Rata share.
9.1.54. "L/C AMENDMENT APPLICATION" means an application form for
amendment of outstanding letters of credit as shall at any time be in use at the
Issuing Bank, as the Issuing Bank shall request.
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9.1.55. "L/C APPLICATION" means an application form for issuances of
letters of credit as shall at any time be in use at the Issuing Bank, as the
Issuing Bank shall request.
9.1.56. "L/C BORROWING" means an extension of credit resulting from a
drawing under any Letter of Credit which shall not have been reimbursed on the
date of such drawing.
9.1.57. "L/C COMMITMENT" means the commitment of the Issuing Bank to
Issue, and the commitment of the Lenders severally to participate in, Letters of
Credit from time to time Issued or outstanding under Section 1.2, in an
aggregate amount not to exceed on any date the amount of $20,000,000, as the
same shall be reduced as a result of a reduction in the Line of Credit
Commitment pursuant to Section 1.1.6.2.
9.1.58. "L/C OBLIGATIONS" means at any time the sum of (a) the
aggregate undrawn amount of all Letters of Credit then outstanding, plus (b) the
amount of all unreimbursed drawings under all Letters of Credit, including all
outstanding L/C Borrowings.
9.1.59. "L/C-RELATED DOCUMENTS" means the Letters of Credit, the L/C
Applications, the L/C Amendment Applications and any other document relating to
any Letter of Credit, including any of the Issuing Bank's standard form
documents for letter of credit issuances.
9.1.60. "LENDER" means, individually and collectively, the following:
a. LaSalle National 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.
9.1.61. "LETTERS OF CREDIT" means any letters of credit Issued by the
Issuing Bank pursuant to Section 1.2.
9.1.62. "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).
9.1.63. "LIBO RATE" has the meaning set forth in the definition of
"Adjusted LIBO Rate."
9.1.64. "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.
9.1.65. "LIEN" means any security interest, mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
otherwise), reversionary or reclamation interest, charge against or interest in
property to secure payment of a debt or
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performance of an obligation or other priority or preferential arrangement of
any kind or nature whatsoever.
9.1.66. "LINE OF CREDIT COMMITMENT" means, at any time of
determination, the aggregate amount of all Commitments of all Lenders at such
time up to a maximum amount of $100,000,000 as reduced from time to time
pursuant to Section 1.1.6.2.
9.1.67. "LINE OF CREDIT FACILITY" means the line of credit facility as
described in Article 1 hereof.
9.1.68. "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.
9.1.69. "LINE OF CREDIT NOTE" means that certain Note (or Notes)
payable to the order of each Lender in the amount of its Commitment 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.
9.1.70 "LIQUIDITY" shall mean, at any time of determination, the
amount of Borrower's cash and cash equivalents at such time PLUS the amount of
the Available Credit Portion at such time.
9.1.71. "LOAN DOCUMENTS" means, collectively, this Agreement, the
Notes, the Parent Guaranty, the Pledge Agreement, any Subsidiary Guaranty, the
Subordination Agreement, all L/C-Related 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, restated,
modified and supplemented from time to time.
9.1.72. "LOCAL AUTHORITIES" means, individually and collectively, the
state and local governmental authorities that govern the activities of Borrower.
9.1.73. "MARGIN REGULATIONS" means, collectively, Regulation T at 12
CFR 220, Regulation U at 12 CFR 221 and Regulation X at 12 CFR 224, promulgated
by the FRB, as amended from time to time.
9.1.74. "MARGIN STOCK" has the meaning set forth in the Margin
Regulations.
9.1.75. "MATERIAL ADVERSE CHANGE" means any change that has or causes
a Material Adverse Effect.
9.1.76. "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:
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a. The business, assets, revenues, financial condition,
operations of Guarantor and the Borrower and its
Subsidiaries, taken as a whole; or
b. The ability of Borrower to perform any of its payment
obligations under the Loan Documents when due or the ability
of 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 to 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.
9.1.77. "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).
9.1.78. "OBLIGATIONS" means all of the indebtedness and obligations
(monetary or otherwise) of Borrower and any other Obligor owing to the
Administrative Agent, the Lenders or the Issuing Bank or otherwise arising under
or in connection with any Loan Document as well as all indebtedness and
obligations (monetary or otherwise) of any Affiliate of 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).
9.1.79. "OBLIGOR" means Borrower, Guarantor and any other Person
(other than Administrative Agent and Lenders) obligated under any Loan Document.
9.1.80. "OCF" (or "Operating Cash Flow") means, at the time of any
determination, the sum of the following items for Borrower and its Subsidiaries
on a consolidated basis during the relevant four consecutive fiscal quarter
period:
a. EBITDA during such period, AND
b. other non-cash expenses recognized during such period to the
extent not accounted for in (a) above, MINUS however the
total amount of other non-cash revenue recognized during
such period.
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 Borrower or its Subsidiaries for financial reporting purposes
in accordance with GAAP; provided, however, that the operations of InsurQuote
Systems, Inc. shall not be included in determining OCF unless and until it
becomes a
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Subsidiary of Borrower.
9.1.81. "OFFICIAL BODY" means any federal, state, local, or other
government or political subdivision (and any agency, authority, bureau, central
bank, commission, department or instrumentality of either) and any court,
tribunal, grand jury or arbitrator, in each case whether foreign or domestic.
9.1.82. "ORGANIC DOCUMENT" means, relative to any entity, its
certificate and articles of incorporation or organization, its by-laws or
operating agreements, and all equityholder agreements, voting agreements and
similar arrangements applicable to any of its authorized shares of capital
stock, its partnership interests or its member interests, and any other
arrangements relating to the control or management of any such entity (whether
existing as a corporation, a partnership, an LLC or otherwise).
9.1.83. "PARENT GUARANTY" means that certain Guaranty required to be
delivered under Section 2.1.2.4 hereof.
9.1.84. "PBGC" means the Pension Benefits Guaranty Corporation or any
other entity that succeeds to its responsibilities and powers under ERISA.
9.1.85. "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.
9.1.86. "PERMITTED DIVIDENDS" has the meaning set forth in Section
5.10 hereof.
9.1.87. "PERMITTED INDEBTEDNESS" has the meaning set forth in Section
5.2 hereof.
9.1.88. "PERMITTED INVESTMENTS" has the meaning set forth in Section
5.7 hereof.
9.1.89. "PERMITTED LIENS" has the meaning set forth in Section 5.5
hereof.
9.1.90. "PERMITTED ADVANCES" has the meaning set forth in Section 5.4
hereof.
9.1.91. "PERMITTED TRANSFERS" has the meaning set forth in Section 5.6
hereof.
9.1.92. "PERSON" means any natural person, corporation, LLC, joint
venture, partnership, firm, association, trust, government, governmental agency
or any other entity, whether acting in an individual, fiduciary or other
capacity.
9.1.93. "PLAN" means any pension benefit or welfare benefit plan as
defined in Sections 3(1), (2) or (3) of ERISA covering employees of Borrower or
any ERISA Affiliate of Borrower.
9.1.94. "PLEDGE AGREEMENT" means, the pledge agreement relating to a
pledge of the Borrower's stock (all as may be amended, modified and supplemented
from time to time) to be
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executed by the Guarantor in form and substance satisfactory to the
Administrative Agent.
9.1.95. "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.
9.1.96. "PRIME RATE" means, for any day, the higher of (a) 0.5% per
annum above the latest Federal Funds Rate, and (b) the rate of interest per
annum publicly announced by Administrative Agent from time to time as its prime
rate of interest on direct, short-term borrowings to its large business
customers with high credit standings; such term, however, does not necessarily
mean Administrative Agent's best or lowest rate available.
9.1.97. "PRIME RATE ADVANCES" means Advances which bear interest with
reference to the Prime Rate as a Rate Index.
9.1.98. "PRO RATA" means from or to each Lender in proportion to its
Commitment Percentage.
9.1.99. "RATE INDEX" has the meaning set forth in Section 1.1.5
hereof.
9.1.100. "RATE MARGIN" has the meaning set forth in Section 1.1.5
hereof.
9.1.101 "REPLACEMENT LENDER" has the meaning set forth in Section 1.8
hereof.
9.1.102. "REQUIRED LENDERS" means Lenders in the aggregate holding
more than 51% of the aggregate outstanding principal amount of the Advances (or,
if no Advances at the time of such determination are outstanding, then Lenders
obligated with respect to more than 51% of the Commitments) but at all times at
least 50% of the number of Lenders at such time.
9.1.103. "RESERVE PERCENTAGE" has the meaning set forth in the
definition of "Adjusted LIBO Rate."
9.1.104. "RESTRICTED SUBSIDIARY" means a Subsidiary of Borrower that
executes and delivers a Subsidiary Guaranty.
9.1.105. "SEC" means the Securities and Exchange Commission or any
other entity that succeeds to its responsibilities and powers.
9.1.106. "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.
9.1.107. "SETTLEMENT DATE" means, with respect to any Advance
hereunder, the date on which funds are advanced by Administrative Agent (on
behalf of Lenders).
9.1.108. "SUBORDINATED INDEBTEDNESS" means indebtedness under those
certain
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subordinated notes owing from the Borrower to the Guarantor, the payment of
which is subject to that certain Subordination Agreement dated as of the date
hereof in favor of the Administrative Agent for the benefit of the Lenders and
the Issuing Bank and all other indebtedness and monetary obligations of Borrower
or any of its Subsidiaries subordinated to the repayment of the Obligations on
terms and conditions satisfactory to the Required Lenders.
9.1.109. "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 more than 50% of the voting stock OR (b), except in the case of InsurQuote
Systems, Inc., is otherwise required in accordance with GAAP to be considered as
part of a consolidated organization
9.1.110. "SUBSIDIARY GUARANTY" the guaranty to be executed by certain
Subsidiaries of Borrower in accordance with Section 4.15.4.
9.1.111. "TAXES" shall have the meaning specified in Section 1.5.4.
