<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 16, 1997
REGISTRATION NO. 333-30297
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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PRE-EFFECTIVE
AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
CHOICEPOINT INC.
(Exact name of registrant as specified in its charter)
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<TABLE>
<S> <C> <C>
GEORGIA 7375 58-2309650
(State or other jurisdiction Primary Standard Industrial (I.R.S. Employer
of incorporation) Classification Code Number) Identification No.)
</TABLE>
1000 ALDERMAN DRIVE
ALPHARETTA, GEORGIA 30005
(770) 752-6000
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
DEREK V. SMITH
PRESIDENT AND CHIEF EXECUTIVE OFFICER
CHOICEPOINT INC.
1000 ALDERMAN DRIVE
ALPHARETTA, GEORGIA 30005
(770) 752-6000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies to:
<TABLE>
<C> <C>
B. LYNN WALSH, ESQ. M. HILL JEFFRIES, JR.
HUNTON & WILLIAMS ALSTON & BIRD LLP
NATIONSBANK PLAZA ONE ATLANTIC CENTER
SUITE 4100 1201 WEST PEACHTREE STREET
600 PEACHTREE STREET, N.E. ATLANTA, GEORGIA 30309-3424
ATLANTA, GEORGIA 30308-2216 (404) 881-7000
(404) 888-4000 (404) 881-7777 (FAX)
(404) 888-4190 (FAX)
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED DISTRIBUTION TO THE
PUBLIC: July 31, 1997.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES WILL NOT BE
DISTRIBUTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE.
THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION
OF AN OFFER TO BUY ANY SECURITIES.
SUBJECT TO COMPLETION, DATED JULY 16, 1997
PROSPECTUS
14,800,000 SHARES
CHOICEPOINT INC.
COMMON STOCK
(PAR VALUE $.10 PER SHARE)
(CHOICEPOINT LOGO)
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This Prospectus is being furnished in connection with the distribution by
Equifax Inc., a Georgia corporation, of one share of Common Stock, par value
$.10 per share, of its wholly-owned subsidiary, ChoicePoint Inc., a Georgia
corporation, for each ten shares of Equifax Common Stock, par value $1.25 per
share, held by Equifax shareholders of record on the Record Date of ,
1997. The distribution by Equifax of shares of ChoicePoint Common Stock to
Equifax shareholders is referred to in this Prospectus as the Spinoff.
The Spinoff, and certain related transactions, will be accomplished as
follows:
(i) Pursuant to a Distribution Agreement by and between Equifax and
ChoicePoint: (a) Equifax will contribute to ChoicePoint all of the issued
and outstanding capital stock of the wholly-owned Equifax subsidiaries that
comprise the Insurance Services Group operations of Equifax, which include
Osborn Laboratories Inc. ("Osborn Labs"), Equifax Services Inc. ("Equifax
Services") and Equifax Government and Special Systems, Inc. ("Government and
Special Systems") in exchange for a number of shares of ChoicePoint Common
Stock that, when combined with the shares of ChoicePoint Common Stock
already owned by Equifax, will equal the number of shares of Equifax Common
Stock issued and outstanding on the Record Date of the Spinoff divided by
ten (excluding those shares held by certain grantor trusts of Equifax, which
will not receive ChoicePoint Common Stock in the Spinoff); (b) Equifax will
transfer to ChoicePoint substantially all of the assets and liabilities of
the insurance services division of Equifax's United Kingdom operations; and
(c) immediately following the transactions described in (a) and (b) above,
ChoicePoint will transfer all of the issued and outstanding shares of
capital stock of Osborn Labs and Government and Special Systems to Equifax
Services;
(ii) Equifax will deliver all of the outstanding shares of ChoicePoint
Common Stock to SunTrust Bank, Atlanta, which will serve as the Distribution
Agent for the Spinoff, for distribution of one share of ChoicePoint Common
Stock for each ten shares of Equifax Common Stock held by Equifax record
shareholders on , 1997 (except for certain grantor trusts of
Equifax, which will not receive ChoicePoint Common Stock pursuant to the
Spinoff); and
(iii) The Distribution Agent will aggregate all fractional shares of
ChoicePoint Common Stock that would otherwise be distributed to Equifax
shareholders and sell them in an orderly manner in the open market at
prevailing market prices after regular trading in ChoicePoint Common Stock
has started. After completion of such sales, the Distribution Agent will
distribute a pro rata portion of the proceeds from such sales, based upon
the average gross selling price of all such ChoicePoint Common Stock, to
each Equifax shareholder who would otherwise have received a fractional
share of ChoicePoint Common Stock.
The Spinoff will result in 100% of the outstanding shares of ChoicePoint
Common Stock being distributed to Equifax shareholders. Equifax shareholders do
not have to pay for shares of ChoicePoint Common Stock they will receive in the
Spinoff, nor do they have to surrender or exchange shares of Equifax Common
Stock in order to receive shares of ChoicePoint Common Stock. The number of
shares of Equifax Common Stock held by Equifax shareholders will not change as a
result of the Spinoff. The Distribution Agent will, as applicable, credit the
brokerage accounts of, or mail ChoicePoint Common Stock certificates to, Equifax
shareholders in 1997. See "THE SPINOFF."
A public trading market for ChoicePoint Common Stock does not currently
exist, although a "when-issued" trading market is expected to develop on or
about the Record Date. Shares of ChoicePoint Common Stock have been approved for
listing, subject to official notice of issuance, on the New York Stock Exchange
("NYSE") under the symbol CPS.
SEE "RISK FACTORS" BEGINNING ON PAGE 9 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED IN CONNECTION WITH THE DISTRIBUTION OF CHOICEPOINT
COMMON STOCK.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
---------------------
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES.
The date of this Prospectus is , 1997.
<PAGE> 3
SUMMARY
This summary highlights selected information from this document but does
not contain all details concerning ChoicePoint or the Spinoff, including
information that may be important to you. To better understand ChoicePoint and
the Spinoff, you should carefully read this entire document. References in this
document to "we," "our," "ChoicePoint" or "the Company" mean ChoicePoint Inc.,
its subsidiaries and divisions after the Spinoff and the Insurance Services
Group of Equifax prior to the Spinoff. References in this document to "Equifax"
mean Equifax Inc. and its subsidiaries and divisions.
INTRODUCTION
The Spinoff is the result of a process in which the Equifax Board of
Directors and the executives and employees of Equifax and ChoicePoint undertook
to separate Equifax and ChoicePoint into two publicly traded companies. The
separation was prompted by recognition that the strategies of the two companies
have become increasingly different in response to new market trends and
opportunities. The separation of the two companies will create direct investment
opportunities in a leading provider of information to the financial services
industry and a leading provider of information to the insurance industry. The
Equifax Board of Directors believes that this action is in the best long-term
interests of Equifax shareholders and should further the growth of and increase
the business opportunities available to both Equifax and ChoicePoint.
To provide you with a better understanding of ChoicePoint and the Spinoff,
we have highlighted information in this Summary that provides a general
description of the business and management of ChoicePoint and explains the
Spinoff process. We also have included cross-references in the Summary to other
portions of the document to help you find more detailed information about
ChoicePoint and the Spinoff. We encourage you to read the entire document for a
better understanding of both ChoicePoint and the Spinoff.
CHOICEPOINT INC.
STRATEGIC FOCUS
ChoicePoint believes that new and increasingly complex risks are
confronting organizations and individuals, and that timely and quality
information is a critical component of effective risk assessment and management.
ChoicePoint's mission is to assist its clients in using information to enhance
their risk management decision processes. The Company intends to be the leading
provider of risk management and fraud prevention information and related
technology solutions to a broad range of industries worldwide.
BUSINESS
Based on market share, ChoicePoint is a leading provider of risk management
and fraud prevention information and related technology solutions to the
insurance industry. The Company also offers risk management and fraud prevention
solutions to organizations in other industries. ChoicePoint currently has three
core capabilities: (i) data warehousing; (ii) data access and analytics; and
(iii) related professional services. These capabilities currently are delivered
by the Company through three service groups: Property and Casualty Insurance
Services; Life and Health Insurance Services; and Business and Government
Services.
ChoicePoint provides most major domestic insurance companies with automated
and traditional underwriting and claim information services to assist those
companies in assessing the insurability of individuals and property and the
validity of insurance claims. The Company provides background investigations,
performs paramedical exams, furnishes access to motor vehicle reports, maintains
a database of claims histories and provides claims verification and
investigative services to both the property and casualty and the life and health
insurance markets. ChoicePoint also offers pre-employment background
investigations, pre-employment and regulatory compliance drug testing services
and public record information to other corporate and government organizations,
as well as the aforementioned insurance markets. See "BUSINESS."
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GROWTH STRATEGIES
Management of ChoicePoint intends to pursue the following growth
strategies: (i) diversify ChoicePoint's customer base across non-insurance
markets; (ii) acquire or establish strategic alliances with organizations that
provide new data, markets and technology; (iii) enhance technological
capabilities by improving current systems and developing new solutions; and (iv)
increase awareness of risk and fraud issues to expand new market and business
opportunities. In furtherance of its strategy of growth by acquisition, the
Company has entered into an agreement in principle to purchase all of the
capital stock of Kroll Holdings, Inc., a privately-held investigative services
firm. The acquisition is expected to be completed shortly after the date of the
Spinoff. See "BUSINESS -- Strategic Acquisitions."
FINANCIAL HIGHLIGHTS
For the quarter ended March 31, 1997, ChoicePoint generated operating
revenue, net of motor vehicle records registry revenue, of approximately $102.9
million, an increase of 22%, from approximately $84.1 million for the quarter
ended March 31, 1996. ChoicePoint generated operating income of approximately
$12.2 million in the quarter ended March 31, 1997, an increase of 36%, from
approximately $9.0 million for the quarter ended March 31, 1996. For the fiscal
year ended December 31, 1996, ChoicePoint generated operating revenue, net of
motor vehicle records registry revenue, of approximately $366.5 million, an
increase of 37% from approximately $268.1 million in 1993, when the Company's
current senior management was installed. ChoicePoint generated operating income
of approximately $47.6 million in 1996, fourteen times the Company's 1993
operating income of approximately $3.4 million. ChoicePoint generated net income
of approximately $23.3 million in 1996, nineteen times the Company's 1993 net
income of approximately $1.2 million. See "SELECTED FINANCIAL DATA."
ChoicePoint's principal executive offices are located at 1000 Alderman
Drive, Alpharetta, Georgia 30005, and its telephone number is (770) 752-6000.
QUESTIONS AND ANSWERS ABOUT THE SPINOFF
HOW WILL I BENEFIT FROM THE DIRECT INVESTMENT IN TWO MARKET LEADERS. The
SPINOFF? Spinoff will give you a direct investment in two
market leaders.
Based on market share, Equifax is a leading
provider of information services and products to
the financial services industry, including consumer
credit information and transaction processing.
Based on market share, ChoicePoint is a leading
provider of risk management and fraud prevention
information and related technology solutions to the
insurance industry, providing underwriting and
claims management information to property and
casualty and life and health insurance companies.
The Company also offers public record information
services, employee risk management services, and
specialized investigation services to businesses
and governments to help them manage risk. See
"BUSINESS."
FOCUSED PERFORMANCE. Equifax believes that the
Spinoff will enhance the ability of the financial
markets to evaluate the individual operations of
Equifax and ChoicePoint. This should enable the
markets to measure the performance of the business
of each company against companies in the same or
similar businesses. Management of each company will
be able to focus its efforts and financial
resources on its core business. Each company will
be able to pursue growth opportunities
independently. Moreover, separate incentive
compensation plans for key employees of Equifax and
ChoicePoint will provide incentives that are
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more directly related to the performance of the
individual companies. See "THE
SPINOFF -- Background and Reasons for the Spinoff."
DIRECT ACCESS TO CAPITAL. The Spinoff will give
each company direct access to capital markets and
the ability to issue stock to finance expansion and
growth opportunities.
WHY IS EQUIFAX SEPARATING DIVERGENT STRATEGIC DIRECTIONS. The Equifax Board
INTO TWO PUBLICLY TRADED of Directors determined that the Spinoff is in the
COMPANIES AT THIS TIME? best interests of Equifax shareholders because the
strategies of Equifax and ChoicePoint have become
increasingly different. Equifax is focusing on
providing decision support information to the
financial services industry, including the
provision of consumer and commercial credit
information, payment services and analytics and
consulting services. ChoicePoint is focusing on
expanding the scope of its risk management and
fraud prevention information and related technology
solutions to a broader range of industries and
markets worldwide. The Equifax Board of Directors
believes that the public perceives that credit
reporting services offered by Equifax and the more
privacy sensitive services offered by ChoicePoint
should not be available from a single provider.
Moreover, as independent organizations, each
company will be able to more effectively pursue
growth opportunities. See "THE SPINOFF --
Background and Reasons for the Spinoff."
WHAT DO I HAVE TO DO TO NOTHING. No proxy or vote is necessary for the
PARTICIPATE IN THE Spinoff. If you own Equifax Common Stock at the
SPINOFF? close of business on the Record Date of , 1997,
shares of ChoicePoint Common Stock will be credited
to your brokerage account or certificates
representing shares of ChoicePoint Common Stock
will be mailed to you in 1997. You do not need
to mail in Equifax Common Stock certificates to
receive ChoicePoint Common Stock certificates. You
will not receive new Equifax Common Stock
certificates as a result of the Spinoff, nor will
the Spinoff change the number of shares of Equifax
Common Stock that you own. See "THE
SPINOFF -- Manner of Effecting the Spinoff."
WHEN DOES CHOICEPOINT , 1997. At the Effective Time, which will
BECOME INDEPENDENT FOR be at 5:00 p.m. Atlanta time on , 1997, all of
ACCOUNTING PURPOSES? the stock, assets and liabilities of the Insurance
Services Group of Equifax will be transferred by
Equifax to its wholly-owned subsidiary,
ChoicePoint. The Spinoff will actually be complete,
however, when Equifax distributes all of the shares
of ChoicePoint Common Stock to its Record Date
shareholders on the Mail Date on or about ,
1997. Regardless of when shares of ChoicePoint
Common Stock are distributed, ChoicePoint and its
new public shareholders will be the sole
beneficiaries of the operation of the Insurance
Services Group after the Effective Time.
WHAT IS THE DISTRIBUTION ONE-FOR-TEN. You will receive one share of
RATIO? ChoicePoint Common Stock in the Spinoff for every
ten shares of Equifax Common Stock you own on the
Record Date. You will receive cash for any
fractional shares of ChoicePoint Common Stock. See
"THE SPINOFF -- Manner of Effecting the Spinoff"
and " -- No Issuance of Fractional Shares."
Example: If you own 105 shares of Equifax Common
Stock at the close of business on the Record Date,
you will receive ten shares of ChoicePoint Common
Stock in certificate form or credited to your
brokerage account and a check for the value of .5
shares of ChoicePoint
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Common Stock. You will continue to own 105 shares
of Equifax Common Stock.
WILL MY DIVIDENDS CHANGE? EQUIFAX CURRENTLY EXPECTS TO CONTINUE PAYING ITS
REGULAR QUARTERLY DIVIDEND OF $.0875 PER SHARE OF
EQUIFAX COMMON STOCK FOR THE FORESEEABLE
FUTURE. ChoicePoint does not anticipate paying any
cash dividends on its Common Stock in the near
future. The dividend policies of Equifax and
ChoicePoint are, however, subject to change. The
Boards of Directors of the respective companies are
responsible for deciding if a dividend will be paid
and the amount of any dividend. See "DIVIDEND
POLICY."
WILL CHOICEPOINT'S SHARES YES. ChoicePoint Common Stock will be listed on
BE LISTED ON A STOCK the New York Stock Exchange under the symbol CPS,
EXCHANGE? and regular trading will begin on or about the Mail
Date. Equifax Common Stock will continue to be
listed on the New York Stock Exchange under the
symbol EFX. See "THE SPINOFF -- Listing and Trading
of ChoicePoint Common Stock."
WILL SHARES TRADE ANY MOST LIKELY, DURING PART OF 1997. A regular
DIFFERENTLY AS A RESULT OF public market for ChoicePoint Common Stock will not
THE SPINOFF? exist prior to the Mail Date. We expect, however,
that "when-issued" trading for ChoicePoint Common
Stock will develop on or about the Record Date and
continue through the Mail Date.
When-issued trading means that shares can be traded
prior to the time certificates are actually
available or issued and reflects the assumed value
of a security after it has been issued (e.g., the
assumed value of ChoicePoint Common Stock after the
Spinoff). When-issued trading would occur to
develop an orderly market and trading price for
ChoicePoint Common Stock after the Spinoff.
If when-issued trading develops, you may buy and
sell shares of ChoicePoint Common Stock before the
Mail Date. None of these trades, however, would
settle until after the Mail Date, after regular
trading in ChoicePoint has begun. If the Spinoff
does not occur, all when-issued trading would be
null and void. If and as long as when-issued
trading in ChoicePoint Common Stock occurs, the
symbol on the New York Stock Exchange will be
CPSwi.
We expect that Equifax Common Stock will continue
to trade on a regular basis through the Mail Date,
but any shares of Equifax Common Stock sold between
the Record Date and the Mail Date will have a due
bill attached representing ChoicePoint Common Stock
to be distributed in the Spinoff. In addition,
Equifax Common Stock may also trade on a
when-issued basis, reflecting an assumed
post-Spinoff value for Equifax Common Stock. If and
as long as when-issued trading in Equifax Common
Stock occurs, the symbol on the New York Stock
Exchange will be EFXwi. See "THE SPINOFF -- Listing
and Trading of ChoicePoint Common Stock."
WILL THE SPINOFF AFFECT THE PROBABLY. After the Spinoff, the trading price of
TRADING PRICE OF MY Equifax Common Stock will likely be lower than the
EQUIFAX COMMON STOCK? trading price immediately prior to the Spinoff.
Moreover, until the market has evaluated the
operations of Equifax without ChoicePoint's
operations, the trading price of Equifax Common
Stock may fluctuate significantly. The combined
trading prices of Equifax Common Stock and
ChoicePoint Common Stock after the Spinoff may not
equal the trading price of Equifax Common Stock
prior to the Spinoff. See "THE SPINOFF -- Listing
and Trading of ChoicePoint Common Stock."
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WHAT WILL HAPPEN TO SHARES THEY WILL BE TREATED THE SAME AS ALL OTHER SHARES
OWNED THROUGH THE EQUIFAX OF EQUIFAX COMMON STOCK. You will continue to own
DIRECT SHARE PURCHASE the Equifax Common Stock that you owned through the
PROGRAM? Equifax Direct Share Purchase Program prior to the
Spinoff. In the Spinoff, you will receive one share
of ChoicePoint Common Stock in certificate form or
credited to your brokerage account for every ten
shares of Equifax Common Stock that you owned on
the Record Date through the Equifax Direct Share
Purchase Program. You will receive a check for the
cash equivalent of any fractional shares.
WHAT WILL HAPPEN TO GENERALLY, CHOICEPOINT EMPLOYEES WILL RETAIN THEIR
EXISTING OPTIONS TO VESTED OPTIONS TO PURCHASE EQUIFAX COMMON STOCK.
PURCHASE EQUIFAX COMMON Although they will forfeit unvested Equifax stock
STOCK? options, they will receive options to purchase
ChoicePoint Common Stock, adjusted to preserve the
value of the forfeited Equifax stock options.
Certain senior officers of ChoicePoint may choose
either to retain vested Equifax stock options or
have their vested Equifax stock options replaced
with ChoicePoint stock options. See
"MANAGEMENT -- Compensation and Benefit Plans."
IS THE SPINOFF TAXABLE FOR GENERALLY, NO. The Internal Revenue Service has
FEDERAL INCOME TAX ruled that the Spinoff will be tax-free to Equifax
PURPOSES? shareholders for United States federal income tax
purposes, except for cash received for fractional
shares. You may have to pay tax on a limited amount
of capital gain arising from any cash received in
lieu of a fractional share of ChoicePoint Common
Stock. Soon after the Spinoff, Equifax will send a
letter to its Record Date shareholders that will
explain how they should allocate tax basis between
Equifax Common Stock and ChoicePoint Common Stock.
See "THE SPINOFF -- Federal Income Tax Consequences
of the Spinoff."
WHAT ARE THE RISKS INVOLVED ChoicePoint will be subject to risks related to,
INOWNING CHOICEPOINT among other things, no operating history as an
COMMON STOCK? independent company, dependence on data sources,
dependence on key personnel, inability to find
suitable acquisition targets or to complete
acquisitions, and absence of Equifax funding. See
"RISK FACTORS."
WILL EQUIFAX AND EQUIFAX WILL NO LONGER OWN ANY CHOICEPOINT COMMON
CHOICEPOINT BE RELATED IN STOCK AFTER THE SPINOFF. Equifax and ChoicePoint
ANY WAY AFTER THE SPINOFF? will, however, have two common Board members,
including a common Chairman of the Board for a
transitional period. Equifax and ChoicePoint have
also entered into various agreements to define
their continuing business relationships. See
"ARRANGEMENTS BETWEEN EQUIFAX AND CHOICEPOINT
RELATING TO THE SPINOFF."
WHAT WE HAVE ALREADY ACCOMPLISHED TO PREPARE FOR THE SPINOFF
SELECTED BOARD MEMBERS Equifax, as the current sole shareholder of
ChoicePoint, has identified eight persons to serve
on the ChoicePoint Board of Directors and will
elect such persons at or prior to the Mail Date. C.
B. Rogers, Jr. will serve as the Chairman of the
Board of Directors of both Equifax and ChoicePoint
for a transitional period after the Spinoff.
Although five of the new ChoicePoint Board members,
including Mr. Rogers, are currently members of the
Equifax Board, three of those persons will resign
from the Equifax Board prior to the Spinoff.
ChoicePoint and Equifax will therefore have two
common Board members, including a common Chairman
of the Board, for a transitional period. See
"MANAGEMENT -- Directors and Executive Officers."
APPOINTED SENIOR MANAGEMENT The Equifax Board of Directors has appointed Derek
V. Smith as President and Chief Executive Officer
of ChoicePoint. Mr. Smith has been employed by
Equifax for more than 16 years, most recently as
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Executive Vice President and Group Executive for
the Insurance Services Group. Mr. Smith and his
management team are credited with the turnaround of
the Insurance Services Group of Equifax, which will
be ChoicePoint after the Spinoff. Mr. Smith's prior
Equifax positions include Senior Vice President and
Chief Financial Officer, as well as Corporate Vice
President and Treasurer. Mr. Smith is supported by
a senior management group with extensive executive
experience, including officers and senior
executives previously responsible for Equifax's
Insurance Services Group. See "MANAGEMENT."
ARRANGED $250 MILLION ChoicePoint has obtained a commitment for a $250
CREDIT FACILITY million five-year unsecured revolving Credit
Facility. Concurrently with the Spinoff,
ChoicePoint expects to use borrowings under the
Credit Facility to repay the net intercompany debt
owed to Equifax at the Effective Time, to repay
$29.0 million of Equifax debt to be assumed by
ChoicePoint, and to purchase approximately $6.5
million of ChoicePoint Common Stock in the open
market after the Mail Date for two grantor trusts.
Intercompany debt as of March 31, 1997 was
approximately $92.6 million. The amount of
intercompany debt owed at the Effective Time will
be reduced by a $13.0 million obligation assumed by
ChoicePoint with respect to certain ChoicePoint
employees. Based upon the relative financial
conditions of Equifax and ChoicePoint and
discussions with and the advice of its investment
advisors, Credit Suisse First Boston Corporation
and The Robinson-Humphrey Company, Inc., Equifax
determined that $29.0 million would be an
appropriate allocation to ChoicePoint of the
existing Equifax debt. The cash distribution will
be used by Equifax to repay Equifax debt. See
"CAPITALIZATION."
REQUESTED INTERNAL REVENUE Equifax has received a tax ruling from the Internal
SERVICE TAX RULING Revenue Service concerning the federal income tax
consequences of the Spinoff to Equifax and its
shareholders. See "THE SPINOFF -- Federal Income
Tax Consequences of the Spinoff."
KEY TERMS AND DEFINITIONS OF THE SPINOFF TRANSACTION
NO SHAREHOLDER ACTION No action is required by Equifax shareholders to
REQUIRED receive ChoicePoint Common Stock in the Spinoff.
You do not need to surrender Equifax Common Stock
to receive ChoicePoint Common Stock in the Spinoff.
The number of shares of Equifax Common Stock you
own will not change as a result of the Spinoff.
RECORD DATE You must own Equifax Common Stock as of the close
of business on the Record Date of ,
1997 to receive ChoicePoint Common Stock in the
Spinoff.
EFFECTIVE TIME The transfer by Equifax of the stock, assets and
liabilities of its Insurance Services Group to
ChoicePoint, its wholly-owned subsidiary, will be
effective as of 5:00 p.m. Atlanta time on
, 1997.
MAIL DATE The Distribution Agent will credit the brokerage
accounts of Equifax shareholders or mail
ChoicePoint Common Stock certificates to Equifax
shareholders on or about , 1997.
DISTRIBUTION RATIO You will receive one share of ChoicePoint Common
Stock for every ten shares of Equifax Common Stock
you own as of the close of business on the Record
Date.
SHARES TO BE DISTRIBUTED All of the ChoicePoint Common Stock owned by
Equifax will be distributed in the Spinoff. As a
result of the Spinoff, approximately
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<PAGE> 9
14,700,000 shares of ChoicePoint Common Stock are
expected to be outstanding.
NO FRACTIONAL SHARES WILL Fractional shares of ChoicePoint Common Stock will
BE ISSUED not be distributed. Instead, they will be
aggregated and sold in the public market by the
Distribution Agent, and the aggregate cash proceeds
will be distributed to shareholders otherwise
entitled to fractional shares. If you would
otherwise be entitled to a fractional share, you
will receive a check or a credit to your brokerage
account in an amount equal to the value of the
fractional share as soon as practicable after the
Spinoff. See "THE SPINOFF -- No Issuance of
Fractional Shares."
SPINOFF The Spinoff is the series of transactions whereby
Equifax will transfer the stock, assets and
liabilities of its Insurance Services Group to its
wholly-owned subsidiary ChoicePoint and distribute
all the shares of ChoicePoint Common Stock to its
Record Date shareholders.
WHO CAN ASSIST IN ANSWERING YOUR QUESTIONS?
Before the Spinoff, shareholders of Equifax with inquiries relating to the
Spinoff may contact:
Equifax Investor Relations Department
P.O. Box 4081
Atlanta, GA 30302
Telephone: (404)885-8304
After the Spinoff, shareholders of ChoicePoint with inquiries relating to
their investment in ChoicePoint Common Stock may contact:
ChoicePoint Investor Relations Department
1000 Alderman Drive
Alpharetta, GA 30005
Telephone: (770) 752-4050
The Distribution Agent responsible for the distribution of ChoicePoint
Common Stock in the Spinoff and acting as transfer agent and registrar for
ChoicePoint Common Stock after the Spinoff is:
SunTrust Bank, Atlanta
P.O. Box 4625
Atlanta, Georgia 30302
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SUMMARY CONSOLIDATED FINANCIAL DATA
The following summary consolidated financial data of ChoicePoint highlights
selected historical and pro forma financial data and should be read in
conjunction with the Consolidated Financial Statements and the unaudited pro
forma consolidated financial data included elsewhere in this document. The
historical financial information presents information for ChoicePoint for the
periods in which it operated as the Insurance Services Group of Equifax. The pro
forma data has been derived from the unaudited pro forma consolidated statement
of income for the quarter ended March 31, 1997 and the year ended December 31,
1996 and the unaudited pro forma consolidated balance sheet as of March 31,
1997, which present the consolidated results of operations and financial
position of ChoicePoint assuming that the transactions contemplated by both the
Spinoff and ChoicePoint's acquisition of a 70% interest in CDB Infotek had been
completed as of the beginning of 1996 and as of March 31, 1997, respectively.
Neither the historical financial information nor the pro forma financial data
presented below is necessarily indicative of the results of operations or
financial position that ChoicePoint would have reported if it had operated as an
independent company during the periods presented, nor is it indicative of
ChoicePoint's future performance as an independent company.
For management's explanation of the following results of operations and
financial condition, see "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS."
<TABLE>
<CAPTION>
QUARTER ENDED MARCH 31, YEAR ENDED DECEMBER 31,
------------------------------- ------------------------------------------
PRO FORMA PRO FORMA
1997 1997 1996 1996 1996 1995 1994
--------- -------- -------- --------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
Operating revenue(1)............... $102,852 $102,852 $ 84,140 $389,262 $366,481 $328,990 $284,566
Operating income................... 12,198 12,198 9,006 44,636 47,611 31,928 16,577
Income before income taxes......... 10,256 10,579 7,431 37,228 41,014 26,098 13,939
Net income......................... 5,347 5,541 4,218 21,042 23,280 14,865 6,612
Pro forma earnings per share....... $ .36 $ 1.41
Pro forma common and common
equivalent shares outstanding.... 14,828 14,957
Total assets....................... $318,914 $318,914 $208,268 $301,824 $301,824 $200,779 $193,820
Long-term debt, less current
maturities....................... 115,965 872 -- 107,544 1,051 -- 5
Total shareholder's equity......... 95,374 210,467 112,344 89,834 196,327 104,641 98,028
EBITDA(2).......................... $ 18,525 $ 18,525 $ 12,425 $ 69,389 $ 66,265 $ 45,249 $ 26,610
Cash flows provided by operating
activities....................... 1,375 1,893 36,779 20,240 8,225
Cash flows used by investing
activities....................... (7,185) (2,863) (91,786) (12,008) (18,076)
Cash flows provided (used) by
financial activities............. 8,585 3,568 56,066 (9,887) 12,386
</TABLE>
- ---------------
(1) Historically, motor vehicle records registry revenue, the fee charged by
states for motor vehicle records which is passed on by ChoicePoint to its
customers, has been reflected in Equifax's consolidated statements of income
as operating revenue and costs of services. ChoicePoint has elected to
exclude these customer reimbursed fees from revenue and reduce cost of
services by a corresponding amount. This change in accounting presentation
does not impact operating income.
(2) EBITDA represents income before income taxes, plus depreciation and
amortization and interest expense. EBITDA is presented not as a substitute
for income from operations, net income or cash flows from operating
activities. The Company has included EBITDA data (which is not a measure of
financial performance under generally accepted accounting principles)
because such data is used by certain investors to analyze and compare
companies on the basis of operating performance, leverage and liquidity, and
to determine a company's ability to service debt. See the Consolidated
Financial Statements and the unaudited pro forma consolidated financial
information and the notes thereto included elsewhere in this document.
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<PAGE> 11
RISK FACTORS
NO OPERATING HISTORY AS AN INDEPENDENT COMPANY
Although ChoicePoint will be comprised of the business operations that
comprised the Insurance Services Group of Equifax, ChoicePoint does not have an
operating history as an independent public company. The Company has historically
relied on Equifax for financial, administrative and managerial support relevant
to operating a public company. Except for certain services for which ChoicePoint
will pay Equifax to provide during the 18-month transition period following the
Effective Time, Equifax will have no obligation to support the Company after the
Effective Time. Following the Spinoff, ChoicePoint will maintain its own lines
of credit and banking relationships and perform its own administrative
functions. There can be no assurance that the Company will be able to develop
successfully the financial, administrative and managerial structure necessary to
operate as an independent public company, or that the development of such
structure will not require a significant amount of management's time and other
resources. See "-- Absence of Equifax Funding," "ARRANGEMENTS BETWEEN EQUIFAX
AND CHOICEPOINT RELATING TO THE SPINOFF -- Transition Support Agreement" and the
Consolidated Financial Statements and notes thereto.
DEPENDENCE ON DATA SOURCES
ChoicePoint relies on data from outside sources to create and maintain its
proprietary and non-proprietary databases, including data received from
customers and various government and public record services. There can be no
assurance that ChoicePoint's data sources, particularly data from customers,
will continue to be available in the future. In addition, ChoicePoint's data
sources generally are not subject to exclusive agreements with ChoicePoint, such
that data included in ChoicePoint's data products may also be included in data
products of ChoicePoint's competitors. Although ChoicePoint has no reason to
believe that access to current data sources will become restricted, loss of such
access or the availability of data in the future due to increased government
regulation or otherwise could have a material adverse effect on ChoicePoint's
business, financial condition and results of operations. See
"BUSINESS -- Sources of Supply."
DEPENDENCE ON KEY PERSONNEL
ChoicePoint's success depends to a significant extent on the continued
service of certain key management personnel, including Derek V. Smith,
ChoicePoint's President and Chief Executive Officer. The loss or interruption of
Mr. Smith's services would likely have a material adverse effect on ChoicePoint.
The loss or interruption of the services of other senior management personnel or
the inability to attract and retain other qualified management, sales, marketing
and technical employees could also have an adverse effect on the Company.
Although ChoicePoint does not currently have employment agreements with any of
its executive officers, the Company intends to enter into employment agreements
with all such executive officers prior to the Spinoff. Such employment
agreements will, where appropriate, include non-compete agreements. In addition,
ChoicePoint will use a variety of incentive plans to attract and retain key
management personnel, including a stock incentive plan, annual bonus plans, a
deferred compensation plan and a 401(k) Profit Sharing Plan. See
"MANAGEMENT -- Compensation and Benefit Plans" and "-- Employment and
Compensation Agreements."
INABILITY TO IDENTIFY OR COMPLETE ACQUISITIONS
ChoicePoint intends to pursue acquisitions and form strategic alliances
that will enable ChoicePoint to acquire complementary skills and capabilities,
offer new products, expand its customer base and obtain other competitive
advantages. There can be no assurance, however, that ChoicePoint will be able to
successfully identify suitable acquisition candidates or strategic partners,
obtain financing on satisfactory terms, complete acquisitions or strategic
alliances, integrate acquired operations into its existing operations or expand
into new markets. Once integrated, acquisitions may not achieve anticipated
levels of revenue, profitability or productivity or otherwise perform as
expected. Acquisitions also involve special risks, including risks associated
with unanticipated problems, liabilities and contingencies, diversion of
management resources and possible adverse effects on earnings resulting from
increased goodwill amortization, increased interest costs,
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<PAGE> 12
the issuance of additional securities and difficulties related to the
integration of the acquired business. Except for the pending acquisition of
Kroll Holdings, Inc., ChoicePoint is unable to predict whether or when any
prospective acquisition candidate will become available or the likelihood that
any acquisition will be completed. The risks associated with acquisitions could
have a material adverse effect on the Company's business, financial condition
and results of operations. See "BUSINESS -- Strategic Acquisitions" and
"-- Growth Strategies."
ABSENCE OF EQUIFAX FUNDING
ChoicePoint has historically used cash flow from operations and capital
from Equifax to fund its operations and acquisitions. After the Spinoff, Equifax
will no longer provide capital to finance ChoicePoint's operations or for any
other purpose. In order to meet financing needs after the Spinoff, ChoicePoint
will enter into an agreement for a five-year, unsecured revolving Credit
Facility with a group of banks.
GOVERNMENT REGULATION
Certain data and services provided by ChoicePoint are subject to regulation
by the Federal Trade Commission under the Federal Fair Credit Reporting Act, and
to a lesser extent, by various other federal, state and local regulatory
authorities. Compliance with existing federal, state and local laws and
regulations has not had a material adverse effect on the results of operations
or financial condition of ChoicePoint. Nonetheless, federal, state and local
laws and regulations in the United States designed to protect the public from
the misuse of personal information in the marketplace and adverse publicity or
potential litigation concerning the commercial use of such information may
increasingly affect the operations of ChoicePoint, which could result in
substantial regulatory compliance, litigation expense and a loss of revenue.
Certain state and local licensing regulations provide that the licenses
held by Equifax may not be transferred. Accordingly, the Company likely will be
required to apply for relicensing in certain states. Although ChoicePoint
believes that such licenses will be issued to the Company, no assurance can be
given that this will actually occur.
NO PRIOR MARKET FOR CHOICEPOINT COMMON STOCK; FLUCTUATIONS IN PRICE OF
CHOICEPOINT COMMON STOCK
There is currently no public trading market for ChoicePoint Common Stock.
Although ChoicePoint Common Stock has been approved for listing, subject to
official notice of issuance, on the New York Stock Exchange, the Company cannot
predict, estimate or give assurances about the trading prices for ChoicePoint
Common Stock after the Spinoff. Until the ChoicePoint Common Stock is fully
distributed and an orderly trading market develops, the trading prices for
ChoicePoint Common Stock may fluctuate significantly. Prices for ChoicePoint
Common Stock will be determined in the public trading markets and may be
influenced by many factors, including the depth and liquidity of the market for
ChoicePoint Common Stock, investor perceptions of ChoicePoint and its business,
ChoicePoint's results of operations, and general economic and market conditions.
In addition, financial markets, including the New York Stock Exchange, have
experienced extreme price and volume fluctuations that have affected the market
price of many information technology industry stocks and that, at times, could
be viewed as unrelated or disproportionate to the operating performance of such
companies. Such fluctuations have also affected the stock prices of many new
public issues. Such volatility and other factors could materially affect the
market price of ChoicePoint Common Stock.
The ChoicePoint Common Stock distributed to Equifax shareholders in the
Spinoff will be freely transferable under the Securities Act of 1933, as amended
(the "Securities Act"), except for shares of ChoicePoint Common Stock received
by persons who may be deemed affiliates of ChoicePoint. The sale of a
substantial number of shares of ChoicePoint Common Stock after the Spinoff, or
the perception that such sales could occur, could adversely affect the market
price of ChoicePoint Common Stock. See "THE SPINOFF -- Listing and Trading of
ChoicePoint Common Stock."
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<PAGE> 13
FLUCTUATIONS IN PRICE OF EQUIFAX COMMON STOCK
After the Spinoff, Equifax Common Stock will continue to be listed and
traded on the New York Stock Exchange. As a result of the Spinoff, the trading
price of Equifax Common Stock will likely be lower than the trading price of
Equifax Common Stock immediately prior to the Spinoff. The combined trading
prices of Equifax Common Stock and ChoicePoint Common Stock after the Spinoff
may be less than, equal to or greater than the trading prices of Equifax Common
Stock immediately prior to the Spinoff. Until the market has fully analyzed the
operations of Equifax without the operations of ChoicePoint, the prices at which
Equifax Common Stock trades may fluctuate significantly. See "THE
SPINOFF -- Listing and Trading of ChoicePoint Common Stock."
CURRENT DEPENDENCE ON INSURANCE CUSTOMERS
Approximately 86% of ChoicePoint's revenue in 1996 was derived from its
property and casualty and life and health insurance services to domestic
insurance companies and independent agents who sell insurance products.
ChoicePoint has no long-term agreements with those customers. Although
ChoicePoint's management believes that the quality of its products and services
and its leading position in those markets should permit it to maintain its
relationship with its customers or dominant market position, there can be no
assurance that ChoicePoint will be able to sustain its current revenue levels.
In addition, the insurance industry has experienced significant consolidation in
recent years, which could result in the loss of one or more significant
insurance company customers in the future if the surviving entity in any such
consolidation purchases similar products from a ChoicePoint competitor. One of
ChoicePoint's strategies is to offer a variety of new products to a diverse set
of industries in order to decrease its dependence on the domestic insurance
industry. See "BUSINESS -- Growth Strategies" and "-- Products and Customers."
COMPETITION
The Company operates in a number of geographic and product and service
markets, which are highly competitive. In the property and casualty insurance
services market, ChoicePoint's most significant competitors include Dateq
Information Network, Inc. a subsidiary of Trans Union Corporation, and Policy
Management Systems Corporation. In the life and health insurance services
market, ChoicePoint's most significant competitors include Hooper Holmes, Inc.
and Examination Management Services, Inc. with respect to manual information
collection services and LabOne, Inc. with respect to insurance laboratory
services. In the business and government services market, ChoicePoint's most
significant competitors include Information America, Inc. and Lexis-Nexis with
respect to public records information, various security companies and clinical
labs with respect to pre-employment screening services and various small
companies with respect to background checks or drug screening services. In each
of its markets, the Company competes on the basis of responsiveness to customer
needs and the quality and range of products and services offered. Although the
Company believes that it offers a broader range of products and services in more
geographic markets than its competitors, competition in particular geographic or
product or service markets may have a material adverse effect on the financial
condition or results of operations of the Company. In addition, certain of
ChoicePoint's competitors have greater financial resources than the Company. See
"BUSINESS -- Competition."
CERTAIN ANTI-TAKEOVER PROVISIONS
The ChoicePoint Articles of Incorporation and Bylaws contain provisions
that may make more difficult or expensive or that may discourage a tender offer,
change in control or takeover attempt that is opposed by the ChoicePoint Board
of Directors. Certain provisions of the Articles of Incorporation and Bylaws,
among other things: (i) classify the ChoicePoint Board of Directors into three
classes, each of which serve for staggered three-year terms; (ii) provide that a
director of ChoicePoint may only be removed for "cause" (as defined by the
Georgia Business Corporation Code); (iii) provide that only the Board of
Directors, the Chairman or Vice Chairman of the Board of Directors, certain
officers of ChoicePoint or the holders of all of the outstanding ChoicePoint
voting stock may call special meetings of shareholders; (iv) provide that
shareholders must comply with certain advance notice procedures to nominate
candidates for election to the
11
<PAGE> 14
ChoicePoint Board of Directors or to place shareholder proposals on the agenda
for consideration at annual or special meetings of shareholders; and (v) provide
that ChoicePoint shareholders may amend or repeal the provisions of the
ChoicePoint Articles of Incorporation and Bylaws relating to the staggered terms
of directors only by a vote of the holders of two-thirds of the ChoicePoint
voting stock. See "DESCRIPTION OF CAPITAL STOCK -- Certain Anti-Takeover
Provisions of Georgia Law and the ChoicePoint Articles and Bylaws."
Additionally, the Georgia Business Corporation Code generally imposes
certain restrictions on mergers and other business combinations between
ChoicePoint and any holder of 10% or more of the ChoicePoint Common Stock if the
holder's acquisition of such position was not approved in advance by the
ChoicePoint Board of Directors. In addition, the ChoicePoint 1997 Omnibus Stock
Incentive Plan contains provisions permitting the acceleration or modification
of benefits upon a Change in Control (as defined in the plans) of ChoicePoint,
and ChoicePoint intends to enter into employment agreements with certain of its
key employees, which may contain severance provisions that would provide certain
benefits to such employees in the event of a change in control of ChoicePoint
and the subsequent termination of such employees from the Company. The
ChoicePoint Board of Directors anticipates adopting a Shareholder Rights Plan
after the Spinoff. If adopted, the Shareholder Rights Plan would cause
substantial dilution to a person or group that attempts to acquire ChoicePoint
on terms not approved in advance by the ChoicePoint Board of Directors. See
"MANAGEMENT -- Employment and Compensation Agreements" and "DESCRIPTION OF
CAPITAL STOCK -- Shareholder Rights Plan."