9.1.112. "TOTAL CHARGES" means, at the time of any determination, the
sum of the following items for Borrower and its Subsidiaries on a consolidated
basis during the relevant four consecutive fiscal quarter period:
a. The amount of Fixed Charges during such period,
b. PLUS the net amount of federal and state income taxes paid
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 Borrower or its
Subsidiaries for financial reporting purposes in accordance with GAAP; provided,
however, that the operations of InsurQuote Systems, Inc. shall not be included
in determining Total Charges unless and until it becomes a Subsidiary of the
Borrower.
9.1.113. "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).
9.1.114. "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,
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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, Borrower hereby agrees
to defend Administrative Agent and each Lender (and the directors, officers,
employees, agents and affiliates of 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, Borrower will reimburse
and indemnify Administrative Agent and each Lender (and the directors, officers,
employees, agents and Affiliates of Administrative Agent and each Lender) for
all reasonable costs, expenses and losses resulting from the following: (1) any
failure or refusal by Borrower or by any Affiliate of 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 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
Borrower and Administrative Agent or Lenders hereunder and all other matters and
transactions in connection therewith, Borrower 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 Borrower. 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 Borrower, Administrative
Agent and each Lender each agrees to adopt such internal measures and
operational procedures to protect its interest. By reason thereof, 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 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 Borrower; PROVIDED, HOWEVER, Borrower has not 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. 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.
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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 Borrower without the prior written consent of Lenders. Notwithstanding
any other provision of any Loan Document, any Lender may, with the written
consent of the Administrative Agent (which consent shall not be unreasonably
withheld or delayed) and, as long as no Event of Default exists, the Borrower
(which consent shall not be unreasonably withheld or delayed) at any time assign
and delegate to one or more Eligible Assignees (provided that no written consent
of or fee to the Administrative Agent shall be required in connection with any
assignment and delegation by a Lender to another Lender or to an Eligible
Assignee that is an Affiliate of such Lender ) (each an "Assignee") all, or any
ratable part of all, of its Advances, Commitment and the other rights and
obligations of such Lender hereunder; provided, however, that (i) such
assignment shall involve at least $5,000,000, (ii) each Lender must retain a
Commitment of at least $10,000,000 unless such Lender is assigning its entire
Commitment and; and (iii) the Borrower and the Administrative Agent may continue
to deal solely and directly with such Lender in connection with the interest so
assigned to an Assignee until (A) written notice of such assignment, together
with payment instructions, addresses and related information with respect to the
Assignee, shall have been given to the Borrower and the Administrative Agent by
such Lender and the Assignee; (B) such Lender and its Assignee shall have
delivered to the Borrower and the Administrative Agent an Assignment and
Acceptance in the form of Exhibit 10.2.1 ("Assignment and Acceptance") together
with any Note or Notes subject to such assignment and (C) except in the case of
assignments by any Lender to any of its Affiliates, the assignor Lender or
Assignee has paid to the Administrative Agent a processing fee in the amount of
$3,500.00.
a. From and after the date that the Administrative Agent
notifies the assignor Lender that it has received (and provided its
consent with respect to) an executed Assignment and Acceptance and
payment of the above-referenced processing fee, (i) the Assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, shall have the rights and obligations of a
Lender under the Loan Documents, and (ii) the assignor Lender shall, to
the extent that rights and obligations hereunder and under the other
Loan Documents have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights and be released from its obligations
under the Loan Documents.
b. Within five Business Days after its receipt of notice by
the Administrative Agent that it has received an executed Assignment
and Acceptance and payment of the processing fee, the Borrower shall
execute and deliver to the Administrative Agent, new Notes evidencing
such Assignee's assigned Advances and Commitment and, if the assignor
Lender has retained a portion of its Advances and its Commitment,
replacement Notes in the principal amount of the Advances retained by
the assignor Lender (such Notes to be in exchange for, but not in
payment of, the Notes held by such Lender). Immediately upon each
Assignee's making its processing fee payment under the Assignment and
Acceptance, this Agreement shall be deemed to be amended to the extent,
but only to the extent, necessary to reflect the addition of the
Assignee and the resulting adjustment of the
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Commitments arising therefrom. The Commitment allocated to each
Assignee shall reduce such Commitment of the assigning Lender pro
tanto.
c. Any Lender may at any time sell to one or more commercial
banks or other Persons not Affiliates of the Borrower (a "Participant")
participating interests in any Advances, the Commitment of that Lender
and the other interests of that Lender (the "originating Lender")
hereunder and under the other Loan Documents; provided, however, that
(i) the originating Lender's obligations under this Agreement shall
remain unchanged, (ii) the originating Lender shall remain solely
responsible for the performance of such obligations, (iii) the Borrower
and the Administrative Agent shall continue to deal solely and directly
with the originating Lender in connection with the originating Lender's
rights and obligations under this Agreement and the other Loan
Documents, and (iv) no Lender shall transfer or grant any participating
interest under which the Participant has rights to approve any
amendment to, or any consent or waiver with respect to, this Agreement
or any other Loan Document, except to the extent such amendment,
consent or waiver would require unanimous consent of the Lender as
described in Section 10.5; provided, however, that no Participant shall
be entitled to receive any greater payments under this Agreement than
such Lender would have been entitled to receive with respect to the
rights participated, and if amounts outstanding under this Agreement
are due and unpaid, or shall have been declared or shall have become
due and payable upon the occurrence of an Event of Default, each
Participant shall be deemed to have the right of set-off in respect of
its participating interest in amounts owing under this Agreement to the
same extent as if the amount of its participating interest were owing
directly to it as a Lender under this Agreement; provided further,
however, that any Participant exercising its right of set-off shall
agree to be bound under this Agreement as if it were a Lender.
d. Notwithstanding any other provision in this Agreement, any
Lender may at any time create a security interest in, or pledge, all or
any portion of its rights under and interest in this Agreement and the
Note held by it in favor of any Federal Reserve Bank in accordance with
Regulation A of the FRB or U.S. Treasury Regulation 31 CFR Section
203.14, and such Federal Reserve Bank may enforce such pledge or
security interest in any manner permitted under applicable law.
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 Borrower and its Subsidiaries that is conspicuously designated by
Borrower or any Subsidiary 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 Borrower and its Subsidiaries
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 FOREGOING, Administrative Agent and each Lender may furnish
or disclose any information concerning 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
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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 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 Borrower and
its Subsidiaries in a manner that is attributable to Borrower or any Subsidiary
UNLESS (1) such disclosure is permitted under the standards outlined above in
this Section OR (2) 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 State of Illinois.
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), 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
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
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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 Person (other than the
Lenders) 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 be approved by all
Lenders:
a. Increase the Commitment 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 Advances, 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 Line of Credit Maturity Date 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. Release or discharge Borrower or any Obligor under the Loan
Documents or permit Borrower or any Obligor to assign to another
Person any of its rights or obligations under the Loan Documents,
OR
h. 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
i. Amend this Section.
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
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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 Borrower: CCC Information Services Inc.
World Trade Center Chicago
444 Merchandise Mart
Chicago, IL 60654
Attention: Robert Welyki
Facsimile: (312) 527-2298
With a Copy To (which shall not constitute notice
to Borrower):
Winston & Strawn
35 W. Wacker Drive
Chicago, IL 60601
Attention: Leland E. Hutchinson, Esquire
Facsimile: (312) 558-5700
and
CCC Information Services Inc.
World Trade Center Chicago
444 Merchandise Mart
Chicago, IL 66654
Attention: Legal Department
Facsimile: (312) 527-5888
If to Administrative
Agent: LaSalle National Bank
135 South LaSalle Street
Chicago, Illinois 60603
Attention: John J. McGuire
Facsimile: (312) 904-4660
With a Copy To
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Sonnenschein Nath & Rosenthal
8000 Sears Tower
Chicago, Illinois 60606
Attention: Victoria Gilbert, Esq.
Facsimile:(312) 876-7934
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 Borrower and Administrative Agent or any Lender under any Loan Document,
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. Any agreement of the
Administrative Agent and the Lender herein to receive certain notices by
telephone or facsimile is solely for the convenience and at the request of the
Borrower. The Administrative Agent and the Lenders shall be entitled, absent any
act or omission constituting gross negligence or willful misconduct on the part
of the Administrative Agent or such Lender, to rely on the authority of any
Person purporting to be a Person authorized by the Borrower to give such notice
and the Administrative Agent and the Lender shall not, absent any act or
omission constituting gross negligence or willful misconduct on the part of the
Administrative Agent or such Lender, have any liability to the Borrower or other
Person on account of any action taken or not taken by the Administrative Agent
or the Lenders in reliance upon such telephonic or facsimile notice. The
obligation of the Borrower to repay the Advances shall not be affected in any
way or to any extent by any failure by the Administrative Agent and the Lenders
to receive written confirmation of any telephonic or facsimile notice or the
receipt by the Administrative Agent and the Lenders of a confirmation which is
at variance with the terms understood by the Administrative Agent and the
Lenders to be contained in the telephonic or facsimile notice.
10.8. TIME OF DAY. All time of day restrictions imposed herein shall be
calculated using Central 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 Borrower, Administrative Agent and any Lender concerning the
terms and conditions of this
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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.
10.11. TERMINATION AND SURVIVAL. All agreements, representations,
warranties and covenants of 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 Line of Credit Facility hereunder, and (iii) return and
cancellation of any effective letters of credit issued by Administrative Agent
or any Lender for the account of 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).
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 Borrower or any other Person or upon the
appointment of any receiver, intervenor, conservator, trustee or similar
official for Borrower or other Person or for any substantial part of the assets
of Borrower or any other Person, or otherwise, all as though such payments had
not been made.
10.13. NOTIFICATION OF ADDRESSES, LENDING OFFICES, ETC. Each Lender shall
notify the Administrative Agent in writing of any changes in the address to
which notices to such Lender should be directed, or addresses of any lending
office, of payment instructions in respect of all payments to be made to it
hereunder and of such other administrative information as the Administrative
Agent shall reasonably request.
10.14. 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
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constitute one and the same instrument.
10.15. 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, the terms and conditions of this Agreement shall
govern.