Certain provisions of ChoicePoint's contractual arrangements with Equifax
may also have anti-takeover effects. ChoicePoint has agreed to indemnify Equifax
for any tax liability resulting from the sale of ChoicePoint to a third party
after it is spun off from Equifax. This provision may discourage or preclude an
acquisition of ChoicePoint because it would make the acquisition more expensive.
POTENTIAL TAXATION
Equifax and ChoicePoint intend for the Spinoff generally to be tax-free for
United States federal income tax purposes, and the Internal Revenue Service (the
"IRS") has issued a ruling confirming such tax-free status. It is possible,
however, that the Spinoff could be rendered taxable as a result of subsequent
actions or events, or as a result of a determination that Equifax or ChoicePoint
failed to disclose properly to the IRS all material facts related to the
Spinoff. Also, proposed legislation currently pending in Congress would, if
enacted, cause ChoicePoint to incur substantial federal income tax liability if
Equifax were to be acquired by a third party within two years after it spins off
ChoicePoint and ChoicePoint failed to prove that the subsequent acquisition of
Equifax was not "related" to the Spinoff. Although ChoicePoint would be
indemnified by Equifax for such taxes under the Tax Sharing and Indemnification
Agreement, no assurance can be made that Equifax will be able to pay its
indemnification obligation. Similarly, if ChoicePoint is acquired by a third
party within two years after the Spinoff, Equifax may incur a substantial tax
liability for which ChoicePoint would be obligated to indemnify Equifax under
the Tax Sharing and Indemnification Agreement. This indemnification obligation
would have a material adverse effect on the results of operations and financial
position of ChoicePoint. See "THE SPINOFF -- Federal Income Tax Consequences of
the Spinoff."
Under the Tax Sharing and Indemnification Agreement between ChoicePoint and
Equifax, each of Equifax and ChoicePoint have represented to the other that (i)
it has not knowingly misstated or omitted a material fact in connection with
Equifax obtaining the IRS ruling, (ii) it is not currently engaged in any
negotiations involving a transaction that, if consummated, would constitute such
a "related" acquisition, and (iii) it will neither engage in negotiations nor
consummate a business combination that constitutes such a "related" acquisition.
The Company has agreed to indemnify Equifax against any tax or other liability
that Equifax may incur if the transfer of the capital stock of certain
subsidiaries and certain other assets of Equifax to ChoicePoint (and the
assumption by ChoicePoint of liabilities related thereto) or the Spinoff is not
tax-free solely because of a breach by ChoicePoint of a representation made in
connection with the IRS ruling request or contained in the Tax Sharing and
Indemnification Agreement. The Company has also agreed to indemnify Equifax for
a portion of such liabilities if the transaction is not tax-free and ChoicePoint
is partially responsible or neither party is responsible for such result. See
"ARRANGEMENTS BETWEEN EQUIFAX AND CHOICEPOINT RELATING TO THE SPINOFF -- Tax
Sharing and Indemnification Agreement."
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<PAGE> 15
THE SPINOFF
BACKGROUND AND REASONS FOR THE SPINOFF
The Equifax Board of Directors has determined that the Spinoff is in the
best interest of the shareholders of Equifax because the strategic directions of
the business operations of Equifax and ChoicePoint have diverged. Equifax and
ChoicePoint have different operating objectives and growth opportunities.
Equifax continues to focus primarily on consumer and commercial credit
information services and payment services related to card processing and check
warranty. ChoicePoint's operations have historically consisted of database
information and inspection and investigative services supplied primarily to the
insurance industry. ChoicePoint believes it can enhance future growth and
profitability by offering a broader range of risk assessment services, fraud
management information and technology solutions to clients outside of the
insurance industry. Although Equifax believes that significant growth
opportunities exist for ChoicePoint's products and services, it anticipates that
marketing and promotion of these services will be necessary. The public
perceives, however, that credit reporting services and the more privacy
sensitive services offered by ChoicePoint should not be available from a single
provider.
The Spinoff will also enable management of each company to focus its
efforts and financial resources on the core business of each company. The
Spinoff will enable each company to develop employee compensation and benefit
programs more appropriate to their individual operations, including stock-based
and other incentive programs that reward employees of each company based on the
success of the individual company's operations. The Spinoff will enable each
company to access capital markets independently without the capital resource
allocation issues present within the combined Equifax and provide a stock-based
acquisition currency particular to each of the companies. The Spinoff will also
enable investors to make investment decisions based on the operations of the
individual companies.
MANNER OF EFFECTING THE SPINOFF
The general terms and conditions relating to the Spinoff are set forth in a
Distribution Agreement between Equifax and ChoicePoint. See "ARRANGEMENTS
BETWEEN EQUIFAX AND CHOICEPOINT RELATING TO THE SPINOFF -- Distribution
Agreement."
Equifax will effect the Spinoff by delivering all of the outstanding shares
of ChoicePoint Common Stock to SunTrust Bank, Atlanta, which will serve as the
Distribution Agent for the Spinoff, for distribution to the holders of record of
Equifax Common Stock as of the close of business on the Record Date of ,
1997. The distribution of ChoicePoint Common Stock will be made on the basis of
a distribution ratio of one share of ChoicePoint Common Stock for every ten
shares of Equifax Common Stock held as of the close of business on the Record
Date. The actual total number of shares of ChoicePoint Common Stock to be
distributed will depend on the number of shares of Equifax Common Stock
outstanding as of the Record Date. The Distribution Agent will credit the
brokerage accounts of Equifax shareholders or will mail ChoicePoint Common Stock
certificates to Equifax shareholders on or about , 1997. See "DESCRIPTION
OF CAPITAL STOCK -- ChoicePoint Common Stock."
NO ISSUANCE OF FRACTIONAL SHARES
No certificates representing fractional interests in shares of ChoicePoint
Common Stock will be issued to Equifax shareholders as part of the Spinoff. The
Distribution Agent, acting as agent for Equifax shareholders otherwise entitled
to receive certificates representing fractional shares of ChoicePoint Common
Stock, will aggregate and sell all fractional shares in the open market at then
prevailing market prices and distribute the proceeds to shareholders who are
entitled to payment. The Distribution Agent will sell the fractional shares
after the Spinoff, when regular trading in ChoicePoint Common Stock has started.
RESULTS OF THE SPINOFF
The transfer and assignment by Equifax of the stock, assets and liabilities
of its Insurance Services Group to its wholly-owned subsidiary ChoicePoint will
be effective at the Effective Time, and as long as the Spinoff
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<PAGE> 16
occurs, the business of the Insurance Services Group will be deemed to be
operated for the sole benefit of ChoicePoint and its new public shareholders
after the Effective Time. After the Spinoff, ChoicePoint will be a separate
public company. The number and identity of shareholders of ChoicePoint
immediately after the Spinoff generally will be the same as the number and
identity of shareholders of Equifax prior to the Spinoff. As a result of the
Spinoff, ChoicePoint expects to have approximately 8,800 holders of record of
ChoicePoint Common Stock and approximately 14,700,000 shares of ChoicePoint
Common Stock outstanding, based on the number of record shareholders and issued
and outstanding shares of Equifax Common Stock as of the close of business on
June 20, 1997 and the distribution ratio. The actual number of shares of
ChoicePoint Common Stock to be distributed will be determined as of the Record
Date. The Spinoff will not affect the number of outstanding shares of Equifax
Common Stock or the rights of Equifax shareholders.
FEDERAL INCOME TAX CONSEQUENCES OF THE SPINOFF
The following is a general description of the material federal income tax
consequences associated with the Spinoff. It is not intended to address all tax
consequences of the Spinoff and does not purport to address the tax consequences
applicable to every Equifax shareholder. Accordingly, shareholders are strongly
encouraged to consult their individual tax advisors as to particular tax
consequences of the Spinoff, including but not limited to international, state,
local and other tax consequences that may be applicable to them.
Equifax has received a ruling from the IRS to the effect, among other
things, that for federal income tax purposes:
(i) the Spinoff will qualify as a tax-free distribution under Section
355 of the Internal Revenue Code of 1986, as amended (the "IRC");
(ii) except for any cash received in lieu of fractional shares, Equifax
shareholders will not recognize any gain or loss as a result of their
receipt of ChoicePoint Common Stock in the Spinoff; to the extent an
Equifax shareholder receives cash in lieu of a fractional share, such
shareholder will recognize gain or loss equal to the difference between the
shareholder's basis in the fractional share and the amount received for
such fractional share;
(iii) in connection with the Spinoff, a shareholder's tax basis in
Equifax Common Stock will be apportioned between Equifax Common Stock and
ChoicePoint Common Stock received in the Spinoff in accordance with
relative fair market values of such shares at the time of the Spinoff. For
example, if Equifax Common Stock trades at $94 per share at the time of the
Spinoff and ChoicePoint Common Stock trades at $60 per share at the time of
the Spinoff, a shareholder with 100 shares of Equifax Common Stock would
allocate his tax basis 94% to the Equifax Common Stock (100 shares
multiplied by $94 per share divided by $10,000 aggregate value of Equifax
and ChoicePoint Common Stock) and 6% to the ChoicePoint Common Stock that
he receives in the Spinoff (10 shares multiplied by $60 per share divided
by $10,000 aggregate value of Equifax and ChoicePoint Common Stock); and
(iv) the holding period of the ChoicePoint Common Stock received in the
Spinoff will include the holding period of the Equifax Common Stock with
respect to which the ChoicePoint Common Stock will be distributed, provided
the Equifax Common Stock is held as a capital asset on the date of the
Spinoff.
The ruling from the IRS was issued based upon the accuracy of factual
representations made by Equifax and ChoicePoint in connection with the Spinoff.
Soon after the Spinoff, Equifax will send a letter to Equifax shareholders
receiving ChoicePoint Common Stock in the Spinoff explaining how such
shareholders should allocate tax basis between Equifax Common Stock held
immediately before the Spinoff and the ChoicePoint Common Stock received in the
Spinoff.
Under proposed legislation, if it is enacted in its current form,
ChoicePoint would incur substantial federal income tax liability if Equifax is
acquired by a third party after Equifax spins off ChoicePoint and ChoicePoint
failed to prove that the subsequent acquisition of Equifax was not "related" to
the Spinoff. Similarly, Equifax would incur a substantial federal income tax
liability if ChoicePoint is acquired by a third
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<PAGE> 17
party after the Spinoff and Equifax failed to prove that the subsequent
acquisition of ChoicePoint was not "related" to the Spinoff.
LISTING AND TRADING OF CHOICEPOINT COMMON STOCK
A public market for ChoicePoint Common Stock does not currently exist. The
ChoicePoint Common Stock has, however, been approved for listing, subject to
official notice of issuance, on the New York Stock Exchange. A when-issued
trading market for ChoicePoint Common Stock is expected to develop on or about
the Record Date. The term "when-issued" means that shares can be traded prior to
the time certificates are actually available or issued. Prices at which the
ChoicePoint Common Stock may trade on a when-issued basis or after the time
certificates are actually available or issued cannot be predicted. Until the
ChoicePoint Common Stock is fully distributed, an orderly trading market
develops, and the market has fully analyzed the operations of ChoicePoint, the
prices at which trading in such stock occurs may fluctuate significantly. The
prices at which ChoicePoint Common Stock trades will be determined by the market
and may be influenced by many factors, including, among others, the depth and
liquidity of the market for ChoicePoint Common Stock, investor perception of
ChoicePoint and its business, ChoicePoint's financial results, ChoicePoint's
dividend policy, sales of substantial amounts of ChoicePoint Common Stock (or
the perception that such sales could occur) and general economic and market
conditions. During the period when ChoicePoint Common Stock is subject to
when-issued trading, its symbol on the New York Stock Exchange will be CPSwi.
Even though when-issued trading may develop, none of these trades would settle
prior to the Mail Date, and if the Spinoff does not occur, all when-issued
trading will be null and void.
Equifax Common Stock will continue to trade on a regular basis and may also
trade on a when-issued basis, reflecting an assumed post-Spinoff value for
Equifax Common Stock. When-issued trading in Equifax Common Stock, if available,
could last from on or about the Record Date through the Mail Date. If when-
issued trading in Equifax Common Stock is available, Equifax shareholders may
trade their existing Equifax Common Stock prior to the Mail Date in either the
when-issued market or in the regular market for Equifax Common Stock. If a
shareholder trades in the when-issued market, he will have no obligation to
transfer to a purchaser of Equifax Common Stock the ChoicePoint Common Stock
such shareholder receives in the Spinoff. If a shareholder trades in the regular
market, the shares of Equifax Common Stock traded will be accompanied by due
bills representing the ChoicePoint Common Stock to be distributed in the
Spinoff.
If a when-issued market for Equifax Common Stock develops, an additional
listing for Equifax Common Stock, identifiable by the trading symbol EFXwi, will
appear on the New York Stock Exchange. Differences may exist between the
combined value of when-issued ChoicePoint Common Stock plus when-issued Equifax
Common Stock and the price of Equifax Common Stock during this period. Until the
market has fully analyzed the operations of Equifax without the operations of
ChoicePoint, the prices at which Equifax Common Stock trades may fluctuate
significantly.
ChoicePoint and Equifax understand that if when-issued trading in Equifax
Common Stock is not available, the New York Stock Exchange will require that
shares of Equifax Common Stock that are sold or purchased during the period from
the Record Date through the Mail Date be accompanied by due bills representing
the ChoicePoint Common Stock distributable with respect to such shares, and that
during such period neither the Equifax Common Stock nor the due bills may be
purchased or sold separately.
ChoicePoint Common Stock distributed to Equifax shareholders in the Spinoff
will be freely transferable under the Securities Act, except for securities
received by persons who may be deemed to be affiliates of ChoicePoint under
Securities Act rules. Persons who may be deemed to be affiliates of ChoicePoint
after the Spinoff generally include individuals or entities that control, are
controlled by, or are under common control with ChoicePoint, such as directors
and executive officers of ChoicePoint. Persons who are affiliates of ChoicePoint
generally will be permitted to sell their shares of ChoicePoint Common Stock
received in the Spinoff only pursuant to Rule 144 under the Securities Act,
except that the holding period requirement of Rule 144 will not apply. As a
result, ChoicePoint Common Stock received by ChoicePoint affiliates pursuant to
the Spinoff may be sold if certain provisions of Rule 144 under the Securities
Act are complied with (e.g., affiliates of ChoicePoint may not sell their shares
of ChoicePoint Common Stock for a period of 90 days after
15
<PAGE> 18
the date of this Prospectus, the amount sold within a three-month period does
not exceed the greater of one percent of the outstanding ChoicePoint Common
Stock or the average weekly trading volume for ChoicePoint Common Stock during
the preceding four week period, and the securities are sold in "broker's
transactions" and in compliance with certain notice provisions under Rule 144).
The Transfer Agent, Distribution Agent and Registrar for ChoicePoint Common
Stock will be SunTrust Bank, Atlanta.
REASONS FOR FURNISHING THIS DOCUMENT
This document is being furnished solely to provide information to Equifax
shareholders who will receive ChoicePoint Common Stock in the Spinoff. It is
not, and is not to be construed as, an inducement or encouragement to buy or
sell any securities of either Equifax or ChoicePoint. Equifax and ChoicePoint
believe that the information contained in this document is accurate as of the
date on the cover. Changes may occur after such date, and neither Equifax nor
ChoicePoint will update the information except as is required in the normal
course of their respective public disclosure practices.
16
<PAGE> 19
CAPITALIZATION
The following table sets forth the capitalization of ChoicePoint as of
March 31, 1997 (actual) and after giving pro forma effect to the Spinoff and
related transactions. ChoicePoint is expected to use borrowings under the Credit
Facility to repay in full the amount of net intercompany debt owed by
ChoicePoint to Equifax at the Effective Time, to repay $29.0 million of Equifax
debt to be assumed by ChoicePoint, and to purchase approximately $6.5 million of
ChoicePoint Common Stock in the open market after the Mail Date for two grantor
trusts. Based upon the relative financial conditions of Equifax and ChoicePoint
and discussions with and the advice of its investment advisors, Credit Suisse
First Boston Corporation and The Robinson-Humphrey Company, Inc., Equifax
determined that $29.0 million would be an appropriate allocation to ChoicePoint
of the existing Equifax debt. Intercompany debt as of March 31, 1997 was
approximately $92.6 million, and this amount may increase or decrease before
repayment based upon normal interim operating cash receipts and payments and
acquisition funding requirements. In addition, the intercompany debt will be
reduced by a $13.0 million obligation assumed by ChoicePoint with respect to
certain ChoicePoint employees. See Note 8 to the Consolidated Financial
Statements.
<TABLE>
<CAPTION>
MARCH 31, 1997
-----------------------
ACTUAL PRO FORMA(1)
-------- ------------
(UNAUDITED)
(IN THOUSANDS,
EXCEPT SHARE DATA)
<S> <C> <C>
Long-term debt, excluding current portion(2)................ $ 872 $115,965
Shareholder's Equity:
Equifax equity investment(3).............................. 210,555 --
Preferred Stock (pro forma), $.01 par value, 10,000,000
shares authorized, no shares issued and outstanding.... -- --
Common Stock (pro forma), $.10 par value, 100,000,000
shares authorized, 14,718,000 shares issued and
14,393,000 shares outstanding(4)(5).................... -- 1,472
Paid-in capital........................................... -- 100,490
Foreign currency translation adjustments.................. (88) (88)
Stock held by employee benefit trusts(6).................. -- (6,500)
-------- --------
Total Shareholder's Equity........................ 210,467 95,374
-------- --------
Total Capitalization.............................. $211,339 $211,339
======== ========
</TABLE>
- ---------------
(1) See "PRO FORMA CONSOLIDATED FINANCIAL DATA" and notes thereto.
(2) See Notes 2(b) and 2(i) to "PRO FORMA CONSOLIDATED FINANCIAL DATA."
(3) See Note 7 to the Consolidated Financial Statements.
(4) See Notes 2(h) and 2(i) to "PRO FORMA CONSOLIDATED FINANCIAL DATA."
(5) The number of shares issued after giving effect to the Spinoff was
determined based upon the number of shares of Equifax Common Stock
outstanding at March 31, 1997 and reflects the assumed distribution of one
share of ChoicePoint Common Stock ($.10 par value) for every ten shares of
Equifax Common Stock ($1.25 par value) (which does not include two grantor
trusts established by Equifax). In addition, the number of shares issued
includes 200,000 restricted shares anticipated to be issued and outstanding
as a result of the Spinoff. The number of shares outstanding has been
reduced by the 325,000 shares anticipated to be purchased by ChoicePoint in
the open market after the Mail Date for two new grantor trusts. See Note 7
to the Consolidated Financial Statements. The actual number of shares of
ChoicePoint Common Stock distributed will depend on the number of shares of
Equifax Common Stock outstanding on the Record Date.
(6) Represents the 325,000 shares discussed in footnote (5) above with an
assumed market value of $20 per share.
DIVIDEND POLICY
ChoicePoint does not anticipate paying any cash dividends in the
foreseeable future. The Company currently intends to retain future earnings to
finance operations and the expansion of its business. Any future determination
to pay cash dividends will be at the discretion of the Company's Board of
Directors and will be dependent upon the Company's financial condition,
operating results, capital requirements and such other factors as the Company's
Board of Directors deems relevant.
17
<PAGE> 20
PRO FORMA CONSOLIDATED FINANCIAL DATA
The following unaudited pro forma consolidated statement of income for the
quarter ended March 31, 1997 and the year ended December 31, 1996 and the
unaudited pro forma consolidated balance sheet as of March 31, 1997 present the
consolidated results of operations and consolidated financial position of
ChoicePoint assuming that the transactions contemplated by both the Spinoff and
ChoicePoint's acquisition of the 70% interest in CDB Infotek had been completed
as of the beginning of 1996 and as of March 31, 1997, respectively. In the
opinion of management, they include all material adjustments necessary to
reflect, on a pro forma basis, the impact of material transactions contemplated
by the Spinoff on ChoicePoint's historical financial information. The
adjustments are described in Note 2 of the Notes to the Pro Forma Consolidated
Financial Data (Unaudited) and are set forth in the "Pro Forma Adjustments"
columns. No pro forma adjustments have been made to selling, general and
administrative expenses because expenses reflected in the historical statements
include an allocation of corporate administrative expenses which ChoicePoint
believes, based upon current circumstances, will not differ materially from
actual selling, general and administrative expenses to be incurred following the
Spinoff.
The unaudited Pro Forma Consolidated Financial Data of ChoicePoint should
be read in conjunction with the Consolidated Financial Statements included
elsewhere in this document. The information presented below is not necessarily
indicative of the financial condition or results of operations that ChoicePoint
would have reported if it had operated as an independent company.
CHOICEPOINT INC.
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
QUARTER ENDED MARCH 31, 1997
----------------------------------------
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- ---------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNT)
<S> <C> <C> <C>
Operating revenue........................................ $102,852 $ -- $102,852
Costs and expenses:
Costs of services...................................... 68,359 -- 68,359
Selling, general and administrative.................... 22,295 -- 22,295
-------- ------- --------
Total costs and expenses....................... 90,654 -- 90,654
Operating income......................................... 12,198 -- 12,198
Interest expense......................................... 1,619 (1,547)(2a) 1,942
1,870(2b)
-------- ------- --------
Income before income taxes............................... 10,579 (323) 10,256
Provision (benefit) for income taxes..................... 5,038 (129)(2c) 4,909
-------- ------- --------
Net income..................................... $ 5,541 $ (194) $ 5,347
======== ======= ========
Pro forma net income per common and common equivalent
share.................................................. $ .36(3)
========
</TABLE>
See Notes to the Pro Forma Consolidated Financial Data.
18
<PAGE> 21
CHOICEPOINT INC.
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
--------------------------------------------------------
PRO FORMA ADJUSTMENTS
---------------------------
HISTORICAL CDB INFOTEK(2D) SPINOFF PRO FORMA
---------- --------------- ------- ---------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNT)
<S> <C> <C> <C> <C>
Operating revenue......................... $366,481 $22,781 $ -- $389,262
Costs and expenses:
Costs of services....................... 252,118 12,466 -- 264,584
Selling, general and administrative..... 66,752 7,915 -- 74,667
Non-recurring expenses.................. -- 5,375(2e) -- 5,375
-------- ------- ------- --------
Total costs and expenses........ 318,870 25,756 -- 344,626
Operating income.......................... 47,611 (2,975) -- 44,636
Interest expense.......................... 6,597 1,041 (7,152)(2f) 7,408
6,922(2b)
-------- ------- ------- --------
Income before income taxes................ 41,014 (4,016) 230 37,228
Provision (benefit) for income taxes...... 17,734 (1,640) 92(2c) 16,186
-------- ------- ------- --------
Net income...................... $ 23,280 $(2,376) $ 138 $ 21,042
======== ======= ======= ========
Pro forma net income per common and common
equivalent share........................ $ 1.41(3)
========
</TABLE>
See Notes to the Pro Forma Consolidated Financial Data.
19
<PAGE> 22
CHOICEPOINT INC.
PRO FORMA CONSOLIDATED BALANCE SHEET
(UNAUDITED)
<TABLE>
<CAPTION>
MARCH 31, 1997
------------------------------------------
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents........................... $ 4,471 $ -- $ 4,471
Accounts receivable, net............................ 88,635 -- 88,635
Deferred income tax assets.......................... 4,753 -- 4,753
Other current assets................................ 10,894 -- 10,894
-------- --------- --------
Total current assets........................ 108,753 -- 108,753
Property and Equipment, net........................... 38,635 -- 38,635
Goodwill, net......................................... 121,309 -- 121,309
Deferred Income Tax Assets............................ 16,157 -- 16,157
Other................................................. 34,060 -- 34,060
-------- --------- --------
Total Assets................................ $318,914 $ -- $318,914
======== ========= ========
LIABILITIES AND SHAREHOLDER'S EQUITY
Current Liabilities:
Current maturities of long-term debt................ $ 864 $ -- $ 864
Accounts payable.................................... 13,537 -- 13,537
Accrued salaries and bonuses........................ 9,791 -- 9,791
Other current liabilities........................... 24,074 -- 24,074
-------- --------- --------
Total current liabilities................... 48,266 -- 48,266
Long-Term Debt, Less Current Maturities............... 872 108,593(2b) 115,965
6,500(2i)
Postretirement Benefit Obligations.................... 55,650 -- 55,650
Other Long-Term Liabilities........................... 3,659 -- 3,659
-------- --------- --------
Total Liabilities........................... 108,447 115,093 223,540
Shareholder's Equity:
Equifax equity investment........................... 210,555 (108,593)(2b) --
(13,000)(2g)
(88,962)(2h)
Preferred stock..................................... -- -- --
Common stock........................................ -- 1,472(2h) 1,472
Paid-in capital..................................... -- 13,000(2g) 100,490
87,490(2h)
Foreign currency translation adjustments.............. (88) -- (88)
Stock held by employee benefit trusts................. -- (6,500)(2i) (6,500)
-------- --------- --------
Total Shareholder's Equity.................. 210,467 (115,093) 95,374
-------- --------- --------
Total Liabilities and Shareholder's
Equity.................................... $318,914 $ -- $318,914
======== ========= ========
</TABLE>
See Notes to the Pro Forma Consolidated Financial Data.
20
<PAGE> 23
CHOICEPOINT INC.
NOTES TO THE PRO FORMA CONSOLIDATED FINANCIAL DATA
(UNAUDITED)
NOTE 1. The accompanying unaudited Pro Forma Consolidated Financial Data
reflects all adjustments that, in the opinion of management, are necessary to
present fairly the pro forma financial position and pro forma results of
operations. This information should be read in conjunction with the Consolidated
Financial Statements and notes thereto included elsewhere in this document.
NOTE 2. Following are the pro forma adjustments to the accompanying pro forma
consolidated financial data:
(a) To eliminate the first quarter 1997 corporate interest expense
charged to ChoicePoint.
(b) To record the expected repayment of the net intercompany debt owed
to Equifax, repayment of $29.0 million of Equifax debt to be assumed by
ChoicePoint and the associated increase in debt and interest expense from
the borrowings incurred to fund the payments. The interest expense also
includes interest on borrowings to fund the $6.5 million of ChoicePoint
Common Stock anticipated to be purchased in the open market after the Mail
Date for two grantor trusts discussed in (i) below. An interest rate of
6.5% is assumed on the borrowings. The intercompany debt owed to Equifax
(which was approximately $92.6 million as of March 31, 1997 and $84.0
million as of December 31, 1996) will be reduced by a $13.0 million
obligation assumed by ChoicePoint discussed in (g) below. Borrowings under
the Credit Facility will have a variable interest rate, and a 1% change in
the annual interest rate would impact pro forma interest expense by
$288,000 for the quarter ended March 31, 1997 and $1.1 million for the year
ended December 31, 1996. See "CAPITALIZATION" and "MANAGEMENT'S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS -- Financial
Condition and Liquidity."
(c) To record the estimated income tax provision (benefit) related to
the net pro forma interest expense adjustments.
(d) Represents the January 1, 1996 to August 30, 1996 operating results
for ChoicePoint's August 30, 1996 acquisition of 70% of the capital stock
of CDB Infotek. The acquisition was accounted for as a purchase. The pro
forma data also includes an additional $3.2 million in expense for
amortization of goodwill and other intangible assets from January 1, 1996
to August 30, 1996 resulting from this transaction. The amortization
expense is included in costs of services. See Note 3 to the Consolidated
Financial Statements.
(e) Represents a one-time charge for the vesting of all CDB Infotek
non-qualified stock options outstanding on August 30,1996 and other stock
option expense as a result of ChoicePoint's purchase of 70% of the capital
stock of CDB Infotek.
(f) To eliminate the 1996 corporate interest expense of $6.2 million
charged to ChoicePoint and to reverse $937,000 of CDB Infotek interest
expense related to third-party long-term debt that was repaid using funds
borrowed from Equifax.
(g) To record, in accordance with the Employee Benefits Agreement, an
assumed obligation of $13.0 million to contribute to a defined contribution
plan for certain ChoicePoint employees. The additional benefits are
intended to offset the adverse impact of transitioning out of a defined
benefit pension plan. The $13.0 million represents the present value of the
estimated future contributions. In exchange for this obligation, Equifax
will make a capital contribution to ChoicePoint in the amount of $13.0
million and ChoicePoint's intercompany liability to Equifax will be reduced
accordingly. See Note 8 to the Consolidated Financial Statements.
(h) To reflect the distribution of Equifax's 100% equity interest in
ChoicePoint to Equifax shareholders. See "CAPITALIZATION." This amount was
determined assuming a distribution ratio of one share of ChoicePoint Common
Stock ($.10 par value per share) for every ten shares of Equifax Common
Stock ($1.25 par value) (which does not include two grantor trusts
established by Equifax) reflected in Equifax's consolidated balance sheet
at March 31, 1997.
21
<PAGE> 24
CHOICEPOINT INC.
NOTES TO THE PRO FORMA CONSOLIDATED FINANCIAL DATA -- (CONTINUED)
(i) To record the anticipated purchase of 325,000 shares of ChoicePoint
Common Stock in the open market after the Mail Date for two grantor trusts.
The amount also assumes a market value of $20 per share of ChoicePoint
Common Stock. The assumed $20 per share market value is based on a range of
earnings multiples of comparable companies and ChoicePoint's pro forma
earnings as analyzed by Equifax's independent investment advisors, Credit
Suisse First Boston Corporation and The Robinson-Humphrey Company, Inc. See
Note 7 to the Consolidated Financial Statements.
NOTE 3. Net income per share information is based upon 14.8 million and 15.0
million common and common equivalent shares for the quarter ended March 31, 1997
and the fiscal year ended December 31, 1996, respectively. This amount was
determined assuming the distribution ratio of one share of ChoicePoint Common
Stock for every ten shares of Equifax Common Stock reflected in Equifax's March
31, 1997 and December 31, 1996 consolidated financial statements, and
subtracting the 325,000 shares of ChoicePoint Common Stock anticipated to be
purchased in the open market after the Mail Date for two grantor trusts, and
adding the estimated dilutive effect of ChoicePoint stock options and restricted
shares expected to be issued to replace Equifax stock options and restricted
shares held by ChoicePoint officers and employees. The number of shares subject
to stock options will depend upon the extent to which existing stock options to
purchase Equifax Common Stock are converted into options to purchase ChoicePoint
Common Stock. The number of ChoicePoint stock options granted in respect of
converted Equifax stock options and their exercise prices will be set to
maintain the excess of market value over the exercise price of the Equifax stock
options after taking into account such excess amount on the Mail Date and the
fair market value of ChoicePoint Common Stock the day after the Mail Date. The
number of common and common equivalent shares used to compute earnings per share
after the Spinoff will depend upon the number of shares of ChoicePoint Common
Stock and ChoicePoint stock options outstanding and the market price of
ChoicePoint Common Stock.
22
<PAGE> 25
SELECTED FINANCIAL DATA
The following table summarizes certain selected consolidated financial data
of ChoicePoint, which has been derived from the Consolidated Financial
Statements of ChoicePoint for the quarters ended March 31, 1997 and 1996 and for
each of the five years ended December 31, 1996. The historical information may
not be indicative of ChoicePoint's future performance as an independent company.
The information set forth below should be read in conjunction with "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" and
the Consolidated Financial Statements and notes thereto included elsewhere in
this document. Per share data has not been presented since the companies that
comprise ChoicePoint were majority-owned subsidiaries of Equifax or one of its
affiliates and will be recapitalized as part of the Spinoff.
<TABLE>
<CAPTION>
QUARTER ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
------------------- ----------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
-------- -------- -------- -------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Operating revenue(1)..... $102,852 $ 84,140 $366,481 $328,990 $284,566 $268,114 $275,449
Costs and expenses(1).... 90,654 75,134 318,870 297,062 267,989 264,738 273,929
-------- -------- -------- -------- -------- -------- --------
Operating income......... 12,198 9,006 47,611 31,928 16,577 3,376 1,520
Interest expense......... 1,619 1,575 6,597 5,830 2,638 2,181 998
-------- -------- -------- -------- -------- -------- --------
Income before income
taxes.................. 10,579 7,431 41,014 26,098 13,939 1,195 522
Provision (benefit) for
income taxes........... 5,038 3,213 17,734 11,233 7,327 (44) 389
-------- -------- -------- -------- -------- -------- --------
Net income............... $ 5,541 $ 4,218 $ 23,280 $ 14,865 $ 6,612 $ 1,239 $ 133
======== ======== ======== ======== ======== ======== ========
Total assets............. $318,914 $208,268 $301,824 $200,779 $193,820 $106,938 $108,685
Long-term debt, less
current maturities..... $ 872 $ -- $ 1,051 $ -- $ 5 $ -- $ --
Total shareholder's
equity................. $210,467 $112,344 $196,327 $104,641 $ 98,028 $ 13,961 $ 17,053
</TABLE>
- ---------------
(1) Historically, motor vehicle records registry revenue, the fee charged by
states for motor vehicle records which is passed on by ChoicePoint to its
customers, has been reflected in Equifax's consolidated statements of income
as operating revenue and cost of services. ChoicePoint has elected to
exclude these customer reimbursed fees from revenue and reduce cost of
services by a corresponding amount. This change in accounting presentation
does not affect operating income.
23
<PAGE> 26
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion is based upon and should be read in conjunction
with "PRO FORMA CONSOLIDATED FINANCIAL INFORMATION," "SELECTED FINANCIAL DATA"
and the Consolidated Financial Statements and the notes thereto included
elsewhere in this document.
INTRODUCTION
ChoicePoint is a leading provider of risk management and fraud prevention
information and related technology solutions to the insurance industry. The
Company also offers risk management and fraud prevention solutions to
organizations in other industries. ChoicePoint is organized into three service
groups: Property and Casualty Insurance Services, Life and Health Insurance
Services and Business and Government Services. The Company offers the following
products through these groups:
<TABLE>
<CAPTION>
SERVICE GROUP PRODUCTS
- ------------- --------
<S> <C>
Property and Casualty Insurance
Services............................... Automated underwriting and claims
information for home and auto insurers,
commercial inspections, workers
compensation audits of commercial
properties, and customized application
rating and issuance software development
Life and Health Insurance Services....... Underwriting and claims information for
life and health insurers, including
medical records collection, paramedical
services, laboratory services, and
investigative services
Business and Government Services......... Pre-employment background searches, drug
screenings, public record searches,
people locator services, and UCC searches
and filings
</TABLE>
RESULTS OF OPERATIONS
Revenue and operating income for the quarters ended March 31, 1997 and 1996
and the years ended December 31, 1996, 1995, and 1994 were as follows:
<TABLE>
<CAPTION>
QUARTER ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
------------------ --------------------------------
1997 1996 1996 1995 1994
-------- ------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Operating revenue(1).............. $102,852 $84,140 $366,481 $328,990 $284,566
Costs and expenses(1)............. 90,654 75,134 318,870 297,062(2) 267,989
-------- ------- -------- -------- --------
Operating income.................. $ 12,198 $ 9,006 $ 47,611 $ 31,928 $ 16,577
======== ======= ======== ======== ========
</TABLE>
- ---------------
(1) Historically, motor vehicle records registry revenue, the fee charged by
states for motor vehicle records which is passed on by ChoicePoint to its
customers, has been reflected in Equifax's consolidated statements of income
as operating revenue and costs of services. ChoicePoint has elected to
exclude these customer reimbursed fees from revenue and reduce cost of
services by a corresponding amount. This change in accounting presentation
does not impact operating income.
(2) Includes a $9,150,000 restructuring charge discussed below.
Historical earnings per share are not presented because the companies that
comprise ChoicePoint were majority-owned subsidiaries of Equifax or one of its
affiliates and will be recapitalized as part of the Spinoff.
24
<PAGE> 27
Quarter Ended March 31, 1997 Compared to Quarter Ended March 31, 1996
Consolidated revenue increased $18.8 million, or 22.4%, from $84.1 million
in the first quarter of 1996 to $102.9 million in the first quarter of 1997. The
increase was primarily attributable to sales volume growth in all three service
groups, as well as the second quarter 1996 acquisition of Professional Test
Administrators, Inc. ("PTA") and the third quarter 1996 acquisition of a 70%
interest in CDB Infotek. These acquisitions accounted for $8.9 million, or
47.3%, of the increase in consolidated revenue. Since these acquisitions were
accounted for as purchases, their results of operations were included in the
consolidated statements of income from the dates of acquisition. Revenue from
Property and Casualty Insurance Services grew $5.8 million, or 15.3%, from $37.8
million in the first quarter of 1996 to $43.6 million in the first quarter of
1997, primarily due to sales growth in automated underwriting product lines,
offset by declines in claims information and commercial inspection revenue. The
decline in claims information was due to competition while the decline in
commercial inspection revenue was primarily attributable to the reorganization
of the commercial inspection group in 1996. Revenue from Life and Health
Insurance Services increased $2.0 million, or 5.4%, from $37.0 million in the
first quarter of 1996 to $39.0 million in the first quarter of 1997. This
increase was primarily the result of growth in laboratory services revenue,
partially offset by a relative decline in investigative services, because of a
non-recurring customer project recorded in the first quarter of 1996. Revenue
from Business and Government Services increased $11.0 million, or 118.3%, from
$9.3 million in the first quarter of 1996 to $20.3 million in the first quarter
of 1997. Revenue from pre-employment reports increased $1.3 million, or 11.8% of
the increase in Business and Government Services revenue, with the remaining
increase coming primarily from the PTA and CDB Infotek acquisitions.
Operating income increased $3.2 million, or 35.6%, from $9.0 million in the
first quarter of 1996 to $12.2 million in the first quarter of 1997. Operating
margins increased from 10.7% in the first quarter of 1996 to 11.9% in the first
quarter of 1997, primarily as a result of the strong revenue performance in
automated underwriting and lab services and the improved operating efficiencies
in the paramedical services group, partially offset by the dilutive effect of
the CDB Infotek acquisition.
Year Ended December 31, 1996 Compared to Year Ended December 31, 1995
Consolidated revenue increased $37.5 million, or 11.4%, from $329.0 million
in 1995 to $366.5 million in 1996. The increase was primarily attributable to
sales volume growth in all three service groups, as well as the second quarter
1996 acquisition of PTA and the third quarter 1996 acquisition of a 70% interest
in CDB Infotek. These acquisitions accounted for $11.5 million or 30.7% of the
increase in consolidated revenue. Since these acquisitions were accounted for as
purchases, their results of operations were included in the consolidated
statements of income from the dates of acquisition. Revenue from Property and
Casualty Insurance Services grew $13.0 million, or 9.0%, from $143.7 million in
1995 to $156.7 million in 1996, primarily due to sales volume growth in
automated underwriting product lines, offset by a decline in commercial
inspection revenue due to a reorganization of the commercial inspection group in
1996. Revenue from Life and Health Insurance Services increased $8.3 million, or
5.6%, from $148.8 million in 1995 to $157.1 million in 1996. This increase was
primarily the result of growth in laboratory services revenue, partially offset
by a decline in claims revenue, primarily due to increased competition. Revenue
from Business and Government Services increased $16.2 million, or 44.4%, from
$36.5 million in 1995 to $52.7 million in 1996. Revenue from pre-employment
reports increased $4.1 million, or 25.3% of the increase in Business and
Government Services revenue, with the remaining increase coming from the PTA and
CDB Infotek acquisitions.
During the fourth quarter of 1995, ChoicePoint recorded a $9.2 million
restructuring charge to reduce staffing levels and fixed expenses. Excluding the
effects of the restructuring charge, operating income increased $6.5 million, or
15.8%, from $41.1 million in 1995 to $47.6 million in 1996. Operating margins
(excluding the effects of the restructuring charge) increased from 12.5% in 1995
to 13.0% in 1996, primarily as a result of the strong revenue performance in
automated underwriting and lab services, partially offset by a decline in
commercial inspection revenue and the slightly dilutive effect of the CDB
Infotek acquisition. Benefits from the 1995 restructuring and improved operating
efficiencies also contributed to the increase in operating income in 1996.
25
<PAGE> 28
Year Ended December 31, 1995 Compared to Year Ended December 31, 1994
Consolidated revenue increased $44.4 million, or 15.6%, from $284.6 million
in 1994 to $329.0 million in 1995. This increase was primarily attributable to
sales volume growth in the Property and Casualty Insurance Services and the
Business and Government Services Groups, as well as the full year impact of
acquisitions consummated in 1994. Programming Resources Company ("PRC") was
acquired in the second quarter of 1994 and Osborn Labs was acquired in the
fourth quarter of 1994. These acquisitions accounted for $26.0 million or 58.6%
of the increase in consolidated revenue. They were accounted for as purchases,
and their results of operations were included in the consolidated statements of
income from the dates of acquisition. Revenue from Property and Casualty
Insurance Services increased $15.4 million, or 12.0%, from $128.3 million in
1994 to $143.7 million in 1995. All product lines contributed to this growth,
with the largest contributor being the automated underwriting products sold in
the United States and the United Kingdom. The full year impact of the April 1994
PRC acquisition represented $2.9 million, or 18.8%, of the 1995 increase in
Property and Casualty Insurance Services revenue. Revenue from Life and Health
Insurance Services increased $21.5 million, or 16.9%, from $127.3 million in
1994 to $148.8 million in 1995. This increase resulted primarily from the
inclusion of Osborn Labs operating results for a full year in 1995, which
represented a $23.1 million increase over 1994. Revenue from Business and
Government Services increased $7.5 million, or 25.9%, from $29.0 million in 1994
to $36.5 million in 1995, primarily due to demand for pre-employment background
searches.
Excluding the effect of the fourth quarter 1995 restructuring charge of
$9.2 million, operating income increased $24.5 million, or 148%, from $16.6
million in 1994 to $41.1 million in 1995. Operating margins (excluding the
effects of the restructuring charge) increased from 5.8% in 1994 to 12.5% in
1995. This increase resulted from strong performance in the higher margin
automated underwriting product lines, cost controls in life and health insurance
services and commercial inspection lines, and the full year impact of
acquisitions consummated in 1994.
INCOME TAXES
Historically, the Company has been included in the consolidated federal
income tax return of Equifax. ChoicePoint's provision for income taxes in the
consolidated statements of income reflects federal and state income taxes
calculated on ChoicePoint's separate income, but recognizes the impact of
unitary tax regulations of certain states on ChoicePoint as a member of the
Equifax consolidated group. These unitary tax provisions, as reflected in the
Consolidated Financial Statements, resulted in overall effective tax rates of
47.6% in the first quarter of 1997, 43.2% in the first quarter of 1996, 43.2% in
1996, 43.0% in 1995, and 52.6% in 1994. If the provision for income taxes had
been calculated for ChoicePoint as a separate taxable entity for federal and
state income tax purposes, the Company estimates that its overall effective tax
rates would have been 43.8% in the first quarter of 1997, 40.8% in the first
quarter of 1996, 40.8% in 1996, 40.9% in 1995, and 45.8% in 1994.
The higher effective tax rate in 1994 is due primarily to foreign operating
losses that could not be offset against taxable income in 1994. These losses
were recovered in 1995 and 1996, resulting in reduced effective tax rates. The
increase in effective tax rates from 1996 to 1997 is primarily the result of
foreign income being subject to tax and increased goodwill amortization not
deductible for income tax purposes.
FINANCIAL CONDITION AND LIQUIDITY
Cash provided by operations decreased from $1.9 million in the first
quarter of 1996 to $1.4 million in the first quarter of 1997. This decrease was
primarily attributable to the increase in accounts receivable. During the first
quarter of 1997, ChoicePoint used $7.2 million for investing activities, which
included $6.1 million of property and equipment additions. Building and
leasehold improvements for the office facility in Alpharetta, Georgia and the
expansion of the existing Osborn Labs facility in Olathe, Kansas represented
approximately $1.7 million of the $6.1 million additions with the remainder due
primarily to system upgrades. Net cash provided by financing activities was $8.6
million in the first quarter of 1997, which is due to the increase in the
intercompany debt payable to Equifax.
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<PAGE> 29
Cash provided by operations increased from $20.2 million in 1995 to $36.8
million in 1996. This increase was primarily attributable to strong operating
performance in 1996. During 1996, ChoicePoint used $91.8 million in cash for
investing activities, which included $69.7 million for acquisitions and $18.1
million for property and equipment. Property and equipment additions increased
from $5.4 million in 1995 to $18.1 million in 1996, primarily due to
approximately $8.4 million of building and leasehold improvements for the office
facility in Alpharetta, Georgia and the expansion of the existing Osborn Labs
facility in Olathe, Kansas. Net cash provided by financing activities was $56.1
million in 1996, which is reflected in an increase in the intercompany debt due
to Equifax in connection with acquisitions completed in 1996.
The Company's short-term and long-term liquidity depends primarily upon its
level of net income, accounts receivable, accounts payable and accrued expenses.
In order to meet its working capital needs after the Spinoff, ChoicePoint will
arrange a five-year $250 million revolving Credit Facility with a group of
banks, which will become effective on the date of the Spinoff. The Credit
Facility will bear interest at variable rates and will be expandable to $300
million, subject to approval of the lenders. All obligations of ChoicePoint will
be guaranteed by all current and future subsidiaries. The Credit Facility will
be used by ChoicePoint to repay the net intercompany debt due to Equifax, to
repay $29.0 million of Equifax debt to be assumed by ChoicePoint, to purchase
approximately $6.5 million of ChoicePoint Common Stock in the open market after
the Mail Date for two grantor trusts, and to finance acquisitions and general
corporate cash requirements. For a more complete description of the terms of the
Credit Facility, see Note 5 to the Consolidated Financial Statements.
As of March 31, 1997, ChoicePoint had no significant third party debt.
Intercompany debt at March 31, 1997 was $92.6 million and is included in the
Equifax equity investment account on ChoicePoint's consolidated balance sheet.
This amount is subject to change based on ChoicePoint's operations between March
31, 1997 and the Effective Time and will be reduced by $13.0 million due to
ChoicePoint's obligation to contribute to a defined contribution plan for
certain ChoicePoint employees. Giving pro forma effect to the Spinoff and
related transactions, total long-term debt of ChoicePoint as of March 31, 1997
would have been $109.5 million.
ChoicePoint recently reached an agreement in principle to acquire all of
the capital stock of Kroll Holdings, Inc. ("Kroll"). The proposed acquisition is
subject to customary closing contingencies and is expected to be completed
shortly after the Spinoff. According to information provided by Kroll, it
generated approximately $70.0 million in revenue for the year ended December 31,
1996. The Company anticipates funding this acquisition with a combination of
ChoicePoint Common Stock and borrowings under its Credit Facility. See
"BUSINESS -- Strategic Acquisitions."
Interest expense in the consolidated statements of income includes interest
charged by Equifax based on the relationship of ChoicePoint net assets to
Equifax net assets, excluding corporate debt. The amounts charged were $1.5
million in the first quarter of 1997, $1.6 million in the first quarter of 1996,
$6.2 million in 1996, $5.4 million in 1995, and $2.5 million in 1994. Following
the Spinoff, ChoicePoint's results may be affected by an increase in interest
expense resulting from expected higher borrowing costs as an independent
company, repayment of the net intercompany debt, repayment of $29.0 of Equifax
debt to be assumed by ChoicePoint, and the purchase of $6.5 million of
ChoicePoint Common Stock in the open market after the Mail Date for two grantor
trusts. As a result, based upon anticipated average borrowings under the Credit
Facility during 1997 and interest rate protection arrangements that the Company
will enter into after the Spinoff, it is anticipated that the Company will incur
approximately $1.3 million in additional annual interest expense. See "PRO FORMA
CONSOLIDATED FINANCIAL DATA."
The Company anticipates capital expenditures will be approximately $27.2
million in 1997, which includes $7.3 million for the office facility in
Alpharetta, Georgia and the expansion of the Osborn Labs facility in Olathe,
Kansas. The remainder of the 1997 capital expenditures will be used primarily
for system rewrites and upgrades. In addition, ChoicePoint expects to expense
approximately $4.4 million in 1997 and $5.2 million in 1998 to modify computer
software for compliance with Year 2000 as required by FASB's Emerging Issues
Task Force Issue No. 96-14. Year 2000 expenses were $793,000 in 1996. The amount
and timing of these expenses may vary as current estimates are refined.
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<PAGE> 30
In connection with the acquisition of CDB Infotek, additional consideration
of up to $20.0 million may be paid based on its future operating performance. In
addition, the Company entered into an option agreement with the remaining
shareholders of CDB Infotek. The agreement grants the Company an option to
purchase the remaining 30% interest in CDB Infotek (the "Call Option") and an
option for the remaining shareholders to sell their 30% interest to the Company
(the "Put Option"). The options may be exercised at any time after December 31,
1999. The Put Option will expire on the later of June 30, 2000 or the date that
is 90 days after the final determination of the option price and the Call Option
has no expiration date. The exercise date may be accelerated upon the breach of
certain obligations. If certain 1999 operating results are met, then the option
price is determined by a formula not to exceed $53.0 million. If certain 1999
operating results are not met, and both parties cannot mutually agree on an
option price, then the option price is determined by an independent appraisal,
not to exceed $25.5 million. ChoicePoint expects to fund any additional amounts
paid in connection with the acquisition of CDB Infotek with cash flow from
operations or borrowings under the Credit Facility.
The Company believes that cash flows from operations, availability of funds
under the Credit Facility and other short and long-term debt financing (if any),
including access to capital markets, will be sufficient to satisfy its working
capital, research and development, acquisitions, capital expenditures and other
financing requirements for the foreseeable future.
NEW ACCOUNTING PRONOUNCEMENT
In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, "Earnings per Share," which revises the calculation of and disclosures
related to EPS. The impact of this statement on ChoicePoint cannot currently be
determined as the number of common and common equivalent shares used to compute
EPS will depend upon the number of shares of ChoicePoint Common Stock and
ChoicePoint stock options outstanding and the market price of Choice Point
Common Stock.
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<PAGE> 31
BUSINESS
GENERAL
Based on market share, ChoicePoint is a leading provider of risk management
and fraud prevention information and related technology solutions to the
insurance industry. The Company also offers risk management and fraud prevention
solutions to organizations in other industries. ChoicePoint currently has three
core capabilities: (i) data warehousing; (ii) data access and analytics; and
(iii) related professional services. These capabilities currently are delivered
by the Company through three service groups: Property and Casualty Insurance
Services, Life and Health Insurance Services and Business and Government
Services.
ChoicePoint provides most major domestic insurance companies with automated
and traditional underwriting and claim information services to assist those
companies in assessing the insurability of individuals and property and the
validity of insurance claims. The Company provides background investigations,
performs paramedical exams, furnishes access to motor vehicle reports, maintains
a database of claims histories and provides claims verification and
investigative services to both the property and casualty and the life and health
insurance markets. ChoicePoint also offers pre-employment background
investigations, pre-employment and regulatory compliance drug testing services
and public record information to other corporate and government organizations,
as well as the aforementioned insurance markets.
In response to declining revenues and profits in the 1980s and early 1990s,
ChoicePoint's current senior management team was installed in 1993 and initiated
a turnaround of the Company's operations. The Company reorganized itself to
eliminate unnecessary layers of management and rightsized its workforce to
increase profitability and the responsiveness of the organization to its
customers. In response to a shift by insurance companies over the prior decade
from demanding subjective information of the type historically provided by
ChoicePoint to demanding objective information, ChoicePoint accelerated the
automation of its services. The Company also eliminated unprofitable services in
response to diminishing demand for certain labor intensive products and
increased its focus on non-insurance markets, including growth areas such as
pre-employment background screening and business information services.
For the fiscal year ended December 31, 1996, ChoicePoint generated
operating revenue of approximately $366.5 million, an increase of 37% from
approximately $268.1 million in 1993, when the Company's current senior
management team was installed. ChoicePoint generated operating income of
approximately $47.6 million in 1996, fourteen times the Company's 1993 operating
income of approximately $3.4 million. As ChoicePoint's profitability has
increased, the Company has invested significant capital to extend existing
service capabilities to new markets and has pursued strategic acquisitions to
fuel both internal growth and expansion of the Company beyond its historical
customer base.
STRATEGIC ACQUISITIONS
Commencing in 1993, the Company initiated a strategy of acquiring
organizations that add new data, markets and technology to ChoicePoint's
operations. In April 1994, ChoicePoint acquired PRC, headquartered in Hartford,
Connecticut, which develops custom rating and issuance software for commercial
property and casualty insurance companies. The PRC acquisition enhanced
ChoicePoint's technological capability by adding a systems development
competency and expanded the Company's presence in the commercial insurance
market. ChoicePoint also acquired Osborn Labs in 1994. Osborn Labs is a blood,
urine and saliva testing business that provides insurance companies with
applicant-specific information. Osborn Labs, which is the second largest
laboratory of its kind in the United States, uses state-of-the-art technologies
that incorporate voice, image and other data into its production and
communication processes. The combination of Osborn Labs' services and
ChoicePoint's paramedical exam services offers insurers an unbroken chain of
custody to preserve the integrity of specimens. Osborn Labs also has a highly
skilled research and development team, which researches alternative sampling and
testing techniques for delivery of more effective and lower cost testing
solutions to customers.
ChoicePoint acquired PTA, headquartered in Chicago, Illinois, in 1996 to
accelerate the Company's entry into the occupational health market. The PTA
acquisition gives ChoicePoint the ability to administer all
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<PAGE> 32
components of substance abuse programs, including results analysis. Occupational
health screening adds another market to which ChoicePoint's existing paramedical
collection services may be delivered and enhances the value of ChoicePoint's
employment services by creating a total hiring management solution for
customers.
In August 1996, ChoicePoint acquired 70% of the outstanding capital stock
of CDB Infotek, an automated public records company with more than 1,600 on-line
public record databases. Headquartered in Santa Ana, California, CDB Infotek
provides corporations and the legal, insurance and investigative markets with
access to criminal, bankruptcy, judgment and lien databases, which ChoicePoint
can access through CDB Infotek's sophisticated search engines. The Company
believes that significant potential exists to blend CDB Infotek's data with
ChoicePoint's manual and database information gathering services to offer more
comprehensive and effective information solutions. ChoicePoint has the exclusive
option to purchase the remaining shares of CDB Infotek in 2000.
ChoicePoint recently entered into an agreement in principle to acquire all
of the capital stock of Kroll Holdings, Inc. ("Kroll"), the parent company of
Kroll Associates, Inc., which is headquartered in New York, New York. The
proposed acquisition is subject to customary closing contingencies and is
expected to be completed shortly after the Spinoff. Kroll provides
investigative, intelligence and risk management consulting services to a diverse
set of domestic and international clients, including corporations, law firms,
financial institutions and governments around the world. According to
information provided by Kroll, it currently operates 22 offices in 12 countries
and generated approximately $70.0 million in revenue for the year ended December
31, 1996, of which approximately 40.0% was generated from international
operations. The acquisition of Kroll immediately and significantly expands
ChoicePoint's available customer base beyond its current core insurance market
base and expands the Company's international presence. The Company believes that
Kroll's risk management consulting expertise will significantly enhance
ChoicePoint's risk management product and service offerings.
GROWTH STRATEGIES
ChoicePoint believes that organizations and individuals are encountering
more and increasingly complex risks. The Company believes that these enhanced
risks are generating a growing demand by organizations and individuals for
effective and efficient risk management and fraud prevention tools. ChoicePoint
believes that timely and quality information is the most powerful tool available
to decision makers to mitigate escalating risk.
ChoicePoint's strategic goal is to be the leading provider of risk
management and fraud prevention information and related technology solutions to
a broad range of industries worldwide. The Company is continuing to enhance its
database distribution, data gathering and technological capabilities, and
believes that it is positioned to offer a variety of new products to a diverse
set of industries. ChoicePoint believes that its range of information sources
and technology position ChoicePoint to be the leader in the risk management and
fraud prevention markets.
The Company intends to accomplish its goals by pursuing the following
strategies:
Expand presence in non-insurance markets. ChoicePoint believes that its
most significant opportunities for growth exist beyond its traditional
business of assisting insurance companies in assessing the insurability of
individuals and organizations. The Company believes that significant
opportunities exist to expand the application of its information resources
and technology to non-insurance business and government markets. For
example, ChoicePoint intends to: (i) pursue growth opportunities in pre-
employment services by leveraging its technology, background screening and
drug testing capabilities to offer a total hiring solution to customers;
(ii) pursue additional applications in the government and health care
markets, including assisting agencies in developing solutions to reduce
fraudulent healthcare claims; (iii) expand public record information
applications to both organization and individual risk assessment and
management; and (iv) pursue international expansion of the Company's risk
management services.
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<PAGE> 33
Aggressively pursue acquisitions and strategic alliances. ChoicePoint
intends to continue pursuing acquisitions of, or strategic alliances with,
domestic and international organizations that would allow the Company to
enter new markets or to increase its presence in existing markets, as well
as to expand technology expertise to advance the Company's customized
solutions-building capabilities, and add data resources and skills that
enhance ChoicePoint's ability to deliver risk management solutions. In
particular, the Company intends to identify and acquire organizations with
data warehousing and modeling capabilities that will enhance ChoicePoint's
ability to tailor data solutions to individual customer requirements.
ChoicePoint's numerous acquisitions since 1993 and its agreement in
principle to acquire Kroll are examples of the Company's commitment to
pursue acquisitions that complement and expand the Company's existing
customer base, products and services. See "-- Strategic Acquisitions."
Develop and enhance key technological capabilities. The Company is: (i)
enhancing its capability to automate, database and disseminate certain
public record information; (ii) developing new databases and key interfaces
to external data sources to expand information resources; and (iii)
developing proprietary front-end interfaces to the Company's systems to
facilitate customized order and delivery processes. ChoicePoint
continuously updates current systems critical to its infrastructure, and
develops, as appropriate, new technology solutions.
Increase public awareness of risk and fraud issues. ChoicePoint
believes that the success of its risk management strategy and expansion of
the Company's business opportunities may be enhanced by increasing the
awareness of organizations and individuals of changing risk profiles and
ChoicePoint's ability to assist them in identifying and managing such
risks. To enhance public awareness, the Company intends to publicize
examples of increased personal risks, proactively participate in
legislative discussions to define legitimate and proper use of databased
risk and fraud information, and communicate the value of increased use of
fraud-related public record data in managing business and personal risks.
PRODUCTS AND CUSTOMERS
ChoicePoint currently has three core capabilities: (i) data warehousing,
(ii) data access and analytics and (iii) related professional services. These
capabilities currently are delivered by the Company through three service
groups: Property and Casualty Insurance Services, Life and Health Insurance
Services and Business and Government Services. ChoicePoint's offices are
currently located throughout the United States and in the United Kingdom. The
Company's business is not seasonal. The following table reflects the revenue
generated by each of ChoicePoint's service groups from 1994 to 1996 and the
percentage contribution by each group to ChoicePoint revenue for each such year.
HISTORICAL REVENUE BY SERVICE GROUP
<TABLE>
<CAPTION>
1996 1995 1994
-------------- -------------- --------------
AMOUNT % AMOUNT % AMOUNT %
-------- --- -------- --- -------- ---
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Property and Casualty Insurance Services.... $156,698 43% $143,726 44% $128,305 45%
Life and Health Insurance Services.......... 157,071 43 148,765 45 127,216 45
Business and Government Services............ 52,712 14 36,499 11 29,045 10
-------- --- -------- --- -------- ---
Total............................. $366,481 100% $328,990 100% $284,566 100%
======== === ======== === ======== ===
</TABLE>
Property and Casualty Insurance Services. ChoicePoint provides
underwriting and claims information to property and casualty insurance companies
in the United States and the United Kingdom. Personal lines property and
casualty insurance services include automated underwriting and claims
information, such as motor vehicle reports and the Company's Comprehensive Loss
Underwriting Exchange ("C.L.U.E.") database services, subrogation services,
surveillance, accident scene documentation and investigation of potentially
fraudulent claims. C.L.U.E. is a proprietary database comprised of claims
information contributed by major insurance underwriters (and accessed by those
same underwriters), which enable them to assess underwriting risks and pending
claims in the auto and home insurance markets. ChoicePoint's proprietary
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<PAGE> 34
Auto and Home 2000 systems use customer-specific decision making criteria to
provide property and casualty insurance underwriters with decision management
tools that streamline and reduce the cost of the underwriting process.
The CUE UK database, a proprietary database containing home and motor
insurance claims information, was developed by the Company in response to
growing insurance fraud in the United Kingdom. The success of C.L.U.E. database
services in the United States served as a catalyst for the development of the
CUE UK database, which was specifically designed to serve the United Kingdom
market. The CUE UK database compiles claim information contributed by the United
Kingdom's larger insurers for use by the same insurers to detect fraudulent
claims. The CUE UK database is comprised of the CUE Home and CUE Motor
proprietary databases.
In addition to personal lines underwriting and claims information,
ChoicePoint provides services to the commercial property and casualty insurance
market. Those services include commercial inspections for underwriting purposes,
workers compensation audits of commercial properties, and development of
high-end customized application rating and issuance software for commercial
customers.
Life and Health Insurance Services. ChoicePoint also provides underwriting
and claims information to most major life and health insurance companies in the
United States. Life and health insurance services include medical records
collection, paramedical exams, health history interview services, blood and
urine specimen collection and laboratory testing services, verification of
continued disability, investigations of contestable and accidental death claims
and surveillance of claimants' activities in connection with potentially
fraudulent claims.
ChoicePoint's proprietary LifePlus database contains automated real-time
information used by life and health insurers to reduce underwriting time and
application processing costs. Life 2000, based upon the same concept as the Auto
and Home 2000 systems, uses customer-specific decision making criteria to
provide life and health insurance underwriters with a decision management tool
that streamlines and reduces the cost of the underwriting process.
Business and Government Services. In addition to serving the property and
casualty and life and health insurance markets, ChoicePoint provides risk
management and fraud prevention services and related technology solutions to
many non-insurance businesses and government agencies. For instance, the Company
provides information and services to customers in a variety of industries for
use in the hiring and employee regulatory compliance process, including: (i)
pre-employment background screenings, which include credit and driving record
checks, prior employment verification, education and licensing verification and
criminal record searches; (ii) pre-employment and/or continuous compliance drug
screening; and (iii) comprehensive drug screening program management and
administration. ChoicePoint believes it is the only company in the United States
that offers customers a full range of proprietary integrated services and
products to manage and mitigate risk in the hiring process.
The Company also provides risk management information services to
government agencies, such as (i) its parent locator services, which locate for
the public sector individuals who are in violation of court mandates and (ii)
screening of certain Medicare and Medicaid providers and provider applicants to
assist in identifying and reducing health care fraud. ChoicePoint also maintains
databases of medical device recipients, which assist device manufacturers in
locating and notifying device recipients of certain information when necessary.
In connection with its business and government services, the Company provides
searches and filings of public business records, including Uniform Commercial
Code searches and filings, bankruptcy, lien and judgment searches, searches of
partnership and corporation filing records, and criminal record searches to
assist organizations and lending institutions in managing potential risk
exposure.
Customers. ChoicePoint's customer base includes substantially all domestic
insurance companies, many Fortune 500 companies, and certain state and federal
government agencies. The Company has more than 5,000 customers, most of which
are insurance companies. The top 30 customers of the Company contributed
approximately one-third of the Company's total revenue in 1996. ChoicePoint has
two customers, each of which accounted for approximately 5% of the Company's
total revenue for 1996. Based upon ChoicePoint's
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<PAGE> 35
relationship with these customers, and the customers' dependence upon the
Company's services in their operations, ChoicePoint believes that there is no
significant risk of loss of a material portion of this revenue.
Each of ChoicePoint's three service groups has the capability to receive
orders for and deliver products and services through electronic communications.
The Company supplies software to customers that wish to access ChoicePoint via
private networks.
INTERNATIONAL OPERATIONS
CUE UK, located in the United Kingdom, is currently ChoicePoint's primary
international operation. Annual revenues from this operation were less than 5%
of the Company's total revenue in each of 1994, 1995 and 1996. In connection
with the acquisition of Kroll, the Company expects that the amount of revenue
generated by the Company outside the United States will increase.
COMPETITION
The Company operates in a number of geographic and product and service
markets, which are highly competitive. In the property and casualty insurance
services market, ChoicePoint's most significant competitors include Dateq
Information Network, Inc., a subsidiary of Trans Union Corporation and Policy
Management Systems Corporation. In the life and health insurance services
market, ChoicePoint's most significant competitors include Hooper Holmes, Inc.
and Examination Management Services, Inc. with respect to manual information
collection services and LabOne, Inc. with respect to insurance laboratory
services. In the business and government services market, ChoicePoint's most
significant competitors include Information America, Inc. and Lexis-Nexis with
respect to public records information, various security companies and clinical
labs with respect to pre-employment screening services and various small
companies with respect to background checks or drug screening services. In each
of its markets, the Company competes on the basis of responsiveness to customer
needs and the quality and range of products and services offered.
SOURCES OF SUPPLY
ChoicePoint's operations depend upon information derived from a wide
variety of automated and manual sources. External sources of data include public
records information companies, governmental authorities, and on-line search
systems. ChoicePoint does not anticipate the termination of any significant
relationships with data suppliers. In the event that such a termination
occurred, the Company believes that it could acquire the data from other
sources, and such termination would not have a materially adverse effect on the
Company's financial condition or results of operations.
ChoicePoint currently maintains databases that contain information provided
and used by insurance underwriters. The information comprising these databases
is not owned by ChoicePoint, and the participating organizations could
discontinue contributing information to the databases. If this were to occur,
the Company's financial condition and results of operations would be materially
affected. ChoicePoint believes, however, that such an event is unlikely because
contributors to the databases depend upon the aggregated information in such
databases to conduct their business operations.
In connection with the inspection and investigative services that it
provides, ChoicePoint compiles data from manual and automated sources, including
insurance applicants, medical service providers and public records sources.
PROPERTIES AND EMPLOYEES
ChoicePoint's current principal executive offices are located in 200,000
square feet of leased office space in Alpharetta, Georgia, a suburb of Atlanta.
ChoicePoint maintains 170 other offices in the United States and one office in
the United Kingdom. These offices, all of which are leased, contain a total of
approximately 850,000 square feet of space. Through Osborn Labs, ChoicePoint
owns two laboratory facilities in Olathe, Kansas with approximately 31,000
square feet of space.
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<PAGE> 36
ChoicePoint currently employs approximately 4,600 persons, none of whom are
unionized. Substantially all of the Company's workforce currently is employed in
the United States. ChoicePoint employs approximately 330 individuals in Olathe,
Kansas in its Osborn Labs facilities, approximately 190 individuals in Hartford,
Connecticut in its PRC facilities, approximately 195 individuals in San Diego at
its CDB Infotek location, and approximately 26 individuals in the United Kingdom
in connection with CUE UK. Approximately 700 individuals are employed in the
Atlanta area in the Company's headquarters and three branch office locations.
The balance of ChoicePoint's employees are located in the Company's remaining
offices. ChoicePoint believes that its relations with its employees are good.
PROPRIETARY MATTERS
ChoicePoint owns a number of trademarks and tradenames that ChoicePoint
believes are important to its business. Except for the ChoicePoint trademark,
however, ChoicePoint is not dependent upon any single trademark or tradename or
group of trademarks or tradenames. The ChoicePoint trademark is currently
registered in the United States. The current duration for such registration
ranges from seven to 15 years, but each registration may be renewed an unlimited
number of times. Other trademarks and tradenames used in the ChoicePoint
business are registered and maintained in the U.S. and United Kingdom.
LEGAL PROCEEDINGS
ChoicePoint is involved in litigation from time to time in the ordinary
course of its business. The Company does not believe that the outcomes of any
pending or threatened litigation will have a material adverse effect on the
financial position or results of operations of ChoicePoint. However, as is
inherent in legal proceedings where issues may be decided by finders of fact,
there is a risk that unpredictable decisions adverse to the Company could be
reached. See "RISK FACTORS -- Government Regulation."
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<PAGE> 37
EQUIFAX INC.
Equifax currently conducts its operations primarily through the Insurance
Services Group and the Financial Services Group. After the Spinoff, ChoicePoint
will conduct the business of the Insurance Services Group and Equifax will
continue to operate the business of the Financial Services Group.
Through its Financial Services Group, based on market share, Equifax is a
worldwide leader in providing decision support information to retailers, banks
and financial institutions and customers in other industries. Equifax provides
services and systems that help its customers grant credit, authorize and process
credit card and check transactions, manage receivables, predict consumer
behavior and market their products. Equifax offers credit services, payment
services and analytics and consulting services worldwide, with operations in 17
countries in North America, Europe, Latin America and Asia.
The following table sets forth, for each of the last three years, the
operating revenue, operating income, total assets and number of employees for
ChoicePoint and the remainder of Equifax. This historical information is not
necessarily indicative of the results of operation or financial position that
either company would have reported if they had operated independently.
<TABLE>
<CAPTION>
1996 1995 1994
---------------- ---------------- ----------------
AMOUNT % AMOUNT % AMOUNT %
---------- --- ---------- --- ---------- ---
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Equifax operating revenue............... $1,219,959 67% $1,102,323 68% $ 965,537 68%
ChoicePoint operating revenue(1)........ 366,481 20 328,990 20 284,566 20
ChoicePoint registry revenue(2)......... 224,783 13 191,645 12 171,893 12
---------- --- ---------- --- ---------- ---
$1,811,223 100% $1,622,958 100% $1,421,996 100%
========== === ========== === ========== ===
Equifax operating income................ $ 256,807 84% $ 231,011 88% $ 197,530 92%
ChoicePoint operating income(1)......... 47,611 16 31,928 12 16,577 8
---------- --- ---------- --- ---------- ---
$ 304,418 100% $ 262,939 100% $ 214,107 100%
========== === ========== === ========== ===
Equifax total assets.................... $1,000,960 77% $ 852,916 81% $ 827,354 81%
ChoicePoint total assets(1)............. 301,824 23 200,779 19 193,820 19
---------- --- ---------- --- ---------- ---
$1,302,784 100% $1,053,695 100% $1,021,174 100%
========== === ========== === ========== ===
Equifax number of employees............. 9,500 67% 9,800 69% 9,600 68%
ChoicePoint number of employees......... 4,600 33 4,400 31 4,600 32
---------- --- ---------- --- ---------- ---
14,100 100% 14,200 100% 14,200 100%
========== === ========== === ========== ===
</TABLE>
- ---------------
(1) ChoicePoint's consolidated financial data included in this Prospectus
differs from Equifax's historically reported segment information on the
Insurance Services Group due to certain intercompany adjustments, allocation
of general corporate expenses, the transfer of Equifax Government and
Special Systems, Inc. to the Insurance Services Group, and the registry
revenue discussed below.
(2) Historically, motor vehicle records registry revenue, the fee charged by
states for motor vehicle records which is passed on by ChoicePoint to its
customers, has been reflected in Equifax's consolidated statements of income
as operating revenue and cost of services. ChoicePoint has elected to
exclude these customer reimbursed fees from revenue and reduce cost of
services by a corresponding amount. This change in accounting presentation
does not impact operating income.
35
<PAGE> 38
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The following table sets forth certain information as of May 1, 1997
concerning the persons who are currently serving or are expected to serve as the
executive officers and directors of ChoicePoint after the Spinoff.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Derek V. Smith............................. 42 President, Chief Executive Officer and
Director
Dan H. Rocco............................... 56 Executive Vice President
Douglas C. Curling......................... 42 Executive Vice President, Chief Financial
Officer and Treasurer
David T. Lee............................... 37 Senior Vice President
J. Michael de Janes........................ 39 General Counsel and Assistant Secretary
C. B. Rogers, Jr........................... 67 Chairman of the Board of Directors
Ron D. Barbaro............................. 65 Director Nominee
James M. Denny............................. 64 Director
Tinsley H. Irvin........................... 63 Director Nominee
Daniel W. McGlaughlin...................... 60 Director
Julia B. North............................. 49 Director
Charles I. Story........................... 42 Director
</TABLE>
Derek V. Smith is a director and the President and Chief Executive Officer
of ChoicePoint. He has served as Executive Vice President of Equifax and Group
Executive of the Insurance Services Group since 1993. Mr. Smith was appointed to
the Board of Directors of Equifax in 1996 and was elected to serve a three year
term beginning April 1997. From 1991 to 1993, he served as Senior Vice President
and Chief Financial Officer of Equifax. Mr. Smith was Corporate Vice President
and Treasurer of Equifax from 1990 to 1991. He also served as Vice President of
Equifax Credit Information Services and in several other positions after joining
Equifax in January 1981. Mr. Smith also serves as a director of Integon
Corporation. At or prior to the Spinoff, Mr. Smith will resign from his
positions as an officer and director of Equifax.
Dan H. Rocco is Executive Vice President of ChoicePoint. He has served as
Senior Vice President -- Operations of the Insurance Services Group since 1993.
Mr. Rocco served as President and General Manager of the Automated Services
Division of the Insurance Services Group from 1991 to 1993.
Douglas C. Curling is Executive Vice President, Chief Financial Officer and
Treasurer of ChoicePoint. He has served as Senior Vice President -- Finance and
Administration of the Insurance Services Group since 1993. Mr. Curling served as
Vice President and Assistant Corporate Controller of Equifax from 1989 to 1993.
David T. Lee is Senior Vice President of ChoicePoint. He served as Vice
President -- Property and Casualty Marketing and Sales of the Insurance Services
Group from 1991 to the present. Since joining Equifax in 1984, Mr. Lee has
served in a variety of positions, including Vice President for Systems and
Services, Assistant Vice President -- Executive Assistant to the Chief Executive
Officer, Director of Corporate Financial Systems and Financial Systems Analyst.
J. Michael de Janes is General Counsel and Assistant Secretary of
ChoicePoint. He has served as Vice President and Counsel of the Insurance
Services Group since 1993. Prior to joining the Insurance Services Group, Mr. de
Janes was an Assistant Vice President in Equifax Credit Information Services
legal department from 1991 to 1993.
C. B. Rogers, Jr. is Chairman of the Board of ChoicePoint. Mr. Rogers is
also currently the Chairman of the Board of Directors of Equifax and served as
an executive officer of Equifax for more than five years prior to his retirement
on December 31, 1995 as Chief Executive Officer. He currently serves as a
director of Sears, Roebuck & Co., Morgan Stanley, Dean Witter, Discover & Co.,
Briggs and Stratton Corporation, Oxford Industries, Inc. and Teleport
Communications Group, Inc., and has served as a director of Equifax
36
<PAGE> 39
since 1978. After the Spinoff, Mr. Rogers will serve as Chairman of the Board of
Directors of both Equifax and ChoicePoint for a transitional period.
Ron D. Barbaro is expected to serve as a director of ChoicePoint after the
Spinoff. Prior to Mr. Barbaro's retirement in December 1992 as President of The
Prudential Insurance Company of America, an international multi-line insurance
company, he served in various executive positions with that company or its
subsidiaries for more than five years. Mr. Barbaro currently serves as a
director of Prudential of America Life Insurance Company (Canada), The Thomson
Corporation, Canbra Foods Limited, Flow International, Inc., Clairvest Group,
Inc. and Natraceuticals Inc. He served as a director of Equifax Canada Inc. from
1990 through 1992, and has been a director of Equifax since 1992. At or prior to
the Spinoff, Mr. Barbaro will resign from his position as a director of Equifax.
James M. Denny is a director of ChoicePoint. Mr. Denny has served as a
Managing Director of William Blair Capital Partners, L.L.C., a company engaged
in private equity investments, since September 1995. Mr. Denny served as Vice
Chairman of Sears, Roebuck and Co. from February 1992 until his retirement in
August 1995. Previously, Mr. Denny was Senior Vice President and Chief Financial
Officer of Sears from 1988 to 1992. He also serves as a director of Allstate
Corporation, Astra AB, GATX Corporation and Gilead Sciences, Inc.
Tinsley H. Irvin is expected to serve as a director of ChoicePoint after
the Spinoff. Mr. Irvin retired as Chairman and Chief Executive Officer of
Alexander & Alexander Services Inc., an international insurance brokerage
company, in 1994. Prior to his retirement, Mr. Irvin served in various executive
capacities with Alexander & Alexander Services Inc. or its subsidiaries. He has
served as a director of Equifax since 1989, but will resign from such position
at or prior to the Spinoff.
Daniel W. McGlaughlin is a director of ChoicePoint. He is currently the
President and Chief Executive Officer of Equifax, and has served as an executive
officer of Equifax for more than five years. Mr. McGlaughlin serves as a
director of Wachovia Corporation of Georgia, Wachovia Bank of Georgia, N.A.,
American Business Products, Inc. and FORE Systems, Inc. He also has been a
director of Equifax since 1990. After the Spinoff, he will serve as a director
of ChoicePoint, as well as Vice Chairman of the Board of Directors and Chief
Executive Officer of Equifax.
Julia B. North is a director of ChoicePoint. Ms. North has been
President-Consumer Services for BellSouth Telecommunications since April 1996.
From April 1989 to April 1996, she was a Vice President for BellSouth
Telecommunications. Ms. North is a member of the Board of Directors of
Winn-Dixie Stores, Inc., the National Board of Distinguished Women at
Mississippi University for Women, the Executive Advisory Board of the YWCA, a
member of the Society of International Business Fellows, and a member of the
Management of Technology Business Council at the Georgia Institute of
Technology. She has been a member of the Board of Directors of the American Red
Cross, the Board of Science and Technology Museum of Atlanta, and a
Vice-Chairman of United Way in Charlotte, North Carolina.
Charles I. Story is a director of ChoicePoint. Mr. Story is the President
and Chief Executive Officer of INROADS, Inc., a national non-profit training and
development organization that prepares talented minorities for careers in
business and engineering. He served as Executive Vice President -- Operations of
INROADS, Inc. from July 1991 to December 1992 and as Vice President and Director
of Community Development of First American National Bank from 1989 to 1991. Mr.
Story also serves as a director of INROADS, Inc. and Briggs and Stratton
Corporation and is an advisory director of First American National Bank.
The ChoicePoint Board of Directors is divided into three classes of
directors serving staggered three-year terms. Of the initial ChoicePoint
directors, Messrs. Rogers, McGlaughlin and Smith will serve until the 1998
annual meeting of shareholders, Messrs. Irvin and Barbaro will serve until the
1999 annual meeting of directors, and Messrs. Story and Denny and Ms. North will
serve until the 2000 annual meeting of directors. See "DESCRIPTION OF CAPITAL
STOCK -- Certain Anti-Takeover Provisions of Georgia Law and the ChoicePoint
Articles and Bylaws."
37
<PAGE> 40
SUMMARY OF EXECUTIVE COMPENSATION
The following table shows, for fiscal 1996, all compensation awarded to,
earned by or paid to ChoicePoint's Chief Executive Officer and the four other
most highly compensated executive officers of ChoicePoint (collectively, the
"Named Officers"). All cash compensation was paid by Equifax and all stock
compensation was in the form of Equifax Common Stock or options to purchase
Equifax Common Stock.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------------------------- ------------------------------------
AWARDS
------------------------- PAYOUTS
OTHER RESTRICTED SECURITIES --------
NAME AND PRINCIPAL ANNUAL STOCK UNDERLYING LTIP ALL OTHER
POSITION SALARY BONUS(1) COMPENSATION(2) AWARDS(1)(3) OPTIONS(#) PAYOUTS COMPENSATION(4)
- ------------------ -------- -------- --------------- ------------ ---------- -------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Derek V. Smith.......... $259,654 $259,654 $209,422 $120,246 125,000 $465,150 $4,950
President and Chief
Executive Officer
Dan H. Rocco............ $198,532 $158,825 $ -- $ -- 50,000 $139,545 $4,950
Executive Vice
President
Douglas C. Curling...... $168,834 $148,219 $ -- $ -- 50,000 $ 94,718 $4,950
Executive Vice
President, Chief
Financial Officer
and Treasurer
David T. Lee............ $143,000 $ 83,697 $ -- $ -- 7,000 $ -- $4,719
Senior Vice President
J. Michael de Janes..... $ 96,061 $ 52,833 $ -- $ -- 5,000 $ -- $3,161
General Counsel and
Assistant Secretary
</TABLE>
- ---------------
(1) Represents an annual incentive award earned and paid in cash for performance
in 1996. Participants in the Equifax executive incentive plan may elect to
receive all or part of any cash bonus earned in the form of restricted
stock, and all amounts earned above a designated percentage of salary are
only awarded in the form of restricted stock.
(2) Includes for Mr. Smith a cash amount of $196,197, designated for satisfying
certain income tax obligations due as a consequence of the vesting of
restricted stock grants made to Mr. Smith in 1991. This tax assistance
provision, which was included as part of the original terms of the grant,
but discontinued in subsequent grants, enabled Mr. Smith to retain 100% of
the shares earned rather than being required to dispose of a portion of
these shares to satisfy income taxes due. Miscellaneous benefits such as
financial planning services are also included under this column.
(3) Dividend income is paid on restricted stock at the same rate as paid to all
Equifax shareholders. Value of restricted stock shown in table is as of the
date of grant. As of December 31, 1996, total restricted stock awards
outstanding and related fair market values were 35,548 shares and
$1,088,658, respectively. Such restricted stock awards will vest as to
24,000 shares on December 31, 1998, 7,472 shares on January 25, 2000 and
4,076 shares on January 29, 2002. Mr. Smith is entitled to all dividends
paid on the restricted stock, which dividends are currently $.0875 per share
per quarter.
(4) Includes Equifax 401(k) Retirement Savings Plan matching contribution.
38
<PAGE> 41
OPTION GRANTS
The following table shows all grants by Equifax of options to purchase
Equifax Common Stock to the Named Officers during 1996. For a discussion of the
treatment of Equifax stock options after the Spinoff, see "-- Compensation and
Benefit Plans."
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
------------------------------------------------------ VALUE AT ASSUMED
NUMBER OF PERCENT OF RATES OF STOCK
SECURITIES TOTAL OPTIONS PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE OR FOR OPTION TERM
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION ---------------------
NAME GRANTED(#) FISCAL YEAR ($/SH) DATE 5% 10%
- ---- ---------- ------------- ----------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Derek V. Smith................. 5,369(1) 0.25% $18.63 1/31/06 $ 62,888 $159,370
19,631(2) 0.90 18.63 1/31/06 229,941 582,719
25,000(3) 1.14 22.35 1/31/06 199,704 648,961
25,000(3) 1.14 24.21 1/31/06 153,129 602,386
25,000(4) 1.14 26.08 1/31/06 106,579 555,836
25,000(4) 1.14 27.94 1/31/06 60,004 509,261
Dan H. Rocco................... 10,000(3) 0.46% $18.63 1/31/06 $117,132 $296,835
5,341(5) 0.24 22.35 1/31/06 42,665 138,644
4,659(6) 0.21 22.35 1/31/06 37,217 120,940
369(1) 0.02 24.21 1/31/06 2,260 8,891
9,631(7) 0.44 24.21 1/31/06 58,991 232,063
2,466(4) 0.11 26.08 1/31/06 10,513 54,828
7,534(4) 0.34 26.08 1/31/06 32,119 167,507
10,000(4) 0.46 27.94 1/31/06 24,002 203,705
Douglas C. Curling............. 10,000(3) 0.46% $18.63 1/31/06 $117,132 $296,835
5,341(5) 0.24 22.35 1/31/06 42,665 138,664
4,659(6) 0.21 22.35 1/31/06 37,217 120,940
369(1) 0.02 24.21 1/31/06 2,260 8,891
9,631(7) 0.44 24.21 1/31/06 58,991 232,063
2,684(4) 0.12 26.08 1/31/06 11,442 59,675
7,316(4) 0.33 26.08 1/31/06 31,189 162,660
10,000(4) 0.46 27.94 1/31/06 24,002 203,705
David T. Lee................... 7,000(3) 0.32% $18.63 1/31/06 $ 81,992 $207,784
J. Michael de Janes............ 5,000(3) 0.23% $18.63 1/31/06 $ 58,566 $148,417
</TABLE>
- ---------------
(1) Vest 100% on fourth anniversary of date of grant.
(2) Vest in increments of 6,250 each on the first through the third anniversary
of date of grant and in an increment of 881 on the fourth anniversary of
date of grant.
(3) Vest 25% on the first through the fourth anniversary of date of grant.
(4) Vested 100% on date of grant.
(5) Vest in increments of 947 each on the first through the third anniversary of
date of grant and in an increment of 2,500 on the fourth anniversary of date
of grant.
(6) Vest 33 1/3% on the first through the third anniversary of date of grant.
(7) Vest in increments of 2,500 each on the first through the third anniversary
of date of grant and in an increment of 2,131 on the fourth anniversary of
date of grant.
39
<PAGE> 42
OPTION EXERCISES
The following table shows all exercises of options to purchase Equifax
Common Stock by the Named Officers during 1996:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS AT
SHARES AT FISCAL YEAR-END(#) FISCAL YEAR-END(1)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Derek V. Smith............... -- $ -- 127,000 138,000 $1,714,738 $1,745,863
Dan H. Rocco................. -- -- 42,750 44,250 537,979 518,448
Douglas C. Curling........... 5,900 77,531 22,500 43,900 113,151 511,208
David T. Lee................. -- -- 18,400 14,600 383,075 219,038
J. Michael de Janes.......... -- -- 4,800 10,400 91,519 152,994
</TABLE>
- ---------------
(1) Value of unexercised options equals the fair market value per share of
Equifax Common Stock as of December 31, 1996, less the exercise price,
multiplied by the number of shares underlying the stock options. The fair
market value of a share of Equifax Common Stock as of December 31, 1996, was
$30 5/8.