10.16. WAIVER OF LIABILITY. 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 BORROWER
(WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) FOR LOSSES OR COSTS SUFFERED
OR INCURRED BY 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 FORT, 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 BORROWER HEREBY WAIVES,
RELEASES AND AGREES NOT TO SUE UPON ANY CLAIM FOR) ANY SPECIAL, INDIRECT,
CONSEQUENTIAL, PUNITIVE OR NON-FORESEEABLE DAMAGES SUFFERED BY 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 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 BORROWER WILL BE BROUGHT AND
MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF ILLINOIS OR IN THE UNITED
STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS; PROVIDED, HOWEVER,
THAT ANY SUIT SEEKING ENFORCEMENT AGAINST 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 BORROWER. BORROWER HEREBY EXPRESSLY AND IRREVOCABLY
SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF ILLINOIS AND OF THE
UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS 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 HEREBY IN
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CONNECTION WITH SUCH LITIGATION. 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 BORROWER HAS OR HEREAFTER
MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL
PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT,
ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS
PROPERTY, THEN 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
BORROWER'S IN A STATE COURT OF THE STATE OF ILLINOIS 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 NORTHERN DISTRICT OF ILLINOIS
(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 BORROWER 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 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 BORROWER. 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 Amended and Restated Credit Facility Agreement, as of the day
and year first above written.
CCC INFORMATION SERVICES INC.
N
By: __________________________________
Name:____________________________
Title: ____________________________
LASALLE NATIONAL BANK, (AS ADMINISTRATIVE AGENT)
By: __________________________________
LASALLE NATIONAL BANK, (AS ISSUING BANK)
By: __________________________________
LASALLE NATIONAL BANK, (AS LENDER)
By: __________________________________
Address: 135 South LaSalle Street
Chicago, Illinois 60603
Attention: John J. McGuire, Vice President
Facsimile: (312) 904-4660
COMMITMENT: $50,000,000
<PAGE>
EX 10.3 EUROPEAN VERSION
MOTOR CRASH ESTIMATING GUIDES
DATABASE LICENSE AGREEMENT
AGREEMENT made as of this 30th day of December, 1998, between Motor
Information Systems, a unit of Hearst Business Publishing, Inc., a Delaware
corporation, with offices at 5600 Crooks Road, Suite 200, Troy, Michigan 48098
(hereinafter "Licensor"), and Newco Limited, a private limited company organized
under the laws of England and Wales (hereinafter jointly and severally
"Licensee").
WHEREAS, Licensor has title to and ownership of printed Motor Crash
Estimating Guides (the "Periodicals") and desires to create and license
hereunder an electronic database European version of certain data and
illustrations set forth in the Periodicals for vehicles sold in the European
market, together with additional data and illustrations for vehicles sold in the
European market and not included in the Periodicals, as described in Schedule A,
attached hereto, which may be amended from time to time (the "Database"),
exclusive of any datum which is not the subject of a copyright or other
ownership right in favor of Licensor, as more specifically set forth in Schedule
A, and
WHEREAS, Licensor's parent Hearst Communications, Inc., a Delaware
corporation (hereinafter "HCI") and Rayfield Limited, a private limited company
organized under the laws of England and Wales (hereinafter "CCC-UK"), a
subsidiary of CCC Information Services Group, Inc., a Delaware corporation with
offices at World Trade Center Chicago, 444 Merchandise Mart, Chicago, IL
60654-1005 (hereinafter "CCCIS"), have entered into a Subscription and
Stockholders Agreement with Licensee, as of the 30th day of December, 1998 (the
"Subscription Agreement"), pursuant to which, INTER ALIA, this Agreement is
being entered into and CCCIS is simultaneously entering into a software license
with Licensee (the "Software Agreement") for CCCIS to develop and license a
European version of its Pathways application software for accessing the
information in the Database (the "Software"), and
WHEREAS, Licensee desires to enter into this Agreement for the purpose of
marketing and distributing, directly and indirectly through distributors and
value added remarketers (collectively referred to as "VARS"), a European crash
estimating system, comprised of the Database and the Software (the "System") to
vehicle repair and insurance industry businesses (the "End-Users") within Europe
(the "Territory") in order to enable such End-Users to
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electronically estimate collision costs and process vehicle claims information,
and to enable Licensee, on behalf of such End-Users, to perform collision
estimating services (the "Business Purpose").
NOW, THEREFORE, in consideration of the foregoing premises and the terms
and conditions hereinafter set forth, the parties hereby agree as follows:
1. Licensor hereby grants Licensee a restricted license to use and
distribute the Database described in Schedule A within the Territory, solely as
part of the System, subject to and in accordance with the terms of this
Agreement. Licensor agrees to provide Licensee with the Database and to perform
the services in accordance with Schedule A.
2. Licensee acknowledges that the Database is confidential, proprietary
material owned and copyrighted by Licensor and that certain information and
illustrations contained therein is owned and copyrighted by the original
equipment manufacturers ("OEMS"). Licensee agrees that the Licensor shall retain
exclusive ownership of the Database, including new editions, updates, new
releases and all modifications and enhancements, versions, and derivative works
thereof, all of which will be deemed included in the term "Database", and such
ownership rights of Licensor shall include all literary property rights,
copyrights, trademarks, trade secrets, trade names or service marks, including
goodwill relating thereto.
3. The Database is intended for use solely by Licensee for the limited
Business Purpose of (i) marketing, demonstration, sub-licensing and distribution
of authorized copies on any media now in existence or hereafter developed to
duly licensed End-Users for use with the Software as part of the System to
electronically estimate collision costs and process vehicle claims information,
and (ii) performing on behalf of End-Users collision estimating services
utilizing the Database with the Software as part of the System, in which event
Licensee shall be subject to the obligations of an End-User. Licensee shall be
entitled to sublicense to CCC-UK, as an End-User, the right to perform Section
3(ii) services, provided CCC-UK expressly agrees to use its best efforts to
market the System to its customers on a priority basis over any competing
system. In the event that the Software and the System permit an End-User to
manually or automatically override the Database, Licensee's Software and the
System will mark all estimates and invoices with an asterisk to denote any
elements of the estimate or invoice which are not exactly as in the Database
information provided by Licensor. Except as expressly permitted in this
Agreement, Licensee agrees not to copy, modify, sublicense, assign, transfer or
resell the Database, in whole or in part. Licensee further agrees
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not to establish or act as a service bureau for insurance companies or others
whereby Licensee utilizes the Database to directly or indirectly prepare
estimates, supplements to estimates and/or invoices for and on behalf of
insurance companies or others unless Licensee itself has executed an End-User
Agreement. Licensee agrees to use its best efforts to restrict access to the
Database to duly licensed End-Users and designated employees and to use its best
efforts to prevent violation of these restrictions by agents, employees, and
others, taking such steps and security precautions as may reasonably be
necessary to ensure compliance herewith. In the event that Licensee discovers
any breach by an End-User of any of the restrictions on use of the Database,
Licensee shall take immediate steps to remedy such breach and if such breach
cannot be remedied to terminate such End-User's license. Licensee agrees to
encrypt, compile, or otherwise secure each End-User file to prevent the use of
the file after a given date as appropriate under the terms of the End-User
license. Licensee further agrees to use reasonable efforts to monitor compliance
by End-Users and VARS with the restrictions on the use of the Database and
cooperate with Licensor and take necessary and appropriate legal action in
asserting any and all claims against an End-User or VAR for the unauthorized use
of the Database, it being understood that Licensor will pay the costs of such
legal action except if the End-User or VAR has also infringed the Software, in
which event the costs associated with the protection of the Software shall be
borne by Licensee or CCCIS, as required by the Software Agreement, and if no
allocation is made, the parties' costs will be shared.
4. Licensee agrees to submit to the Licensor, for approval in advance, all
advertising copy and promotional material regarding the Database, and to
identify the Licensor as the copyright owner and trademark registrant in such
copy and material and the computer screen where appropriate to give notice to
End-Users, and to label all copies of advertising, promotional material and the
Database distributed to End-Users and VARS, and on printed estimates from the
System accordingly. Any objection of the Licensor to the Licensee's advertising
or promotional material must be reasonable and must be made in writing within
ten (10) days from the date that such material is submitted by the Licensee to
the Licensor for review. If such approval is not received within such ten (10)
day period, Licensor shall be deemed to have approved any such advertising or
promotional material. CCCIS and Licensee shall be accorded the same right of
pre-approval of Licensor's advertising or promotional material regarding the
Software as Licensor has with respect to
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Licensee's advertising regarding the Database.
5. Licensee shall require that all End-Users sign System license agreements
in form approved in advance by Licensor (the "End-User Agreements") or, if
appropriate, a Licensor approved form of trial agreement ("Evaluation
Agreement"), prior to End-Users receiving copies of the Database or Licensee
performing Section 3 (ii) services for End-Users. Licensee shall be free to
establish End-User Agreement fees, however Licensee shall obtain the prior
written consent of the Licensor to any other proposed change in terms and
conditions of the End-User Agreements pertaining to the Database, which is
inconsistent with this Agreement or affects Licensor's proprietary rights,
restrictions on use of the Database or Licensor's interests therein, and any
alternative form of End-User Agreement or Evaluation Agreement to be offered to
End-Users containing other provisions regarding the Database, which is
inconsistent with this Agreement or affects Licensor's proprietary rights,
restrictions on use of the Database or Licensor's interests therein, shall be
approved in advance by Licensor, which shall not be unreasonably withheld or
delayed. Within ninety (90) days following the end of the month during which
End-User Agreements including the VAR End-User Agreements, and each End-User for
whom Licensee performs collision estimating services, and VAR Agreements are
executed and/or renewed, Licensee shall provide Licensor with a written report
listing the name and address and expiration date for each such Agreement.
Licensee shall be responsible for reproducing and/or distributing to duly
licensed End-Users copies of the Database in machine readable form and for
replacing defective or damaged copies. Licensee shall maintain records of all
transactions involving use of the Database with Licensee End-Users, including
End-Users for whom Licensee performs services, VARS, and VAR End-Users, and
shall provide Licensor with access to such records for review, and to verify
Licensee's, End-Users' and VARS' compliance with this Agreement once each
quarter during normal business hours upon ten (10) days prior written notice.
Licensee will not be obligated to reimburse Licensor's reasonable costs in
conducting any such audit unless Licensor discovers that any fees payable
hereunder were underpaid by five percent (5%) or more with respect to the period
which is the subject of such audit. All information produced by Licensee for
such audit shall be held in strict confidence by Licensor and shall be used for
no other purpose. Licensor's outside auditors shall be required to sign a
confidentiality agreement in form approved by Licensee. Licensor shall be liable
for any breach of this confidentiality obligation by its employees, agents or
representatives.
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6. In consideration for this Agreement and the grant of the license to use
the Database and for the services to be performed by Licensor, Licensee agrees
to pay Licensor, during the term of this Agreement, the applicable license fees,
and other applicable fees and charges provided for in and payable in the manner
and on the dates set forth in Schedule B attached hereto. Licensee also agrees
to pay any and all applicable duties and taxes which may now or hereafter be
assessed upon the importing, rental, license, possession and/or use of the
Database by Licensee, excluding taxes based on Licensor's income.
7. In addition to the right to grant sublicenses to End-Users directly,
Licensor grants Licensee a limited right to sublicense the Database to VARS that
desire to sublicense and distribute the Database and the Software as a System to
End-Users in the Territory, provided the VARS and their End-Users are bound by
the terms and conditions and restrictions on use set forth in this Agreement.
Accordingly, Licensee shall require that all such VARS sign an agreement in form
approved in advance by Licensor (the "VAR Agreement"), and Licensee shall
further require that such VARS enter into End-User agreements in substantially
the same form as the End-User Agreement or, if appropriate, a Licensor approved
form of Evaluation Agreement prior to VARS' End-Users receiving copies of the
Database, provided that any change to such forms of agreement, which is
inconsistent with this Agreement or affects Licensor's proprietary rights,
restriction on use of the Database or Licensor's interest therein shall be
approved in advance by Licensor, which approval shall not be unreasonably
withheld or delayed. All references throughout this Agreement to End-Users shall
include VARS' End-Users and all references to obligations and covenants of
Licensee with respect to the Database shall be equally applicable to VARS.
8. The initial term of this Agreement and license shall commence on
December 30, 1998 and will expire on December 29, 2018. The term of this
Agreement and license shall be automatically renewed thereafter for two (2)
successive renewal periods of five (5) years (sixty months) each, unless either
party gives written notice to the other party of its termination of the
Agreement at least (2) years (twenty-four months) prior to the expiration of the
initial term of renewal period, as the case may be. Within thirty (30) days
following expiration or termination of this License Agreement, Licensee shall
return, postage prepaid, or shall destroy, all copies of the tapes or other
media containing the Database, in whole or in part, and shall expunge the
Database and all machine-readable material, data or information relating
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thereto from its data storage facilities, personal computers, central processing
units, disks and other media. Licensee shall not retain any Database
machine-readable material, data or information and shall cease all use of the
Database. Continued use of the Database or any information contained therein or
supplied under this Agreement after expiration or termination of this Agreement
is expressly prohibited. Notwithstanding the Term of this Agreement, this
Agreement and license may be terminated (a) by Licensor (i) upon the failure of
the Licensee to make payment of license fees, royalties and other charges due
hereunder, in accordance with Schedule B, (ii) in the event of a material breach
by CCCIS of the Software Agreement which shall be deemed to be a breach of this
Agreement, (iii) in the event of a material breach by CCC-UK of the Subscription
Agreement which shall be deemed to be a breach of this Agreement, (iv) in the
event Licensee is controlled by (whether through ownership of voting securities,
contract or otherwise) any entity which directly or indirectly competes with
Licensor in any market or produces or distributes a product which competes with
the Database which shall be deemed to be a breach of this Agreement, or (v) two
(2) years (twenty-four months) following notice from Licensor to Licensee of its
intention to discontinue or abandon, as distinguished from a sale of,
publication of the Database; or (b) by either party (i) upon the failure of the
other party to comply with the material terms and conditions of this Agreement,
or to perform any of its material obligations hereunder for a period of thirty
(30) days after notice thereof (ninety (90) days as to Licensor's failure to
cure a performance requirement under Schedule A), unless such failure or
nonperformance is capable of being cured within a reasonable period and
commencement of the cure has commenced prior to the expiration of such period,
(ii) upon the bankruptcy or insolvency of the other party, however evidenced,
resulting in an inability or failure to perform hereunder or inability or
failure to perform any other material obligation or agreement, which failure
shall continue for a period of sixty (60) days. The above rights of termination
are in addition to such other rights as the parties may have hereunder, under
the Subscription Agreement, or as otherwise provided by law. All End-User
Agreements and VAR Agreements and their agreements with End-Users, and collision
estimating service agreements between Licensee and End-Users entered into or
renewed during the Term of this Agreement shall terminate on expiration or
termination of this Agreement, subject to a right for such End-Users to continue
to use the Database for an additional period of up to one (1) year, subject to
the terms of this Agreement and the End-User
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<PAGE>
Agreement.
9. (a) Licensor warrants its ownership rights in and to the Database and
agrees to defend, indemnify and hold Licensee harmless from, or settle at its
option, any action against Licensee, or End-Users arising from a claim that
Licensee's, or an End-User's use of the Database under this Agreement or the
End-User Agreement infringes any copyright, patent, trademark or other rights of
any third party, except with respect to Database elements for which Licensor has
no copyright or ownership right and acquired no rights as specified in Schedule
A. Licensor further warrants that it will affirmatively take all steps
reasonable and necessary to protect the Database in order to preserve its
ownership rights and copyrights in and to the Database. LICENSOR MAKES NO OTHER
WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, THE ACCURACY OF
THE DATABASE, THE MERCHANTABILITY AND FITNESS OF THE DATABASE FOR A PARTICULAR
PURPOSE, NOR THE COMPATIBILITY OF THE DATABASE WITH LICENSEE'S, VARS' OR
END-USERS' COMPUTER HARDWARE AND/OR SOFTWARE SYSTEMS.
(b) Licensee agrees, and shall enforce its rights under the Software
Agreement to compel CCCIS, to defend, indemnify and hold Licensor harmless from,
or settle at its or CCCIS's option, any action against Licensor arising from a
claim that the Software and System infringes any copyright, patent, trademark or
other right of any third party, except that this indemnity obligation does not
arise for any such claim based solely on Licensee's or End-User's use of the
Database.
10. Neither party shall be liable to the other party for any indirect,
special or consequential damages of any kind, including, without limitation,
damages for loss of goodwill, work stoppage, computer failure or malfunction
resulting from or caused by a breach of this Agreement. Damages in such event
shall be limited to the actual and direct damages attributable to the breach,
except that the foregoing limitations on damages shall not apply in the event of
a willful breach of this Agreement by either party hereto or in the event
Licensor seeks damages on termination of this Agreement pursuant to Section 8(a)
(i) - (iv). Nothing in this Section 10 shall be construed as limiting the
indemnity obligations of the parties set forth in Section 9, or the liability of
VARS and End-Users to Licensor and/or Licensee, as the case may be.
11. (a) During the Term of this Agreement, Licensee agrees that the
Software and System and all derivative works and systems using the Software will
be distributed to End-Users and used by Licensee solely and exclusively with the
Database, the Software and System will not be used or licensed for
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use with any other crash/collision estimating database, and no other
crash/collision estimating database will be used, licensed or distributed for
use with the Software and System by Licensee, directly or indirectly, to any
other entity, including but not limited to VARS or End-Users, except as
expressly permitted in this Agreement. This covenant to market and distribute
the Database exclusively with the Software is unconditional. Licensee agrees
that the Software will not be licensed, sold, transferred or assigned to or used
by any subsidiary or affiliate of Licensee which is not a Licensee signatory to
this Agreement. As an additional inducement for the Licensor to enter into this
Agreement, the Licensee represents and agrees that now and during the Term of
this Agreement, neither it nor its subsidiaries, shall, directly or indirectly,
for itself, or as agent of, or on behalf of, or in conjunction with, any person,
firm or corporation, or as partner of any partnership or joint venture, or as
shareholder of any corporation, own (except for investment purposes only and not
with intent to control), manage, acquire, operate, control or participate in any
manner in the development, ownership, license, marketing, distribution,
operation or control of, or be associated with, or otherwise connected in any
manner with, any database(s) which compete with the Database, except (i)
Licensee shall be entitled to license, on a country by country basis, the
standard collision estimating database required to be used, ie. Thatchum in the
U.K., in addition to but not in lieu of the Database, and (ii) if a network is
established for the purpose of transferring estimates or invoices
electronically, directly or indirectly, between or among appraisers, mechanical
repair shops, body shops and/or insurance companies (the "Network"), such
Network may permit the transmission of estimates and invoices. However, the
Licensee shall not permit use of the Network to carry a database that competes
with the Database or software that competes with the Software for the purpose of
enabling users of the Network to prepare estimates, supplements to estimates, or
invoices.
(b) Except as to Licensor's obligations in connection with the Agreement of
Joint Venture, dated as of February 6, 1998, and the database license granted to
the Joint Venture and Licensor's or any affiliate's present and future
relationship with Eurotax Holding A.G., and or its affiliates, the license
granted to Licensee under this Agreement shall be for exclusive use of the
Database for collision estimating purposes, as distinguished from other
applications as to which Licensor reserves all of its rights.
(c) In the event that Licensee, its subsidiaries, joint ventures or parent,
either directly or indirectly, wishes to offer a collision estimating
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system with a database for use in any market outside the Territory, Licensor
shall have the right of first refusal to provide such database and Licensor and
Licensee, or Licensee's subsidiaries, joint ventures or parent, shall negotiate
in good faith an agreement to do so on commercially competitive terms.
12. (a) Licensor and Licensee agree that the remedy at law for any breach
by either of them of this Agreement, including the provisions on exclusivity and
non-compete, may be inadequate and that in the event of any alleged breach or
threatened breach, Licensor or Licensee, as the case may be, shall, in addition
to all other remedies available to it, be entitled to seek injunctive relief
therefor and specific performance.