LONG-TERM INCENTIVE COMPENSATION PLAN AWARDS
The following table provides information concerning awards to the Named
Officers under Equifax's 1988 Performance Share Plan for Officers (the
"Performance Share Plan"), each of which awards will, after the Spinoff, be
converted into the right to receive ChoicePoint restricted stock. Each unit
under the Performance Share Plan, when awarded in 1996, represented the right,
subject to certain conditions set forth in the Performance Share Plan, to
receive one share of Equifax Common Stock or its cash equivalent (up to 50% of
total units awarded), plus cash representing dividends. Payments of awards are
tied to achieving specified levels of return on equity, growth in earnings per
share and stock price appreciation, as well as achievement of other specified
financial performance targets. The target amount will be earned if 100% of
targeted goals are achieved. If targeted goals are not met or are exceeded, the
award will be reduced or increased proportionately.
As a result of the Spinoff, each outstanding performance share award held
by ChoicePoint employees under the Performance Share Plan and granted to them in
1996 or 1997 will be converted into shares of ChoicePoint restricted stock under
the ChoicePoint Inc. 1997 Omnibus Stock Incentive Plan. Payment will be made at
the end of the relevant performance measurement periods. The ChoicePoint
restricted stock will retain similar compensation opportunities, deliver
compensation on approximately the same schedule and contain performance criteria
similar to the Performance Share Plan for the relevant performance measurement
periods. The number of shares of ChoicePoint restricted stock awarded will be
based upon the price of Equifax Common Stock as of the Mail Date and ChoicePoint
Common Stock the day after the Mail Date.
LONG-TERM INCENTIVE PLANS -- AWARDS FOR LAST FISCAL YEAR
<TABLE>
<CAPTION>
PERFORMANCE ESTIMATED FUTURE PAYOUTS OF THE CHOICEPOINT
OR OTHER RESTRICTED STOCK GRANTS(1)
PERIOD UNTIL ---------------------------------------------
MATURATION THRESHOLD TARGET MAXIMUM
NAME OR PAYOUT (# OF SHARES) (# OF SHARES) (# OF SHARES)
- ---- ------------ ------------- ------------- -------------
<S> <C> <C> <C> <C>
Derek V. Smith............................... 12/31/98 29,859 37,406 52,500
Dan H. Rocco................................. 12/31/98 11,944 14,963 21,000
Douglas C. Curling........................... 12/31/98 11,944 14,963 21,000
</TABLE>
- ---------------
(1) The estimated number of shares of ChoicePoint restricted stock to be granted
is based on assumed per share prices of Equifax Common Stock of $35 and
ChoicePoint Common Stock of $20.
40
<PAGE> 43
COMPENSATION AND BENEFIT PLANS
The Company has adopted the ChoicePoint 1997 Omnibus Stock Incentive Plan
(the "Omnibus Plan"), which is intended to attract and retain directors,
officers and key employees. The Omnibus Plan authorizes grants of stock options,
stock appreciation rights, restricted stock, deferred shares, performance shares
and performance units totaling four million shares of ChoicePoint Common Stock
(subject to adjustment for subsequent stock splits, stock dividends and in
certain other circumstances). Except as set forth below, ChoicePoint Employees
will retain their vested options to purchase Equifax Common Stock under various
Equifax equity-based compensation plans. Although they will forfeit the unvested
Equifax stock options, they will receive options to purchase ChoicePoint Common
Stock. Certain senior officers of ChoicePoint will be permitted to choose either
to retain vested Equifax stock options or have their vested Equifax stock
options replaced with ChoicePoint stock options in amounts and at exercise
prices intended to preserve the economic benefit inherent in the Equifax stock
options at such time.
ChoicePoint has also adopted annual bonus plans for eligible employees that
provide for the payment of annual cash bonuses following the close of each
fiscal year based upon the achievement of specified objective performance goals.
The Compensation Committee of the Board of Directors of ChoicePoint will approve
the bonus plans with respect to the executive officers of ChoicePoint.
Equifax has historically maintained deferred compensation plans for certain
of its employees. These plans are not qualified for federal tax purposes and are
not "funded" within the meaning of the Employee Retirement Income Security Act
of 1974. With the consent of the affected employees, ChoicePoint, rather than
Equifax, will provide the benefits related to past deferrals made by ChoicePoint
employees under certain of these plans. The Company has implemented a new
deferred compensation plan that will allow certain ChoicePoint employees to: (a)
defer all or a portion of their annual salary and bonus payouts; (b) make
contributions in excess of 401(k) contribution limitations for "highly
compensated" employees; and (c) receive additional employer contributions as a
supplement to the 401(k) Profit Sharing Plan. A participant's deferred
compensation will be invested in one or more hypothetical investment funds
selected by the participant and the plan.
ChoicePoint has adopted a 401(k) Profit Sharing Plan, under which eligible
Company employees may contribute up to 16% of their compensation. ChoicePoint
will make minimum matching contributions in the form of ChoicePoint Common Stock
equal to 25% of employee contributions up to the first 6% of an employee's
contributions. Employee contributions will be invested in one of the available
investment funds, including a ChoicePoint stock fund. Matching contributions
will be invested in the ChoicePoint stock fund. ChoicePoint may make additional
contributions based on achievement of targeted performance levels.
Assets of Equifax's 401(k) Retirement Savings Plan that are attributable to
the accounts of ChoicePoint employees will be transferred to ChoicePoint's
401(k) Profit Sharing Plan and will be held for the benefit of these employees.
ChoicePoint employees may direct that their investment in the Equifax stock fund
be retained or be liquidated and the proceeds invested in a ChoicePoint stock
fund or any other available investment funds.
ChoicePoint intends to establish two grantor trusts to which the Company
will transfer cash with the intention of purchasing approximately 325,000 shares
of ChoicePoint Common Stock for distribution under its various compensation and
benefit plans. The purchase of such shares by these trusts will occur as soon as
reasonably practicable after the Spinoff.
DIRECTOR COMPENSATION
Directors who are salaried employees of ChoicePoint will receive no
additional compensation for services as a director or as a member of a committee
of the Board of Directors. Each director who is not a ChoicePoint salaried
officer or employee shall be compensated as follows. The Chairman of the Board
of Directors will be paid an annual fee of $30,000 for services as a director
and an additional fee of $2,500 for attendance at each meeting of the Board of
Directors or a committee thereof. Each other director will be paid an annual fee
of $15,000 for services as a director and an additional fee of $1,000 for
attendance at each meeting of the Board of Directors and $1,000 ($2,500 if
Committee Chairman) for attendance at each committee meeting. In addition, each
non-employee director, upon initial election to the Board of Directors,
41
<PAGE> 44
will receive a one-time grant of restricted ChoicePoint Common Stock with a
market value of $25,000, which will vest after 36 months or upon death or
retirement from the Board of Directors, whichever occurs first. Non-employee
directors will also receive annual stock option awards of 3,000 shares of
ChoicePoint Common Stock, and the Chairman of the Board of Directors will
receive annual stock option awards of 5,000 shares. The stock option awards will
vest after 24 months or upon death or retirement from the Board of Directors,
whichever occurs first. Restricted stock and stock option awards will be issued
under the Omnibus Plan.
EMPLOYMENT AND COMPENSATION AGREEMENTS
The Company intends to enter into employment agreements with all of its
executive officers prior to the Effective Time. The employment agreements are
expected to contain change in control provisions, which will provide for
severance pay and certain other benefits in the event that a change in control
of the Company occurs. Each change in control provision will have an initial
term of up to five years and will be renewable for an additional period of time
and effective only in the event any such executive officer's employment with the
Company is terminated within five years from the date of a change in control of
the Company. A "change in control" will be defined in the employment agreements
generally to include the acquisition by an entity, or a group of entities acting
in concert, of more than fifty percent of the shares of outstanding stock of any
class of voting stock of the Company, and other specified events. In such event,
upon termination of the executive's employment within five years after the date
of a change in control, the executive will be entitled to severance pay and
certain other benefits, unless such termination: (i) occurs as a result of the
executive's death; (ii) is effected by the Company for "Cause" or "Disability"
(as defined in the employment agreements); or (iii) is effected by the executive
for reasons other than a "Good Reason" (as defined in the employment
agreements). The severance payment will be based upon annual compensation,
multiplied by a factor not to exceed three, plus payments for other benefits.
Equifax currently has a Compensation Agreement with Mr. Rocco which
entitles Mr. Rocco to annual base compensation of not less than $200,000 and
total compensation of not less than $225,000. The Compensation Agreement
provides for deferred benefit payments to Mr. Rocco and his participation in all
employee benefit plans of Equifax. Pursuant to the agreement, subject to certain
limitations and employment conditions, if Mr. Rocco remains continuously
employed by the Company for three years after January 1, 1996, Mr. Rocco would
be entitled to severance benefits in a lump sum of $150,000. The Company intends
to become a successor to such agreement or to enter into a new employment
agreement with Mr. Rocco upon the Spinoff.
42
<PAGE> 45
ARRANGEMENTS BETWEEN EQUIFAX AND CHOICEPOINT
RELATING TO THE SPINOFF
Equifax and ChoicePoint have entered into or expect to enter into the
agreements described in this section to facilitate an orderly transition in
connection with establishing ChoicePoint as an independent company. The
agreements summarized below have been filed as exhibits to a Registration
Statement on Form S-1 (the "Registration Statement") filed under the Securities
Act. The following descriptions include a summary of all material terms of such
agreements but are qualified in their entirety by reference to the filed
agreements.
DISTRIBUTION AGREEMENT
The Distribution Agreement provides for, among other things, the principal
corporate transactions required to effect the Spinoff, the conditions that must
be satisfied prior to the Mail Date and the allocation between ChoicePoint and
Equifax of certain assets and liabilities. The Distribution Agreement also
contemplates the execution by the parties of the following Additional Agreements
that address particular matters related to the Spinoff: the Employee Benefits
Agreement, the Transition Support Agreement, the Intercompany Information
Services Agreement, the Real Estate Agreements, the Tax Sharing and
Indemnification Agreement, the Intellectual Property Agreement and the CUE UK
Agreements. In the event of a conflict between the terms of the Distribution
Agreement and the terms of an Additional Agreement, the terms of the Additional
Agreement will govern.
Reorganization. The Distribution Agreement sets forth the following
corporate transactions to be accomplished at or before the Effective Time:
(i) Equifax will contribute to ChoicePoint all of the issued and
outstanding capital stock of the wholly-owned Equifax subsidiaries that
comprise the Insurance Services Group operations, which include Osborn
Labs, Equifax Services and Government and Special Systems in exchange for a
number of shares of ChoicePoint Common Stock that, when combined with the
shares of ChoicePoint Common Stock already owned by Equifax, will equal the
number of shares of Equifax Common Stock issued and outstanding on the
Record Date divided by ten (excluding those shares held by certain grantor
trusts of Equifax, which will not receive ChoicePoint Common Stock pursuant
to the Spinoff);
(ii) Equifax will transfer to ChoicePoint substantially all the assets
and substantially all the liabilities of CUE UK, the insurance services
division of Equifax's United Kingdom operations; and
(iii) Immediately following the transactions described in items (i) and
(ii) above, ChoicePoint will transfer all of the issued and outstanding
shares of capital stock of Osborn Labs and Government and Special Systems
to Equifax Services.
Distribution. On or before the Mail Date, Equifax will deliver to the
Distribution Agent a certificate or certificates representing all of the then
outstanding shares of ChoicePoint Common Stock held by Equifax, and will
instruct the Distribution Agent to distribute to each holder of record of
Equifax Common Stock on the Record Date (except for certain grantor trusts of
Equifax, which will not receive ChoicePoint Common Stock pursuant to the
Spinoff) one share of ChoicePoint Common Stock for each ten shares of Equifax
Common Stock so held, either by crediting the holder's brokerage account or
delivering a certificate or certificates representing such shares.
Fractional Shares. The Distribution Agent will not distribute any
fractional shares of ChoicePoint Common Stock to any holder of Equifax Common
Stock. The Distribution Agent will aggregate all fractional shares and sell them
in an orderly manner in the open market after the Mail Date. After completion of
such sales, the Distribution Agent will distribute a pro rata portion of the
proceeds from such sales, based upon the average gross selling price of all such
ChoicePoint Common Stock, to each holder of Equifax Common Stock who would
otherwise have received a fractional share of ChoicePoint Common Stock.
Effective Time. The Distribution Agreement provides that the transfer by
Equifax of the stock, assets and liabilities of its Insurance Services Group to
ChoicePoint will be effective as of the Effective Time and
43
<PAGE> 46
that the insurance services business will be operated for the sole benefit of
ChoicePoint and its public shareholders after the Effective Time.
Satisfaction of Conditions. Equifax's Board of Directors has the sole
discretion to establish the Record Date, the Mail Date and any appropriate
procedures in connection with the Spinoff. The Spinoff will not occur unless the
following conditions have been satisfied: (i) all necessary regulatory approvals
have been received; (ii) the Registration Statement has become effective under
the Securities Act; (iii) ChoicePoint's Board of Directors has been elected by
Equifax, as sole shareholder of ChoicePoint, and the ChoicePoint Articles of
Incorporation and Bylaws are in effect; (iv) ChoicePoint Common Stock has been
approved for listing on the New York Stock Exchange, subject to official notice
of issuance; (v) Equifax has received a favorable ruling from the IRS that the
distribution of ChoicePoint Common Stock will generally not be taxable to
Equifax or its shareholders, except for cash received for fractional shares;
(vi) ChoicePoint has entered into the Credit Facility; and (vii) no order,
injunction or decree issued by any court of competent jurisdiction or other
legal restraint or prohibition preventing consummation of the Spinoff shall be
in effect.
Allocation of Assets and Liabilities. The Distribution Agreement provides
that the following will become exclusively the assets of ChoicePoint at or prior
to the Effective Time: (i) the capital stock of Osborn Labs, Government and
Special Systems and Equifax Services; and (ii) any assets that (a) are owned of
record or held in the name of ChoicePoint as of the Effective Time, (b) are
treated for internal financial reporting purposes of Equifax prior to the
Effective Time as owned by ChoicePoint, and (c) at the Effective Time are used
exclusively by ChoicePoint (collectively, the "ChoicePoint Assets"). Equifax has
agreed to transfer all of its right, title and interest in the ChoicePoint
Assets to ChoicePoint. All assets of Equifax other than the ChoicePoint Assets
will remain exclusively the assets of Equifax. ChoicePoint has agreed to
transfer to Equifax all right, title and interest to any assets that are not
ChoicePoint Assets.
The Distribution Agreement further provides generally that any liabilities
of the Insurance Services Group, including, without limitation, liabilities: (i)
of ChoicePoint arising under the Distribution Agreement or any Additional
Agreement; (ii) incurred in connection with the conduct or operation of
ChoicePoint's business (including any acquired businesses) or the ownership or
use by ChoicePoint of its assets, whether arising before, at or after the
Effective Time; (iii) arising under or in connection with the Registration
Statement, except to the extent such liabilities arise out of or are based upon
information included in the section of the Registration Statement entitled
"Equifax Inc."; (iv) set forth on the balance sheet of the Insurance Services
Group of Equifax as of the Effective Time (the "ISG Balance Sheet"); (v) of
Equifax or ChoicePoint relating to any business formerly owned or operated by
ChoicePoint or arising out of the sale thereof; (vi) assumed by ChoicePoint in
connection with its purchase of CUE UK; (vii) under a certain Equifax
discretionary line of credit in the amount of $29.0 million; and (viii) relating
to the acquisition by the Insurance Services Group of any business prior to the
Effective Time, except to the extent such liabilities arise out of the issuance
of securities of Equifax in any such acquisition (collectively, the "ChoicePoint
Liabilities") will become exclusively the liabilities of ChoicePoint as of the
Effective Time. All liabilities of Equifax, other than the ChoicePoint
Liabilities, will remain exclusively the liabilities of Equifax (collectively,
the "Equifax Liabilities").
Intercompany accounts. On or before the Mail Date, Equifax will deliver to
ChoicePoint a preliminary ISG Balance Sheet setting forth estimates of all
intercompany account balances between Equifax and ChoicePoint as of the
Effective Time, and ChoicePoint shall pay all estimated account balances on the
Mail Date. Within 30 business days after the Effective Time, Equifax will
deliver to ChoicePoint a final ISG Balance Sheet setting forth final
intercompany account balances between Equifax and ChoicePoint as of the
Effective Time, and either Equifax or ChoicePoint, as the case may be, will pay
to the other the difference between the estimated account balances and the final
account balances.
Payments Received. From and after the Effective Time, both Equifax and
ChoicePoint will promptly transfer to the other, from time to time, any property
received that is an asset of the other. Funds received by one upon the payment
of accounts receivable that belong to the other will be transferred to the other
by wire transfer not more than five business days after receipt of such payment.
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<PAGE> 47
Amendments; Further Assurances. The Distribution Agreement may only be
amended or rights thereunder waived by an instrument signed by the party to be
charged with the amendment or waiver. Equifax and ChoicePoint will use their
reasonable efforts to: (i) execute and deliver such further instruments and
documents and take such actions as the other party may reasonably request in
order to effectuate the purposes of the Distribution Agreement and the
Additional Agreements and their terms; and (ii) take all actions and do all
things reasonably necessary under applicable laws and agreements or otherwise to
consummate and make effective the transactions contemplated by the Distribution
Agreement and the Additional Agreements.
No Representations or Warranties. Except as stated in the Distribution
Agreement or an Additional Agreement, no party to such agreements or any other
agreement or document contemplated by the Distribution Agreement or any
Additional Agreement has or shall be deemed to have made any representation or
warranty as to: (i) the assets, businesses or liabilities retained, transferred
or assumed as contemplated thereby; (ii) any consents or approvals required in
connection with the transfer or assumption by such party of any asset or
liability contemplated by the Distribution Agreement; (iii) the value or freedom
from any lien, claim, equity or other encumbrance of, or any other matter
concerning, any assets of such party; or (iv) the absence of any defenses or
right of setoff or freedom from counterclaim with respect to any claim or other
asset of any party. Except as may expressly be set forth in the Distribution
Agreement or an Additional Agreement, all such assets were, or are being,
transferred, or are being retained, on an "as is," "where is" basis and the
respective transferees will bear the economic and legal risks that any
conveyance will prove to be insufficient to vest in the transferee a title that
is free and clear of any lien, claim, equity or other encumbrance.
Dispute Resolution. Except as specifically provided in an Additional
Agreement, any disputes arising from or in connection with the Distribution
Agreement or any Additional Agreement must be resolved in accordance with the
dispute resolution procedures set forth in the Distribution Agreement.
Insurance. ChoicePoint will use its best efforts to procure and maintain
directors' and officers' liability insurance coverage at least equal to the
amount of Equifax's current directors' and officers' insurance coverage with
respect to directors and officers of Equifax who will become directors and
officers of ChoicePoint as of the Mail Date for acts as directors and officers
of ChoicePoint for periods from and after the Mail Date. Equifax has agreed to
use its best efforts to maintain directors' and officers' liability insurance
coverage at least equal to the amount of Equifax's current directors' and
officers' liability insurance coverage for a period of five years with respect
to the directors and officers of Equifax who will become directors and officers
of ChoicePoint as of the Mail Date for acts as directors and officers of Equifax
or one of its affiliates during periods prior to the Mail Date.
Employee Matters. Unless otherwise agreed to by Equifax and ChoicePoint,
no employees who previously provided services for both Equifax and ChoicePoint
will become employees of ChoicePoint after the Effective Time.
Guaranteed Liabilities. ChoicePoint will use all reasonable efforts
(excluding payment of money) to obtain as promptly as practicable after the Mail
Date the release of Equifax from its obligations with respect to the ChoicePoint
Liabilities on which Equifax is an obligor by reason of any guarantee or
contractual commitment (the "Guaranteed ChoicePoint Liabilities"). In no event
shall ChoicePoint extend the term of any Guaranteed ChoicePoint Liabilities
(such as by exercising an option to renew a lease) or modify any such Guaranteed
ChoicePoint Liability in any way that would increase the liability guaranteed
thereunder unless the guarantee of Equifax is released as to any extended or
released liability of obligations under such Guaranteed ChoicePoint Liabilities
or Equifax otherwise consents in writing. In the event that Equifax is required
to pay any Guaranteed ChoicePoint Liabilities, Equifax will be entitled to all
the rights of the payee in any property of ChoicePoint pledged as security for
such Guaranteed ChoicePoint Liabilities. Equifax will use all reasonable efforts
(excluding payment of money) to obtain as promptly as practicable after the Mail
Date the release of ChoicePoint from its obligations with respect to the Equifax
Liabilities on which ChoicePoint is an obligor by reason of any guarantee or
contractual commitment (the "Guaranteed Equifax Liabilities"). In no event shall
Equifax extend the term of any Guaranteed Equifax Liabilities (such as by
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<PAGE> 48
exercising an option to renew a lease) unless the guarantee of ChoicePoint is
released as to any future obligations under such Guaranteed Equifax Liabilities
or ChoicePoint otherwise agrees in writing. In the event that ChoicePoint is
required to pay any Guaranteed Equifax Liabilities, ChoicePoint will be entitled
to all the rights of the payee in any property of Equifax pledged as security
for such Guaranteed Equifax Liabilities.
Cross Indemnification. At and after the Mail Date, ChoicePoint will
indemnify, defend and hold harmless Equifax and its directors, officers,
employees and agents (the "Equifax Indemnitees") from and against any and all
damage, loss, liability and expense (including, without limitation, reasonable
expenses of investigation and reasonable attorneys' fees and expenses in
connection with any and all actions or threatened actions) (collectively, the
"Indemnifiable Losses") incurred or suffered by any of the Equifax Indemnitees
and arising out of, or due to: (i) the failure of ChoicePoint to pay, perform or
otherwise discharge, any of the ChoicePoint Liabilities; and (ii) any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement, the preliminary or final Prospectus, or any amendment or
supplement thereto, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading (other than information provided by Equifax contained in
the section entitled "Equifax Inc." of the preliminary or final Registration
Statement, the preliminary or final Prospectus or any amendment or supplement
thereto). At and after the Mail Date, Equifax will indemnify, defend and hold
harmless ChoicePoint and its directors, officers, employees and agents (the
"ChoicePoint Indemnitees") from and against any and all Indemnifiable Losses
incurred or suffered by any of the ChoicePoint Indemnitees and arising out of,
or due to: (i) the failure of Equifax to pay, perform or otherwise discharge,
any of the Equifax Liabilities; and (ii) any untrue statement or alleged untrue
statement of any material fact contained in the section entitled "Equifax Inc."
of the preliminary or final Registration Statement, the preliminary or final
Prospectus, or any amendment or supplement thereto, or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading. In circumstances in
which the indemnity is unavailable or insufficient, for any reason, to hold
harmless an indemnified party in respect of any Indemnifiable Losses, each
indemnifying party, in order to provide for just and equitable contribution,
will contribute to the amount paid or payable by such indemnified party as a
result of such Indemnifiable Losses, in such proportion as is appropriate to
reflect the relative fault of the indemnifying party or parties on the one hand
and the indemnified party on the other in connection with the statements or
omissions or alleged statements or omissions that resulted in such Indemnifiable
Losses, as well as any other relevant equitable considerations.
Other Expenses of the Spinoff. The Distribution Agreement provides that
all costs and expenses incurred in connection with the consummation of the
Spinoff and the transactions contemplated thereby and in connection with the
preparation, execution, delivery and implementation of the Distribution
Agreement and the Additional Agreements will be paid by Equifax. Equifax will
pay the legal, filing, accounting, printing and other expenses incurred in
connection with the preparation, printing and filing of the Registration
Statement.
EMPLOYEE BENEFITS AGREEMENT
ChoicePoint and Equifax have entered into an agreement that provides for
the transition of employee plans or programs sponsored by Equifax for its
employees who will become employed by ChoicePoint (the "ChoicePoint Employees").
In the case of certain retiree medical and death benefits, the Employee Benefits
Agreement also applies to specified former employees of Equifax subsidiaries
that will become ChoicePoint subsidiaries. Under the Employee Benefits
Agreement, ChoicePoint is liable for providing specified welfare and retirement
benefits to salaried ChoicePoint Employees at and after July 1, 1997. These
benefits include medical and dental benefits, flexible spending accounts
covering health care and dependent care expenses, life and accident insurance
plans, a before-tax premium plan (which allows employees to pay for medical,
dental and certain other benefit premiums on a before-tax basis), a 401(k) plan,
and policies covering vacations, holidays, sick leave and short-term disability.
ChoicePoint will not adopt a defined benefit retirement plan but will adopt
a 401(k) Profit Sharing Plan. ChoicePoint will also provide a transition benefit
to employees of ChoicePoint who have been participants in the Equifax defined
benefit retirement plan. The benefit will consist of additional contributions
based on
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prior service with Equifax to reduce the impact of the loss of future benefits
from the Equifax defined benefit retirement plan. The present value of the
future contributions for these transition benefits is approximately $13.0
million. To facilitate funding of these additional contributions, Equifax will
make a capital contribution to ChoicePoint in the amount of $13.0 million and
ChoicePoint's intercompany liability to Equifax will be reduced accordingly.
ChoicePoint's 401(k) plan will receive a transfer of account balances from
Equifax's 401(k) plan for the ChoicePoint Employees. A ChoicePoint stock account
will be created under the 401(k) plans of both companies to hold the ChoicePoint
Common Stock distributed with respect to the Equifax Common Stock held in the
Equifax 401(k) plan prior to the Mail Date. ChoicePoint Employees who had
participated in the Equifax Inc. Supplemental Executive Retirement Plan will be
credited with an account under a ChoicePoint deferred compensation plan equal to
the actuarial equivalent of the benefit accrued under the Equifax Inc.
Supplemental Executive Retirement Plan, if they consent to the transfer of such
benefit from Equifax to ChoicePoint. ChoicePoint Employees who were participants
in other Equifax deferred compensation plans may consent to the transfer of such
accounts from Equifax to ChoicePoint. Except as set forth below, ChoicePoint
Employees will retain their vested options to purchase Equifax Common Stock
under various Equifax equity-based compensation plans. Although they will
forfeit their unvested Equifax stock options, they will receive options to
purchase ChoicePoint Common Stock, adjusted to preserve the value of the
forfeited Equifax stock options. Certain senior officers of ChoicePoint will be
permitted to choose either to retain vested Equifax stock options or have their
vested Equifax stock options replaced with ChoicePoint stock options in amounts
and at exercise prices intended to preserve the economic benefit inherent in the
Equifax stock options at such time. See "MANAGEMENT -- Summary of Executive
Compensation."
TRANSITION SUPPORT AGREEMENT
Pursuant to the Transition Support Agreement, following the Effective Time,
Equifax has agreed to provide ChoicePoint with tax services, centralized
accounting services, purchasing services, travel services, corporate information
services, distribution database services, mailroom services, corporate financial
systems and certain other services, and ChoicePoint has agreed to provide
Equifax with certain services as agreed upon by Equifax and ChoicePoint prior to
the Effective Time. The period during which Equifax and ChoicePoint are required
to provide services to the other will vary depending upon the particular
category of service, but in no event will any service be provided beyond 15
months from the Effective Time. Equifax and ChoicePoint will charge each other
for services on a shared-cost basis consistent with current methods of
allocating internal costs. Equifax and ChoicePoint will submit invoices to each
other within 15 business days after the end of each month during the term of the
Transition Support Agreement, and the invoice will be payable within five
business days after the receipt thereof. Upon 60 days prior written notice,
either ChoicePoint or Equifax may direct the other to discontinue any particular
category of service provided under the Transition Support Agreement. The
Transition Support Agreement may be terminated by mutual consent of the parties,
by either party for a material uncured breach, the insolvency of either party,
or the acquisition of either party by a competitor of the non-acquired party,
but such termination will be applicable only with respect to services provided
by the non-acquired party to the portion of the acquired party's business that
has been affected by the change in control. The party receiving the services
under the Transition Support Agreement will indemnify the party furnishing the
services, subject to certain limitations, for losses resulting from the
provider's furnishing or failure to furnish the services unless the party
receiving the services commits willful misconduct or gross negligence. The party
furnishing the services will indemnify the party receiving the services, subject
to certain limitations, for losses resulting from its gross negligence in
providing services.
INTERCOMPANY INFORMATION SERVICES AGREEMENT
The Intercompany Information Services Agreement will state that each of
Equifax and ChoicePoint will provide to the other certain data and products for
utilization in their respective operations and, in some instances, the
appointment by each of them of the other as a broker for certain of their
respective products. The agreement will have a one-year renewable term and is
subject to certain limitations as set forth in the Intellectual Property
Agreement and the Transition Support Agreement. During the initial one-year term
of
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the Intercompany Information Services Agreement, ChoicePoint and Equifax will
purchase from, and supply to, each other certain information, including but not
limited to, consumer credit information and drivers license and motor vehicle
information, subject to certain exceptions. ChoicePoint and Equifax intend to
enter into the Intercompany Information Services Agreement prior to the
Effective Time.
REAL ESTATE AGREEMENTS
As of the Effective Time, Equifax, ChoicePoint and Equifax Services will
enter into various agreements relating to the lease, sublease and sharing of
facilities (collectively, the "Real Estate Agreements"). Pursuant to the Real
Estate Agreements, Equifax will sublease to Equifax Services a portion of
Equifax's corporate headquarters and a portion of Equifax's principal data
center. The sublease arrangements will generally provide for the pro rata
allocation of rental and other occupancy costs based upon the square footage of
the premises subleased by Equifax Services. Equifax will also grant to
ChoicePoint an easement across property owned by Equifax that will permit
ChoicePoint to connect certain of its data processing facilities to data
processing equipment located at Equifax's principal data center. Following the
Effective Time, Equifax and Equifax Services will continue to share a number of
office facilities located throughout the United States. In those cases where the
lease of the office facility is in the name of an Equifax company, that company
will sublease a portion of the space in that facility to Equifax Services.
Equifax Services will sublease to an Equifax company a portion of the space in
those office facilities currently leased by an Equifax Services company. The
provisions contained in such subleases will mirror the provisions of the
underlying leases and be subject to the terms thereof. ChoicePoint intends to
lease its principal office facilities in Alpharetta, Georgia from a third party.
TAX SHARING AND INDEMNIFICATION AGREEMENT
ChoicePoint and Equifax have entered into a Tax Sharing and Indemnification
Agreement to allocate federal, state, local and foreign tax liabilities between
ChoicePoint and Equifax and their respective subsidiaries. Under the Tax Sharing
and Indemnification Agreement, Equifax has agreed to pay and indemnify
ChoicePoint for all taxes attributable to Equifax that are imposed for periods
before and after the Effective Time (except to the extent described below).
ChoicePoint has agreed to pay and indemnify Equifax for all taxes
attributable to ChoicePoint that are imposed for periods before and after the
Effective Time. ChoicePoint's post-Effective Time liability for certain
pre-Effective Time taxes is, however, limited to an amount equal to $2.0 million
(on an after tax basis), and Equifax will indemnify ChoicePoint for any
liability in excess of that amount. Equifax will also indemnify ChoicePoint for
any taxes incurred by ChoicePoint (plus a gross-up amount) caused solely by a
breach by Equifax of any representation made by Equifax in connection with the
IRS ruling request or contained in the Tax Sharing and Indemnification
Agreement. In addition, ChoicePoint has agreed to indemnify Equifax for any
taxes attributable to Equifax and any liability to Equifax's shareholders (plus
a gross-up amount and certain related expenses) resulting from the failure of
the Spinoff to qualify as a tax-free transaction where such failure is caused
solely by the breach by ChoicePoint of a representation made in connection with
the IRS ruling request or contained in the Tax Sharing and Indemnification
Agreement. Where both Equifax and ChoicePoint are responsible for the breach (or
each is responsible for a separate breach), or where such failure occurs
notwithstanding the absence of a breach, ChoicePoint has agreed to indemnify
Equifax for only a portion of such amounts.
In the Tax Sharing and Indemnification Agreement, each of Equifax and
ChoicePoint represents that it: (i) has not knowingly misstated or omitted a
material fact in connection with Equifax obtaining the IRS ruling; (ii) is not
currently engaged in any negotiations involving a transaction that, if
consummated, would constitute a 50% acquisition; and (iii) will neither engage
in negotiations nor consummate a business combination that constitutes such an
acquisition. For this purpose a 50% acquisition includes an acquisition by one
or more persons of fifty percent or more of the stock of either Equifax or
ChoicePoint where the parties fail to prove that such acquisition is not part of
the same overall plan or series of related transactions that includes the
Spinoff and, as a result, tax is imposed on the nonacquired party under
subsequently enacted
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legislation. Each of Equifax and ChoicePoint further represents that it has not
and will not do anything that would cause the Spinoff to be taxable under United
States federal or state income tax laws.
ChoicePoint will prepare all tax returns due after the Spinoff where such
returns relate exclusively to the property or operations of ChoicePoint. Equifax
will prepare all other tax returns for taxable periods beginning before the
Spinoff. ChoicePoint will have the opportunity to review certain of the tax
returns prepared by Equifax prior to the time such returns are filed. Each party
agrees to cooperate with the other in the preparation and filing of all tax
returns.
Equifax will be entitled to all refunds from any taxing authority with
respect to any tax returns filed by Equifax, except that ChoicePoint will be
entitled to all refunds to the extent the refund relates exclusively to property
or operations of ChoicePoint and does not represent taxes attributable to
ChoicePoint for which Equifax was required to indemnify ChoicePoint. ChoicePoint
will be entitled to all refunds with respect to any tax returns filed by
ChoicePoint.
In general, tax controversies will be handled by the party having filing
responsibility for the tax return to which the controversy relates. At a certain
stage in the proceedings, ChoicePoint may assume control of a tax controversy
that pertains solely to it.
INTELLECTUAL PROPERTY AGREEMENT
The Intellectual Property Agreement addresses the allocation between
Equifax and ChoicePoint of copyrights, trademarks, trade secrets and other
intellectual property (the "Intellectual Property"). The agreement will provide
that Equifax will transfer to ChoicePoint, without charge, title to any of the
Intellectual Property used solely or primarily in the business of ChoicePoint,
effective at the Effective Time. Equifax will retain title to any of the
Intellectual Property it uses solely or primarily in its business. As of the
Effective Time, each of ChoicePoint and Equifax will license to the other party
those items of Intellectual Property it owns and the other party uses on a
royalty free, non-exclusive basis, subject to certain limitations set forth in
the Intellectual Property Agreement, the Intercompany Information Services
Agreement and the Transition Support Agreement. Equifax and ChoicePoint will
agree to cooperate with each other after the Effective Time to effect the
purposes of the Intellectual Property Agreement and the related licenses granted
by Equifax and ChoicePoint to each other.
The Intellectual Property Agreement also states that Equifax will provide
ChoicePoint, at Equifax's expense, with all rights to certain third party
software and other intellectual property necessary for the continued operation
of ChoicePoint's business ("Third Party Rights"). After the Effective Time,
ChoicePoint will be responsible for on-going maintenance, support and upgrades
associated with the continued use of the Third Party Rights at ChoicePoint's
expense. Equifax and ChoicePoint will agree to cooperate after the Effective
Time with the other party in the identification, negotiation, assignment and
acquisition of Third Party Rights as may be reasonably necessary to effect the
purpose of the Intellectual Property Agreement.
CERTAIN RELATIONSHIPS AND TRANSACTIONS
The current Chairman of the Board of Equifax, C.B. Rogers, Jr., will serve
as Chairman of the Board of ChoicePoint for a transitional period after the
Spinoff. In addition to Mr. Rogers, four of the other seven persons identified
by Equifax to serve on the ChoicePoint Board of Directors currently serve on the
Equifax Board of Directors. Three of those persons, however, will resign from
the Equifax Board prior to the Spinoff. ChoicePoint and Equifax will therefore
have two common Board members, including a common Chairman of the Board, for a
transitional period. See "MANAGEMENT."
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BENEFICIAL OWNERSHIP OF CHOICEPOINT COMMON STOCK
The following table sets forth certain information as of March 31, 1997
regarding the projected beneficial ownership of ChoicePoint Common Stock as a
result of the Spinoff by: (i) each director of ChoicePoint; (ii) each Named
Officer; and (iii) all of the directors and executive officers of ChoicePoint as
a group. The Company is not aware of any person who will beneficially own more
than five percent of the ChoicePoint Common Stock as of the Mail Date.
<TABLE>
<CAPTION>
Projected Percentage of
Amount and Nature of Outstanding ChoicePoint
Name of Beneficial Owner Beneficial Ownership(1) Common Stock(2)
------------------------ ----------------------- -----------------------
<S> <C> <C>
Ron D. Barbaro........................................ 1,908(3) *
Douglas C. Curling.................................... 95,954(4) *
J. Michael de Janes................................... 14,083(5) *
James M. Denny........................................ 1,250(6) *
Tinsley H. Irvin...................................... 1,650(3) *
David T. Lee.......................................... 42,582(7) *
Daniel W. McGlaughlin................................. 28,598(8) *
Julia B. North........................................ 1,280(3) *
Dan H. Rocco.......................................... 139,778(9) *
C. B. Rogers, Jr. .................................... 102,513(10) *
Derek V. Smith........................................ 473,608(11) 3.1%
Charles I. Story...................................... 1,250(6) *
All directors and executive officers as a group (12
persons)............................................ 904,454(12) 5.9%
</TABLE>
- ---------------
(1) According to SEC rules, a person is the "beneficial owner" of securities if
he or she has or shares the power to vote them or to direct their
investment or has the right to acquire beneficial ownership of such
securities within 60 days through the exercise of an option, warrant or
right, the conversion of a security or otherwise. To the knowledge of the
Company, the indicated owners will have sole voting and investment power
with respect to shares beneficially owned, except as otherwise noted. The
ownership information presented above: (i) assumes that all of the vested
Equifax stock options held by such beneficial owners are converted into
ChoicePoint stock options; (ii) assumes Equifax stock options are converted
into ChoicePoint stock options at a conversion factor of 1.75 based on a
$35 per share price of Equifax Common Stock and a $20 per share price of
ChoicePoint Common Stock; (iii) assumes that no Equifax stock options are
exercised between March 31, 1997 and the Mail Date; and (iv) reflects the
distribution ratio of one share of ChoicePoint Common Stock for every ten
shares of Equifax Common Stock.
(2) An asterisk indicates projected beneficial ownership of less than 1% of the
ChoicePoint Common Stock.
(3) Includes 1,250 restricted shares of ChoicePoint Common Stock awarded
pursuant to the Omnibus Plan.
(4) Includes 179 shares of ChoicePoint Common Stock owned through ChoicePoint's
401(k) Profit Sharing Plan and 56,875 shares of ChoicePoint Common Stock
subject to ChoicePoint stock options exercisable on or within 60 days after
the Mail Date and 38,500 shares of restricted ChoicePoint Common Stock
awarded pursuant to the Omnibus Plan.
(5) Includes 345 shares of ChoicePoint Common Stock owned through ChoicePoint's
401(k) Profit Sharing Plan, 13,738 shares of ChoicePoint Common Stock
subject to ChoicePoint stock options exercisable on or within 60 days after
the Mail Date.
(6) Represents restricted shares of ChoicePoint Common Stock awarded pursuant
to the Omnibus Plan.
(7) Includes 296 shares of ChoicePoint Common Stock owned through ChoicePoint's
401(k) Profit Sharing Plan and 42,000 shares of ChoicePoint Common Stock
subject to ChoicePoint stock options exercisable on or within 60 days after
the Mail Date.
(8) Includes 404 shares of ChoicePoint Common Stock owned through Equifax's
401(k) Retirement Savings Plan and 1,250 restricted shares of ChoicePoint
Common Stock awarded pursuant to the Omnibus Plan.
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(9) Includes 415 shares of ChoicePoint Common Stock owned through ChoicePoint's
401(k) Profit Sharing Plan and 100,188 shares of ChoicePoint Common Stock
subject to ChoicePoint stock options exercisable on or within 60 days after
the Mail Date and 38,500 shares of restricted ChoicePoint Common Stock
awarded pursuant to the Omnibus Plan.
(10) Includes 1,492 shares of ChoicePoint Common Stock owned through Equifax's
401(k) Retirement Savings Plan and 1,250 restricted shares of ChoicePoint
Common Stock awarded pursuant to the ChoicePoint Restricted Stock Plan.
(11) Includes: (i) 569 shares of ChoicePoint Common Stock owned through
ChoicePoint's 401(k) Profit Sharing Plan; (ii) 302,313 shares of
ChoicePoint Common Stock subject to ChoicePoint stock options exercisable
on or within 60 days after the Mail Date; (iii) 62,209 restricted shares of
ChoicePoint Common Stock acquired upon an assumed conversion of 35,548
restricted shares of Equifax Common Stock on the Mail Date; and (iv)
101,500 shares of restricted ChoicePoint Common Stock awarded pursuant to
the Omnibus Plan.
(12) Includes: (i) 1,804 shares of ChoicePoint Common Stock owned through
ChoicePoint's 401(k) Profit Sharing Plan; (ii) 1,896 shares of ChoicePoint
Common Stock owned through Equifax's 401(k) Retirement Savings Plan; (iii)
515,114 shares of ChoicePoint Common Stock subject to ChoicePoint stock
options exercisable on or within 60 days after the Mail Date; and (iv)
251,792 restricted shares of ChoicePoint Common Stock.
BENEFICIAL OWNERSHIP OF MANAGEMENT
Equifax currently owns all of the outstanding shares of ChoicePoint Common
Stock. For information with respect to the number of shares of ChoicePoint
Common Stock expected to be beneficially owned immediately following the Spinoff
by (i) the persons expected to be ChoicePoint directors and (ii) the executive
officers of ChoicePoint named under "MANAGEMENT -- Summary of Executive
Compensation," see the table set forth under "BENEFICIAL OWNERSHIP OF
CHOICEPOINT COMMON STOCK."
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DESCRIPTION OF CAPITAL STOCK
INTRODUCTION
ChoicePoint presently expects that it will have the following capital stock
authorization and terms and anti-takeover provisions in place at the Effective
Time.
The authorized capital stock of ChoicePoint consists of 100 million shares
of ChoicePoint Common Stock, par value $.10 per share, and ten million shares of
Preferred Stock, par value $.01 per share.
As a result of the Spinoff, there are expected to be approximately
14,700,000 shares of ChoicePoint Common Stock outstanding held by approximately
8,800 holders of record. No shares of Preferred Stock have been issued by
ChoicePoint and no shares of Preferred Stock will be issued in the Spinoff.