(b) Neither party shall be liable for failure or delay in performance
of its obligations hereunder when such failure or delay is caused by events
beyond the reasonable control of such party, including but not limited to acts
of God, casualty, labor disputes, failure of equipment despite proper use and
regular maintenance, or compliance with governmental authority. Such party shall
(i) use reasonable best efforts to notify the other party in advance, if
possible, of conditions which may result in such delay in or failure to perform;
(ii) use its reasonable best efforts to avoid or remove such conditions; and
(iii) immediately resume performance when such conditions are removed.
13. This Agreement shall be binding upon and inure to the benefit of the
respective successors and permitted assigns of the parties. Neither party may
assign this Agreement or the performance of its obligations hereunder without
the prior written consent of the other party, which consent shall not be
unreasonably withheld. In the event of a sale of the stock or substantially all
of the assets of either party which results in a change in control, the other
party shall be entitled to sixty (60) days prior written notice. In the case of
such a sale of stock or assets of Licensor by Licensor or its parent, Licensee
shall be entitled to require Licensor or its parent to assign and transfer this
Agreement to the successor, by giving the Licensor written notice within thirty
(30) days after the date of Licensor's notice. This Database License Agreement
shall not be transferred or assigned by operation of law or otherwise to any
Licensee entity or affiliate of Licensee or any other party unless the Software
License is transferred or assigned to and operated by the same legal entity as
this Agreement is to be transferred or assigned to.
14. The Schedules to this Agreement are incorporated herein and constitute
an integral part of this Agreement. This Agreement is the complete and exclusive
statement of the understanding between the parties with respect to the subject
matter, superseding all prior agreements, representations, statements
-9-
<PAGE>
and proposals, oral or written.
15. All amendments to this Agreement shall be in writing, signed by both
parties. Notice hereunder shall be delivered to the following addresses by hand,
or by certified mail, return receipt requested:
Licensor: Motor Information Systems Division
Hearst Business Publishing, Inc.
5600 Crooks Road
Suite 200
Troy Michigan 48098
Attention: Mr. Kevin F. Carr
Vice President and General Manager
with a copy to: General Counsel
The Hearst Corporation
959 Eighth Avenue
New York, New York 10019
Licensee:
16. No term or provision hereof shall be deemed waived and no breach
excused, unless such waiver or consent shall be in writing and signed by the
party claimed to have waived or consented. Any consent by any party to, or
waiver of, a breach by the other, whether express or implied, shall not
constitute a consent to, waiver of, or excuse for any other different or
subsequent breach.
17. The following provisions shall survive termination of this Agreement:
2,3,5 (with respect to Licensor's audit rights), 6 (as to any End-User Agreement
extending beyond the Term of this Agreement), 8, the first sentence of 9, 10,
12(a), 16, 17, 18, 20, 21, and to the extent necessary to interpret and enforce
the surviving provisions of this Agreement, referred to in Section 17, the
Schedules hereto.
18. (a) (i) This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, United States of America
without regard to its provisions concerning conflicts of law.
(ii) All End-User Agreements and VARS Agreements shall be
governed by and construed in accordance with the laws of the United Kingdom,
without regard to its provisions concerning conflicts of laws, and shall contain
a provision evidencing the End-User's or VARS' agreement to this choice of law.
(b) For purposes of any proceeding arising in connection with this
Agreement, the parties hereby submit to the exclusive jurisdiction of the state
and federal courts located in the County of New York, State of New York, and
-10-
<PAGE>
waive all claims of inconvenient forum or improper venue, and agree that all
actions or proceedings relating to this Agreement shall be litigated in such
courts.
(c) In the event that Licensee becomes aware of actions of End-Users,
VARS, or third parties that violate or infringe any rights of Licensor in the
Database, or those licensed to Licensee under this Agreement, including, but not
limited to, any rights under copyright, trademark, trade secret or sui generis
database protection laws, Licensee shall promptly notify Licensor of such
violation or infringement and shall cooperate with Licensor in halting and
seeking remedy for said violation or infringement. Prior to initiating any claim
arising from such a violation or infringement, Licensee shall notify Licensor of
such claim and afford Licensor an opportunity to join in that claim at
Licensor's sole discretion. Licensee agrees that in connection with any claim
made by it for violation or infringement of any right in the Database, any
recovery obtained by Licensee over and above its actual damages and costs
associated with pursuing the claim shall be paid to Licensor.
19. This Agreement may be executed in two (2) or more counterparts, each of
which shall be deemed an original, and all of which together shall constitute
one and the same instrument.
20. If any provision of this Agreement or any Schedule is for any reason
held invalid, illegal, void or unenforceable, all other provisions of this
Agreement and any such Schedule will remain in full force and effect and the
invalid, illegal, void or unenforceable provision shall be replaced by a
mutually acceptable, valid, legal and enforceable provision that is closest to
the original intention to the parties.
21. The parties agree that each party shall undertake performing its
obligations pursuant to this Agreement as an independent contractor. Nothing
contained herein or done pursuant to this Agreement shall make any party or its
agents or employees the legal representative, agent or employee of the other
party for any purpose whatsoever.
-11-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first written above.
Motor Information Systems Division
Hearst Business Publishing, Inc.
By:________________________
Kevin F. Carr
Date:______________________
Newco Limited
By:__________________________
Date: ________________________
-12-
<PAGE>
EX 10.10
DATED: JULY 1, 1998
PHILLIP JOHN CARTER
and
CCC INFORMATION SERVICES INC.
----------------------------------------
SALE AND PURCHASE
AGREEMENT
relating to
the entire share capital of
RAYFIELD LIMITED
----------------------------------------
GREENWOODS
Solicitors
30 Priestgate
Peterborough
PE1 1JE
(MJE)
<PAGE>
INDEX
<TABLE>
<S> <C> <C>
CLAUSE 1. INTERPRETATION p. 1
2. SALE OF SHARES p. 3
3. CONSIDERATION p. 3
4. COMPLETION p. 3
5. WARRANTIES p. 6
6. PROVISIONS RELATING TO THIS AGREEMENT p. 9
7. COSTS p. 12
FIRST SCHEDULE - Warranties p. 13
Clause 1. Interpretation p. 13
2. Warranties p. 13
SECOND SCHEDULE - Purchaser's Responsibilities and Warranties p. 19
THIRD SCHEDULE - Part III Details of Company p. 21
</TABLE>
<PAGE>
THIS AGREEMENT is made the 1st day of July One thousand nine hundred and ninety
eight
BETWEEN:
(1) PHILLIP JOHN CARTER of Stibbington Hall Stibbington Nr Wansford
Peterborough (herein called "the Vendor") and
(2) CCC INFORMATION SERVICES INC. a company registered in Delaware USA whose
office is at World Trade Center Chicago 444 Merchandise Mart Chicago
Illinois 60654 USA (hereinafter called "the Purchaser")
WHEREAS:
The Purchaser wishes to acquire 900 Ordinary Shares of L1 each of the issued
share capital of the Company being 960 Ordinary shares of L1 each (the Shares as
hereinafter defined) from the Vendor on the terms of this Agreement
NOW IT IS HEREBY AGREED as follows:-
INTERPRETATION
DEFINITIONS
In this Agreement where the context so admits:-
"THE COMPANY" means RAYFIELD LIMITED further details of which are
set out in Part III of the Third Schedule
"COMPLETION" means completion of the sale and purchase of the
Shares
"COMPLETION DATE" means the date hereof
"THE DIRECTOR" means the person who is a Director of the Company
whose name and address is set out in Part I of the Third Schedule
and
"THE CONTINUING DIRECTOR" means the person named in Part II of
that Schedule
"THE DISCLOSURE LETTER" means the letter of even date herewith
from the Vendor to the Purchaser "the Shares" means the shares to
be bought and sold pursuant to Clause 2
"THE WARRANTIES" means the warranties and representations set out
in the First Schedule
CONSTRUCTION OF CERTAIN REFERENCES
In this Agreement unless the context otherwise requires:-
words and phrases the definitions of which are contained or
referred to in
<PAGE>
Part XXVI of the Companies Act 1985 shall be construed as having
the meanings thereby attributed to them and references to the
Companies Act shall mean the Companies Act 1985 references to a
statute or statutory provisions shall be construed as references
to those provisions as consolidated or amended or re-enacted or
replaced or as their application is modified by other provisions
(whether before or after the date hereof) from time to time and
shall include references to any provisions of which they are
re-enactments (whether with or without modification) and shall
include any subordinate legislation in force under the same from
time to time references to clauses and schedules are references
to clauses hereof and schedules hereto. References to Clauses are
unless otherwise stated references to Clauses of the clause in
which the reference appears and references to this Agreement
include the Schedules which form part of this Agreement for all
purposes references to any document being in agreed terms are to
that document in the form signed by or on behalf of the parties
for identification references to persons includes firms
corporations and unincorporated associations references to the
singular gender shall also include the plural gender
HEADINGS
The headings and sub-headings are inserted for convenience only
and shall not affect the construction of this Agreement Each of
the schedules shall have effect as if set out herein and are part
of this Agreement
SALE OF SHARES
SALE AND PURCHASE
Subject to the terms of this Agreement the Vendor with full title
guarantee shall sell and the Purchaser shall with effect from
Completion purchase free from all liens charges equities and
encumbrances and together with all rights now or hereafter
attaching thereto the Purchaser relying upon the representations
and warranties of the Vendor herein contained 900 of the issued
Ordinary Shares of L1 each in the capital of the Company
<PAGE>
CONSIDERATION
SHARES
The total consideration for the Shares shall be L1,000,000
COMPLETION
COMPLETION
Subject to the provisions of this Clause Completion of the sale
and purchase of the Shares shall take place on the Completion
Date at such place as the parties may agree whereupon:-
the Vendor shall:-
deliver to the Purchaser:-
(a) duly executed transfer of the Shares by
the registered holders thereof in favour
of the Purchaser together with the
relative share certificate
(b) all the statutory and other books (duly
written up to date) of the Company and
its Certificate of Incorporation and
Incorporation on Change of Name (if
received by the Company by this time)
and common seal
on Completion the Vendor shall cause to be duly held a
meeting of the Board of the Company validly to effect or
execute or validly to resolve to effect or execute:-
the approval of the transfers of the Shares to the
Purchaser the issue to the Purchaser of Share
Certificates in respect of those shares and the
registration of the Purchaser as holders of those
Shares (subject only to those transfers being
represented duly stamped);
the appointment as Directors and Secretary of the
Company of such persons as the Purchaser may
nominate subject to such persons consenting to
such appointment and not being disqualified from
holding such offices;
the issue of mandates in relation to the Company
to such bank or banks and in such form as the
Purchaser may direct; the appointment as auditors
of the Company of such person or firm as the
Purchaser may nominate subject to the provisions
of the Companies Act;
the change in the registered office of the Company
to such
<PAGE>
address as may be nominated by the Purchaser; the
sealing of the Share Certificates in favour of the
Purchaser;
any other business which may be necessary or
desirable to give full and valid effect to the
sale and purchase provided for in this Agreement
or as the Purchaser may reasonably require;
the Purchaser shall:-
pay the consideration for the Shares as provided
for in Clause 3 (such payment to be made by way of
banker's transfer to the Vendor's bank account at
Lloyds Bank Plc deliver to the Vendor a duly
executed employment Agreement with the Purchaser
in the agreed terms deliver to the Vendor in
exchange for a duly signed counterpart from the
Vendor and the Company a duly signed copy of the
Joint Venture Agreement in agreed terms procure a
meeting of the shareholders of the Company and
vote to approve the Share Option Scheme as set out
in the Share Option Scheme Deed in agreed terms
and exchange a duly executed copy thereof for
others duly executed by the other parties thereto
procure that the Board of the Company authorises
Mr Carter to:
offer to employ in the Company such of the
staff of Carter and Carter Limited as he
sees fit on such terms as he sees fit take
over the existing rental agreements in
respect of 3 vehicles used in the previous
business of Carter and Carter Limited and 1
previously used by Carter and Carter take
over such of the contracts in respect of the
said previous business of Carter and Carter
Limited and Carter and Carter as Mr Carter
may decide
deliver to the Vendor a duly executed copy of
Share Put
<PAGE>
Option Deed in agreed terms in exchange for a duly
executed copy by Mr Carter and the Company
The Vendor hereby declares that so long as it remains the
registered holder of any of the Shares it will:-
stand and be possessed of the Shares and the dividends and
other distributions of profits or surplus or other assets in
respect thereof and all rights arising out of or in
connection therewith in trust for the Purchaser and its
successors in title;
at all times hereafter deal with and dispose of the Shares
dividends distributions and rights as aforesaid as the
Purchaser or any such successor may direct; at the request
of the Purchaser or any such successor vote at all meetings
which he shall be entitled to attend as the registered
holder of the Shares in such manner as the Purchaser or any
such successor may direct;
and (if so requested by the Purchaser or any such successor)
execute all instruments of proxy or other documents which
the Purchaser may reasonably require and which may be
necessary or desirable or convenient to enable the Purchaser
or any such successor to attend and vote at any such meeting
WARRANTIES
FIRST SCHEDULE
The First Schedule shall have effect
PURCHASER'S KNOWLEDGE
The Warranties are given subject to matters excepted in the first
sentence of Clause 2 of the First Schedule and to the terms of
Clauses 5.5 to 5.17 inclusive
WARRANTIES TO BE INDEPENDENT
Each of the Warranties shall be separate and independent and save
as expressly provided shall not be limited by reference to any
other Warranty or anything in this Agreement
REDUCTION OF PURCHASE CONSIDERATION
Any payments made by the Vendor in satisfaction of any claim in
respect of a breach of the Warranties are less than the
consideration for the Shares they shall constitute a repayment of
and reduction in such consideration
LIMITATION OF VENDOR'S LIABILITY
Neither of the parties shall have the right to rescind this
Agreement after Completion The aggregate amount of the liability
of the Vendor under the Warranties shall not
<PAGE>
exceed the total consideration for the Shares
No liability shall attach to the Vendor under the Warranties
unless the aggregate amount of such liability shall exceed
L50,000 in which event the liability of the Vendor (subject to
the other provisions of this Clause 5) shall include the amount
of all claims and not merely the excess over L50,000
No claim shall be capable of being made against the Vendor under
the Warranties unless written notice thereof (specifying the
breach or other event to which such claim shall relate and the
amount claimed in respect thereof) shall have been given to the
Vendor within a reasonable time after a claim has arisen (or the
Purchaser ought reasonably to have realised that circumstances
exist where a claim might or will be made) and in the event of
any claim relating to taxation not later than the sixth
anniversary of Completion and in any other event not later than
1st June 2000 and any such claim which may be made shall (if it
has not been previously satisfied, settled or withdrawn or is in
the process of being negotiated or settled with the Inland
Revenue) be deemed to be withdrawn at the expiration of six
months from the date of giving notice of such claim or the
cessation of such negotiations or settlement unless legal
proceedings in respect thereof have been commenced by the issuing
and service of such proceedings against the Vendor
Payment of any claim under the Warranties shall pro tanto satisfy
and discharge any other claim under the Warranties in respect of
the same facts which is capable of being made in respect of one
and the same subject matter
No liability shall attach to the Vendor in respect of a claim
under the Warranties to the extent that:
such claim arises as a consequence of a change in the law
enacted after the date hereof; such claim arises as the
result of the retrospective imposition of taxation as a
consequence of a change in the law enacted after the date
hereof;
such claim or the events giving rise to such claim would not
have arisen but for an act omission or transaction of the
Purchaser or of the Company effected after Completion
otherwise than in the ordinary course of business
In assessing the liability of the Vendor under Warranties
relating to taxation there shall be taken into account any
benefit accruing to the Purchaser or the Company as a consequence
of the relevant breach
All amounts available for set-off or otherwise liable to be
deducted pursuant to sub-Clauses 5.10 or 5.11 shall first be
taken into account for the purpose of determining the amount of
liability for the purposes of sub-Clause 5.7
In the event of the Vendor having paid to the Purchaser an amount
in respect of a
<PAGE>
claim under the Warranties and subsequent to the date of making
such payment the Purchaser or the Company recover from a third
part a sum which is directly referable to that payment then the
Purchaser shall forthwith repay or procure the repayment by the
Company to the Vendor of so much of the amount paid by the third
party as does not exceed the sum paid by the Vendor to the
Purchaser less the costs of the Purchaser or of the Company in
recovering such sum
In the event that the Purchaser or the Company shall be in
receipt of any claim which might constitute or give rise to a
claim under the Warranties the Purchaser shall as soon as
reasonably practicable notify the Vendor giving full details as
far as practicable and shall not settle or compromise any such
claim or make any admission of liability without the prior
written consent of the Vendor (such consent not to be
unreasonably withheld or delayed by the Vendor). The Vendor shall
be entitled to require the Purchaser to take or to procure that
the Company takes such reasonable steps or proceedings as the
Vendor may consider necessary in order to mitigate any claim
under the Warranties
Nothing herein or in the Warranties shall be deemed to relieve
the Purchaser from any common law duty to mitigate any loss or
damage incurred by it
The Purchaser shall not be entitled to a claim that any fact or
circumstance constitutes a breach of any of the Warranties if
such fact or circumstance has been disclosed in this Agreement or
the Disclosure Letter
PURCHASER'S REPRESENTATIONS AND WARRANTIES
The Second Schedule shall have effect
PROVISIONS RELATING TO THIS AGREEMENT
WHOLE AGREEMENT
This Agreement (together with any documents referred to
herein) constitutes the whole agreement between the parties
hereto relating to its subject matter and supersedes any
previous agreement whether written or oral between the
parties in relation to that subject matter and no variations
hereof shall be effective unless made in writing and signed
by all parties
The Purchaser irrevocably and unconditionally waives any
right it may have to claim damages for any misrepresentation
whether or not contained in this Agreement or for breach of
any warranty not contained in the Agreement unless such
misrepresentation or warranty was made fraudulently and/or
to rescind this Agreement.
AGREEMENT SURVIVES COMPLETION
The Warranties and all other provisions of this Agreement insofar
as the same shall
<PAGE>
not have been performed at Completion shall remain in full force
and effect notwithstanding Completion
FURTHER ACTS AND DEEDS
At the request of the Purchaser the Vendor shall execute and
perform all such further documents deeds or assurances and do
such acts and things as may be required for effectually vesting
the Shares in the Purchaser and otherwise for fulfilling the
provisions of this Agreement.
WAIVER
Any release delay or waiver by any party in favour of
another of any (or part of any) of its rights power or
privileges under this Agreement shall:-
be confined to the specific circumstances in which it
is given; not affect any other enforcement of the same
right or the enforcement of any other right by or
against the same party; (unless it is expressed to be
irrevocable) be revocable at any time
No delay or omission by the Purchaser in exercising any
right power or remedy shall operate as a waiver thereof and
any single or partial exercise thereof shall not preclude
any other or further exercise thereof or the exercise of any
right power or other remedy. The rights and remedies of the
Purchaser hereunder are cumulative and not exclusive of any
right or remedy provided by law
SEVERABILITY
If any part of any provision of this Agreement shall be invalid
or unenforceable then the remainder of such provision and all
other provisions of this Agreement shall remain valid and
enforceable to the fullest extent permitted by law LAW The
validity construction and performance of this Agreement shall be
governed by the law of England and the parties hereby submit to
the non-exclusive jurisdiction of the English Courts
NOTICES
Unless otherwise provided any notice required or permitted under
this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be
notified by hand or professional courier service upon
confirmation of telex or telecopy five days after deposit with
the United States Post Office by registered or certified mail or
with the United Kingdom Post Office by registered post postage
prepaid or upon the next day following deposit with a nationally
recognised overnight air courier addressed as follows:
<PAGE>
(A) if the Purchaser to:
CCC Information Services Inc
World Trade Center Chicago
444 Merchandise Mart
Chicago, Illinois 60654
Attention: Leonard L Ciarrocchi
Telecopy: (312) 527 1843
With a copy to:
Leland E Hutchinson
Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601-9703
Telecopy: (312) 558-5700
(B) if to the Vendor to:
Carter & Carter
Greenhill House
Thorpe Wood
Peterborough
Cambridgeshire
PE3 6RU
Attention of Mr Phillip John Carter
Telecopy:
With a copy to:
Greenwoods
30 Priestgate
Peterborough
Cambridgeshire
PE1 1JE
Attention Michael Evans
Any party may by notice given in accordance with this Clause to
the other party to this Agreement designate another address or
person for receipt of notice hereunder
COSTS
The Purchaser shall pay its own costs and expenses of and incidental
to the preparation and completion of this Agreement and the other
documents referred to in this Agreement and the sale and purchase
hereby agreed to be made and those of the
<PAGE>
Vendor's solicitors and its accountants and of all their and the
Vendor's travelling expenses incurred in connection therewith
EXECUTION
The parties have shown their acceptance of the terms of this Agreement by
executing it as an agreement at the end of the Schedules
<PAGE>
FIRST SCHEDULE
WARRANTIES
INTERPRETATION
In this Schedule where the context so admits:-
"ENCUMBRANCE" includes any interest or equity of any person (including
without prejudice to the generality of the foregoing, any right to acquire,
option or right of pre-emption) or any mortgage, charge, pledge, lien,
assignment, hypothecation, security interest, title retention or any other
security agreement or arrangement.