CHOICEPOINT COMMON STOCK
Subject to all of the rights of the Preferred Stock as expressly provided
for in the ChoicePoint Articles of Incorporation (the "ChoicePoint Articles"),
by operation of law or by the Board of Directors pursuant to the ChoicePoint
Articles, holders of ChoicePoint Common Stock are entitled to: (i) one vote per
share on all matters required to be voted on by shareholders, including the
election of directors; (ii) such dividends as may be declared or set apart for
payment from assets or funds legally available therefor; and (iii) in the event
of liquidation, dissolution or winding-up of ChoicePoint, a pro rata
distribution of the net assets of ChoicePoint available for distribution in
accordance with their respective rights and interests. The ChoicePoint Articles
do not provide for cumulative voting in the election of directors. Additionally,
the holders of ChoicePoint Common Stock have no preemptive, conversion or other
subscription rights and there are no redemption or sinking fund provisions
applicable to the ChoicePoint Common Stock.
PREFERRED STOCK
The ChoicePoint Articles provide that ChoicePoint may issue up to ten
million shares of Preferred Stock, par value $.01 per share. The ChoicePoint
Articles further provide that in accordance with the provisions of the Georgia
Business Corporation Code ("GBCC"), the Board of Directors of the Corporation
may determine the preferences, limitations, and relative rights of (i) any class
of shares before the issuance of any shares of that class or (ii) one or more
series within a class, and designate the number of shares within that series,
before the issuance of any shares of that series.
No shares of Preferred Stock are currently designated, and there is no
current plan to designate or issue any class or series of Preferred Stock.
However, because the terms of the Preferred Stock may be fixed by the
ChoicePoint Board of Directors without shareholder action, Preferred Stock could
be issued quickly with terms calculated to defeat a proposed takeover of
ChoicePoint or to make the removal of management of ChoicePoint more difficult.
In addition, the issuance of Preferred Stock could decrease the amount of
earnings and assets available for distribution to holders of ChoicePoint Common
Stock. In certain circumstances, the aforementioned factors could have the
effect of decreasing the market price of the ChoicePoint Common Stock. See "RISK
FACTORS -- Certain Anti-Takeover Provisions" and " -- Shareholder Rights Plan."
CERTAIN ANTI-TAKEOVER PROVISIONS OF GEORGIA LAW AND THE CHOICEPOINT ARTICLES AND
BYLAWS
The summary of certain provisions of the ChoicePoint Articles and Bylaws
set forth below is subject to and qualified in its entirety by reference to the
ChoicePoint Articles and Bylaws. Certain provisions of Georgia law and the
ChoicePoint Articles and Bylaws are described elsewhere in this Prospectus.
Provisions of Georgia Law
Unless otherwise provided by the articles of incorporation or bylaws or by
resolution of the Board of Directors (by conditioning its submission of a
proposed merger or share exchange), the GBCC generally requires the affirmative
vote of a majority of all votes entitled to be cast, by all shares entitled to
vote, voting as a single class, to approve mergers and share exchanges.
Shareholders of the corporation surviving a merger
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<PAGE> 55
need not approve a merger if: (i) the articles of incorporation of the surviving
corporation will not differ from its articles before the merger; (ii) each share
of stock of the surviving corporation outstanding immediately before the
effective date of the merger is to be an identical outstanding or reacquired
share immediately after the merger; and (iii) the number and kind of shares
outstanding immediately after the merger, plus the number and kind of shares
issuable as a result of the merger and by the conversion of securities issued
pursuant to the merger or the exercise of rights and warrants issued pursuant to
the merger, will not exceed the total number and kind of shares of the surviving
corporation authorized by its articles of incorporation immediately before the
merger. The ChoicePoint Bylaws do not contain a provision which alters the GBCC
voting requirements with respect to mergers.
ChoicePoint has elected to be covered by two provisions of the GBCC that
restrict business combinations with interested shareholders: the Business
Combinations Provision (as defined herein) and the Fair Price Provision (as
defined herein). These provisions do not apply to a Georgia corporation unless
its bylaws specifically make the statute applicable, and once adopted, in
addition to any other vote required by the corporation's articles of
incorporation or bylaws to amend the bylaws, such a bylaw may be repealed only
by the affirmative vote of at least two-thirds of the continuing directors and a
majority of the votes entitled to be cast by the voting shares of such
corporation, other than shares beneficially owned by an interested shareholder
and, with the respect to the Fair Price Provision, his, her or its associates
and affiliates.
Interested Shareholders Transactions. The provisions of the GBCC
concerning "Business Combinations with Interested Shareholders" (the "Business
Combinations Provision") generally prohibits certain "resident domestic
[Georgia] corporations" from entering into certain business combination
transactions with any "interested shareholder" (generally defined as any person
other than the corporation or its subsidiaries beneficially owning at least 10%
of the outstanding voting stock of the corporation) for a period of five years
from the date that person became an interested shareholder, unless: (i) prior to
becoming an interested shareholder, the board of directors of the corporation
approved either the business combination or the transaction by which the
shareholder became an interested shareholder; (ii) in the transaction in which
the shareholder became an interested shareholder, the interested shareholder
became the beneficial owner of at least 90% of the voting stock outstanding
(excluding, for purposes of determining the number of shares outstanding,
"Insider Shares," as defined below) at the time the transaction commenced; or
(iii) subsequent to becoming an interested shareholder, such shareholder
acquired additional shares resulting in the interested shareholder being the
beneficial owner of at least 90% of the outstanding voting shares (excluding,
for purposes of determining the number of shares outstanding, Insider Shares)
and the transaction was approved at an annual or special meeting of shareholders
by the holders of a majority of the voting stock entitled to vote thereon
(excluding from such vote, Insider Shares and voting stock beneficially owned by
the interested shareholder). For purposes of the Business Combinations
Provision, Insider Shares refers generally to shares owned by: (a) persons who
are directors or officers of the corporation, their affiliates, or associates;
(b) subsidiaries of the corporation; and (c) any employee stock plan under which
participants do not have the right (as determined exclusively by reference to
the terms of such plan and any trust which is part of such plan) to determine
confidentially the extent to which shares held under such plan will be tendered
in a tender or exchange offer. A Georgia corporation's bylaws must specify that
all requirements of the Business Combinations Provision apply to the corporation
in order for the Business Combinations Provision to apply. The ChoicePoint
Bylaws contain a provision stating that all requirements of the Business
Combinations Provision (and any successor provisions thereto) apply to
ChoicePoint. See "RISK FACTORS -- Certain Anti-Takeover Provisions."
Fair Price Requirements. The GBCC also contains a provision concerning
"Fair Price Requirements" (the "Fair Price Provision") which imposes certain
requirements on "business combinations" of a Georgia corporation with any person
who is an "interested shareholder" of that corporation. In addition to any vote
otherwise required by law or the corporation's articles of incorporation, under
the Fair Price Provision, business combinations with an interested shareholder
must meet one of the three following criteria designed to protect a
corporation's minority shareholders: (i) the transaction must be unanimously
approved by the "continuing directors" of the corporation (generally directors
who served prior to the time an interested shareholder acquired 10% ownership
and who are unaffiliated with such interested shareholder) provided that
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<PAGE> 56
the continuing directors constitute at least three members of the board of
directors at the time of such approval; (ii) the transaction must be recommended
by at least two-thirds of the continuing directors and approved by a majority of
the votes entitled to be cast by holders of voting shares, other than voting
shares beneficially owned by the interested shareholder who is, or whose
affiliate is, a party to the business combination; or (iii) the terms of the
transaction must meet specified fair pricing criteria and certain other tests. A
Georgia corporation's bylaws must specify that all requirements of the Fair
Price Provision apply to the corporation in order for the Fair Price Provision
to apply. The ChoicePoint Bylaws contain a provision stating that all
requirements of the Fair Price Provision (and any successor provisions thereto)
apply to ChoicePoint. See "RISK FACTORS -- Certain Anti-Takeover Provisions."
Removal of Directors. In addition to the Business Combinations Provision
and the Fair Price Provision, the GBCC contains a provision concerning "Removal
of Directors by Shareholders" (the "Removal Provision") which, among other
things, limits the ability of shareholders of a Georgia corporation to remove
the directors of such corporation if such corporation's directors serve
staggered terms. The Removal Provision generally provides that: (i) directors
having staggered terms may be removed only for "cause," unless the corporation's
articles of incorporation or a bylaw adopted by the corporation's shareholders
provides otherwise; (ii) directors may be removed only by a majority vote of the
shares entitled to vote for the removal of directors; and (iii) a director may
be removed by a corporation's shareholders only at a meeting called for the
purpose of removing him or her and the meeting notice must state that the
purpose, or one of the purposes, of the meeting is removal of the director.
Neither the ChoicePoint Articles nor Bylaws contain provisions permitting the
removal of members of the ChoicePoint Board of Directors other than for "cause."
Accordingly, the Removal Provision could have the effect of restricting the
ability of ChoicePoint shareholders to remove incumbent directors and fill the
vacancies created by such removal with their own nominees. See " -- Articles of
Incorporation and Bylaws -- Staggered Board of Directors."
Articles of Incorporation and Bylaws
Staggered Board of Directors. The ChoicePoint Articles and Bylaws provide
that the ChoicePoint Board of Directors will consist of not less than seven but
no more than fifteen shareholders. The initial Board of Directors has been set
at eight directors. The ChoicePoint Board of Directors is divided into three
classes of directors serving staggered three-year terms, with each class
consisting, as nearly as possible, of one-third of the total number of
directors. If the number of directors is increased or decreased, such increase
or decrease will be apportioned among the classes so as to maintain, as nearly
as possible, an equal number of directors in each class, provided however, that
no decrease in the number of directors for a class shall shorten the term of an
incumbent director. Any additional director elected to fill a vacancy resulting
from an increase in the size of the ChoicePoint Board of Directors shall hold
office for a term that coincides with the remaining term of the class to which
such director is elected, unless otherwise required by law. Of the initial
directors of ChoicePoint, one-third will serve until the 1998 annual meeting of
shareholders, one-third will serve until the 1999 annual meeting of shareholders
and one-third will serve until the 2000 annual meeting of shareholders.
Beginning with the 1998 annual meeting of shareholders, one class of directors
will be elected each year to serve a three-year term. The GBCC provides that a
bylaw establishing staggered terms for directors may only be adopted, amended or
repealed by the shareholders.
The classification of directors has the effect of making it more difficult
for shareholders to change the composition of the ChoicePoint Board of
Directors. At least two annual meetings of shareholders, instead of one,
generally will be required to effect a change in the majority of the ChoicePoint
Board of Directors. The classification provisions could also have the effect of
discouraging a third party from initiating a proxy contest, making a tender
offer or otherwise attempting to obtain control of ChoicePoint, even though such
an attempt might be beneficial to ChoicePoint and its shareholders. See "RISK
FACTORS -- Certain Anti-Takeover Provisions."
Filling Vacancies. The ChoicePoint Articles and Bylaws provide that any
vacancy on the ChoicePoint Board of Directors that results from an increase in
the number of directors, or from prior death, resignation, retirement,
disqualification or removal from office of any director, shall be filled by a
majority of the remaining members of the ChoicePoint Board of Directors, though
less than a quorum, or by the sole
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<PAGE> 57
remaining director. Any director elected to fill a vacancy resulting from prior
death, resignation, retirement, disqualification or removal from office of a
director shall have the same remaining term as his or her predecessor.
Accordingly, the ChoicePoint Board of Directors could temporarily prevent any
shareholder from enlarging the ChoicePoint Board of Directors and filling the
new directorships with such shareholder's own nominees.
Shareholder Proposals at Annual Meeting; Director Nominations. The
ChoicePoint Bylaws provide that in order to bring certain matters before the
annual meeting of shareholders, including nominations of directors, shareholders
must give notice to ChoicePoint containing certain information within the time
period specified in SEC Rule 14a-8(a)(3)(i). Shareholders making proposals,
other than those that appear in a proxy statement after compliance with SEC Rule
14a-8, must file written notice with the ChoicePoint Board of Directors setting
forth certain information called for by the ChoicePoint Bylaws.
Special Meetings of Shareholders. The GBCC provides that a Georgia
corporation shall hold a special meeting of shareholders: (i) on the call of the
corporation's board of directors or the person or persons authorized by the
corporation's articles of incorporation or bylaws; (ii) in the case of a
corporation having more than one hundred (100) shareholders of record, upon the
written demand of the holders of at least twenty five percent (25%), or such
greater or lesser percentage as may be provided in the corporation's articles of
incorporation or bylaws, of all the votes entitled to be cast on any issue
proposed to be considered at the proposed special meeting; or (iii) in the case
of a corporation having one hundred (100) or fewer shareholders of record, upon
the written demand of the holders of at least twenty five percent (25%), or such
lesser percentage as may be provided in the corporation's articles of
incorporation or bylaws, of all the votes entitled to be cast on any issue
considered at the proposed special meeting. The ChoicePoint Bylaws provide that
a special meeting of shareholders may be called by: (i) the Chairman or Vice
Chairman of the ChoicePoint Board of Directors; (ii) the Chief Executive Officer
of ChoicePoint; (iii) the President of ChoicePoint; (iv) the ChoicePoint Board
of Directors by vote at a meeting; (v) a majority of the ChoicePoint Board of
Directors in writing without a meeting; or (vi) the unanimous call of the
ChoicePoint shareholders. The ChoicePoint Bylaws provide that in order to bring
certain matters before a special meeting of shareholders, including the
nomination of directors, shareholders must give notice to ChoicePoint containing
certain information no later than the close of business on the earlier of (i)
the 30th day following the public announcement that a matter will be submitted
to a vote of the shareholders at a special meeting, or (ii) the 15th day
following the day on which notice of the special meeting was given.
Amendment of ChoicePoint Articles. Under the GBCC, in general and except
as otherwise provided by the ChoicePoint Articles, amendments to the ChoicePoint
Articles must be recommended to the shareholders by the ChoicePoint Board of
Directors and approved at a properly called shareholder meeting by a majority of
the votes entitled to be cast on the amendment by each voting group entitled to
vote on the amendment. The ChoicePoint Articles require the affirmative vote of
the holders of not less than two-thirds of the votes entitled to be cast by the
holders of all then outstanding shares of voting stock, voting together as a
single class, to make, alter, amend, change, add to or repeal any provision of
the ChoicePoint Articles or Bylaws where such creation, alteration, amendment,
change, addition or repeal would be inconsistent with the provisions of the
ChoicePoint Articles relating to: (i) the number of members of the ChoicePoint
Board of Directors, (ii) the classification of the ChoicePoint Board of
Directors; or (iii) the filling of vacancies on the ChoicePoint Board of
Directors, provided however, that such two-thirds vote is not required for any
alteration, amendment, change, addition or repeal recommended by a majority of
the ChoicePoint Board of Directors. See " -- Articles of Incorporation and
Bylaws -- Amendment of ChoicePoint Bylaws."
Amendment of ChoicePoint Bylaws. Under the GBCC, in general and subject to
the requirements of the Business Combinations Provision, the Fair Price
Provision and the ChoicePoint Articles of Incorporation, ChoicePoint Bylaws may
be altered, amended or repealed by the ChoicePoint Board of Directors or by the
affirmative vote of the holders of a majority of the shares of ChoicePoint
Common Stock entitled to vote and actually voted on such matter. See
" -- Articles of Incorporation and Bylaws -- Amendment of ChoicePoint Articles,"
" -- Certain Anti-Takeover Provisions of Georgia Law and the ChoicePoint
Articles and Bylaws -- Provisions of Georgia Law" and "RISK FACTORS -- Certain
Anti-Takeover Provisions."
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<PAGE> 58
LIMITED LIABILITY AND INDEMNIFICATION PROVISIONS
The ChoicePoint Articles provide for indemnification of the officers and
directors of ChoicePoint to the fullest extent permitted by the GBCC. Such
indemnification is not exclusive of any additional indemnification that the
ChoicePoint Board of Directors may deem advisable or of any rights to which
those indemnified may otherwise be entitled. The ChoicePoint Articles provide
that the ChoicePoint Board of Directors may determine from time to time whether
and to what extent to maintain insurance providing indemnification for officers
and directors, and such insurance need not be limited to ChoicePoint's power of
indemnification under the GBCC. ChoicePoint intends to purchase and maintain
insurance on behalf of ChoicePoint's officers and directors against liability
asserted against or incurred by such person in such capacity, or arising out of
such person's status as such, whether or not ChoicePoint would have the power to
indemnify or advance expenses to such person against such liability under the
ChoicePoint Articles of Incorporation, the Bylaws or the GBCC.
The ChoicePoint Bylaws generally provide that ChoicePoint shall not
indemnify any officer or director who is adjudged liable to ChoicePoint or is
subjected to injunctive relief in favor of ChoicePoint: (i) for any
appropriation, in violation of his or her duties, of any business opportunity of
ChoicePoint; (ii) for acts or omissions which involve intentional misconduct or
a knowing violation of law; (iii) for the types of liability for unlawful
distributions set forth in Section 14-2-832 of the GBCC; or (iv) for any
transaction from which he or she received an improper personal benefit. The
ChoicePoint Bylaws obligate ChoicePoint, under certain circumstances, to advance
expenses to its officers and directors who are parties to an action, suit or
proceeding for which indemnification may be sought. The ChoicePoint Bylaws
permit, but do not require, ChoicePoint to indemnify and advance expenses to
employees or agents of ChoicePoint who are not officers or directors to the same
extent and subject to the same conditions that a corporation could, without
shareholder approval under Section 14-2-856 of the GBCC. ChoicePoint's Articles
also provide that no director shall have any liability to the Company or to its
shareholders for monetary damages for any action taken, or any failure to take
action, including, without limitation, for breach of duty of care or other duty
as a director, except that there shall be no elimination or limitation of
liability of a director for any conduct described in above clauses (i) through
(iv). As a result of this provision, shareholders may be unable to recover
monetary damages from directors for actions taken by them that constitute
negligence or gross negligence or that are in violation of their fiduciary
duties, although it may be possible to obtain injunctive or other equitable
relief with respect to such actions.
REGISTRATION RIGHTS
ChoicePoint expects to grant to the persons who receive ChoicePoint Common
Stock in the Kroll acquisition certain "demand" Registration Rights. The
Registration Rights become effective not sooner than one year after the date of
the Kroll acquisition. The registration rights, with certain limitations, grant
the holders thereof the right to have such shares registered under a
registration statement filed by ChoicePoint relating to the issuance of
ChoicePoint Common Stock. ChoicePoint will bear the expenses incident to the
registration requirements with respect to such registration rights, except that
such expenses shall not include any underwriting discount or commission,
Commission or state securities registration fees or transfer taxes relating to
such shares.
SHAREHOLDER RIGHTS PLAN
The ChoicePoint Board of Directors anticipates adopting a Shareholder
Rights Plan (the "Rights Plan") after the Spinoff. If adopted, the Rights Plan
will contain provisions to protect the Company's shareholders in the event of an
unsolicited offer to acquire the Company, including offers that do not treat all
shareholders equally, the acquisition in the open market of shares constituting
control without offering fair value to all shareholders, and other coercive,
unfair or inadequate takeover bids and practices that could impair the ability
of the ChoicePoint Board of Directors to represent shareholders' interests
fully. Pursuant to the Rights Plan, if adopted, the ChoicePoint Board of
Directors is expected to declare a dividend of one Share Purchase Right (a
"Right") for each outstanding share of the Company's Common Stock as of a record
date established by the Board of Directors. The Rights will be represented by,
and trade together with, the
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<PAGE> 59
Company's Common Stock. The Rights will not be currently exercisable and will
not become exercisable unless certain triggering events occur. Among the
triggering events will be the acquisition of 20% or more of the Company's Common
Stock by a person or group of affiliated or associated persons. Unless
previously redeemed by the ChoicePoint Board of Directors, upon the occurrence
of one of the specified triggering events, each Right that is not held by the
20% or more shareholder will entitle its holder to purchase one share of
ChoicePoint Common Stock or, under certain circumstances, additional shares of
Common Stock at a discounted price. The Rights will cause substantial dilution
to a person or group that attempts to acquire ChoicePoint on terms not approved
by the ChoicePoint Board of Directors. Thus, the Rights are intended to
encourage persons who may seek to acquire control of ChoicePoint to initiate
such an acquisition through negotiations with the Board of Directors.
OTHER MATTERS
The ChoicePoint Common Stock has been approved for listing on the New York
Stock Exchange, subject to official notice of issuance, under the symbol CPS.
The transfer agent and registrar for the ChoicePoint Common Stock is
SunTrust Bank, Atlanta.
LEGAL MATTERS
The validity of the shares of ChoicePoint Common Stock distributed hereby
will be passed upon for ChoicePoint by Hunton & Williams, Atlanta, Georgia.
EXPERTS
The consolidated balance sheets of ChoicePoint Inc. as of December 31, 1996
and 1995 and the related consolidated statements of income, shareholder's equity
and cash flows for each of the three years in the period ended December 31,
1996, and the Consolidated Financial Statements of CDB Infotek as of December
31, 1995 and for the year then ended, have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their reports with respect
thereto, and are included herein in reliance upon the authority of said firm as
experts in accounting and auditing in giving said reports.
ADDITIONAL INFORMATION
ChoicePoint has filed the Registration Statement with the Securities and
Exchange Commission (the "SEC") concerning the shares of ChoicePoint Common
Stock being received by Equifax shareholders in the Spinoff. This Prospectus
does not contain all of the information set forth in the Registration Statement
and the exhibits and schedules thereto. With respect to each contract, agreement
or other document filed as an exhibit to the Registration Statement, reference
is made to such exhibit for a more complete description of the matter involved,
and each statement made in this document concerning the contents of any such
contract, agreement or other document shall be deemed qualified in its entirety
by such reference.
Following the Spinoff, ChoicePoint will be required to comply with the
reporting requirements of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and, in accordance therewith, will file annual, quarterly and
other reports, proxy and information statements and other information with the
SEC. ChoicePoint will be subject to the proxy solicitation requirements of the
Exchange Act and, accordingly, will furnish audited financial statements to its
shareholders in connection with its annual meetings of shareholders. Such
reports, proxy and other information and the Registration Statement and the
exhibits and schedules thereto filed by ChoicePoint may be inspected and copied
at the public reference facilities maintained by the SEC at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, as well as at the Regional Offices of the
SEC at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661 and 7 World Trade Center, Suite 1300, New York, New York 10048. Copies of
such information can be obtained by mail from the Public Reference Branch of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed
rates. Such materials can also be inspected at the offices of the New York Stock
Exchange, 20
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Broad Street, New York, New York 10005 or accessed electronically by means of
the SEC's home page on the Internet (http://www.sec.gov).
No person is authorized by Equifax or ChoicePoint to give any information
or to make any representations other than those contained in this document, and
if given or made, such information or representations must not be relied upon as
having been authorized.
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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
CHOICEPOINT INC.
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Auditors............................ F-2
Consolidated Statements of Income......................... F-3
Consolidated Balance Sheets............................... F-4
Consolidated Statements of Shareholder's Equity........... F-5
Consolidated Statements of Cash Flows..................... F-6
Notes to Consolidated Financial Statements................ F-7
CDB INFOTEK
Report of Independent Public Accountants.................. F-18
Consolidated Statements of Income......................... F-19
Consolidated Balance Sheets............................... F-20
Consolidated Statement of Stockholders' Equity............ F-21
Consolidated Statements of Cash Flows..................... F-22
Notes to Consolidated Financial Statements................ F-23
</TABLE>
F-1
<PAGE> 62
REPORT OF INDEPENDENT AUDITORS
To the Shareholder of ChoicePoint Inc.:
We have audited the accompanying consolidated balance sheets of the
business conducted through Equifax's Insurance Services Group (as defined in
Note 1), to be reorganized as ChoicePoint Inc. (a Georgia corporation) as of
December 31, 1996 and 1995, and the related consolidated statements of income,
shareholder's equity and cash flows for each of the three years in the period
ended December 31, 1996. 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 in accordance with generally accepted auditing
standards. Those standards 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. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the business conducted
through Equifax's Insurance Services Group as of December 31, 1996 and 1995, and
the results of its operations and its cash flows for each of the three years in
the period ended December 31, 1996, in conformity with generally accepted
accounting principles.
Arthur Andersen LLP
Atlanta, Georgia
April 15, 1997
F-2
<PAGE> 63
CHOICEPOINT INC.
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
QUARTER ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
--------------------- ------------------------------------
1997 1996 1996 1995 1994
-------- ------- -------- -------- --------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Operating revenue................. $102,852 $84,140 $366,481 $328,990 $284,566
-------- ------- -------- -------- --------
Costs and expenses:
Costs of services............... 68,359 59,422 252,118 221,045 205,590
Selling, general, and
administrative............... 22,295 15,712 66,752 66,867 62,399
Restructuring provision......... -- -- -- 9,150 --
-------- ------- -------- -------- --------
Total costs and
expenses.............. 90,654 75,134 318,870 297,062 267,989
Operating income.................. 12,198 9,006 47,611 31,928 16,577
Interest expense.................. 1,619 1,575 6,597 5,830 2,638
-------- ------- -------- -------- --------
Income before income taxes........ 10,579 7,431 41,014 26,098 13,939
Provision for income taxes........ 5,038 3,213 17,734 11,233 7,327
-------- ------- -------- -------- --------
Net income.............. $ 5,541 $ 4,218 $ 23,280 $ 14,865 $ 6,612
======== ======= ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-3
<PAGE> 64
CHOICEPOINT INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
MARCH 31, -------------------
1997 1996 1995
----------- -------- --------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents................................. $ 4,471 $ 1,726 $ 645
Accounts receivable, net of allowance for doubtful
accounts of $1,489 at March 31, 1997, $1,578 at
December 31, 1996 and $798 at
December 31, 1995...................................... 88,635 78,138 65,063
Deferred income tax assets................................ 4,753 3,984 8,428
Other current assets...................................... 10,894 8,083 4,023
-------- -------- --------
Total current assets.............................. 108,753 91,931 78,159
Property and Equipment, net................................. 38,635 35,407 19,796
Goodwill, net............................................... 121,309 123,997 67,513
Deferred Income Tax Assets.................................. 16,157 15,042 18,573
Other....................................................... 34,060 35,447 16,738
-------- -------- --------
Total Assets...................................... $318,914 $301,824 $200,779
======== ======== ========
LIABILITIES AND SHAREHOLDER'S EQUITY
Current Liabilities:
Current maturities of long-term debt...................... $ 864 $ 927 $ 4
Accounts payable.......................................... 13,537 12,828 9,680
Accrued salaries and bonuses.............................. 9,791 11,594 7,632
Other current liabilities................................. 24,074 19,616 23,104
-------- -------- --------
Total current liabilities......................... 48,266 44,965 40,420
Long-Term Debt, Less Current Maturities..................... 872 1,051 --
Postretirement Benefit Obligations.......................... 55,650 55,622 54,430
Other Long-Term Liabilities................................. 3,659 3,859 1,288
-------- -------- --------
Total Liabilities................................. 108,447 105,497 96,138
Commitments and Contingencies (Note 9)
Shareholder's Equity:
Equifax equity investment................................. 210,555 196,414 104,684
Foreign currency translation adjustments.................. (88) (87) (43)
-------- -------- --------
Total Shareholder's Equity........................ 210,467 196,327 104,641
-------- -------- --------
Total Liabilities and Shareholder's Equity........ $318,914 $301,824 $200,779
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated balance
sheets.
F-4
<PAGE> 65
CHOICEPOINT INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY
<TABLE>
<CAPTION>
FOREIGN
EQUIFAX CURRENCY
EQUITY TRANSLATION
INVESTMENT ADJUSTMENTS TOTAL
---------- ----------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Balance, December 31, 1993.................................. $ 13,961 $ -- $ 13,961
Net income................................................ 6,612 -- 6,612
Net transactions with Equifax............................. 15,892 -- 15,892
Translation adjustments................................... -- (76) (76)
Contribution from Equifax (Note 7)........................ 61,639 -- 61,639
-------- ---- --------
Balance, December 31, 1994.................................. 98,104 (76) 98,028
Net income................................................ 14,865 -- 14,865
Net transactions with Equifax............................. (8,285) -- (8,285)
Translation adjustments................................... -- 33 33
-------- ---- --------
Balance, December 31, 1995.................................. 104,684 (43) 104,641
Net income................................................ 23,280 -- 23,280
Net transactions with Equifax............................. 68,450 -- 68,450
Translation adjustments................................... -- (44) (44)
-------- ---- --------
Balance, December 31, 1996.................................. 196,414 (87) 196,327
Net income (Unaudited).................................... 5,541 -- 5,541
Net transactions with Equifax (Unaudited)................. 8,600 -- 8,600
Translation adjustments (Unaudited)....................... -- (1) (1)
-------- ---- --------
Balance, March 31, 1997 (Unaudited)......................... $210,555 $(88) $210,467
======== ==== ========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-5
<PAGE> 66
CHOICEPOINT INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
QUARTER ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
------------------- --------------------------------
1997 1996 1996 1995 1994
-------- ------- -------- -------- --------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income......................... $ 5,541 $ 4,218 $ 23,280 $ 14,865 $ 6,612
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation and amortization... 6,327 3,419 18,654 13,321 10,033
Restructuring provision, net of
cash payments................. -- -- -- 6,944 --
Changes in assets and
liabilities, excluding effects
of acquisitions:
Accounts receivable, net...... (10,555) (5,834) (7,362) (2,966) (9,247)
Current liabilities, excluding
debt....................... 3,389 (700) (60) (4,585) 2,818
Other current assets.......... (2,831) (156) (1,582) (486) (197)
Deferred income taxes......... (325) 449 2,052 (4,845) (2,391)
Other long-term liabilities,
excluding debt............. (171) 497 1,797 (2,008) 597
-------- ------- -------- -------- --------
Net cash provided by
operating activities..... 1,375 1,893 36,779 20,240 8,225
-------- ------- -------- -------- --------
Cash flows from investing activities:
Acquisitions, net of cash
acquired........................ -- -- (69,654) (1,421) (12,462)
Additions to property and
equipment....................... (6,120) (2,206) (18,098) (5,355) (2,574)
Additions to other assets, net..... (1,065) (657) (4,034) (5,232) (3,040)
-------- ------- -------- -------- --------
Net cash used by investing
activities...................... (7,185) (2,863) (91,786) (12,008) (18,076)
-------- ------- -------- -------- --------
Cash flows from financing activities:
Payment of debt assumed in
acquisition..................... -- -- (11,778) -- --
Payments on long-term debt......... (241) (2) (315) (12) (1,008)
Net transactions with Equifax...... 8,826 3,570 68,159 (9,875) 13,394
-------- ------- -------- -------- --------
Net cash provided (used) by
financing activities............ 8,585 3,568 56,066 (9,887) 12,386
-------- ------- -------- -------- --------
Effect of foreign currency exchange
rates on cash...................... (30) (9) 22 23 13
-------- ------- -------- -------- --------
Net increase (decrease) in cash...... 2,745 2,589 1,081 (1,632) 2,548
Cash and cash equivalents, beginning
of period.......................... 1,726 645 645 2,277 (271)
-------- ------- -------- -------- --------
Cash and cash equivalents, end of
period............................. $ 4,471 $ 3,234 $ 1,726 $ 645 $ 2,277
======== ======= ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-6
<PAGE> 67
CHOICEPOINT INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS AND DISCLOSURES APPLICABLE TO MARCH 31, 1997 AND 1996 ARE UNAUDITED)
1. SPIN OFF AND BASIS OF PRESENTATION
In December 1996, the Board of Directors of Equifax Inc. ("Equifax")
announced that it planned to spin off the business conducted through Equifax's
Insurance Services Group to Equifax shareholders (the "Spinoff"). This Spinoff
is expected to occur on ("the Spinoff date") and will be accomplished
by forming ChoicePoint Inc. ("ChoicePoint" or the "Company"), transferring the
stock of the companies which comprise the Insurance Services Group to
ChoicePoint and then distributing all of the shares of Common Stock of
ChoicePoint to Equifax shareholders. Equifax shareholders will receive one share
of ChoicePoint Common Stock for every ten shares of Equifax Common Stock owned
as of the Record Date (which does not include two grantor trusts established by
Equifax). The actual total number of shares of ChoicePoint Common Stock to be
distributed will depend on the number of shares of Equifax Common Stock
outstanding on the Record Date. After the Spinoff, ChoicePoint and Equifax will
be two separate public companies.
The consolidated financial statements of ChoicePoint include substantially
all of the assets, liabilities, revenues, and expenses of the business conducted
through Equifax's Insurance Services Group. ChoicePoint operates in a single
industry segment and provides substantially all domestic insurance companies
with automated and traditional underwriting and claims information services to
assist companies in assessing the insurability of individuals and property and
the validity of insurance claims. ChoicePoint provides background
investigations, performs paramedical exams, furnishes access to motor vehicle
reports, maintains a database of claims histories and provides claims
verification and investigative services to both the property and casualty and
the life and health insurance markets. The Company also offers pre-employment
background investigations, pre-employment and regulatory compliance drug testing
services and public record information to other corporate and government
organizations. The Company's operations are predominantly located in the United
States.
All material transactions between entities included in the consolidated
financial statements have been eliminated. The consolidated financial statements
have been prepared on the historical cost basis, and present the Company's
financial position, results of operations and cash flows as derived from
Equifax's historical financial statements.
In conjunction with the separation of their businesses, ChoicePoint and
Equifax entered into various agreements that address the allocation of assets
and liabilities between them and that define their relationship after the
separation, including a Distribution Agreement, the Employee Benefits Agreement,
the Transition Support Agreement, the Intercompany Information Services
Agreement, the Intellectual Property Agreement, the Tax Sharing and
Indemnification Agreement, the Real Estate Agreements and the CUE UK Agreements.
2. SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates. The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions. These estimates and assumptions affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements as well as reported amounts
of revenues and expenses during the reporting period. Actual results could
differ from these estimates.
Revenue Presentation. Historically, motor vehicle records registry
revenue, the fee charged by states for motor vehicle records which is passed on
by ChoicePoint to its customers, has been reflected in Equifax's consolidated
statements of income as operating revenue and cost of services. ChoicePoint has
elected to exclude these customer reimbursed fees from revenue and reduce cost
of services by a corresponding amount. This change in accounting presentation
does not impact operating income. Registry revenue previously
F-7
<PAGE> 68
CHOICEPOINT INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
reflected in Equifax's consolidated statements of income was $63,922,000 in the
first quarter of 1997, $52,477,000 in the first quarter of 1996, $224,783,000 in
1996, $191,645,000 in 1995 and $171,893,000 in 1994.
Property and Equipment. Property and equipment at December 31, 1996 and
1995 consisted of the following:
<TABLE>
<CAPTION>
1996 1995
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Land, buildings, and improvements........................... $ 10,824 $ 5,087
Data processing equipment and furniture..................... 66,019 43,086
-------- --------
76,843 48,173
Less: Accumulated depreciation.............................. (41,436) (28,377)
-------- --------
$ 35,407 $ 19,796
======== ========
</TABLE>
The cost of property and equipment is depreciated primarily on the
straight-line basis over estimated asset lives of 30 to 40 years for buildings;
useful lives, not to exceed lease terms, for leasehold improvements; three to
five years for data processing equipment and eight to 20 years for furniture.
Goodwill and Other Assets. Goodwill is amortized on a straight-line basis
over 20 to 40 years. Amortization expense was $2,873,000 in 1996, $2,013,000 in
1995, and $894,000 in 1994. As of December 31, 1996 and 1995, accumulated
amortization was $9,032,000 and $5,134,000, respectively.
Other assets at December 31, 1996 and 1995 consisted of the following:
<TABLE>
<CAPTION>
1996 1995
------- -------
(IN THOUSANDS)
<S> <C> <C>
Purchased software, datafiles, and technology............... $26,629 $14,126
Other....................................................... 8,818 2,612
------- -------
$35,447 $16,738
======= =======
</TABLE>
Purchased software, datafiles, and technology are being amortized on a
straight-line basis over five to ten years. Amortization expense for other
assets was $6,479,000 in 1996, $3,810,000 in 1995, and $2,913,000 in 1994. As of
December 31, 1996 and 1995, accumulated amortization was $17,719,000 and
$11,240,000, respectively.
The Company regularly evaluates whether events and circumstances have
occurred that indicate the carrying amount of goodwill or other assets may
warrant revision or may not be recoverable. When factors indicate that goodwill
or other assets should be evaluated for possible impairment, the Company uses an
estimate of the future undiscounted net cash flows of the related business over
the remaining life of the goodwill or other assets in measuring whether the
goodwill or other assets are recoverable.
Foreign Currency Translation. The assets and liabilities of foreign
subsidiaries are translated at the year-end rate of exchange and income
statement items are translated at the average rates prevailing during the year.
The resulting translation adjustment is recorded as a component of shareholder's
equity. Foreign currency transaction gains and losses, which are not material,
are recorded in the consolidated statements of income.
Consolidated Statements of Cash Flows. The Company considers cash
equivalents to be short-term cash investments with original maturities of three
months or less.
F-8
<PAGE> 69
CHOICEPOINT INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Tax provisions are settled through the intercompany account and Equifax
makes income tax payments on behalf of the Company. Based on the income tax
returns filed, or to be filed, the amounts paid would have been approximately
$14,842,000 in 1996, $8,723,000 in 1995, and $5,962,000 in 1994.
Interest paid on long-term debt, excluding amounts charged by Equifax,
totaled $147,000 in 1996, $200,000 in 1995, and $131,000 in 1994.
In 1996, 1995 and 1994, the Company acquired various businesses that were
accounted for as purchases (Note 3). In conjunction with these transactions,
liabilities were assumed as follows:
<TABLE>
<CAPTION>
1996 1995 1994
------- ------ -------
(IN THOUSANDS)
<S> <C> <C> <C>
Fair value of assets acquired.............................. $97,204 $1,438 $82,970
Cash paid for acquisitions................................. 71,661 1,421 14,146
Contribution by Equifax (Note 7)........................... -- -- 60,000
------- ------ -------
Liabilities assumed........................................ $25,543 $ 17 $ 8,824
======= ====== =======
</TABLE>
Financial Instruments. The Company's financial instruments consist
primarily of cash and cash equivalents, accounts and notes receivable, accounts
payable and long-term debt. The carrying amounts of these items approximate
their fair market values. During 1996, the Company did not hold any derivative
financial instruments.
Earnings Per Share. Historical earnings per share are not presented since
the companies that comprise ChoicePoint were majority-owned subsidiaries of
Equifax or one of its affiliates and will be recapitalized as part of the
Spinoff.
3. ACQUISITIONS
During 1996, 1995 and 1994, the Company acquired or made equity investments
in the following businesses:
<TABLE>
<CAPTION>
DATE PERCENTAGE
BUSINESS ACQUIRED OWNERSHIP
- -------- ------------- ----------
<S> <C> <C>
CDB Infotek................................................. August 1996 70.0%
Professional Test Administrators, Inc....................... April 1996 100.0
Vallance and Associates, Inc................................ February 1995 100.0
Osborn Laboratories, Inc.................................... November 1994 100.0
Programming Resources Company............................... April 1994 100.0
</TABLE>
The 1996 acquisitions were accounted for as purchases and had an aggregate
purchase price of $71,661,000, with $59,457,000 allocated to goodwill, and
$20,932,000 to other intangible assets (primarily purchased datafiles and
software). Their results of operations have been included in the consolidated
statements of income from the dates of acquisition.
Additional consideration of up to $20.0 million may be paid for the 1996
acquisition of CDB Infotek based on its future operating performance. In
addition, the Company entered into an option agreement with the remaining
shareholders of CDB Infotek. The agreement grants the Company an option to
purchase the remaining 30% interest in CDB Infotek (the "Call Option") and an
option for the remaining shareholders to sell their 30% interest to the Company
(the "Put Option"). The options may be exercised at any time after December 31,
1999. The Put Option will expire on the later of June 30, 2000 or the date that
is 90 days after the final determination of the option price and the Call Option
has no expiration date. The exercise date may be accelerated upon the breach of
certain obligations. If certain 1999 operating results are met, then the option
price is determined by a formula not to exceed $53.0 million. If certain 1999
operating results are not met,
F-9
<PAGE> 70
CHOICEPOINT INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
and both parties cannot mutually agree on an option price, then the option price
is determined by an independent appraisal, not to exceed $25.5 million.
The following unaudited pro forma information has been prepared as if the
1996 acquisition of CDB Infotek had occurred on January 1, 1995. The information
is based on historical results of the separate companies and may not necessarily
be indicative of the results that could have been achieved or of results which
may occur in the future. The pro forma information includes the expense for
amortization of goodwill and other intangible assets resulting from this
transaction.
<TABLE>
<CAPTION>
1996 1995
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Revenue..................................................... $389,262 $361,010
Net Income.................................................. 20,904 12,765
</TABLE>
The 1995 acquisition was accounted for as a purchase and had an aggregate
purchase price of $1,421,000, with $1,222,000 allocated to goodwill and $216,000
to other intangible assets (noncompete agreement). The results of operations
have been included in the consolidated statements of income from the date of
acquisition and were not material.
The 1994 acquisitions were accounted for as purchases and had an aggregate
purchase price of $74,146,000, with $54,486,000 allocated to goodwill, and
$10,908,000 to other intangible assets (primarily purchased software and
technology). Their results of operations have been included in the consolidated
statements of income from the dates of acquisition. They were purchased using a
combination of cash totaling $14,146,000, and the contribution by Equifax of
$60,000,000 (Note 7).
4. TRANSACTIONS WITH EQUIFAX
There are no material intercompany purchase or sale transactions between
Equifax and ChoicePoint. Under Equifax's centralized cash management system,
short-term advances from Equifax and excess cash sent to Equifax are reflected
as intercompany debt and are included in Equifax equity investment in the
accompanying balance sheets (Note 7). ChoicePoint was charged corporate costs in
the amount of $2,551,000 in the first quarter of 1997, $2,815,000 in the first
quarter of 1996, $11,260,000 in 1996, $11,833,000 in 1995, and $11,065,000 in
1994. These allocations were based on an estimate of the proportion of corporate
expenses related to ChoicePoint, utilizing such factors as revenues, number of
employees, number of transactions processed and other applicable factors. In the
opinion of management, the corporate charges have been made on a reasonable
basis and approximate all the incremental costs ChoicePoint would have incurred
had it been operating on a stand-alone basis. These amounts have been included
in selling, general, and administrative expenses. ChoicePoint was also charged
corporate interest expense based on the relationship of its net assets to total
Equifax net assets, excluding corporate debt, in amounts of $1,547,000 in the
first quarter of 1997, $1,554,000 in the first quarter of 1996, $6,215,000 in
1996, $5,401,000 in 1995, and $2,489,000 in 1994. These amounts are included in
interest expense. Intercompany debt as of March 31, 1997 and December 31, 1996
was $92,593,000 and $83,993,000, respectively, and is included in Equifax equity
investment in the accompanying balance sheets.