"TAXATION" means any form of taxation levy rate or impost whenever created
imposed levied or deducted and whether of the United Kingdom or elsewhere
Any question whether a person is connected with another shall be determined
in accordance with s.839 Income and Corporation Taxes Act 1988 ("ICTA
1988") which shall apply in relation to this Schedule as it applies in
relation to that Act. Where any statement is qualified by the expression
"so far as the Vendor is aware" or "to the best of the Vendors knowledge
and belief" or any similar expression, the Vendor shall be deemed to have
made proper enquiry in respect of the matter of the all appropriate
employees
WARRANTIES AND REPRESENTATIONS
The Vendor hereby warrants and represents to and for the benefit of the
Purchaser in the following terms which are at the date of this Agreement true
and accurate in all material respects save as to the matters disclosed in the
Disclosure Letter
THE COMPANY AND GENERAL MATTERS
The Company has not traded and does not own nor has it ever owned any
freehold or leasehold property The Company has not committed any criminal
offence nor is it subject to any claim in respect of any matter from any
person.
THE VENDOR
CAPACITY
The Vendor has full power to enter into and perform this Agreement and this
Agreement constitutes binding obligations on the Vendor in accordance with
its terms.
LOANS TO OR BY THE VENDOR
<PAGE>
There is not outstanding any indebtedness or other liability (actual or
contingent) owing by the Company to the Vendor or any person connected with
the Vendor nor is there any indebtedness owing to the Company by any such
person.
THE COMPANY'S CONSTITUTION
SHARE CAPITAL
The Shares are beneficially owned by the Vendor free from all liens,
charges, equities, encumbrances or interests in favour of any other person
and the Shares will at Completion constitute 90% of the allotted share
capital of the Company and the Vendor is entitled to sell and transfer the
full legal and beneficial ownership of the Shares to the Purchaser on the
terms set out in this Agreement.
The particulars of the Company given in the Second Schedule to this
Agreement are true complete and accurate.
MEMORANDUM AND ARTICLES
The copy of the Memorandum and Articles of Association of the Company
attached to the Disclosure Letter is true and complete and has embodied
therein or annexed thereto a copy of every such resolution or agreement as
is referred to in s.380 of the Companies Act 1985.
COMPANY RESOLUTION
Neither the Company nor any class of its members has passed any resolution
save for a resolution to change its name to Rayfield Limited and has made
all returns required to the Registrar of Companies
OPTIONS ETC.
No person has the right (whether exercisable now or in the future and
whether contingent or not) to call for allotment, issue, sale, transfer or
other form of security mortgage charge or pledge of any share or loan
capital of the Company under any option or other agreement (including
conversion rights and rights of pre-emption).
REDEMPTION AND FINANCIAL ASSISTANCE
The Company has not at any time:
(a) purchased or redeemed or repaid any share capital; or
(b) given any financial assistance in connection with any such acquisition
of share capital as would fall within sections 151 to 258 (inclusive)
of the Companies Act 1985
THE COMPANY AND THE LAW
COMPLIANCE WITH LAWS
The Company has been constituted in all respects in accordance with all
applicable laws and regulations of the United Kingdom and there is no
order, decree or judgment of any Court or any governmental agency of the
United Kingdom or any foreign country outstanding against the Company or
which may have a material adverse effect
<PAGE>
upon the assets or business of the Company.
LICENCES ETC.
All necessary licences, consents, permits and authorities (public and
private) can be obtained by the Company to enable the Company to carry on
its business effectively in the places and in the manner in which such
business is intended to be carried on and the Vendor knows of no reason why
any of them should not be granted
BREACH OF STATUTORY PROVISIONS
The Company has not committed or omitted to do any act or thing the
commission or omission of which is, or could be, in contravention of any
Act, order, regulation or the like in the United Kingdom or elsewhere which
is punishable by fine or other penalty.
LITIGATION
The Company is not engaged in any litigation or arbitration prosecution or
other legal or tribunal proceedings or any governmental investigation and
so far as the Vendor is aware no litigation or arbitration prosecution or
other legal or tribunal proceedings are pending or threatened by or against
the Company and there are no circumstances likely to give rise to any
litigation or arbitration or other legal or tribunal proceedings or
governmental investigations and the Company has not been a party to any
undertaking or assurance given to any court or governmental agency which is
still in force and so far as the Vendor is aware of any circumstances which
may give rise to any such matter.
INSOLVENCY
No order has been made or petition presented or resolution passed for the
winding up of the Company nor has any distress, execution or other process
been levied against the Company and so far as the Vendor is aware none are
threatened or proposed.
GRANTS
The Company has not applied for or received any grant from any
supranational, national or local authority or governmental agency.
ASSETS AND CHARGES
The Company has no assets other than the goodwill of the firm of Carter &
Carter from which it acquired pursuant to the Deed of Gift of even date a
copy of which is annexed to the Disclosure Letter and to which it has good
marketable title and neither such goodwill or uncalled capital of the
Company is subject to any Encumbrance or any agreement or commitment to
give or create any Encumbrance.
CREDITORS AND DEBTS
The Company has no creditors and owes no debts.
TITLE RETENTION
<PAGE>
The Company has not acquired or agreed to acquire any asset other than the
said goodwill
THE COMPANY'S CONTRACTS
DOCUMENTS
The Company has no contracts.
POWERS OF ATTORNEY
There are in force no powers of attorney given by the Company. No person,
as agent or otherwise, is entitled or authorised to bind or commit the
Company to any obligation not in the ordinary course of the Company's
business.
THE COMPANY AND ITS BANKERS
BANKERS
The Company has no bankers.
EMPLOYEES
The Company has no employees.
DIRECTORS
The particulars shown in the Third Schedule are true and complete and no
person not named therein as such is a director of the Company.
THE COMPANY AND THE REVENUE
The Company is resident in the United Kingdom for taxation purposes. The
Company has not been party to any transaction that would make it liable to
any form of taxation other than the transfer to it of the said goodwill
The Company has not any obligation to make any returns nor has had any
obligation to make any returns to the taxation authorities
INVESTMENTS ASSOCIATION AND BRANCHES
The Company:-
is not the holder or beneficial owner of and has not agreed to acquire
any class of the share or other capital of any other company or
corporation (whether incorporated in the United Kingdom or elsewhere);
is not and has not agreed to become a member of any partnership joint
venture consortium or other unincorporated association;
and has no branch outside England and no permanent establishment (as
that expression is defined in the respective Double Taxation Relief
Orders current at the date hereof) outside the United Kingdom.
<PAGE>
SECOND SCHEDULE
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Vendor that:
AUTHORISATION
The Purchaser has full power and authority to enter into this
Agreement and that this Agreement constitutes a valid and legally
binding obligation of the Purchaser
ACQUIRE ENTIRELY FOR OWN ACCOUNT
This Agreement is made with the Purchaser in reliance upon the
Purchaser's representation to the Vendor which by its execution of
this Agreement it hereby confirms that the Shares will be acquired for
investment for the Purchaser's own account not as a nominee agent and
not with a view to the resale or distribution of any part thereof and
that the Purchaser has no present intention of selling granting any
participation in or otherwise distributing the same. By executing this
Agreement the Purchaser further represents that it does not have any
contract undertaking agreement or arrangement with any person to sell
transfer or grant participation to such person or to any third parson
with respect to any of the Shares
SOPHISTICATED PURCHASER
The Purchaser is a sophisticated Purchaser with respect to the Shares
has been given the opportunity to access the records of the Company
and has made its own independent analysis and investigation into the
business operations financial condition and general credit worthiness
of the Company and has made its own independent decision to acquire on
the date hereof the Shares pursuant to the terms and conditions set
forth in this Agreement except that the Purchaser has relied upon the
Warranties contained in this Agreement
COVENANTS OF THE INVESTOR
CONFIDENTIAL INFORMATION
Prior to the Closing the Company shall at the Purchaser's request
afford or cause to be afforded to the agents attorneys accountants and
other authorised representatives of the Purchaser reasonable access
during normal business hours to all employees properties books and
records relating to the Company and shall permit such persons to make
copies of such book and records. The Purchaser will treat and shall
cause all of its agents attorneys accountants and other authorised
representatives to treat all information obtained pursuant to this
Clause 5 as confidential subject to any disclosure requirements of the
Purchaser under applicable law. No investigation by the Purchaser or
any of its representatives pursuant to this Clause 5 shall affect any
representation warranty or Closing condition of either party hereto
<PAGE>
THIRD SCHEDULE
PART I
Director Phillip John Carter
PART II
Continuing Director Phillip John Carter
PART III
DETAILS OF COMPANY
<TABLE>
<S> <C> <C>
Name: Rayfield Limited
No: 3566516
Date and Place of Incorporation: 19th May 1998 - Cardiff, Wales
Class of Company: Private Limited
Authorised Share Capital: 1000 Ordinary Shares of L1 each
Issued Share Capital: 960 Ordinary Shares of L1 each
Director: Phillip John Carter
Secretary: Stuart Manning
Registered Office: Greenhill House, Thorpe Wood, Peterborough
Shareholder: Phillip John Carter - 960 Ordinary Shares of L1 each
Tax Residence: UK
</TABLE>
<PAGE>
SIGNED by PHILLIP JOHN CARTER )
in the presence of: )
SIGNED by )
and )
for and on behalf of CCC INFORMATION )
SERVICES INC. )
Director
Director
<PAGE>
EXHIBIT 11
CCC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES
STATEMENT RE: COMPUTATION OF NET INCOME (LOSS) PER SHARE
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Per share income from continuing operations:
Income (loss) from continuing operations $ (81) $ 15,832 $ 15,522 $ 1,286 $(13,159)
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Weighted average common shares outstanding:
Shares attributable to common stock outstanding 24,616 23,807 19,056 16,300 13,090
Shares attributable to common stock equivalents outstanding 572 1,152 1,311 -- --
-------- -------- -------- -------- --------
25,188 24,959 20,367 16,300 13,090
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Per share income (loss) from continuing operations $ -- $ 0.63 $ 0.76 $ 0.07 $ (1.00)
Per share income from discontinued operations:
Income from discontinued operations $ -- $ -- $ -- $ -- $ 1,006
Weighted average common shares outstanding:
Shares attributable to common stock outstanding 24,616 23,807 19,056 16,300 13,090
Shares attributable to common stock equivalents outstanding 572 1,152 1,311 -- --
-------- -------- -------- -------- --------
25,188 24,959 20,367 16,300 13,090
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Per share income from discontinued operations $ -- $ -- $ -- $ -- $ 0.08
-------- -------- -------- -------- --------
Per share loss from extraordinary item:
Extraordinary loss on early retirement of debt, net of taxes $ -- $ -- $ (678) $ -- $ --
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Weighted average common shares outstanding:
Shares attributable to common stock outstanding 24,616 23,807 19,056 16,300 13,090
Shares attributable to common stock equivalents outstanding 572 1,152 1,311 -- --
-------- -------- -------- -------- --------
25,188 24,959 20,367 16,300 13,090
-------- -------- -------- -------- --------
Per share loss from extraordinary item $ -- $ -- $ (0.03) $ -- $ --
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Per share dividends and accretion on mandatorily redeemable preferred:
Dividends and accretion on mandatorily redeemable preferred: $ 43 $ (365) $ (6,694) $ (3,003) $ (1,518)
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Weighted average common shares outstanding:
Shares attributable to common stock outstanding 24,616 23,807 19,056 16,300 13,090
Shares attributable to common stock equivalents outstanding 572 1,152 1,311 -- --
-------- -------- -------- -------- --------
25,188 24,959 20,367 16,300 13,090
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Per share dividends and accretion on mandatorily redeemable preferred $ -- $ (0.01) $ (0.33) $ (0.18) $ (0.12)
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Per share net income applicable to common stock:
Net income applicable to common stock $ (38) $ 15,467 $ 8,150 $ (1,717) $(13,671)
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Weighted average common shares outstanding:
Shares attributable to common stock outstanding 24,616 23,807 19,056 16,300 13,090
Shares attributable to common stock equivalents outstanding 572 1,152 1,311 -- --
-------- -------- -------- -------- --------
25,188 24,959 20,367 16,300 13,090
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Per share net income applicable to common stock $ -- $ 0.62 $ 0.40 $ (0.11) $ (1.04)
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
</TABLE>
<PAGE>
EXHIBIT 21
Subsidiaries of CCC Information Services Group Inc.:
CCC Information Services Inc.
CCC Consumer Processing Services Inc.
Asset Management Inc.
Professional Claims Services Inc. (California)
Professional Claims Services Inc. (Nevada)
Professional Claims Services Inc. (Washington)
Professional Claims Services Inc. (Utah)
Professional Claims Services Inc. of Arizona
Certified Collateral Corporation of Canada, Ltd.
CCC International Holding Ltd.
Rayfield Limited (dba CCC International)
Credit Card Service Corporation
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (Nos. 333-15207, 333-67645, 333-32139 and 333-47205) of
our report dated March 31, 1999 appearing on page 27 of CCC Information
Services Group Inc.'s Annual Report on Form 10-K for the year ended
December 31, 1998.
PricewaterhouseCoopers LLP
Chicago, Illinois
March 31, 1999
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FORM THE AUDITED
CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED DECEMBER 31, 1998
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-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 1,526
<SECURITIES> 0
<RECEIVABLES> 26,470
<ALLOWANCES> (3,258)
<INVENTORY> 0
<CURRENT-ASSETS> 30,736
<PP&E> 49,445
<DEPRECIATION> (34,494)
<TOTAL-ASSETS> 79,018
<CURRENT-LIABILITIES> 27,445
<BONDS> 0
688
0
<COMMON> 81,798
<OTHER-SE> (46,495)<F1>
<TOTAL-LIABILITY-AND-EQUITY> 79,018
<SALES> 0
<TOTAL-REVENUES> 188,169
<CGS> 0
<TOTAL-COSTS> 168,170
<OTHER-EXPENSES> 697<F2>
<LOSS-PROVISION> 2,803
<INTEREST-EXPENSE> 258
<INCOME-PRETAX> 20,438
<INCOME-TAX> 8,860
<INCOME-CONTINUING> (81)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (81)<F3>
<EPS-PRIMARY> 0
<EPS-DILUTED> 0<F4>
<FN>
<F1>Accumulated deficit & cumulative translation adjustment.
<F2>Other income, net of expenses.
<F3>Net loss
<F4>Includes dividends and accretion on mandatorily redeemable preferred stock.
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS AS OF AND FOR THE THREE AND
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH CONSOLIDATED INTERIM FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 1,909
<SECURITIES> 1,531
<RECEIVABLES> 32,561
<ALLOWANCES> (4,170)
<INVENTORY> 0
<CURRENT-ASSETS> 38,784
<PP&E> 47,804
<DEPRECIATION> (32,565)
<TOTAL-ASSETS> 88,182
<CURRENT-LIABILITIES> 27,524
<BONDS> 0
5,239
0
<COMMON> 94,082
<OTHER-SE> (43,828)<F1>
<TOTAL-LIABILITY-AND-EQUITY> 88,182
<SALES> 0
<TOTAL-REVENUES> 138,886
<CGS> 0
<TOTAL-COSTS> 122,442
<OTHER-EXPENSES> 634<F2>
<LOSS-PROVISION> 1,944
<INTEREST-EXPENSE> 126
<INCOME-PRETAX> 16,952
<INCOME-TAX> 7,333
<INCOME-CONTINUING> 2,213
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,213
<EPS-PRIMARY> 0.08
<EPS-DILUTED> 0.08<F3>
<FN>
<F1>ACCUMULATED DEFICIT & CUMULATIVE TRANSLATION ADJUSTMENT.
<F2>OTHER INCOME, NET OF EXPENSES.
<F3>INCLUDES DIVIDENDS AND ACCRETION ON MANDATORILY REDEEMABLE PREFERRED STOCK.
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS AS OF AND FOR THE THREE AND
SIX MONTHS ENDED JUNE 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH CONSOLIDATED INTERIM FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 9,235
<SECURITIES> 0
<RECEIVABLES> 26,625
<ALLOWANCES> (3,780)
<INVENTORY> 0
<CURRENT-ASSETS> 37,984
<PP&E> 46,180
<DEPRECIATION> (30,572)
<TOTAL-ASSETS> 88,812
<CURRENT-LIABILITIES> 25,166
<BONDS> 0
5,245
0
<COMMON> 96,658
<OTHER-SE> (43,455)<F1>
<TOTAL-LIABILITY-AND-EQUITY> 88,812
<SALES> 0
<TOTAL-REVENUES> 90,838
<CGS> 0
<TOTAL-COSTS> 78,993
<OTHER-EXPENSES> 462<F2>
<LOSS-PROVISION> 1,078
<INTEREST-EXPENSE> 65
<INCOME-PRETAX> 12,242
<INCOME-TAX> 5,208
<INCOME-CONTINUING> 2,817
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,817
<EPS-PRIMARY> 0.11
<EPS-DILUTED> 0.10<F3>
<FN>
<F1>Accumulated deficit.
<F2>Other income, net of expenses.
<F3>Includes dividends and accretion on mandatorily redeemable preferred stock.
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS AS OF AND FOR THE THREE
MONTHS ENDED MARCH 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH CONSOLIDATED INTERIM FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 7,257
<SECURITIES> 7,307
<RECEIVABLES> 21,996
<ALLOWANCES> (2,769)
<INVENTORY> 0
<CURRENT-ASSETS> 40,053
<PP&E> 42,583
<DEPRECIATION> (28,632)
<TOTAL-ASSETS> 90,528
<CURRENT-LIABILITIES> 28,425
<BONDS> 0
5,148
0
<COMMON> 94,783
<OTHER-SE> (43,305)<F1>
<TOTAL-LIABILITY-AND-EQUITY> 90,528
<SALES> 0
<TOTAL-REVENUES> 44,691
<CGS> 0
<TOTAL-COSTS> 37,535
<OTHER-EXPENSES> 350<F2>
<LOSS-PROVISION> 477
<INTEREST-EXPENSE> 64
<INCOME-PRETAX> 7,442
<INCOME-TAX> 3,162
<INCOME-CONTINUING> 3,099
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,099
<EPS-PRIMARY> 0.12
<EPS-DILUTED> 0.12<F3>
<FN>
<F1>ACCUMULATED DEFICIT.
<F2>OTHER INCOME, NET OF EXPENSES.
<F3>INCLUDES DIVIDENDS AND ACCRETION ON MANDATORILY REDEEMABLE PREFERRED STOCK.
</FN>
</TABLE>