F-10
<PAGE> 71
CHOICEPOINT INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
5. LONG-TERM DEBT, SHORT-TERM BORROWINGS, AND CREDIT FACILITY
Long-term debt at December 31, 1996 and 1995 is as follows:
<TABLE>
<CAPTION>
1996 1995
------ ----
(IN THOUSANDS)
<S> <C> <C>
Capital leases.............................................. $1,978 $ 4
Less current maturities..................................... (927) (4)
------ ----
$1,051 $ 0
====== ====
</TABLE>
Scheduled maturities of long-term debt during the five years subsequent to
December 31, 1996 are as follows: $927,000 in 1997, $596,000 in 1998, $372,000
in 1999, $83,000 in 2000, and $0 in 2001.
There were no short-term borrowings during 1996 and 1995.
ChoicePoint will arrange a $250 million unsecured revolving credit facility
(the "Credit Facility") with a group of banks. The Credit Facility will be a
revolving facility expandable to $300 million, subject to approval of the
lenders. All obligations of ChoicePoint are guaranteed by all future
subsidiaries. The Credit Facility will be used to repay the net intercompany
debt due to Equifax (Note 7), to repay $29.0 million of Equifax debt to be
assumed by ChoicePoint, to purchase approximately $6.5 million of ChoicePoint
Common Stock in the open market after the Mail Date for two grantor trusts and
for general corporate purposes and for acquisitions. The commitment termination
date and final maturity of the Credit Facility will occur five years after the
closing of the Credit Facility.
Revolving loans under the Credit Facility will bear interest at the
following rates as applicable and selected by the Company from time to time: (1)
the lender's Base Rate, (2) LIBOR plus the applicable margin, (3) the lender's
Cost of Funds plus the applicable margin, and (4) the Competitive Bid Rate
offered by the syndicate lenders at their discretion. The applicable margin will
range from .16% to .45% per annum based on ChoicePoint's leverage ratio. Any
amount not paid when due shall bear interest at the applicable rate plus 2%. At
the end of the applicable interest period for LIBOR or Bid Rate Loans, interest
shall accrue at the Base Rate plus 2%. The Company will also pay customary
annual facility fees based upon its leverage ratio.
The Credit Facility will contain covenants customary for facilities of this
type. Such covenants include limitations, in certain circumstances, on the
ability of the Company and its subsidiaries to (i) effect a change of control of
the Company, (ii) incur certain types of liens, and (iii) transfer or sell
assets. The Credit Facility also requires compliance with financial covenants,
including (i) maximum leverage and (ii) minimum fixed charge coverage.
6. INCOME TAXES
Historically, the Company has been included in the consolidated federal
income tax return of Equifax. ChoicePoint's provision for income taxes in the
accompanying consolidated statements of income reflects federal and state income
taxes calculated on ChoicePoint's separate income, but recognizes the impact of
unitary tax regulations of certain states on ChoicePoint as a member of the
Equifax consolidated group.
The Company records deferred income taxes using enacted tax laws and rates
for the years in which the taxes are expected to be paid. Deferred income tax
assets and liabilities are recorded based on the differences between the
financial reporting and income tax bases of assets and liabilities.
F-11
<PAGE> 72
CHOICEPOINT INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The provision for income taxes consists of the following:
<TABLE>
<CAPTION>
1996 1995 1994
------- ------- ------
(IN THOUSANDS)
<S> <C> <C> <C>
Current:
Federal.................................................. $12,538 $10,890 $3,729
State.................................................... 4,048 2,431 2,041
Foreign.................................................. 444 186 8
------- ------- ------
17,030 13,507 5,778
------- ------- ------
Deferred:
Federal.................................................. 878 (2,863) 997
State.................................................... (169) 589 552
Foreign.................................................. (5) -- --
------- ------- ------
704 (2,274) 1,549
------- ------- ------
Total............................................ $17,734 $11,233 $7,327
======= ======= ======
</TABLE>
The provision for income taxes is based upon income before income taxes as
follows:
<TABLE>
<CAPTION>
1996 1995 1994
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
United States............................................. $38,373 $25,394 $15,837
Foreign................................................... 2,641 704 (1,898)
------- ------- -------
$41,014 $26,098 $13,939
======= ======= =======
</TABLE>
The provision for income taxes is reconciled with the federal statutory
rate as follows:
<TABLE>
<CAPTION>
1996 1995 1994
------- ------- ------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Federal statutory rate..................................... 35.0% 35.0% 35.0%
Provision computed at federal statutory rate............... $14,355 $ 9,134 $4,879
State and local taxes, net of federal tax benefit.......... 2,521 1,963 1,685
Tax effect resulting from foreign activities............... (726) (105) 671
Goodwill amortization...................................... 867 567 201
Other...................................................... 717 (326) (109)
------- ------- ------
$17,734 $11,233 $7,327
======= ======= ======
Overall effective rate..................................... 43.2% 43.0% 52.6%
</TABLE>
F-12
<PAGE> 73
CHOICEPOINT INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Components of the Company's deferred income tax assets and liabilities at
December 31, 1996 and 1995 are as follows:
<TABLE>
<CAPTION>
1996 1995
------- -------
(IN THOUSANDS)
<S> <C> <C>
Deferred income tax assets:
Postretirement benefits................................... $22,804 $22,558
Reserves and accrued expenses............................. 3,870 8,411
Employee compensation programs............................ 2,374 407
Other..................................................... 1,318 1,440
------- -------
30,366 32,816
------- -------
Deferred income tax liabilities:
Purchased software, datafiles, technology, and other
assets................................................. (7,824) (1,518)
Depreciation.............................................. (1,653) (1,782)
Deferred expenses......................................... (1,667) (241)
Other..................................................... (196) (2,274)
------- -------
(11,340) (5,815)
------- -------
Net deferred income tax assets.................... $19,026 $27,001
======= =======
</TABLE>
Accumulated undistributed retained earnings of the Canadian subsidiary are
not considered material at December 31, 1996.
7. SHAREHOLDER'S EQUITY
Equifax Equity Investment. Equifax equity investment includes the original
investment in ChoicePoint, accumulated income of ChoicePoint, and the net
intercompany payable due to Equifax reflecting transactions described in Note 4.
As of March 31, 1997 and December 31, 1996 and 1995, the net intercompany
payable due to Equifax included in Equifax equity investment in the accompanying
balance sheets was $92,593,000, $83,993,000 and $15,543,000, respectively.
Contribution from Equifax. One of the Company's 1994 acquisitions was
acquired by Equifax using cash and the issuance of treasury shares totaling
$60,000,000 in 1994 and $1,639,000 in 1995. As part of the Spinoff, Equifax will
transfer all of the issued and outstanding shares of capital stock of this
acquisition to ChoicePoint. The accompanying financial statements reflect this
transfer as a capital contribution in 1994.
Stock Options. Equifax has certain Stock Option Plans (the "Plans") under
which incentive stock options and non-qualified stock options may be granted to
officers, key employees and directors of Equifax. In connection with the
separation of ChoicePoint from Equifax, stock options under the Plans that are
not exercised prior to the date of the Spinoff will be adjusted. Upon the
Spinoff and except as set forth below, ChoicePoint employees will retain their
vested options to purchase Equifax Common Stock under various Equifax
equity-based compensation plans. Although they will forfeit their unvested
Equifax Stock Options, they will receive options to purchase ChoicePoint Common
Stock. Certain senior officers of ChoicePoint will be permitted to choose either
to retain vested Equifax stock options or have their vested Equifax stock
options replaced with ChoicePoint stock options in amounts and at exercise
prices intended to preserve the economic benefit of the Equifax stock options at
such time. The fair market value of Equifax Common Stock immediately before the
Spinoff and the fair market value of ChoicePoint Common Stock, upon the
commencement of regular way trading, will also impact the number of options
issued to ChoicePoint employees. The number of shares of Equifax Common Stock
subject to options held by option holders expected to become ChoicePoint
employees at December 31, 1996 was 1,510,000. The exercise price of such options
range from $8.13 to $27.94. The ultimate number of Equifax stock options to be
held by ChoicePoint
F-13
<PAGE> 74
CHOICEPOINT INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
employees at December 31, 1996 and the number and exercise price of the
ChoicePoint stock options to be issued, subject to the above calculation, cannot
yet be determined.
1997 Omnibus Stock Incentive Plan. ChoicePoint intends to adopt a 1997
Omnibus Stock Incentive Plan (the "Omnibus Plan"). The Omnibus Plan will
authorize grants of stock options, stock appreciation rights, restricted stock,
deferred shares, performance shares and performance units for an aggregate of
four million shares of ChoicePoint Common Stock. With the exception of the
Equifax stock options that are being replaced with ChoicePoint stock options,
the Omnibus Plan will require options to be granted at no less than fair value.
Shareholder Rights Plan. The Company's Board of Directors anticipates
adopting a Shareholder Rights Plan (the "Rights Plan") after the Spinoff. If
adopted, the Rights Plan will contain provisions to protect the Company's
shareholders in the event of an unsolicited offer to acquire the Company,
including offers that do not treat all shareholders equally, the acquisition in
the open market of shares constituting control without offering fair value to
all shareholders, and other coercive, unfair or inadequate takeover bids and
practices that could impair the ability of the ChoicePoint Board of Directors to
represent shareholders' interests fully. Pursuant to the Rights Plan, if
adopted, the ChoicePoint Board of Directors is expected to declare a dividend of
one Share Purchase Right (a "Right") for each outstanding share of the Company's
Common Stock as of a record date established by the Board of Directors. The
Rights will be represented by, and trade together with, the Company's Common
Stock. The Rights will not be immediately exercisable and will not become
exercisable unless certain triggering events occur. Among the triggering events
is the acquisition of 20% or more of the Company's Common Stock by a person or
group of affiliated or associated persons. Unless previously redeemed by the
ChoicePoint Board of Directors, upon the occurrence of one of the specified
triggering events, each Right that is not held by the 20% or more shareholder
will entitle its holder to purchase one share of common stock or, under certain
circumstances, additional shares of common stock at a discounted price.
Grantor Trusts. ChoicePoint intends to establish two grantor trusts to
which the Company will transfer cash with the intention of purchasing
approximately 325,000 shares of ChoicePoint Common Stock for distribution under
its various compensation and benefit plans. The purchase of such shares by these
trusts will occur as soon as reasonably practicable after the Spinoff.
Common And Preferred Stock. ChoicePoint expects to have 100 million shares
of ChoicePoint Common Stock, par value $.10 per share, authorized and 10 million
shares of Preferred Stock, par value $.01 per share (the "Preferred Stock")
authorized as of the date of the Spinoff. No shares of Preferred Stock are
expected to be issued as of the Spinoff date.
8. EMPLOYEE BENEFITS
United States Retirement Income Plan. Historically, the Company has
participated in the Equifax United States Retirement Income Plan (the "Plan").
The Plan is a non-contributory defined benefit qualified retirement plan that
covers most salaried employees. Under the Plan, retirement benefits are
primarily a function of years of service and the level of compensation during
the final years of employment. Total pension expense allocated to ChoicePoint
and included in the Company's financial results, was $3,310,000 in 1996,
$3,356,000 in 1995 and $2,198,000 in 1994. The expenses for the Plan, other than
service costs (which are allocated directly), are allocated to the companies
comprising the Insurance Services Group based on the relative projected benefit
obligations for Insurance Services Group employees compared with the obligations
for all participants. In the opinion of management, the expenses have been
allocated on a reasonable basis and were actuarially allocated to approximate
the expense ChoicePoint would have incurred had it been operating on a
stand-alone basis.
ChoicePoint has not adopted a defined benefit plan for its employees;
however, it anticipates adopting a profit sharing plan, as described below,
after the Spinoff.
F-14
<PAGE> 75
CHOICEPOINT INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Retirement Savings Plan. Equifax's retirement savings plan provides for
annual contributions at the discretion of the Board of Directors for the benefit
of eligible employees, including ChoicePoint employees, in the form of cash or
shares of the Company's common stock. The Company's portion of expense for this
plan was $1,632,000 in 1996, $1,600,000 in 1995 and $1,349,000 in 1994 and is
included in the Company's financial results. The expense for the Retirement
Savings Plan is a direct function of the contributions made by the participants
employed by the Insurance Services Group. In the opinion of management, the
expenses have been allocated on a reasonable basis and approximate all the
expenses ChoicePoint would have incurred had it been operating on a stand-alone
basis.
ChoicePoint will adopt a 401(k) profit sharing plan, under which eligible
Company employees may contribute up to 16% of their compensation. ChoicePoint
intends to make minimum matching contributions in the form of ChoicePoint Common
Stock equal to 25% of employee contributions up to the first 6% of an employee's
contributions. Employee contributions will be invested in one of the available
investment funds, including a ChoicePoint stock fund. Matching contributions
will be invested in the ChoicePoint stock fund. ChoicePoint may make additional
contributions based on achievement of targeted performance levels. ChoicePoint
will also adopt a defined contribution plan for certain employees to offset the
adverse impact of transitioning out of Equifax's defined benefit pension plan.
Postretirement Benefits. The Company provides certain healthcare and life
insurance benefits for eligible retired employees. Healthcare benefits are
provided through a trust, while life insurance benefits are provided through an
insurance company. The Company accrues the cost of providing postretirement
benefits for medical and life insurance coverage over the active service period
of each employee.
The following table presents a reconciliation of the plan's funded status
at December 31, 1996 and 1995:
<TABLE>
<CAPTION>
1996 1995
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees.................................................. $ 47,599 $ 51,649
Fully eligible active plan participants................... 3,605 5,528
Other active participants................................. 4,826 5,875
-------- --------
56,030 63,052
Plan assets at fair value................................... -- --
-------- --------
Accumulated benefit obligation in excess of plan assets..... (56,030) (63,052)
Unrecognized prior service credit due to plan amendments.... (8,457) (6,950)
Unrecognized net losses..................................... 5,865 12,013
-------- --------
(58,622) (57,989)
Less: Current portion..................................... (3,000) (3,559)
-------- --------
Accrued postretirement benefit obligation................... $(55,622) $(54,430)
======== ========
</TABLE>
The current portion is included in other current liabilities in the accompanying
balance sheets.
Net periodic postretirement benefit expense includes the following
components:
<TABLE>
<CAPTION>
1996 1995 1994
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Service cost.......................................... $ 823 $ 935 $ 1,028
Interest cost on accumulated benefit obligation....... 3,667 4,499 4,095
Amortization of prior service credit.................. (2,652) (2,318) (2,463)
Amortization of losses................................ 118 -- 455
------- ------- -------
Net periodic postretirement benefit expense........... $ 1,956 $ 3,116 $ 3,115
======= ======= =======
</TABLE>
F-15
<PAGE> 76
CHOICEPOINT INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Assumptions used in the computation of postretirement benefit expense and
the related obligation are as follows:
<TABLE>
<CAPTION>
1996 1995 1994
----- ----- -----
<S> <C> <C> <C>
Discount rate used to determine accumulated postretirement
benefit obligation at December 31......................... 7.50% 7.25% 8.75%
Initial healthcare cost trend rate.......................... 10.50% 11.00% 11.00%
Ultimate healthcare cost trend rate......................... 6.00% 6.00% 6.00%
Year ultimate healthcare cost trend rate reached............ 2005 2005 2005
</TABLE>
If the healthcare cost trend rate were increased 1% for all future years,
the accumulated postretirement benefit obligation as of December 31, 1996 would
have increased 12.2%. The effect of such a change on the aggregate of service
and interest cost for 1996 would have been an increase of 8.7%.
The Company continues to evaluate ways in which it can better manage these
benefits and control its costs. Any changes in the plan, revisions to
assumptions, or changes in the Medicare program that affect the amount of
expected future benefits may have a significant effect on the amount of the
reported obligation and future annual expense.
9. COMMITMENTS AND CONTINGENCIES
Leases. The Company's operating leases involve principally office space
and office equipment. Rental expense relating to these leases was $13,353,000 in
1996, $10,655,000 in 1995, and $11,511,000 in 1994.
Future minimum payment obligations for noncancelable operating leases
exceeding one year are as follows as of December 31, 1996:
<TABLE>
<CAPTION>
AMOUNT
--------------
(IN THOUSANDS)
<S> <C>
1997........................................................ $11,217
1998........................................................ 8,584
1999........................................................ 6,520
2000........................................................ 4,613
2001........................................................ 2,584
Thereafter.................................................. 7,417
-------
$40,935
=======
</TABLE>
Data Processing Services Agreement. In April 1993, the Company began
outsourcing a portion of its computer data processing operations and related
functions to Integrated Systems Solutions Corporation ("ISSC"), a subsidiary of
IBM. In 1995 a new five-year outsourcing agreement was reached with ISSC. Under
the terms of the agreement, the Company will pay ISSC an estimated $3.5 million
a year over the five-year term of the agreement, although this amount could be
more or less depending upon various factors such as the inflation rate, the
introduction of significant new technologies or changes in the Company's data
processing needs as a result of acquisitions or divestitures. Under certain
circumstances (e.g., a change in control of the Company), the Company may cancel
the ISSC agreement; however, the agreement provides that the Company must pay a
significant penalty in the event of such a cancellation.
Change in Control Provisions in Employment Agreements. The Company intends
to enter into employment agreements with certain executive officers prior to the
Spinoff which will provide certain severance pay and benefits in the event of a
"change in control" of ChoicePoint, which includes the acquisition of more than
50% of ChoicePoint's outstanding common stock by an entity or a concerted group
of entities.
F-16
<PAGE> 77
CHOICEPOINT INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The severance payment is a derivative of annual compensation multiplied by a
factor not to exceed three plus payments for other benefits.
Litigation. A limited number of lawsuits seeking damages are brought
against the Company each year. The Company provides for estimated legal fees and
settlements relating to pending lawsuits. In the opinion of management, the
ultimate resolution of these matters will not have a materially adverse effect
on the Company's financial position, liquidity or results of operations. The
accrued liability for litigation at December 31, 1996 and 1995 was $3,749,000
and $2,730,000 respectively, and is included in other current liabilities in the
accompanying balance sheets.
10. RESTRUCTURING
In the fourth quarter of 1995, the Company initiated a restructuring
program designed to streamline operations by reducing staffing levels and
consolidating facilities. Staffing levels were reduced by approximately 750
employees. The total cost of this program was $9,150,000. Components of the
restructuring provision and utilization through December 31, 1996 are as
follows:
<TABLE>
<CAPTION>
SEVERANCE AND
TERMINATION LEASE
BENEFITS COSTS TOTAL
------------- ------ -------
(IN THOUSANDS)
<S> <C> <C> <C>
Original provision.................................. $ 7,470 $1,680 $ 9,150
Utilized in 1995.................................. (1,291) (915) (2,206)
------- ------ -------
Balance, December 31, 1995.......................... 6,179 765 6,944
Utilized in 1996.................................. (4,973) (765) (5,738)
------- ------ -------
Balance, December 31, 1996.......................... $ 1,206 $ -- $ 1,206
======= ====== =======
</TABLE>
The reserve balance is included in other current liabilities in the accompanying
balance sheets.
11. QUARTERLY FINANCIAL SUMMARY (UNAUDITED)
Following is a summary of the unaudited interim results of operations for
each quarter in the years ended December 31, 1996 and 1995:
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER TOTAL
------- ------- ------- ------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1996
Revenue....................................... $84,140 $89,986 $94,354 $98,001 $366,481
Operating income.............................. 9,006 12,546 13,744 12,315 47,611
Net income.................................... 4,218 6,207 6,888 5,967 23,280
Year ended December 31, 1995
Revenue....................................... $82,042 $84,370 $82,190 $80,388 $328,990
Operating income.............................. 8,866 10,074 10,566 2,422 31,928
Net income.................................... 4,266 4,904 5,222 473 14,865
</TABLE>
Operating income decreased in the fourth quarter of 1996 due primarily to
the dilutive effect of the amortization of intangibles related to the CDB
Infotek acquisition in August 1996. The fourth quarter of 1995 includes a
$9,150,000 pre-tax ($5,582,000 after-tax) restructuring charge.
F-17
<PAGE> 78
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of CDB Infotek:
We have audited the accompanying consolidated balance sheet of CDB INFOTEK
(a California corporation) and subsidiaries as of December 31, 1995, and the
related consolidated statements of income, stockholders' equity and cash flows
for the year then ended. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards 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. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of CDB Infotek and subsidiaries
as of December 31, 1995, and the results of their operations and their cash
flows for the year then ended in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Orange County, California
April 24, 1996
F-18
<PAGE> 79
CDB INFOTEK
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1995 AND THE SIX MONTHS ENDED JUNE 30, 1995 AND
1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30, JUNE 30,
1995 1995 1996
------------ -------- --------
(AUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
NET REVENUES......................................... $32,020 $16,643 $17,084
------- ------- -------
COSTS AND EXPENSES:
Direct costs....................................... 14,170 7,355 7,149
Depreciation and amortization...................... 3,884 2,130 2,132
Selling and marketing.............................. 5,135 2,518 2,189
General and administrative......................... 3,447 1,738 1,898
Non-recurring expenses and acquisition costs....... 1,363 1,136 --
------- ------- -------
27,999 14,877 13,368
------- ------- -------
Income from operations............................. 4,021 1,766 3,716
------- ------- -------
OTHER INCOME (EXPENSE):
Interest expense, net.............................. (1,688) (584) (578)
Other, net......................................... 4 (22) (63)
------- ------- -------
(1,684) (606) (641)
------- ------- -------
Income before provision for income taxes........... 2,337 1,160 3,075
------- ------- -------
PROVISION FOR INCOME TAXES........................... 1,209 605 1,354
------- ------- -------
NET INCOME........................................... $ 1,128 $ 555 $ 1,721
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-19
<PAGE> 80
CDB INFOTEK
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1995 AND JUNE 30, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1995 1996
------------ -----------
(AUDITED) (UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................................. $ 660 $ 907
Accounts receivable, net of allowance for doubtful
accounts of $354 and $304 in 1995 and 1996,
respectively........................................... 4,455 5,195
Other receivables......................................... 650 108
Prepaid expenses.......................................... 586 513
Income taxes receivable................................... 159 --
Deferred income tax benefit............................... 460 515
------- -------
Total Current Assets.............................. 6,970 7,238
------- -------
PROPERTY AND EQUIPMENT, at cost............................. 17,821 19,616
Less -- Accumulated depreciation and amortization......... 6,470 8,280
------- -------
11,351 11,336
------- -------
INTANGIBLE AND OTHER ASSETS, net............................ 3,921 3,605
------- -------
Total Assets...................................... $22,242 $22,179
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long term debt...................... $ 2,600 $ 2,600
Current maturities of capital leases...................... 870 890
Accounts payable.......................................... 1,810 1,060
Accrued expenses.......................................... 1,442 1,374
Accrued employee benefits................................. 387 690
Income taxes payable...................................... -- 456
Deferred rent............................................. 39 18
------- -------
Total Current Liabilities......................... 7,148 7,088
------- -------
LONG TERM DEBT, net of current maturities................... 10,400 9,100
CAPITAL LEASES, net of current maturities................... 2,055 1,557
DEFERRED RENT............................................... 192 174
DEFERRED INCOME TAXES....................................... 2,120 2,212
------- -------
Total Liabilities................................. 21,915 20,131
------- -------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, no par value, 20,000,000 shares authorized,
10,832,214 shares issued and outstanding, stated at.... 8,195 8,195
Retained deficit.......................................... (7,868) (6,147)
------- -------
Total stockholders' equity........................ 327 2,048
------- -------
Total Liabilities and Stockholders' Equity........ $22,242 $22,179
======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-20
<PAGE> 81
CDB INFOTEK
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1995, AND THE SIX MONTHS ENDED JUNE 30, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
RETAINED EARNINGS AND
ACCUMULATED DEFICIT
PREFERRED STOCK COMMON STOCK -------------------------------------
------------------- ------------------- PREMIUM PAID TOTAL TOTAL
NUMBER OF NUMBER OF RETAINED ON STOCK ACCUMULATED STOCKHOLDERS'
SHARES AMOUNT SHARES AMOUNT EARNINGS REPURCHASES DEFICIT EQUITY
---------- ------ ---------- ------ -------- ------------ ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE, December 31,
1994.................. 2,750,000 $2,700 6,801,527 $ 15 $2,417 $ (2,040) $ 377 $ 3,092
---------- ------ ---------- ------ ------ -------- ------- --------
Repurchase of preferred
stock, common stock
and warrants.......... (2,750,000) (2,700) (218,313) (664) -- (9,373) (9,373) (12,737)
Issuance of common stock
in connection with
acquisitions.......... -- -- 4,249,000 8,844 -- 8,844
Net Income.............. -- -- -- -- 1,128 -- 1,128 1,128
---------- ------ ---------- ------ ------ -------- ------- --------
BALANCE, December 31,
1995.................. -- -- 10,832,214 8,195 3,545 (11,413) (7,868) 327
---------- ------ ---------- ------ ------ -------- ------- --------
Net Income (unaudited).. -- -- -- -- 1,721 -- 1,721 1,721
---------- ------ ---------- ------ ------ -------- ------- --------
BALANCE, June 30, 1996
(unaudited)........... -- -- 10,832,214 $8,195 $5,266 $(11,413) $(6,147) $ 2,048
========== ====== ========== ====== ====== ======== ======= ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-21
<PAGE> 82
CDB INFOTEK
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1995 AND THE SIX MONTHS ENDED JUNE 30, 1995 AND
1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30, JUNE 30,
1995 1995 1996
------------ ------------ ------------
(AUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
CASH PROVIDED BY OPERATING ACTIVITIES:
Net income.............................................. $ 1,128 $ 555 $ 1,721
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization................... 3,884 1,877 2,132
Change in assets and liabilities, net of effect of
acquisitions:
Increase in accounts receivable, net................. (578) (956) (740)
(Increase) decrease in other receivables............. (354) (11) 576
(Increase) decrease in prepaid expenses.............. (256) (326) 73
(Increase) decrease in income taxes receivable....... (159) -- 159
(Increase) decrease in deferred income tax benefit... 106 (206) (55)
Increase in intangible and other assets.............. (181) (270) (5)
Increase (decrease) in accounts payable.............. 403 347 (784)
Increase (decrease) in accrued expenses.............. 896 936 (69)
Increase (decrease) in accrued employee benefits..... (139) 94 303
Increase (decrease) in income taxes payable.......... (479) 170 456
Decrease in deferred rent............................ (156) (68) (38)
Increase (decrease) in deferred income taxes......... (473) (123) 92
-------- -------- -------
Net cash provided by operating activities............... 3,642 2,019 3,821
-------- -------- -------
CASH USED IN INVESTING ACTIVITIES:
Purchase of property and equipment, net................. (3,625) (1,848) (1,795)
-------- -------- -------
CASH USED IN FINANCING ACTIVITIES:
Borrowings (repayments) under long term debt, net....... 13,000 13,000 (1,300)
Principal payments under capital leases................. (850) (359) (479)
Repurchase of preferred stock, common stock and
warrants............................................. (12,737) (12,737) --
-------- -------- -------
Net cash used in financing activities........... (587) (96) (1,779)
-------- -------- -------
CASH AND CASH EQUIVALENTS:
NET INCREASE (DECREASE)................................... (570) 75 247
-------- -------- -------
AT BEGINNING OF PERIOD.................................... 1,230 1,230 660
-------- -------- -------
AT END OF PERIOD.......................................... $ 660 $ 1,305 $ 907
======== ======== =======
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for interest................ $ 1,623 $ 678 $ 578
======== ======== =======
Cash paid during the period for income taxes............ $ 2,214 $ 580 $ 738
======== ======== =======
Capital lease obligations incurred...................... $ 1,218 $ 900 $ --
======== ======== =======
Issuance of Common Stock in connection with acquisitions
(see Note 2 to Notes to Consolidated Financial
Statements).......................................... $ 8,844 $ 8,844 $ --
======== ======== =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-22
<PAGE> 83
CDB INFOTEK
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995
(DOLLARS IN THOUSANDS)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Financial Statement Presentation. The accompanying consolidated financial
statements include the accounts of CDB Infotek and its subsidiaries (the
"Company"). All significant intercompany accounts and transactions have been
eliminated in consolidation.
Statement of Cash Flows. The Company considers investments with a maturity
of three months or less when purchased to be cash equivalents.
Acquisitions. All acquisitions have been accounted for as purchases;
operations of the companies and businesses acquired have been included in the
accompanying consolidated financial statements from their respective dates of
acquisition.
Revenue Recognition. The Company recognizes revenues at the time services
are provided.
Property and Equipment. Property and equipment are recorded at cost.
Depreciation and amortization is computed under the straight-line method over
the assets' estimated useful lives, which range from three to five years.
Leasehold improvements are amortized over the life of the respective lease or
the useful life of the improvement, whichever is shorter. Maintenance and
repairs of property and equipment are charged to expense as incurred. The costs
of additions and betterments that increase the useful lives of the assets are
capitalized. The cost and accumulated depreciation or amortization of property
and equipment retired or otherwise disposed of is removed from the accounts, and
any resulting gain or loss is included in the determination of net income.
The Company capitalizes certain direct costs, comprised primarily of data
and personnel costs that are incurred during the acquisition, design and
development of on-line public record information used in its business.
Amortization of such direct costs commences when the products are available for
general release to customers and is computed on a product-by-product basis using
the straight-line method over the lesser of the expected useful or legal life,
generally three to five years.
Income Taxes. The Company accounts for income taxes using the asset and
liability method pursuant to Statement of Financial Accounting Standards No. 109
(SFAS 109).
Under SFAS 109, deferred tax assets and liabilities are determined based on
differences between the financial statement carrying amounts and the tax bases
of existing assets and liabilities using enacted tax rates in effect for the
year in which the differences are expected to reverse, net of a valuation
allowance for deferred tax assets which are determined to be more likely than
not unrealizable. The effect on deferred taxes of a change in tax rates is
recognized in net income in the period that includes the enactment date.
Concentration of Credit Risk and Major Customer Data. Financial
instruments which potentially expose the Company to concentrations of credit
risk, as defined by Statement of Financial Accounting Standards No. 105, consist
primarily of trade accounts receivable. The Company's customer base is broad,
spans several industries and, although the Company is directly affected by the
general state of the economy, management does not believe any significant
concentration of credit risks exist at December 31, 1995.
During the year ending December 31, 1995, no single customer accounted for
more than 10% of the Company's consolidated net revenues.
Postemployment Benefits. The Financial Accounting Standards Board has
issued SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other
Than Pensions," and SFAS No. 112, "Employers' Accounting for Postemployment
Benefits." The Company does not presently have postretirement or postemployment
benefits for its employees, thus, there is no liability recorded applicable to
these pronouncements.
F-23
<PAGE> 84
CDB INFOTEK
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Long-Lived Assets. In March 1995, the Financial Accounting Standards Board
issued SFAS No. 121 on accounting for the impairment of long-lived assets,
certain identifiable intangibles, and goodwill related to assets to be held and
used. SFAS No. 121 also establishes accounting standards for long-lived assets
and certain identifiable intangibles to be disposed of. The Company is required
to adopt SFAS No. 121 no later than January 1, 1996, although earlier
implementation is permitted. SFAS No. 121 is required to be applied
prospectively for assets to be held and used. The initial application of SFAS
No. 121 to assets held for disposal is required to be reported as the cumulative
effect of a change in accounting principle.
The Company plans to adopt SFAS No. 121 on January 1, 1996 and does not
expect such adoption to have a material impact on its consolidated financial
statements.
Use 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 amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Basis of Presentation for Unaudited Financial Statements as of June 30,
1996 and for the Six Month Periods Ended June 30, 1996 and 1995
(unaudited). The accompanying interim financial statements have been prepared
by the Company in accordance with generally accepted accounting principles.
Certain disclosures and information normally included in financial statements
have been condensed or omitted. In the opinion of the management of the Company,
these financial statements contain all adjustments (consisting only of normal
recurring adjustments) necessary for a fair presentation of the interim periods.
These statements should be read in conjunction with the financial statements and
notes thereto for the year ended December 31, 1995.
2. COMPANY OPERATIONS
The Company was founded in March 1982 to provide on-line computer access to
public record information and research services for insurance companies, legal
and accounting firms, financial institutions, private investigators and other
businesses. The majority of the Company's revenues are derived from sales to
customers in California.
On January 1, 1995, the Company acquired all of the capital stock of three
corporations from Prentice-Hall, Inc. ("PH"), an indirect subsidiary of Viacom,
Inc., in exchange for 4,249,000 shares or approximately 35% of the Company's
common stock, calculated on a fully diluted basis and valued at $8,844. The
entities purchased represent the businesses through which PH operated its
Prentice-Hall On-line ("PHO") and Charles E. Simon & Co. ("CES") businesses (the
"Acquired Entities"). The transactions have been accounted for collectively as a
purchase. Accordingly, the purchase price was allocated to the acquired assets
and liabilities based upon their estimated fair market values. The cost in
excess of net assets acquired has been included in intangible assets in the
accompanying balance sheets and is being amortized using the straight-line
method over 5 years. See Note 4 of the Notes to Consolidated Financial
Statements for further discussion of intangible assets. In addition to the
capital stock of the Acquired Entities, PH delivered to the Company a covenant
not to compete with the Company in these businesses until December 31, 1998, and
a license to use certain trademarks proprietary to PH in the acquired businesses
until April 30, 1997.
Included in other receivables at December 31, 1995 is a $372 receivable
from PH which arose from the resolution of certain provisions in the acquisition
agreement. The amount was received by the Company in January 1996.
Concurrent with the acquisition, the Company entered into an agreement with
PH that grants to PH the right, at certain dates and/or in certain
circumstances, to purchase the remaining capital stock of the Company then
outstanding or to require the Company's majority shareholder to repurchase from
PH the
F-24
<PAGE> 85
CDB INFOTEK
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
shares of Company common stock owned by PH. (See Note 9 of the Notes to
Consolidated Financial Statements). A Shareholders' Agreement between the
Company and PH mandates that two designees of PH be at all times members of the
Company's five person Board of Directors. The Shareholders' Agreement also
stipulates that, in the case of certain types of proposed actions of the Board
of Directors, a majority including at least one of the PH designees must vote in
favor of a resolution in order for it to be adopted. The agreement would
terminate if PH ceased to own Company capital stock at any time. (See Note 12 of
the Notes to Consolidated Financial Statements for a discussion of subsequent
events.)
3. PROPERTY AND EQUIPMENT
The following summarizes the components of property and equipment as of
December 31:
<TABLE>
<CAPTION>
1995
-------
<S> <C>
Computer hardware and software.............................. $ 8,887
Capitalized data base acquisition and development costs..... 7,786
Furniture and fixtures...................................... 846
Leasehold improvements and other............................ 302
-------
$17,821
=======
</TABLE>
The Company capitalized $5,566 in data base acquisition and development
costs in the fiscal year ended December 31, 1995. Included in capitalized data
base acquisition and development costs at December 31, 1995 are acquired
databases from PH (see Note 2 of the Notes to Consolidated Financial Statements)
which had an estimated fair value of $5,000 on the date of acquisition.
Amortization expense related to capitalized data acquisition and development
costs was $1,767 for the fiscal year ended December 31, 1995.
Property and equipment include assets held under capital leases of $4,881,
net of accumulated amortization of $2,147, at December 31, 1995.
4. INTANGIBLE ASSETS
The Company amortizes intangible assets over the period during which it
expects to derive benefit from the related underlying assets. Accumulated
amortization of intangible assets as of December 31, 1995 was $645.
5. DEBT
Effective January 1, 1995, the Company entered into definitive agreements
with a bank pursuant to which the Company may borrow up to $16,000; $13,000 of
which is represented by a term credit facility ("Term Facility") and $3,000 of
which is represented by a revolving credit facility ("Revolving Facility"). At
December 31, 1995, $13,000 was outstanding on the Term Facility and there were
no borrowings on the Revolving Facility.
The Term Facility requires that the Company pay interest on amounts
outstanding at a rate of 2.75 percent above the bank's prime lending rate in the
first year of the six year Term Facility, and at specified rates thereafter
dependent upon the Company's degree of conformity with certain financial
covenants contained in the Term Facility agreement (11.25% as of December 31,
1995). Amounts due under the Term Facility may not be reborrowed by the Company
following repayment. The Company is required to make monthly interest payments
on the outstanding balance under the Term Facility for the first twelve months
of the agreement commencing February 1, 1995, with mandatory quarterly
repayments of principal of $650 and interest each required to be paid commencing
March 1, 1996. Additional repayments of principal may be made in increments of
at least $100 at any time. All amounts of principal and accrued interest must be
repaid by December 31, 2000.
F-25
<PAGE> 86
CDB INFOTEK
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The Revolving Facility permits the Company to borrow up to $3,000 from time
to time. The interest rate on the Revolving Facility at December 31, 1995 was
1.0 percent above the bank's prime lending rate of interest. Thereafter, the
interest rate will be, at the Company's option, the bank's prime lending rate of
interest or LIBOR, in each case, plus a margin dependent upon the Company's
degree of conformity with certain financial covenants contained in the Term
Facility agreement.
Both the Term Facility and the Revolving Facility are secured by a pledge
of the Company's common stock owned by its President and the Company's assets.
The Term and Revolving Facility contain certain covenants requiring that
the Company maintain certain ratios related to the Company's financial
performance. At December 31, 1995, the Company was in compliance with all such
covenants.
On January 3, 1995, the Company borrowed the $13,000 outstanding at
December 31, 1995 on the Term Facility and paid $12,737 of such sum to entities
controlled by its venture capital partner in exchange for all of the Company's
capital stock and warrants then owned by the venture capital partner. See Note 8
of the Notes to Consolidated Financial Statements.
Maturities of long term debt as of December 31, 1995, are as follows:
<TABLE>
<S> <C>
Fiscal year ending:
1996...................................................... $ 2,600
1997...................................................... 2,600
1998...................................................... 2,600
1999...................................................... 2,600
2000...................................................... 2,600
-------
$13,000
=======
</TABLE>
6. COMMITMENTS AND CONTINGENCIES
Operating and Capital Leases. The Company leases certain of its operating
facilities and equipment under non-cancelable operating leases with terms
ranging up to five years. In addition, the Company leases certain equipment and
furniture under capital leases.
F-26
<PAGE> 87
CDB INFOTEK
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following is a schedule by year of future minimum lease payments under
capital and noncancelable operating leases, together with the present value of
the net minimum lease payments under the capital leases as of December 31, 1995:
<TABLE>
<CAPTION>
CAPITAL OPERATING TOTAL FUTURE
LEASES LEASES PAYMENTS
------- --------- ------------
<S> <C> <C> <C>
Fiscal year ending:
1996................................................... $1,142 $1,017 $2,159
1997................................................... 1,074 993 2,067
1998................................................... 677 922 1,599
1999................................................... 396 818 1,214
2000................................................... 51 539 590
Thereafter............................................. -- 5 5
------ ------ ------
Future minimum lease payments............................ 3,340 $4,294 $7,634
------ ====== ======
Less -- Amount representing interest..................... 415
------
Present value of minimum lease payments.................. 2,925
Less -- Current portion of capital lease obligations..... 870
------
$2,055
======
</TABLE>
Rental expense under operating leases was approximately $1,053 for the
fiscal year ended December 31, 1995.
Royalty and License Agreements. The Company has entered into certain
royalty and license agreements to sell the public record information of certain
specialty information service providers. Such agreements provide for either
discounted pricing based on required minimum usage by the Company of the
associated database, unlimited usage of a database for a specified period of
time at a fixed price determined at the agreement's inception or a royalty paid
to the provider based upon actual usage of the database. The Company expects to
maintain or enhance its current royalty and site license agreements and to
continue to enter into additional similar agreements in the future.
The future minimum royalty and license payments required are as follows:
<TABLE>
<S> <C>
Fiscal year ending:
1996...................................................... $1,619
1997...................................................... 1,322
1998...................................................... 1,490
1999...................................................... 1,601
2000...................................................... 1,217
------
$7,249
======
</TABLE>
Employment Agreement. Effective January 1, 1995, the Company entered into
an employment agreement with its President which provides for continued
employment of the President by the Company through December 31, 1999.
Litigation. The Company is party to a number of pending or threatened
lawsuits arising out of, or incident to, its ordinary course of business. In the
opinion of management, outcome of these lawsuits will not have a material
adverse effect upon the financial position or the results of operations of the
Company.
F-27
<PAGE> 88
CDB INFOTEK
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
7. INCOME TAXES
The provision for income taxes for the year ending December 31, 1995 is
comprised of the following:
<TABLE>
<S> <C>
Current:
Federal................................................... $1,340
State..................................................... 236
------
1,576
------
Deferred:
Federal................................................... (312)
State..................................................... (55)
------
(367)
------
Total............................................. $1,209
======
</TABLE>
The difference between the statutory tax rates and the effective tax rates
is due to certain nondeductible expenses. Deferred income taxes have been
provided for at the prevailing and projected actual statutory and combined
average state income tax rates for temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes and the
amounts used for income tax purposes.
The components of the Company's net deferred income tax benefit (liability)
as of December 31, are as follows:
<TABLE>
<CAPTION>
1995
------
<S> <C>
Current Assets, net:
Accounts receivable....................................... $ 157
Accrued expenses.......................................... 155
Accrued vacation.......................................... 102
Deferred rent and accrued relocation expenses............. 15
Accrued employee benefits................................. 31
------
Total current deferred tax assets........................... $ 460
======
Noncurrent (Asset) Liability, net:
Capitalized data acquisition & dev. costs................. $1,669
Depreciation and amortization............................. 480
Capital lease treated as operating lease for tax
purposes............................................... 58
Deferred rent and accrued relocation expenses............. (87)
------
Noncurrent deferred tax liability, net...................... $2,120
======
</TABLE>
The deferred tax assets related to accounts receivable and accrued expenses
and the deferred tax liability related to capitalized data acquisition and
development costs as of December 31, 1995 include assets of $113 and $155 and a
liability of $1,600, respectively, arising from the differences between the tax
and book bases of assets and liabilities acquired from PH (see Notes 2 and 3 of
the Notes to Consolidated Financial Statements).
F-28
<PAGE> 89
CDB INFOTEK
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The effective tax rates differ from the federal statutory rate of 34% due
to the following items:
<TABLE>
<CAPTION>
DECEMBER 31,
1995
------------
<S> <C>
Expected tax provision at statutory rates................... $ 802
State taxes, net of federal tax benefit..................... 182
Expenses not deductible for tax purposes.................... 184
Other....................................................... 41
------
Provision for income taxes.................................. $1,209
======
Effective tax rate.......................................... 51.7%
======
</TABLE>
8. REDEMPTION OF CAPITAL STOCK AND RELATED SECURITIES
Effective January 3, 1995, the Company repurchased 2,750,000 shares of the
Company's Series A Preferred Stock, 218,313 shares of the Company's Common
Stock, and warrants to purchase an additional 340,712 shares of Company Common
Stock from its venture capital partner for an aggregate purchase price of
$12,737. The Preferred and Common Stock that the Company redeemed reverts to
authorized but unissued capital stock by operation of law. As part of the
transaction, the venture capital partner relinquished all right, title and
interest in the Company in exchange for the repurchase price paid to it by the
Company.
9. STOCK OPTION AGREEMENT
Concurrent with the acquisition of the Acquired Entities (see Note 2 to
Notes to Consolidated Financial Statements), the Company entered into an
agreement (the "Stock Option Agreement") with PH and certain officers and
directors of the Company ("Shareholders") pursuant to which PH was granted the
right to purchase from the Shareholders all of the capital stock of the Company
owned by such Shareholders upon the happening of certain events, for a purchase
price per share representing the fair market value at the date of purchase by
PH. A further provision of the Stock Option Agreement gives PH the right to
demand that the Company's President repurchase from PH the 4,249,000 shares of
Company common stock owned by it upon the happening of certain events for an
aggregate purchase price representing the then fair market value or $21,000 (the
"Repurchase Price"), whichever is greater. Effective October 23, 1995, the
parties amended the agreement to alter the period during which those rights of
PH may be exercised at the election of the Company's President. In January 1996,
the Company's President elected to fix such period at May 1, 1996 through May
31, 1996. Also in January 1996, the parties further amended the agreement to
remove PH's right to purchase the remainder of the Company's capital stock,
increased the minimum Repurchase Price to $22,600, and extended the period
during which PH may compel the repurchase of its shares of Company common stock
to an indefinite future period.
10. STOCK OPTION PLAN
In June 1992, the Company established a non-qualified stock option plan
(the Plan), whereby options to purchase the common stock of the Company may be
granted to certain executive officers and board members. The total number of
shares which may be granted under this plan, as amended, is 1,307,761. During
the year ended December 31, 1994, 209,920 options were granted pursuant to the
Plan at an exercise price of $.40 per share. During the year ended December 31,
1995, 150,000 options were granted pursuant to the Plan at an exercise price of
$.50 per share. As of December 31, 1995, 1,225,840 shares had been granted with
an exercise price range of $.204-$.50 per share. In 1994 and 1995, the options
granted were below the then determined fair value of the Company's common stock,
resulting in compensation expense. Such compensation expense is being amortized
through a charge to operations over the vesting period of four years and
amounted to $70 for 1995.
F-29
<PAGE> 90
CDB INFOTEK
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
11. PROFIT SHARING PLAN
The Company has established the CDB Infotek 401(k) Plan and Trust (the
"401(k) Plan") which provides benefits to all employees who are at least 21
years of age and have completed one year of service with the Company. Company
contributions to the 401(k) Plan vest at the rate of 20 percent per year. The
401(k) Plan provides for employer matching contributions equaling 50% of the
first 4% of compensation contributed by qualified participating employees,
subject to certain limitations provided for in Section 401 of the Internal
Revenue Code. In addition, the Company may make additional contributions at the
discretion of the board of directors. The Company recorded approximately $105
for its matching contribution to the 401(k) Plan for the year ending December
31, 1995.
12. SUBSEQUENT EVENT (UNAUDITED)
On August 30, 1996, certain stockholders, including stockholders who
exercised options issued under the Company's Non-qualified Stock Option Plan
(see Note 10 of the Notes to Consolidated Financial Statements), sold equity
interests representing 70% of the fully diluted outstanding capital stock of the
Company to Equifax Services Inc., a Georgia corporation ("Services"), a
subsidiary of Equifax, Inc. (the "Equifax Transaction"). Among the capital stock
purchased by Services were all of the shares of Common Stock of the company
formerly owned by PH. Concurrent with the Equifax Transaction, the owners of the
remaining 30% interest in the Company granted to Services, and received from
Services, the right to compel the purchase of their interest by Services after
December 31, 1999 for a price per share to be determined by preset formula
(based on the Company's revenue in 1997, 1998 and 1999 and earnings before
interest, taxes, depreciation and amortization subject to certain adjustments in
1999) at the time of sale.
F-30
<PAGE> 91
======================================================
NO DEALER, SALES REPRESENTATIVE OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS SPINOFF
OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY DISTRIBUTION
MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE
HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT
THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE
DATE HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR
SOLICITATION OF AN OFFER TO BUY, ANY SECURITIES.
---------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Summary............................... 1
Risk Factors.......................... 9
The Spinoff........................... 13
Capitalization........................ 17
Dividend Policy....................... 17
Pro Forma Consolidated Financial
Data................................ 18
Selected Financial Data............... 23
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 24
Business.............................. 29
Equifax Inc........................... 35
Management............................ 36
Arrangements Between Equifax and
ChoicePoint Relating to the
Spinoff............................. 43
Certain Relationships and
Transactions........................ 49
Beneficial Ownership of ChoicePoint
Common Stock........................ 50
Beneficial Ownership of Management.... 51
Description of Capital Stock.......... 52
Legal Matters......................... 57
Experts............................... 57
Additional Information................ 57
Index to Consolidated Financial
Statements.......................... F-1
</TABLE>
UNTIL , 1997 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS
EFFECTING TRANSACTIONS IN THE CHOICEPOINT COMMON STOCK DISTRIBUTED HEREBY,
WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A
PROSPECTUS.
======================================================
======================================================
14,800,000 SHARES
CHOICEPOINT INC.
COMMON STOCK
(CHOICEPOINT LOGO)
------------
PROSPECTUS
JULY , 1997
------------
======================================================
<PAGE> 92
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth all expenses expected to be incurred in
connection with the issuance and distribution of the securities being
registered. All of the amounts shown are estimated except for the Securities and
Exchange Commission registration fee, which is an actual amount:
<TABLE>
<S> <C>
SEC registration fee........................................ $89,697
New York Stock Exchange Inc. listing fee.................... *
Blue sky qualification fees and expenses.................... *
Printing and engraving expenses............................. *
Legal fees and expenses..................................... *
Accounting fees and expenses................................ *
Transfer agent and registrar fees........................... *
Miscellaneous............................................... *
-------
Total..................................................... $ *
=======
</TABLE>
- ---------------
* To be provided by amendment.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The ChoicePoint Articles provide for indemnification of the officers and
directors of ChoicePoint to the fullest extent permitted by the GBCC. Such
indemnification is not exclusive of any additional indemnification that the
ChoicePoint Board of Directors may deem advisable or of any rights to which
those indemnified may otherwise be entitled. The ChoicePoint Articles provide
that the ChoicePoint Board of Directors may determine from time to time whether
and to what extent to maintain insurance providing indemnification for officers
and directors, and such insurance need not be limited to ChoicePoint's power of
indemnification under the GBCC. ChoicePoint intends to purchase and maintain
insurance on behalf of ChoicePoint's officers and directors against liability
asserted against or incurred by such person in such capacity, or arising out of
such person's status as such, whether or not ChoicePoint would have the power to
indemnify or advance expenses to such person against such liability under the
ChoicePoint Articles of Incorporation, the Bylaws or the GBCC.
The ChoicePoint Bylaws generally provide that ChoicePoint shall not
indemnify any officer or director who is adjudged liable to ChoicePoint or is
subjected to injunctive relief in favor of ChoicePoint: (i) for any
appropriation, in violation of his or her duties, of any business opportunity of
ChoicePoint; (ii) for acts or omissions which involve intentional misconduct or
a knowing violation of law; (iii) for the types of liability for unlawful
distributions set forth in Section 14-2-832 of the GBCC; or (iv) for any
transaction from which he or she received an improper personal benefit. The
ChoicePoint Bylaws obligate ChoicePoint, under certain circumstances, to advance
expenses to its officers and directors who are parties to an action, suit or
proceeding for which indemnification may be sought. The ChoicePoint Bylaws
permit, but do not require, ChoicePoint to indemnify and advance expenses to
employees or agents of ChoicePoint who are not officers or directors to the same
extent and subject to the same conditions that a corporation could, without
shareholder approval under Section 14-2-856 of the GBCC. ChoicePoint's Articles
also provide that no director shall have any liability to the Company or to its
shareholders for monetary damages for any action taken, or any failure to take
action, including, without limitation, for breach of duty of care or other duty
as a director, except that there shall be no elimination or limitation of
liability of a director for any conduct described in above clauses (i) through
(iv). As a result of this provision, shareholders may be unable to recover
monetary damages from directors for actions taken by them that constitute
negligence or gross negligence or that are in violation of their fiduciary
duties, although it may be possible to obtain injunctive or other equitable
relief with respect to such actions.
II-1
<PAGE> 93
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
In connection with the formation of ChoicePoint, on May 29, 1997, 100
shares of ChoicePoint Common Stock were issued to Equifax in exchange for $100.
Such securities were offered only to Equifax and were issued pursuant to Section
4(2) of the Securities Act of 1933, as amended.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ----------- ----------------------
<C> <C> <S>
3.01* -- Articles of Incorporation of the Company, as amended
3.02* -- Bylaws of the Company, as amended
4.01* -- Form of Common Stock certificate
5.01** -- Opinion of Hunton & Williams
10.01 -- Form of ChoicePoint Inc. 1997 Omnibus Stock Incentive Plan
10.02 -- ChoicePoint Inc. 401(k) Profit Sharing Plan
10.03 -- Form of Distribution Agreement by and between Equifax and
the Company
10.04 -- Form of Employee Benefits Agreement by and between Equifax
and the Company
10.05 -- Form of Transition Support Agreement by and between Equifax
and the Company
10.06 -- Form of Intercompany Information Services Agreement by and
between Equifax and the Company
10.07 -- Form of Tax Sharing and Indemnification Agreement by and
between Equifax and the Company
10.08** -- Form of Intellectual Property Agreement by and between
Equifax and the Company
10.09 -- Agreement, dated July 24, 1996, by and between Equifax Inc.
and Dan Rocco, to be effective January 1, 1996 (relating to
compensation of Mr. Rocco)
10.10 -- Form of $250,000,000 Revolving Credit Agreement by and among
ChoicePoint Inc. and Wachovia Bank, N.A. and SunTrust Bank,
Atlanta, as co-arrangers
10.11** -- Form of Master Agreement among ChoicePoint Inc., as lessee,
SunTrust Bank, Inc., as lessor, and SunTrust Bank, Atlanta,
as agent (synthetic lease related to certain property and
building located at 1000 Alderman Drive, Alpharetta,
Georgia)
10.12 -- Form of Sublease Agreement by and between Equifax Inc. and
Equifax Services, Inc. (for certain property and building
located at 1600 Peachtree Street, NW, Atlanta, Georgia)
10.13 -- Form of Sublease Agreement by and between Equifax Inc. and
Equifax Services, Inc. (for certain property and building
located at 1525 Windward Concourse, Alpharetta, Georgia
(J.V. White Technology Center))
10.14** -- Form of Employment Agreement by and between the Company and
each of Derek V. Smith, Dan H. Rocco, Douglas C. Curling,
David T. Lee and J. Michael de Janes
21.01* -- Subsidiaries of the Company
23.01 -- Consent of Arthur Andersen LLP
23.02** -- Consent of Hunton & Williams (included in Exhibit 5.01
hereto)
24.01* -- Powers of Attorney
27* -- Financial Data Schedule (for SEC use only)
99.01* -- Consent of Ron D. Barbaro to be named as a director nominee
in the Registration Statement
99.02* -- Consent of Tinsley H. Irvin to be named as a director
nominee in the Registration Statement
</TABLE>
- ---------------
* Previously filed.
** To be filed by amendment.
(b) The financial statements and schedules filed as a part of this
Registration Statement are as follows:
1. Financial Statements. See Index to Financial Statements on page F-1
of the Prospectus included in this Registration Statement.
II-2
<PAGE> 94
2. Financial Statement Schedules. Financial statement schedules have
been omitted because they are not applicable or are not required, as the
information required to be set forth therein is included in the
consolidated financial statements of the registrant.
ITEM 17. UNDERTAKINGS
(a)-(g), (j) Not applicable
(h) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
(i) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 403A and contained in
the form of prospectus filed by the Registrant pursuant to Rule 424(b)(1)
or (4) or 497(h) under the Securities Act shall be deemed to be part of
this registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-3
<PAGE> 95
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to its Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Atlanta, State of Georgia on July 15, 1997.
CHOICEPOINT INC.
By: /s/ DEREK V. SMITH
------------------------------------
Derek V. Smith
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ DEREK V. SMITH President, Chief Executive July 15, 1997
- ----------------------------------------------------- Officer and Director
Derek V. Smith
/s/ DOUGLAS C. CURLING Executive Vice President, Chief July 15, 1997
- ----------------------------------------------------- Financial Officer and
Douglas C. Curling Treasurer (Chief Accounting
Officer)
* Director July 15, 1997
- -----------------------------------------------------
James M. Denny
* Director July 15, 1997
- -----------------------------------------------------
Daniel W. McGlaughlin
* Director July 15, 1997
- -----------------------------------------------------
Julia B. North
* Director July 15, 1997
- -----------------------------------------------------
C.B. Rogers, Jr.
* Director July 15, 1997
- -----------------------------------------------------
Charles I. Story
*By: /s/ DEREK V. SMITH July 15, 1997
- -----------------------------------------------------
Derek V. Smith, as Attorney-in-fact
</TABLE>
II-4
<PAGE> 96
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO.
- -----------
<C> <C> <S>
3.01* -- Articles of Incorporation of the Company, as amended
3.02* -- Bylaws of the Company, as amended
4.01* -- Form of Common Stock certificate
5.01** -- Opinion of Hunton & Williams
10.01 -- Form of ChoicePoint Inc. 1997 Omnibus Stock Incentive Plan
10.02 -- ChoicePoint Inc. 401(k) Profit Sharing Plan
10.03 -- Form of Distribution Agreement by and between Equifax and
the Company
10.04 -- Form of Employee Benefits Agreement by and between Equifax
and the Company
10.05 -- Form of Transition Support Agreement by and between Equifax
and the Company
10.06 -- Form of Intercompany Information Services Agreement by and
between Equifax and the Company
10.07 -- Form of Tax Sharing and Indemnification Agreement by and
between Equifax and the Company
10.08** -- Form of Intellectual Property Agreement by and between
Equifax and the Company
10.09 -- Agreement, dated July 24, 1996, by and between Equifax Inc.
and Dan Rocco, to be effective January 1, 1996 (relating to
compensation of Mr. Rocco)
10.10 -- Form of $250,000,000 Revolving Credit Agreement by and among
ChoicePoint Inc. and Wachovia Bank, N.A. and SunTrust Bank,
Atlanta, as co-arrangers
10.11** -- Form of Master Agreement among ChoicePoint Inc., as lessee,
SunTrust Bank, Inc., as lessor, and SunTrust Bank, Atlanta,
as agent (synthetic lease related to certain property and
building located at 1000 Alderman Drive, Alpharetta,
Georgia)
10.12 -- Form of Sublease Agreement by and between Equifax Inc. and
Equifax Services, Inc. (for certain property and building
located at 1600 Peachtree Street, NW, Atlanta, Georgia)
10.13 -- Form of Sublease Agreement by and between Equifax Inc. and
Equifax Services, Inc. (for certain property and building
located at 1525 Windward Concourse, Alpharetta, Georgia
(J.V. White Technology Center))
10.14** -- Form of Employment Agreement by and between the Company and
each of Derek V. Smith, Dan H. Rocco, Douglas C. Curling,
David T. Lee and J. Michael de Janes
21.01* -- Subsidiaries of the Company
23.01 -- Consent of Arthur Andersen LLP
23.02** -- Consent of Hunton & Williams (included in Exhibit 5.01
hereto)
24.01* -- Powers of Attorney
27* -- Financial Data Schedule (for SEC use only)
99.01* -- Consent of Ron D. Barbaro to be named as a director nominee
in the Registration Statement
99.02* -- Consent of Tinsley H. Irvin to be named as a director
nominee in the Registration Statement
</TABLE>
- ---------------
* Previously filed.
** To be filed by amendment.
<PAGE> 1
EXHIBIT 10.01
DRAFT OF JUNE 14, 1997
CHOICEPOINT INC.
1997 OMNIBUS STOCK INCENTIVE PLAN
1. PURPOSE. The purpose of the 1997 Omnibus Stock Incentive Plan
(the "Plan") is to attract and retain directors, officers and key employees for
ChoicePoint Inc. (the "Corporation") and its Subsidiaries and to provide to
such persons incentives and rewards for superior performance.
2. DEFINITIONS. As used in this Plan,
"Annual Meeting" means the annual meeting of shareholders of
the Corporation.
"Appreciation Right" means a right granted pursuant to Section
5 of this Plan, including a Free- standing Appreciation Right or a Tandem
Appreciation Right.
"Base Price" means the price to be used as the basis for
determining the Spread upon the exercise of a Free-standing Appreciation Right.
"Board" means the Board of Directors of the Corporation.
"Change in Control" shall have the meaning provided in Section
13 of this Plan.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time.
"Committee" means the committee (or a subcommittee) described
in Section 18 of this Plan.
"Common Shares" means shares of common stock, $____ par value
per share, of the Corporation or any security into which such Common Shares may
be changed by reason of any transaction or event of the type referred to in
Section 12 of this Plan.
"Covered Employee" means a Participant who is, or is
determined by the Committee to be likely to become, a "covered employee" within
the meaning of Section 162(m) of the Code (or any successor provision).
<PAGE> 2
"Date of Grant" means the date specified by the Committee on
which a grant of Option Rights, Appreciation Rights, Performance Shares or
Performance Units or a grant or sale of Restricted Shares or Deferred Shares
shall become effective.
"Deferral Period" means the period of time during which
Deferred Shares are subject to deferral limitations under Section 7 of this
Plan.
"Deferred Shares" means an award made pursuant to Section 7 of
this Plan of the right to receive Common Shares at the end of a specified
Deferral Period.
"Designated Subsidiary" means a Subsidiary that is (i) not a
corporation or (ii) a corporation in which at the time the Corporation owns or
controls, directly or indirectly, less than 80 percent of the total combined
voting power represented by all classes of stock issued by such corporation.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder, as such law, rules and
regulations may be amended from time to time.
"Free-standing Appreciation Right" means an Appreciation Right
granted pursuant to Section 5 of this Plan that is not granted in tandem with
an Option Right or similar right.
"Incentive Stock Options" means Option Rights that are
intended to qualify as "incentive stock options" under Section 422 of the Code
or any successor provision.
"Management Objectives" means the measurable performance
objective or objectives established pursuant to this Plan for Participants who
have received grants of Performance Shares or Performance Units or, when so
determined by the Committee, Option Rights, Appreciation Rights, Restricted
Shares and dividend credits pursuant to this Plan. Management Objectives may
be described in terms of Corporation-wide objectives or objectives that are
related to the performance of the individual Participant or of the Subsidiary,
division, department, region or function within the Corporation or Subsidiary
in which the Participant is employed. The Management Objectives may be made
relative to the performance of other corporations. The Management Objectives
applicable to an award to a Covered Employee shall be based on specified levels
of growth or improvement in one or more of the following criteria:
1. earnings;
2. earnings per share (earnings per share will be
calculated without regard to any change in accounting
standards that may be required by the Financial
Accounting Standards Board after the goal is
established);
3. share price;
4. shareholder return;
5. return on invested capital, equity, or assets;
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<PAGE> 3
6. operating earnings;
7. sales;
8. productivity;
9. cash flow;
10. market share;
11. profit margin;
12. customer service; and/or
13. economic value added.
If the Committee determines that a change in the business,
operations, corporate structure or capital structure of the Corporation, or the
manner in which it conducts its business, or other events or circumstances
render the Management Objectives unsuitable, the Committee may in its
discretion modify such Management Objectives or the related minimum acceptable
level of achievement, in whole or in part, as the Committee deems appropriate
and equitable, except in the case of a Covered Employee where such action would
result in the loss of the otherwise available exemption of the award under
Section 162(m) of the Code. In such case, the Committee shall not make any
modification of the Management Objectives or minimum acceptable level of
achievement.
"Market Value per Share" means, as of any particular date, the
fair market value of the Common Shares as determined by the Committee, which at
the discretion of the Committee may be based on an average price at which the
Common Shares have traded over a period of time specified by the Committee or
any price or combination of prices on a particular date specified by the
Committee.
"Non-Employee Officer or Director" means an officer or
director of the Corporation who is not an employee of the Corporation or any
Subsidiary.
"Optionee" means the optionee named in an agreement evidencing
an outstanding Option Right.
"Option Price" means the purchase price payable on exercise
of an Option Right.
"Option Right" means the right to purchase Common Shares upon
exercise of an option granted pursuant to Section 4 or Section 9 of this Plan.
"Participant" means a person who is selected by the Committee
to receive benefits under this Plan and who is at the time an officer, or other
key employee of the Corporation or any one or more of its Subsidiaries, or who
has agreed to commence serving in any of such capacities within 90 days of the
Date of Grant, and shall also include each Non-Employee Officer or Director who
receives an award of Option Rights pursuant to Section 9 of this Plan, or any
other person, whether or not an employee, Director or officer, who renders
significant services as a consultant or otherwise, in the discretion of the
Committee.
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<PAGE> 4
"Performance Period" means, in respect of a Performance Share
or Performance Unit, a period of time established pursuant to Section 8 of this
Plan within which the Management Objectives relating to such Performance Share
or Performance Unit are to be achieved.
"Performance Share" means a bookkeeping entry that records the
equivalent of one Common Share awarded pursuant to Section 8 of this Plan.
"Performance Unit" means a bookkeeping entry that records a
unit equivalent to $1.00 awarded pursuant to Section 8 of this Plan.
"Reload Option Rights" means additional Option Rights granted
automatically to an Optionee upon the exercise of Option Rights pursuant to
Section 4(f) of this Plan.
"Replacement Awards" means Option Rights or Restricted Shares
that are issued in substitution of awards of option rights or restricted shares
that were granted under the Equifax Inc. Omnibus Stock Incentive Plan, the 1993
Employee Stock Incentive Plan or the 1995 Employee Stock Incentive Plan to
former employees of Equifax Inc. or subsidiaries of Equifax Inc. who are
employees of the Corporation as of the date of the spin-off of the Corporation
to the shareholders of Equifax Inc. or become employees of the Corporation
after such date pursuant to the Equifax/ChoicePoint Employee Benefits
Agreement.
"Restricted Shares" means Common Shares granted or sold
pursuant to Section 6 or Section 9 of this Plan as to which neither the
substantial risk of forfeiture nor the prohibition on transfers referred to in
such Section 6 has expired.
"Rule l6b-3" means Rule 16b-3 of the Securities and Exchange
Commission (or any successor rule to the same effect) as in effect from time to
time.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations thereunder, as such law, rules and regulations
may be amended from time to time.
"Spread" means the excess of the Market Value per Share of the
Common Shares on the date when an Appreciation Right is exercised, or on the
date when Option Rights are surrendered in payment of the Option Price of other
Option Rights, over the Option Price provided for in the related Option Right.
"Subsidiary" means a corporation, company or other entity (i)
more than 50 percent of whose outstanding shares or securities (representing
the right to vote for the election of directors or other managing authority)
are, or (ii) which does not have outstanding shares or securities (as may be
the case in a partnership, joint venture or unincorporated association), but
more than 50 percent of whose ownership interest representing the right
generally to make decisions for such other entity is, now or
4
<PAGE> 5
hereafter, owned or controlled, directly or indirectly, by the Corporation
except that for purposes of determining whether any person may be a Participant
for purposes of any grant of Incentive Stock Options, "Subsidiary" means any
corporation in which at the time the Corporation owns or controls, directly or
indirectly, more than 50 percent of the total combined voting power represented
by all classes of stock issued by such corporation.
"Tandem Appreciation Right" means an Appreciation Right
granted pursuant to Section 5 of this Plan that is granted in tandem with an
Option Right or any similar right granted under any other plan of the
Corporation.
"Voting Shares" means at any time, the then-outstanding
securities entitled to vote generally in the election of directors of the
Corporation.
3. SHARES AVAILABLE UNDER THE PLAN. (a) Subject to adjustment as
provided in Section 12 of this Plan, the number of Common Shares that may be
issued or transferred (i) upon the exercise of Option Rights or Appreciation
Rights, (ii) as Restricted Shares and released from substantial risks of
forfeiture thereof, (iii) as Deferred Shares, (iv) in payment of Performance
Shares or Performance Units that have been earned, (v) as awards to
Non-Employee Officers or Directors, (vi) pursuant to other awards specified in
Section 10 of this Plan or (vii) in payment of dividend equivalents paid with
respect to awards made under the Plan shall not exceed in the aggregate
4,000,000 shares plus any shares specified in paragraph (b) of this Section 3.
Such shares may be shares of original issuance or treasury shares or a
combination of the foregoing. Upon the payment of any Option Price by the
transfer to the Corporation of Common Shares or upon satisfaction of any
withholding amount by means of transfer or relinquishment of Common Shares,
there shall be deemed to have been issued or transferred under this Plan only
the net number of Common Shares actually issued or transferred by the
Corporation.
(b) Total shares available under the Plan shall also
include (i) any shares relating to awards that expire or are forfeited or
cancelled and (ii) the number of shares repurchased by the Corporation after
August 1, 1997 in the open market or otherwise and having an aggregate purchase
price no greater than the amount of cash proceeds received by the Corporation
from the sale of Common Shares under the Plan.
(c) Upon payment in cash of the benefit provided by any
award granted under this Plan, any shares that were covered by that award shall
again be available for issue or transfer hereunder.
(d) Notwithstanding anything in this Section 3, or
elsewhere in this Plan, to the contrary, the aggregate number of Common Shares
actually issued or transferred by the Corporation upon the exercise of
Incentive Stock Options shall not exceed 4,000,000 shares, subject to
adjustments as provided in Section 12 of this Plan.
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<PAGE> 6
(e) Notwithstanding any other provision of this Plan to
the contrary, no Participant shall be granted Option Rights for more than
750,000 Common Shares during any calendar year, subject to adjustments as
provided in Section 12 of this Plan. Further, in no event shall any
Participant in any calendar year receive more than 750,000 Appreciation Rights,
subject to adjustments as provided in Section 12 of this Plan.
(f) Notwithstanding any other provision of this Plan to
the contrary, in no event shall any Participant in any calendar year receive an
award of Performance Shares, Performance Units or Restricted Shares that
specify Management Objectives having an aggregate maximum value as of their
respective Dates of Grant in excess of $2,000,000.
4. OPTION RIGHTS. The Committee may, from time to time and upon
such terms and conditions as it may determine, authorize the granting to
Participants of options to purchase Common Shares. Such grants may be original
awards or Replacement Awards. Each such grant may utilize any or all of the
authorizations, and shall be subject to all of the requirements, contained in
the following provisions:
(a) Each grant shall specify the number of Common Shares
to which it pertains subject to the limitations set forth in Section 3 of this
Plan.
(b) Each grant, other than a grant of a Replacement
Award, shall specify an Option Price per share, which shall not be less than
100 percent of the Market Value per Share on the Date of Grant.
(c) Each grant shall specify whether the Option Price
shall be payable (i) in cash or by check acceptable to the Corporation, (ii) by
the actual or constructive transfer to the Corporation of nonforfeitable,
unrestricted Common Shares owned by the Optionee (or other consideration
authorized pursuant to subsection (d) below) having a value at the time of
exercise equal to the total Option Price, or (iii) by a combination of such
methods of payment.
(d) The Committee may determine, at or after the Date of
Grant, that payment of the Option Price of any option (other than an Incentive
Stock Option) may also be made in whole or in part in the form of Restricted
Shares or other Common Shares that are forfeitable or subject to restrictions
on transfer, Deferred Shares, Performance Shares (based, in each case, on the
Market Value per Share on the date of exercise), other Option Rights (based on
the Spread on the date of exercise) or Performance Units. Unless otherwise
determined by the Committee at or after the Date of Grant, whenever any Option
Price is paid in whole or in part by means of any of the forms of consideration
specified in this paragraph, the Common Shares received upon the exercise of
the Option Rights shall be subject to such risks of forfeiture or restrictions
on transfer as may correspond to any that apply to the consideration
surrendered, but only to the extent of (i) the number of shares or Performance
Shares, (ii) the Spread of any unexercisable portion of Option Rights, or (iii)
the stated value of Performance Units surrendered.
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<PAGE> 7
(e) Any grant may provide for deferred payment of the
Option Price from the proceeds of sale through a broker on a date satisfactory
to the Corporation of some or all of the shares to which such exercise relates.
(f) Any grant may, at or after the Date of Grant, provide
for the automatic grant of Reload Option Rights to an Optionee upon the
exercise of Option Rights (including Reload Option Rights) using Common Shares
or other consideration specified in paragraph (d) above. Reload Option Rights
shall cover up to the number of Common Shares, Deferred Shares, Option Rights
or Performance Shares (or the number of Common Shares having a value equal to
the value of any Performance Units) surrendered to the Corporation upon any
such exercise in payment of the Option Price or to meet any withholding
obligations. Reload Options shall specify an Option Price per share, which
shall not be less than 100 percent of the Market Value per Share on the Date of
Grant of the Reload Option Right, and shall be on such other terms as may be
specified by the Committee, which may be the same as or different from those of
the original Option Rights.
(g) Successive grants may be made to the same Participant
whether or not any Option Rights previously granted to such Participant remain
unexercised.
(h) Each grant shall specify the period or periods of
continuous service by the Optionee with the Corporation or any Subsidiary which
is necessary before the Option Rights or installments thereof will become
exercisable and may provide for the earlier exercise of such Option Rights in
the event of a Change in Control, retirement, death or disability of the
Optionee or other similar transaction or event.
(i) Any grant of Option Rights may specify Management
Objectives that must be achieved as a condition to the exercise of such rights.
(j) Option Rights granted under this Plan may be (i)
options, including, without limitation, Incentive Stock Options, that are
intended to qualify under particular provisions of the Code, (ii) options that
are not intended so to qualify, or (iii) combinations of the foregoing.
(k) The Committee may, at or after the Date of Grant of
any Option Rights (other than Incentive Stock Options), provide for the payment
of dividend equivalents to the Optionee on either a current or deferred or
contingent basis or may provide that such equivalents shall be credited against
the Option Price.
(l) The exercise of an Option Right shall result in the
cancellation on a share-for-share basis of any related Appreciation Right
authorized under Section 5 of this Plan.
(m) Each grant shall specify the term of the Option
Right; provided, however, that no Option Right shall be exercisable more than
10 years from the Date of Grant.
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<PAGE> 8
(n) Each grant of a Replacement Award shall specify an
Option Price per share, as determined by the Committee. Notwithstanding any
other provision in this Plan to the contrary, no grant of a Replacement Award
in substitution of an award that qualified as an Incentive Stock Option
immediately before the grant of the Replacement Award shall contain any term
that is more favorable than the terms of the substituted award.
(o) Each grant of Option Rights shall be evidenced by an
agreement executed on behalf of the Corporation by an officer and delivered to
the Optionee and containing such terms and provisions, consistent with this
Plan, as the Committee may approve.
5. APPRECIATION RIGHTS. The Committee may also authorize grants
to Participants of Appreciation Rights. An Appreciation Right shall be a right
of the Participant to receive from the Corporation an amount, which shall be
determined by the Committee and shall be expressed as a percentage (not
exceeding 100 percent) of the Spread at the time of the exercise of such right.
Any grant of Appreciation Rights under this Plan shall be upon such terms and
conditions as the Committee may determine in accordance with the following
provisions:
(a) Any grant may specify that the amount payable on
exercise of an Appreciation Right may be paid by the Corporation in cash, in
Common Shares or in any combination thereof and may either grant to the
Optionee or retain in the Committee the right to elect among those
alternatives.
(b) Any grant may specify that the amount payable on
exercise of an Appreciation Right may not exceed a maximum specified by the
Committee at the Date of Grant.
(c) Any grant may specify waiting periods before exercise
and permissible exercise dates or periods and shall provide that no
Appreciation Right may be exercised except at a time when the related Option
Right is also exercisable and at a time when the Spread is positive.
(d) Any grant may specify that such Appreciation Right
may be exercised only in the event of a Change in Control or other similar
transaction or event.
(e) Each grant of Appreciation Rights shall be evidenced
by a notification executed on behalf of the Corporation by an officer and
delivered to and accepted by the Optionee, which notification shall describe
such Appreciation Rights, identify the related Option Rights, state that such
Appreciation Rights are subject to all the terms and conditions of this Plan,
and contain such other terms and provisions, consistent with this Plan, as the
Committee may approve.
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<PAGE> 9
(f) Any grant of Appreciation Rights may specify
Management Objectives that must be achieved as a condition of the exercise of
such rights.
(g) Regarding Tandem Appreciation Rights only: Each grant
shall provide that a Tandem Appreciation Right may be exercised only (i) at a
time when the related Option Right (or any similar right granted under any
other plan of the Corporation) is also exercisable and the Spread is positive
and (ii) by surrender of the related Option Right (or such other right) for
cancellation. In addition, a Tandem Appreciation Right awarded in relation to
an Incentive Stock Option must be granted concurrently with such Incentive
Stock Option.
(h) Regarding Free-standing Appreciation Rights only:
(i) Each grant shall specify in respect of each
Free-standing Appreciation Right a Base Price
per Common Share, which shall be equal to or
greater than the Market Value per Share on
the Date of Grant;
(ii) Successive grants may be made to the same
Participant regardless of whether any Free-
standing Appreciation Rights previously
granted to such Participant remain
unexercised;
(iii) Each grant shall specify the period or
periods of continuous service by the
Participant with the Corporation or any
Subsidiary that is necessary before the Free-
standing Appreciation Rights or installments
thereof shall become exercisable, and any
grant may provide for the earlier exercise of
such rights in the event of a Change in
Control, retirement, death or disability of
the Participant or other similar transaction
or event as approved by the Committee; and
(iv) No Free-standing Appreciation Right granted
under this Plan may be exercised more than 10
years from the Date of Grant.
6. RESTRICTED SHARES. The Committee may also authorize the grant
or sale to Participants of Restricted Shares. Each such grant or sale may
utilize any or all of the authorizations, and shall be subject to all of the
requirements, contained in the following provisions:
(a) Each such grant or sale shall constitute an immediate
transfer of the ownership of Common Shares to the Participant in consideration
of the performance of services, entitling such Participant to voting, dividend
and other ownership rights, but subject to the substantial risk of forfeiture
and restrictions on transfer hereinafter referred to.
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<PAGE> 10
(b) Each such grant or sale may be made without
additional consideration or in consideration of a payment by such Participant
that is less than Market Value per Share at the Date of Grant.
(c) Each such grant or sale shall provide that the
Restricted Shares covered by such grant or sale shall be subject to a
"substantial risk of forfeiture" within the meaning of Section 83 of the Code
for a period of not less than one (1) year to be determined by the Committee at
the Date of Grant, or less than one (1) year if so determined by the Committee
in the case of a Replacement Award, and any grant or sale may provide for the
earlier termination of such period in the event of a Change in Control,
retirement, or death or disability of the Optionee or other similar transaction
or event as approved by the Committee.
(d) Each such grant or sale shall provide that during the
period for which such substantial risk of forfeiture is to continue, the
transferability of the Restricted Shares shall be prohibited or restricted in
the manner and to the extent prescribed by the Committee at the Date of Grant
(which restrictions may include, without limitation, rights of repurchase or
first refusal in the Corporation or provisions subjecting the Restricted Shares
to a continuing substantial risk of forfeiture in the hands of any transferee).
(e) Any grant of Restricted Shares may specify Management
Objectives which, if achieved, will result in termination or early termination
of the restrictions applicable to such shares and each grant may specify in
respect of such specified Management Objectives, a minimum acceptable level of
achievement and may set forth a formula for determining the number of
Restricted Shares on which restrictions will terminate if performance is at or
above the minimum level, but falls short of full achievement of the specified
Management Objectives.
(f) Any such grant or sale of Restricted Shares may
require that any or all dividends or other distributions paid thereon during
the period of such restrictions be automatically deferred and reinvested in
additional Restricted Shares, which may be Subject to the same restrictions as
the underlying award.
(g) Each grant or sale of Restricted Shares shall be
evidenced by an agreement executed on behalf of the Corporation by any officer
and delivered to and accepted by the Participant and shall contain such terms
and provisions, consistent with this Plan, as the Committee may approve.
Unless otherwise directed by the Committee, all certificates representing
Restricted Shares shall be held in custody by the Corporation until all
restrictions thereon shall have lapsed, together with a stock power executed by
the Participant in whose name such certificates are registered, endorsed in
blank and covering such Shares.
7. DEFERRED SHARES. The Committee may also authorize the grant
or sale of Deferred Shares to Participants. Each such grant or sale may
utilize any or all of the
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<PAGE> 11
authorizations, and shall be subject to all of the requirements contained in
the following provisions:
(a) Each such grant or sale shall constitute the
agreement by the Corporation to deliver Common Shares to the Participant in the
future in consideration of the performance of services, but subject to the
fulfillment of such conditions during the Deferral Period as the Committee may
specify.
(b) Each such grant or sale may be made without
additional consideration or in consideration of a payment by such Participant
that is less than the Market Value per Share at the Date of Grant.
(c) Each such grant or sale shall be subject, except (if
the Committee shall so determine) in the event of a Change in Control or other
similar transaction or event, to a Deferral Period of not less than 1 year, as
determined by the Committee at the Date of Grant.
(d) During the Deferral Period, the Participant shall
have no right to transfer any rights under his or her award and shall have no
rights of ownership in the Deferred Shares and shall have no right to vote
them, but the Committee may, at or after the Date of Grant, authorize the
payment of dividend equivalents on such Shares on either a current or deferred
or contingent basis, either in cash or in additional Common Shares.
(e) Each grant or sale of Deferred Shares shall be
evidenced by an agreement executed on behalf of the Corporation by any officer
and delivered to and accepted by the Participant and shall contain such terms
and provisions, consistent with this Plan, as the Committee may approve.
8. PERFORMANCE SHARES OR PERFORMANCE UNITS. The Committee may
also authorize the grant of Performance Shares or Performance Units that will
become payable to a Participant upon achievement of specified Management
Objectives. Each such grant may utilize any or all of the authorizations, and
shall be subject to all of the requirements, contained in the following
provisions:
(a) Each grant shall specify the number of Performance
Shares or Performance Units to which it pertains, which number may be subject
to adjustment to reflect changes in compensation or other factors; provided,
however, that no such adjustment shall be made in the case of a Covered
Employee where such action would result in the loss of the otherwise available
exemption of the award under Section 162(m) of the Code.
(b) The Performance Period with respect to each
Performance Share or Performance Unit shall be such period of time not less
than 1 year, (except in the event of a Change in Control or other similar
transaction or event, if the Committee shall so
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<PAGE> 12
determine) commencing with the Date of Grant and ending on the last date of the
Performance Period (as shall be determined by the Committee at the time of
grant).
(c) Any grant of Performance Shares or Performance Units
shall specify Management Objectives which, if achieved, will result in payment
or early payment of the award, and each grant shall specify in respect of such
specified one or more Management Objectives a minimum acceptable level of
achievement and shall set forth a formula for determining the number of
Performance Shares or Performance Units that will be earned if performance is
at or above the minimum level, but falls short of full achievement of the
specified Management Objectives. The grant of Performance Shares or
Performance Units shall specify that, before the Performance Shares or
Performance Units shall be earned and paid, the Committee must certify that the
Management Objectives have been satisfied.
(d) Each grant shall specify a minimum acceptable level
of achievement in respect of the specified Management Objectives below which no
payment will be made and shall set forth a formula for determining the amount
of payment to be made if performance is at or above such minimum but short of
full achievement of the Management Objectives.
(e) Each grant shall specify the time and manner of
payment of Performance Shares or Performance Units which have been earned. Any
grant may specify that the amount payable with respect thereto may be paid by
the Corporation in cash, in Common Shares or in any combination thereof and may
either grant to the Participant or retain in the Committee the right to elect
among those alternatives.
(f) Any grant of Performance Shares may specify that the
amount payable with respect thereto may not exceed a maximum specified by the
Committee at the Date of Grant. Any grant of Performance Units may specify
that the amount payable or the number of Common Shares issued with respect
thereto may not exceed maximums specified by the Committee at the Date of
Grant.
(g) The Committee may, at or after the Date of Grant of
Performance Shares, provide for the payment of dividend equivalents to the
holder thereof on either a current or deferred or contingent basis, either in
cash or in additional Common Shares.
(h) Each grant of Performance Shares or Performance Units
shall be evidenced by a notification executed on behalf of the Corporation by
any officer and delivered to and accepted by the Participant, which
notification shall state that such Performance Shares or Performance Units are
subject to all the terms and conditions of this Plan, and contain such other
terms and provisions, consistent with this Plan, as the Committee may approve.
9. AWARDS TO NON-EMPLOYEE OFFICERS OR DIRECTORS. Restricted
Shares and Option Rights shall be granted to Non-Employee Officers or Directors
as follows:
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(a) Immediately following his or her initial election to
the Board, Restricted Shares with a fair market value of $25,000, if
unrestricted, shall be granted to each Non-Employee Officer or Director. Such
Restricted Shares shall become transferable and nonforfeitable three (3) years
from the Date of Grant; provided, however, that such Restricted Shares shall
immediately become transferable and nonforfeitable in the event of (i) a Change
in Control, or (ii) the Participant's death while a non-Employee Officer or
Director, or (iii) the Participant's retirement from the Board.
(b) Immediately following each Annual Meeting, 3,000
Option Rights shall be granted to each Non- Employee Officer or Director, other
than the Chairman of the Board who shall be granted 5,000 Option Rights
immediately following each Annual Meeting. The exercise price for such Option
Rights shall be Market Value per Share on the Date of Grant. Such Option
Rights shall become exercisable two (2) years from the Date of Grant; provided,
however, that such Option Rights shall immediately become exercisable in the
event of (i) a Change in Control, or (ii) the Participant's death while a
non-Employee Officer or Director, or (iii) the Participant's retirement from
the Board.
(c) Each grant of Restricted Shares or Option Rights
shall be evidenced by an agreement executed on behalf of the Corporation by an
officer and delivered to the grantee and such terms and provisions, consistent
with this Plan, as the Committee may approve. In addition, the Board retains
the discretion at any time to alter the provisions set forth under Sections
9(a) and 9(b) and to add any additional terms as it, in its discretion, deems
appropriate or to make any awards on terms that the Board determines to be
appropriate.
10. OTHER AWARDS. The Committee shall have the authority to
specify the terms and provisions of other equity-based or equity-related awards
not described above ("Other Awards") which the Committee determines to be
consistent with the purpose of the Plan and the interests of the Corporation,
which awards may provide for the acquisition or future acquisition of Common
Shares by Participants.
11. TRANSFERABILITY. (a) Except as otherwise determined by the
Committee, no Option Right, Appreciation Right or other derivative security
granted under the Plan shall be transferable by an Optionee other than by will
or the laws of descent and distribution. Except as otherwise determined by the
Committee, Option Rights and Appreciation Rights shall be exercisable during
the Optionee's lifetime only by him or her or by his or her guardian or legal
representative.
(b) The Committee may specify at the Date of Grant that
part or all of the Common Shares that are (i) to be issued or transferred by
the Corporation upon the exercise of Option Rights or Appreciation Rights, upon
the termination of the Deferral Period applicable to Deferred Shares or upon
payment under any grant of Performance Shares or Performance Units or (ii) no
longer subject to the substantial risk of forfeiture
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and restrictions on transfer referred to in Section 6 of this Plan, shall be
subject to further restrictions on transfer.
12. ADJUSTMENTS. The Committee may make or provide for such
adjustments in the numbers of Common Shares covered by outstanding Option
Rights, Appreciation Rights, Deferred Shares, Performance Shares and Other
Awards granted hereunder, in the prices per share applicable to such Option
Rights and Appreciation Rights and in the kind of shares covered thereby, as
the Committee, in its sole discretion, exercised in good faith, may determine
is equitably required to prevent dilution or enlargement of the rights of
Participants or Optionees that otherwise would result from (a) any stock
dividend, stock split, combination of shares, recapitalization or other change
in the capital structure of the Corporation, or (b) any merger, consolidation,
spin-off, split-off, spin-out, split-up, reorganization, partial or complete
liquidation or other distribution of assets, issuance of rights or warrants to
purchase securities, or (c) any other corporate transaction or event having an
effect similar to any of the foregoing. Moreover, in the event of any such
transaction or event, the Committee, in its discretion, may provide in
substitution for any or all outstanding awards under this Plan such alternative
consideration as it, in good faith, may determine to be equitable in the
circumstances and may require in connection therewith the surrender of all
awards so replaced. The Committee may also make or provide for such
adjustments in the numbers of shares specified in Section 3 of this Plan and in
the number of Option Rights to be granted automatically pursuant to Section 9
of this Plan as the Committee in its sole discretion, exercised in good faith,
may determine is appropriate to reflect any transaction or event described in
this Section 12.
13. [Subject to review] CHANGE IN CONTROL. For purposes of this
Plan, a "Change in Control" shall mean if at any time any of the following
events shall have occurred:
(a) The Corporation is merged or consolidated or
reorganized into or with another corporation or other legal person, and as a
result of such merger, consolidation or reorganization less than a majority of
the combined voting power of the then-outstanding securities of such
corporation or person immediately after such transaction is held in the
aggregate by the holders of Voting Shares immediately prior to such
transaction;
(b) The Corporation sells or otherwise transfers all or
substantially all of its assets to any other corporation or other legal person,
and as a result of such sale or transfer, less than a majority of the combined
voting power of the then-outstanding securities of such corporation or person
immediately after such sale or transfer is held in the aggregate by the holders
of Voting Shares immediately prior to such sale or transfer;
(c) There is a report filed on Schedule 13D or Schedule
14D-1 (or any successor schedule, form or report), each as promulgated pursuant
to the Exchange Act,
14
<PAGE> 15
disclosing that any person (as the term "person" is used in Section 13(d)(3) or
Section 14(d)(2) of the Exchange Act) has become the beneficial owner (as the
term "beneficial owner" is defined under Rule 13d-3 or any successor rule or
regulation promulgated under the Exchange Act) of securities representing 20%
or more of the Voting Shares;
(d) The Corporation files a report or proxy statement
with the Securities and Exchange Commission pursuant to the Exchange Act
disclosing in response to Form 8-K or Schedule 14A (or any successor schedule,
form or report or item therein) that a change in control of the Corporation has
or may have occurred or will or may occur in the future pursuant to any
then-existing contract or transaction; or
(e) If during any period of two consecutive years,
individuals who at the beginning of any such period constitute the Directors of
the Corporation cease for any reason to constitute at least a majority thereof,
unless the election, or the nomination for election by the Corporation's
shareholders, of each Director of the Corporation first elected during such
period was approved by a vote of at least two-thirds of the Directors of the
Corporation then still in office who were Directors of the Corporation at the
beginning of any such period.
(f) Notwithstanding the foregoing provisions of Section
13(c) and (d) above, a "Change in Control" shall not be deemed to have occurred
for purposes of this Plan (i) solely because (A) the Corporation, (B) a
Subsidiary or (C) any Corporation-sponsored employee stock ownership plan or
other employee benefit plan of the Corporation, either files or becomes
obligated to file a report or proxy statement under or in response to Schedule
13D, Schedule 14D-1, Form 8-K or Schedule 14A (or any successor schedule, form
or report or item therein) under the Exchange Act, disclosing beneficial
ownership by it of shares of Voting Shares, whether in excess of 20% or
otherwise, or because the Corporation reports that a change of control of the
Corporation has or may have occurred or will or may occur in the future by
reason of such beneficial ownership or (ii) solely because of a change in
control of any Subsidiary.
(g) Notwithstanding the foregoing provisions of this
Section 13, if prior to any event described in paragraphs (a), (b), (c) or (d)
of this Section 13 instituted by any person who is not an officer or director
of the Corporation, or prior to any disclosed proposal instituted by any person
who is not an officer or director of the Corporation which could lead to any
such event, management proposes any restructuring of the Corporation which
ultimately leads to an event described in paragraphs (a), (b), (c) or (d) of
this Section 13 pursuant to such management proposal, then a "Change in
Control" shall not be deemed to have occurred for purposes of this Plan.
14. FRACTIONAL SHARES. The Corporation shall not be required to
issue any fractional Common Shares pursuant to this Plan. The Committee may
provide for the elimination of fractions or for the settlement of fractions in
cash based on Market Value per Share on the date of settlement.
15
<PAGE> 16
15. WITHHOLDING TAXES. To the extent that the Corporation is
required to withhold federal, state, local or foreign taxes in connection with
any payment made or benefit realized by a Participant or other person under
this Plan, and the amounts available to the Corporation for such withholding
are insufficient, it shall be a condition to the receipt of such payment or the
realization of such benefit that the Participant or such other person make
arrangements satisfactory to the Corporation for payment of the balance of such
taxes required to be withheld, which arrangements (in the discretion of the
Committee) may include relinquishment of a portion of such benefit. The
Corporation and a Participant or such other person may also make similar
arrangements with respect to the payment of any taxes with respect to which
withholding is not required.
16. PARTICIPATION BY EMPLOYEES OF DESIGNATED SUBSIDIARIES. As a
condition to the effectiveness of any grant or award to be made hereunder to a
Participant who is an employee of a Designated Subsidiary, whether or not such
Participant is also employed by the Corporation or another Subsidiary, the
Committee may require such Designated Subsidiary to agree to transfer to such
employee (when, as and if provided for under this Plan and any applicable
agreement entered into with any such employee pursuant to this Plan) the Common
Shares that would otherwise be delivered by the Corporation, upon receipt by
such Designated Subsidiary of any consideration then otherwise payable by such
Participant to the Corporation. Any such award shall be evidenced by an
agreement between the Participant and the Designated Subsidiary, in lieu of the
Corporation, on terms consistent with this Plan and approved by the Committee
and such Designated Subsidiary. All such Common Shares so delivered by or to a
Designated Subsidiary shall be treated as if they had been delivered by or to
the Corporation for purposes of Section 3 of this Plan, and all references to
the Corporation in this Plan shall be deemed to refer to such Designated
Subsidiary, except for purposes of the definition of "Board" and except in
other cases where the context otherwise requires.
17. FOREIGN EMPLOYEES. In order to facilitate the making of any
grant or combination of grants under this Plan, the Committee may provide for
such special terms for awards to Participants who are foreign nationals or who
are employed by the Corporation or any Subsidiary outside of the United States
of America as the Committee may consider necessary or appropriate to
accommodate differences in local law, tax policy or custom. Moreover, the
Committee may approve such supplements to or amendments, restatements or
alternative versions of this Plan as it may consider necessary or appropriate
for such purposes, without thereby affecting the terms of this Plan as in
effect for any other purpose, and the Secretary or other appropriate officer of
the Corporation may certify any such document as having been approved and
adopted in the same manner as this Plan. No such special terms, supplements,
amendments or restatements, however, shall include any provisions that are
inconsistent with the terms of this Plan as then in effect unless this Plan
could have been amended to eliminate such inconsistency without further
approval by the shareholders of the Corporation.
16
<PAGE> 17
18. ADMINISTRATION OF THE PLAN. (a) This Plan shall be
administered by a Committee of the Board (or subcommittee thereof), consisting
of not less than three Non-Employee Directors appointed by the Board.
Moreover, except as the Board may otherwise determine, so long as all of the
Corporation's outstanding shares are owned by Equifax Inc., all matters
relating to awards under the Plan shall be, and are hereby delegated to the
Compensation Committee of Equifax Inc., provided, however, that all actions
taken shall be subject to the approval by the Board. To the extent of such
delegation, references in the Plan to the Board shall also refer to the
appropriate committee. A majority of the Committee (or subcommittee thereof)
shall constitute a quorum, and the action of the members of the Committee (or
subcommittee thereof) present at any meeting at which a quorum is present, or
acts unanimously approved in writing, shall be the acts of the committee (or
subcommittee thereof). Until subsequent action of the Board, the Committee
shall be the Compensation Committee of the Board.
(b) The interpretation and construction by the Committee
of any provision of this Plan or of any agreement, notification or document
evidencing the grant of Option Rights, Appreciation Rights, Restricted Shares,
Deferred Shares, Performance Shares, Performance Units or Other Awards and any
determination by the Committee pursuant to any provision of this Plan or of any
such agreement, notification or document shall be final and conclusive. No
member of the Committee shall be liable for any such action or determination
made in good faith.
19. AMENDMENTS, ETC. (a) The Committee may at any time and from
time to time amend the Plan in whole or in part; provided, however, that any
amendment which must be approved by the shareholders of the Corporation in
order to comply with applicable law or the rules of the principal national
securities exchange upon which the Common Shares are traded or quoted shall not
be effective unless and until such approval has been obtained. Presentation of
this Plan or any amendment hereof for shareholder approval shall not be
construed to limit the Corporation's authority to offer similar or dissimilar
benefits under plans that do not require shareholder approval.
(b) The Committee may, with the concurrence of affected
Optionee, cancel any agreement evidencing Option Rights or any other award
granted under this Plan. In the event of such cancellation, the Committee may
authorize the granting of new Option Rights or other awards hereunder (which
may or may not cover the same number of Common Shares which had been the
subject of the prior award) in such manner, at such option price, and subject
to such other terms, conditions and discretion as would have been applicable
under this Plan had the cancelled Option Rights or other award not been
granted.
(c) The Committee also may permit Participants to elect
to defer the issuance of Common Shares or the settlement of awards in cash
under the Plan pursuant to such rules, procedures or programs as it may
establish for purposes of this Plan. The Committee also may provide that
deferred settlements include the payment or crediting of dividend equivalents
or interest on the deferral amounts.
17
<PAGE> 18
(d) The Committee may condition the grant of any award or
combination of awards authorized under this Plan on the surrender or deferral
by the Participant of his or her right to receive a cash bonus or other
compensation otherwise payable by the Corporation or a Subsidiary to the
Participant.
(e) In case of termination of employment or service by
reason of death, disability or normal or early retirement, or in the case of
hardship or other special circumstances, of a Participant who holds an Option
Right or Appreciation Right not immediately exercisable in full, or any
Restricted Shares as to which the substantial risk of forfeiture or the
prohibition or restriction on transfer has not lapsed, or any Deferred Shares
as to which the Deferral Period has not been completed, or any Performance
Shares or Performance Units which have not been fully earned, or who holds
Common Shares subject to any transfer restriction imposed pursuant to Section
11(b) of this Plan, the Committee may, in its sole discretion, accelerate the
time at which such Option Right or Appreciation Right may be exercised or the
time at which such substantial risk of forfeiture or prohibition or restriction
on transfer will lapse or the time when such Deferral Period will end or the
time at which such Performance Shares or Performance Units will be deemed to
have been fully earned or the time when such transfer restriction will
terminate or may waive any other limitation or requirement under any such
award.
(f) This Plan shall not confer upon any Participant any
right with respect to continuance of employment or other service with the
Corporation or any Subsidiary, nor shall it interfere in any way with any right
the Corporation or any Subsidiary would otherwise have to terminate such
Participant's employment or other service at any time.
(g) To the extent that any provision of this Plan would
prevent any Option Right that was intended to qualify as an Incentive Stock
Option from qualifying as such, that provision shall be null and void with
respect to such Option Right. Such provision, however, shall remain in effect
for other Option Rights and there shall be no further effect on any provision
of this Plan.
20. TERMINATION. No grant (other than an automatic grant of Reload
Option Rights) shall be made under this Plan more than 10 years after the date
on which this Plan is first approved by the shareholders of the Corporation,
but all grants made on or prior to such date shall continue in effect
thereafter subject to the terms thereof and of this Plan.
18
<PAGE> 1
EXHIBIT 10.02
CHOICEPOINT INC.
401(K) PROFIT SHARING PLAN
Effective July 1, 1997
<PAGE> 2
CHOICEPOINT INC.
401(K) PROFIT SHARING PLAN
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Allocation Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Applicable Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.5 Benefit Commencement Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.6 Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.7 Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.8 Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.9 Company Profit-Sharing Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.10 Company Profit-Sharing Contributions Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.11 Controlled Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.12 Disabled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.13 Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.14 Election Directive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.15 Elective Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.16 Elective Contributions Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.17 Eligibility Computation Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.18 Eligible Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.19 Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.20 Employer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.21 Employment Commencement Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.22 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.23 Highly Compensated Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.24 Hours of Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.25 Leased Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.26 Matching Elective Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.27 Matching Elective Contributions Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.28 Matching Voluntary Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.29 Matching Voluntary Contributions Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.30 Normal Retirement Age . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.31 One-Year Break in Service (or Break in Service) . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.32 One-Year Period of Severance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
</TABLE>
i
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<TABLE>
<S> <C> <C> <C>
1.33 Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.34 Period of Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.35 Period of Severance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.36 Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.37 Plan Administrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.38 Plan Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.39 Qualified Spousal Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.40 Reemployment Commencement Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.41 Required Beginning Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.42 Rollover Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.43 Rollover Contributions Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.44 Severance from Service Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.45 Spouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.46 Surviving Spouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.47 Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.48 Trust Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.49 Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.50 Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
1.51 Voluntary Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
1.52 Voluntary Contributions Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
1.53 Year of Eligibility Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE II
ELIGIBILITY FOR PARTICIPATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.1 Initial Attainment of Participation Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.2 Reemployment of Former Non-Participant Employees . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.3 Reemployment of Former Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.4 Transfers to/from Eligible Class . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE III
CONTRIBUTIONS AND ALLOCATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.1 Employer Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.2 Employee Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.3 Return of Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.4 Prior Plan Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE IV
VESTING IN ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.1 Vesting of Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
</TABLE>
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<TABLE>
<S> <C> <C>
ARTICLE V
ACCOUNTS AND INVESTMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.1 Separate Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.2 Investment of Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.3 Trustee's Reliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE VI
VALUATION OF PARTICIPANTS' ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE VII
PAYMENT OF BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.1 Time of Payment of Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.2 Benefits Upon Death . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.3 Form of Payment of Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.4 Valuation of Accounts for Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.5 Code Section 401(a)(14) Requirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.6 Code Section 411(a)(11) Consent Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.7 Code Section 401(k)(2)(B) Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
7.8 Payments to Alternate Payees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
7.9 Withdrawals of Elective Contributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
7.10 Voluntary Contribution and Rollover Contribution Withdrawals . . . . . . . . . . . . . . . . . . . . 37
7.11 Code Section 401(a)(31) Requirement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE VIII
THE TRUST FUND AND THE TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
8.1 Existence of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
8.2 Exclusive Benefit Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
8.3 Removal or Resignation of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
8.4 Powers of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
8.5 Integration of Trust Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
8.6 Records and Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.7 Annual Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
ARTICLE IX
ADMINISTRATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
9.1 Allocation of Responsibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
9.2 Administrative Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
9.3 Committee Powers and Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
9.4 Records and Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
9.5 Reporting and Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
</TABLE>
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9.6 Fiduciaries and Named Fiduciaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
9.7 Plan Administrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
9.8 Interpretation of the Plan and Findings of Facts . . . . . . . . . . . . . . . . . . . . . . . . . . 44
9.9 Bonding, Insurance and Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
9.10 Committee and Plan Administrator Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
ARTICLE X
AMENDMENT, TERMINATION, MERGER, CONSOLIDATION AND ADOPTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
10.1 Continuation of Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
10.2 Right to Amend Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
10.3 Right to Terminate Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
10.4 Merger, Consolidation, or Transfer of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
10.5 Adoption of Plan by Aggregated Code Section 414 Employers . . . . . . . . . . . . . . . . . . . . . 48
ARTICLE XI
GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
11.1 Participant's Rights to Employment, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
11.2 No Guarantee of Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
11.3 Standard of Conduct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
11.4 Allocation of Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
11.5 Claims Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
11.6 Nonalienation or Assignment; QDRO's . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
11.7 Plan Continuance Voluntary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
11.8 Payments to Minors and Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
11.9 Location of Payee; Unclaimed Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
11.10 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
11.11 Correction of Participants' Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
11.12 Action of Employer, Committee and Plan Administrator . . . . . . . . . . . . . . . . . . . . . . . . 56
11.13 Employer Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
11.14 Gender and Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
11.15 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
11.16 Liability Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
11.17 Prohibited Discrimination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
11.18 Legal References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
11.19 Electronic Means of Communication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
APPENDIX I
ADDITIONAL DISCRETIONARY EMPLOYER CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A1
1.1 Employer Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A1
1.2 Separate Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A3
1.3 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A3
</TABLE>
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APPENDIX II
CODE Section 402(g) LIMITATIONS AND CORRECTION OF EXCESS DEFERRALS . . . . . . . . . . . . . . . . . . . . . . . . . A6
2.1 Code Section 402(g) Limitations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A6
2.2 Identification of Excess Deferrals and Correction . . . . . . . . . . . . . . . . . . . . . . . . . A6
2.3 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A7
APPENDIX III
CODE Section Section 401(k) and (m) NONDISCRIMINATION REQUIREMENTS . . . . . . . . . . . . . . . . . . . . . . . . . A8
3.1 Limitation of Elective Deferrals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A8
3.2 Limitation of Employee and Employer Matching Contributions . . . . . . . . . . . . . . . . . . . . . A9
3.3 Corrections Required by Discrimination Tests . . . . . . . . . . . . . . . . . . . . . . . . . . . . A10
3.4 Multiple Use of Alternative Limitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A14
3.5 Discretionary Cutbacks to Satisfy Discrimination Tests . . . . . . . . . . . . . . . . . . . . . . . A16
3.6 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A16
APPENDIX IV
REQUIRED DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A19
4.1 General Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A19
4.2 Required Distribution Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A19
4.3 Limits on Distribution Periods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A19
4.4 Death Distribution Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A19
4.5 Determination of Amount to be Distributed Each Year . . . . . . . . . . . . . . . . . . . . . . . . A21
4.6 Transitional Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A23
4.7 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A24
APPENDIX V
SPECIAL RULES APPLICABLE TO TOP HEAVY PLAN YEARS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A27
5.1 Top-Heavy Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A27
5.2 Top-Heavy Special Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A28
APPENDIX VI
CODE Section 415 LIMITATIONS ON ALLOCATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A32
6.1 General Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A32
6.2 Adjustments for Top Heavy Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A33
6.3 Applicable Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A34
</TABLE>
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APPENDIX VII
SPECIAL PROVISIONS FOR EMPLOYER SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A39
7.1 Limitations on TRASOP Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A39
7.2 Form of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A39
7.3 TRASOP Securities must Remain in Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A39
7.4 Voting Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A40
7.5 Allocation of Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A40
7.6 Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A40
7.7 ESOP Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A41
EXHIBIT A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A42
</TABLE>
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CHOICEPOINT INC. 401(K) PROFIT SHARING PLAN
PREAMBLE
The ChoicePoint Inc. 401(k) Profit Sharing Plan is intended to
constitute a defined contribution plan, qualified under Sections 401(a) and
401(k) of the Internal Revenue Code of 1986, as amended, for the exclusive
benefit of Eligible Employees and their Beneficiaries. The Plan is designed to
qualify as a profit-sharing plan for purposes of Sections 401(a), 402, 412, and
417 of the Code; provided, however, that notwithstanding any other provision
herein to the contrary, contributions to the Plan may be made without reference
to the current or accumulated net earnings or net profit of the Company. The
Company intends to maintain the tax-qualified status of the Plan and Trust
Fund, but makes no guarantee that it can or will continue to do so. No part of
the Trust Fund is to be used for or diverted to purposes other than the Plan,
and no part of the Trust Fund may revert to the Employer except as provided in
the Plan. The Plan is funded through a Trust Fund intended to be tax-exempt
under Section 501(a) of the Code.
The effective date of the Plan is July 1, 1997. The Plan was
originally created by the division of the Equifax Inc. Employees 401(k)
Retirement and Savings Plan as of the Effective Date, for the benefit of those
employees of Equifax Inc. and its related companies who were participants in
said Equifax Inc. plan and who became or remained employees of ChoicePoint Inc.
or its subsidiaries as of the Effective Date. Except as may be otherwise
stated herein, any amendment of the Plan shall apply only to a Participant who
is credited with an Hour of Service on or after the effective date of the
amendment. The rights and benefits of a Participant who is not credited with
an Hour of Service on or after the effective date of the amendment shall be
determined in accordance with the terms of the Plan in effect on the date of
the Participant's termination of employment with the Employer.
<PAGE> 9
ARTICLE I
DEFINITIONS
The following words and phrases as used in this Plan shall have the
meanings set forth in this Article unless a different meaning is clearly
required by the context:
1.1 Account shall mean a separate account which is established and
maintained for a Participant (or his Beneficiary) and to which contributions
made under this Plan which are allocated to such Participant, if any, and
earnings or losses thereon, if any, shall be credited. See Section 5.1 herein.
1.2 Allocation Participant shall, for a Plan Year, mean those
Participants:
(a) who are employed by any member of the
Controlled Group as an Eligible Employee on November 30 or a
later date in such Plan Year, or
(b) who terminated employment during such Plan
Year
(i) after becoming Disabled,
(ii) after having attained their Normal
Retirement Age, or
(iii) after having attained the age of 55
and having completed 5 Years of Eligibility Service,
but who did not receive a distribution of their entire Account
balance during such Plan Year.
1.3 Applicable Compensation shall, with respect to an Employee for
a Plan Year, mean the amount of wages, as defined in Code Section 3401(a), and
all other amounts of Compensation which are paid to an Employee and for which
the Employer is required to furnish the Employee a written statement under Code
Section Section 6041(d), 6051(a)(3) and 6052; provided, however, that
Applicable Compensation shall not include:
- deferred compensation (either in the Plan Year with
respect to which it is earned or in the Plan Year
when it is paid),
- reimbursed expenses (including without limitation
travel and entertainment expenses),
- moving expenses,
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<PAGE> 10
- fringe benefits (including without limitation income
relating to a company car),
- welfare benefits (including without limitation,
imputed income from life insurance and severance
payments),
- educational assistance, and,
- except as provided in the next sentence,
contributions to or amounts paid to the Employee from
this Plan or any other employee benefit plan;
provided, further, that with respect to Highly Compensated Employees only,
Applicable Compensation shall not include:
- incentive payments (including without limitation any
performance share plan benefits or payments),
- bonus payments,
- overtime pay and
- commission pay.
In addition, Applicable Compensation also includes any Elective Contributions or
any other contributions made by the Employers on behalf of an Employee (but only
pursuant to a deferral election) under an employee benefit plan containing a
cash or deferred arrangement under Code Section 401(k) and any amounts which
would have been received as cash but for an election to receive benefits under a
cafeteria plan meeting the requirements of Code Section 125. The annual
Applicable Compensation of each Employee taken into account in determining
contributions under the Plan for any Plan Year shall not exceed the applicable
annual amount of compensation which may be taken into account under Code Section
401(a)(17) for the Plan Year. Such applicable annual compensation limit is
$160,000, as adjusted by the Secretary of the Treasury for increases in the cost
of living, in accordance with applicable law.
1.4 Beneficiary shall mean any person or persons, including a
trust for the benefit of individuals, last designated in writing by a
Participant pursuant to the provisions and conditions of Section 7.2(b), who is
or may become entitled to a benefit hereunder. If, at any time, no Beneficiary
has been validly designated by the Participant, or the Beneficiary validly
designated by the Participant is no longer living or no longer exists,
whichever is applicable, then the Participant's Beneficiary shall be deemed to
be the person or persons (by right of representation) in the first of the
following classes of beneficiaries with one or more members of such class
surviving or in existence as of the Participant's death, and in the absence
thereof, the Participant's estate:
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<PAGE> 11
(a) the Participant's Surviving Spouse; or
(b) the Participant's lineal descendants, per stirpes.
1.5 Benefit Commencement Date means, with respect to a payee, the
first day on which all events have occurred which entitle the payee to such
payee's benefit, in accordance with Treas. Reg. Section
1.401(a)-20(Q&A-10)(b)(1), Code Section 417(f)(2) and Notice 93-26, and
determined pursuant to the provisions of Article VII of this Plan.
1.6 Code shall mean the Internal Revenue Code of 1986, as the same
may be amended from time to time.
1.7 Committee shall mean the ChoicePoint Inc. Group Benefit
Committee.
1.8 Company shall mean ChoicePoint Inc., its successors and
assigns, and any other corporation, partnership or sole proprietorship into
which the Company may be merged or consolidated or to which all or
substantially all of its assets may be transferred unless such organization
indicates in writing delivered to the Trustee that it does not approve of such
automatic succession.
1.9 Company Profit-Sharing Contributions shall mean Employer
contributions, if any, made to this Plan pursuant to Section 3.1(d) of this
Plan, and shall be allocated pursuant to Section 3.1(d)(ii) hereof.
1.10 Company Profit-Sharing Contributions Account shall mean the
Account of a Participant to which are credited any Company Profit-Sharing
Contributions allocated to the Participant each Plan Year under Section 3.1(d)
of this Plan.
1.11 Controlled Group shall mean the Company and any other entity
which is required to be aggregated with the Company pursuant to Code Section
Section 414(b), (c), (m) or (o).
1.12 Disabled shall mean, when used to describe a Participant, a
Participant who (i) is determined to be disabled either under the provisions of
the Federal Social Security Act or under the provisions of the group long term
disability insurance plan of the Company or (ii) is determined by the Committee
or the Plan Administrator to have any medically determinable physical or mental
impairment that can be expected to continue for a long, indefinite period or to
result in death and which causes the Participant to be unable to engage in the
Participant's occupation or any other gainful occupation for which the
Participant is qualified by reason of education, training or experience.
1.13 Effective Date shall mean July 1, 1997.
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<PAGE> 12
1.14 Election Directive shall mean the means allowed by the Plan
Administrator by which a Participant may elect to make Voluntary Contributions
or to have the Employer make Elective Contributions on behalf of such
Participant.
1.15 Elective Contributions shall mean Employer contributions that
were subject to a cash or deferred election under which a Participant could
elect to have the Employer either contribute an amount to this Plan or provide
such amount to the Participant in cash or in the form of some other taxable
benefit.
1.16 Elective Contributions Account shall mean the Account of a
Participant to which are credited any Elective Contributions allocated to the
Participant each Plan Year. A Participant's Elective Contributions Account
shall be a Nonforfeitable Account.
1.17 Eligibility Computation Period shall mean, for purposes of
determining Years of Eligibility Service and One-Year Breaks in Service for
eligibility, the following:
(a) The initial Eligibility Computation Period is the
12-consecutive- month period beginning on the Employee's Employment
Commencement Date.
(b) Succeeding 12-consecutive-month periods commencing
with each anniversary of the Employee's Employment Commencement Date
shall constitute subsequent Eligibility Computation Periods for the
Employee.
(c) In the case of a reemployed Employee, the Eligibility
Computation Periods of such Employee after the Employee's date of
reemployment shall commence on either his original date of hire or his
reemployment date, as applicable, determined in accordance with DOL
Reg. Section 2530.200b-4(b).
1.18 Eligible Employee shall mean an Employee (i) who is employed
by an Employer, and (ii) who is eligible to participate in this Plan and to
become a Participant for all or a portion of a Plan Year pursuant to Article II
of this Plan. (Employees described in subsections (d) through (f) of Section
2.1 shall not be Eligible Employees while such description is applicable.) See
also Section 3.6(j) of Appendix III.
1.19 Employee shall mean a person who performs services for a
member of the Controlled Group and who is a common law employee of such
Controlled Group member. The term Employee shall (i) also include any Leased
Employee of a Controlled Group member but shall (ii) exclude any individual who
provides services to the Controlled Group member pursuant to a contractual
arrangement with that individual or with another entity, but who is not deemed
to constitute a Leased Employee.
1.20 Employer shall mean the Company and each member of the
Controlled Group which has adopted this Plan pursuant to Section 10.5 herein.
See also Section 6.3(f) of Appendix VI.
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<PAGE> 13
1.21 Employment Commencement Date shall mean the date on which an
Employee first performs an Hour of Service (as defined in subsection (a) of
Section 1.24) for any member of the Controlled Group, and, for Employees as of
the Effective Date, for Equifax Inc. or any member of its controlled group (as
defined in Section 1.11 above but substituting "Equifax Inc." for "the
Company"), hereinafter referred to as the "Equifax Controlled Group".
1.22 ERISA shall mean the Employee Retirement Income Security Act
of 1974, as the same may be amended from time to time.
1.23 Highly Compensated Employee shall mean the following:
(a) An individual shall be a Highly Compensated Employee,
with respect to a Plan Year, if the individual is described under
either or both subsection (b) or subsection (c) below. (The
italicized words and phrases have the meanings assigned to them in
this Section.)
(b) An individual is described under this subsection (b)
if the individual is performing services during the determination
period for the Controlled Group or the Equifax Controlled Group as to
calendar year 1996, and: (1) the individual received compensation
from the Controlled Group or the Equifax Controlled Group as to the
calendar year 1996, during the look-back year in excess of $80,000 and
was a member of the top-paid group for that year; or (2) the
individual was a 5-percent owner at any time during either or both the
look- back year or the determination period.
(c) An individual is described under this subsection (c)
if the individual was, at one time, an Employee of the Controlled
Group or the Equifax Controlled Group as to calendar year 1996 and the
individual separated from service (or was deemed to have separated
from service pursuant to Treas. Reg. Section 1.414(q)-1T(Q&A-5)) from
the Controlled Group or the Equifax Controlled Group as to calendar
year 1996 prior to the determination period, such individual performs
no service for the Controlled Group during the determination period,
and such individual is a "highly compensated employee" (as defined in
Code Section 414(q)) for either the determination period during which
the individual separated from service with the Controlled Group or the
Equifax Controlled Group as to calendar year 1996 or any determination
period ending on or after the individual's 55th birthday.
(d) For purposes of this Section, the applicable dollar
amount specified in clause (1) of subsection (b) shall be the
applicable dollar amounts prescribed in Code Section 414(q)(1)(B) and
shall be adjusted pursuant to the last sentence of Code Section
414(q)(1).
(e) For purposes of this Section the term determination
period shall mean the respective Plan Year specified in subsection (a)
above, and the term look-back year shall mean the 12-month period
immediately preceding the determination period.
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(f) In determining who is a Highly Compensated Employee,
the following definitions shall apply:
(i) Top-paid group shall mean the top 20% of
Employees of the Controlled Group or the Equifax Controlled
Group as to calendar year 1996 ranked on the basis of
compensation received during the determination period or
look-back year, as applicable. For purposes of determining
the number of Employees in the top-paid group, Employees
described in Treas. Reg. Section 1.414(q)-1T(Q&A-9)(b) are
excluded.
(ii) 5-percent owner shall mean a 5-percent owner
determined pursuant to Treas. Reg. Section 1.416-1(T-17) and
(T-18). If an individual is a 5-percent owner at any time
during a determination period or look-back year, the
individual shall be considered a 5-percent owner for such
period or year.
(iii) Compensation shall mean compensation as
defined in Section 6.3(b) of Appendix VI herein, except that
compensation shall include any amount which is contributed by
any member of the Controlled Group or the Equifax Controlled
Group as to calendar year 1996 pursuant to a salary reduction
agreement and which is not includible in the gross income of
the Employee under Code Section Section 125, 402(e)(3) or
403(b).
(g) The determination of who is a Highly Compensated
Employee, including the determinations of the number and identity of
the Employees in the top-paid group, and the compensation that is
considered, will be made in accordance with Code Section 414(q) and
the regulations thereunder.
1.24 Hours of Service shall mean those hours calculated in
accordance with the following provisions:
(a) An Employee shall receive credit for an Hour of
Service for each hour for which he is paid or entitled to payment by
the Employer or, prior to the Effective Date, by any member of the
Equifax Controlled Group, for the performance of duties, according to
the further provisions of this Section.
(b) An Employee shall also receive credit for an Hour of
Service for each hour for which he is paid or entitled to payment by
the Employer on account of a period of time during which no duties are
performed (irrespective of whether the employment relationship has
terminated) due to vacation, holiday, illness, incapacity (including
short-term disability or a period during which a Participant is
Disabled), layoff, jury duty or military duty; provided, however,
that:
(i) No more than 501 Hours of Service shall be
credited because of this subsection (b) to an Employee on
account of any single continuous period during
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<PAGE> 15
which the Employee performs no duties (whether or not said
period occurs in a single computation period);
(ii) An hour for which an Employee is directly or
indirectly paid or entitled to payment on account of a period
during which no duties are performed shall not be credited to
an Employee if said payment is made or due under a plan
maintained solely for the purpose of complying with applicable
worker's compensation, unemployment compensation, or
disability insurance laws; and
(iii) Hours of Service shall not be credited for a
payment which reimburses an Employee solely for medical or
medically related expenses incurred by the Employee.
For purposes of subsection (b), a payment shall be deemed to be made
by or due from the Employer regardless of whether said payment is made
by or due from the Employer directly or indirectly through, among
others, a trust fund or insurer to which the Employer contributes or
pays premiums and regardless of whether contributions made or due to
the trust fund, insurer or other entity are for the benefit of
particular Employees or are on behalf of a group of Employees in the
aggregate.
(c) An Employee shall also receive credit for an Hour of
Service for each hour for which back pay, irrespective of mitigation
of damages, is either awarded or agreed to by the Employer provided
that no Hour of Service shall be credited pursuant both to this
subsection (c) and subsections (a) or (b) above. Crediting of Hours
of Service for back pay awarded or agreed to with respect to periods
described in subsection (b) above shall be subject to the limitations
set forth in that subsection.
(d) In addition to the Service for which an Hour of
Service must be credited pursuant to subsections (a), (b) and (c)
above, an Employee shall receive credit for an Hour of Service for:
(i) Each hour, whether or not said Employee is
paid therefor, during which he would otherwise perform an Hour
of Service, except for the fact that he is Disabled or on
short-term disability pursuant to the Company's Short-Term
Disability Plan, or on an approved leave of absence in
accordance with established Company policy; provided, however,
that the number of hours credited with respect to any period
of leave of absence shall not exceed the number that would be
credited with respect to a one-year period of service. If he
does not return to work on or before the end of his leave,
service will be deemed to have terminated as of the beginning
of his leave;
(ii) Each hour for which an Employee performs no
duties due to absence during any military service and without
regard to the 501-hour maximum described above, so long as
such hours are required to be taken into account under
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<PAGE> 16
the Selective Service and Training Act of 1940, as amended,
the Military Selective Service Act of 1967, as amended, and/or
the Vietnam Era Veteran's Readjustment Act of 1974, as
amended, or other applicable federal law.
(e) Each Employee for whom the records of actual Hours of
Service are not maintained shall be credited with 190 Hours of Service
for each month for which said Employee would be required to be
credited with at least one Hour of Service, in accordance with this
Section and applicable regulations promulgated by the Department of
Labor.
(f) In determining and crediting to computation periods
the number of Hours of Service to be credited to an Employee, the
provisions of DOL Reg. Section Section 2530.200b-2(b) and 2(c) are
incorporated herein by reference.
(g) If an Employee is absent from service with the
Employer as a result of a maternity/paternity absence, then, the
Employee will be credited with Hours of Service under either
subsection (d)(i) or this subsection (g), whichever results in the
crediting of the greater number of Hours of Service. Under this
subsection (g), the Employee will be credited with up to 501 Hours of
Service with respect to the period of maternity/paternity absence
solely for the purposes of determining whether the Employee incurs a
One Year Break in Service for purposes of eligibility to participate.
Such 501 Hours of Service shall be credited at the rate at which the
Employee would have otherwise accrued Hours of Service but for the
maternity/paternity absence, provided that, if the Plan Administrator
is unable to determine the Hours of Service that would have otherwise
been credited, such Hours of Service shall be credited at the rate of
eight hours for each day of the maternity/paternity absence. Such 501
Hours of Service shall be credited only in the Eligibility Computation
Period, in which the Employee's maternity/paternity absence commences
if the Employee would have incurred a One Year Break in Service, but
for the crediting of the additional Hours of Service. If such Hours
of Service (not in excess of 501) are not credited to the Eligibility
Computation Period, in which the maternity/paternity absence commences
pursuant to the immediately preceding sentence, such Hours of Service
shall be credited to the next Eligibility Computation Period
commencing after the maternity/paternity absence commences. For
purposes of this subsection, the term "maternity/paternity absence"
means an absence from service with the Employer by an Employee if the
absence is caused:
(i) By reason of the pregnancy of the Employee;
(ii) By reason of the birth of a child of the
Employee;
(iii) By reason of the placement of a child with
the Employee in connection with the adoption of such child by
the Employee; or
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<PAGE> 17
(iv) For purposes of caring for such child for a
period beginning immediately following such birth or
placement.
(h) For purposes of this Section, employment with other
members of the Controlled Group shall be considered employment with
the Employer. In addition, in the case of a Leased Employee of any
member of the Controlled Group, service with such member shall be
considered employment with the Employer. In addition, employment with
the Equifax Controlled Group prior to the Effective Date shall be
considered employment with an Employer for purposes of Sections 1.31
and 1.53.
1.25 Leased Employee.
(a) Leased Employee shall mean any person (other than a
common law employee of a member of the Controlled Group) who pursuant
to an agreement between a member of the Controlled Group and any other
person ("leasing organization") has performed services for a member of
the Controlled Group (or for a member of the Controlled Group and
related persons determined in accordance with Code Section 414(n)(6))
on a substantially full time basis for a period of at least one year,
and such services are performed under primary direction or control of
the member of the Controlled Group. Contributions or benefits
provided to a Leased Employee by the leasing organization which are
attributable to services performed for a member of the Controlled
Group shall be treated as provided by a member of the Controlled
Group.
(b) A Leased Employee shall not, however, be considered
an Employee of a member of the Controlled Group if: (i) such Employee
is covered by a money purchase pension plan of his legal employer
providing: (1) a nonintegrated employer contribution rate of at least
10% of compensation (as defined in Section 7.3(b) of Appendix VII, but
including amounts contributed pursuant to a salary reduction agreement
which are excludable from the Employee's gross income under Code
Section Section 125, 402(e)(3), 402(h) or 403(b)), (2) immediate
participation, and (3) full and immediate vesting; and (ii) Leased
Employees do not constitute more than 20% of the Controlled Group's
nonhighly compensated workforce. For purposes of this subsection (b),
the term "nonhighly compensated workforce" means the total number of
individuals (other than Highly Compensated Employees) who are either
Employees of a member of the Controlled Group or Leased Employees of a
member of the Controlled Group.
1.26 Matching Elective Contributions shall mean Employer
contributions which are allocated to Allocation Participants based upon their
Elective Contribution elections.
1.27 Matching Elective Contributions Account shall mean the Account
of a Participant to which are credited any Matching Elective Contributions
allocated to the Participant.
1.28 Matching Voluntary Contributions shall mean Employer
contributions which are allocated to Allocation Participants based upon their
Voluntary Contribution elections.
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<PAGE> 18
1.29 Matching Voluntary Contributions Account shall mean the
Account of a Participant to which are credited any Matching Voluntary
Contributions allocated to the Participant.
1.30 Normal Retirement Age shall mean age 62.
1.31 One-Year Break in Service (or Break in Service) shall mean an
Eligibility Computation Period during which the Employee does not complete more
than 500 Hours of Service with the Employer.
1.32 One-Year Period of Severance shall mean a 12-consecutive-month
period beginning on an Employee's Severance from Service Date or an anniversary
of that date and ending one year after the beginning date, during which the
Employee does not perform an Hour of Service for the Employer.
1.33 Participant shall mean an Eligible Employee who has met the
requirements of Article II for participation in this Plan and who is
potentially eligible to receive a benefit of any type from this Plan or whose
Beneficiaries are potentially eligible to receive a benefit of any type from
this Plan, or a former Employee who retains any Account balance in this Plan.
An Employee who has made a Rollover contribution to this Plan shall also be
considered a Participant, although such an Employee shall not be considered a
Participant for purposes of receiving any allocations under any provision of
this Plan, until otherwise eligible pursuant to Article II, and shall only be
considered a Participant to the extent of such Rollover Contribution.
1.34 Period of Service shall mean a period of service commencing on
the Employee's Employment Commencement Date or Reemployment Commencement Date,
whichever is applicable, and ending on the Employee's Severance from Service
Date.
1.35 Period of Severance shall mean the period of time commencing
on an Employee's Severance from Service Date and ending on the date on which
the Employee again performs an Hour of Service (as defined in subsection (a) of
Section 1.24) for any member of the Controlled Group.
1.36 Plan shall mean the ChoicePoint Inc. 401(k) Profit Sharing
Plan, and all amendments to such plan made from time to time. This Plan is
intended to be a profit sharing plan within the meaning of Code Section 401(a)
and Treas. Reg. Section 1.401-1 under which contributions shall be made without
regard to current or accumulated profits as permitted by Code Section
401(a)(27)(A). This Plan is intended to contain a qualified cash or deferred
arrangement within the meaning of Code Section 401(k).
1.37 Plan Administrator shall mean the person or persons appointed
by the Committee to administer the Plan pursuant to Article IX herein, who
shall initially be the Chief Financial Officer of the Company and the Vice
President of the Company with responsibility for compensation and benefits,
each of whom may independently exercise the authority of the Plan
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<PAGE> 19
Administrator. If no such appointment is effective at any time, the Committee
shall be the Plan Administrator.
1.38 Plan Year shall mean the 12-consecutive-month period for
keeping the books and records of the Plan, which shall be the calendar year,
commencing on January 1 and ending on December 31. The initial Plan Year of
the Plan shall be the period beginning on the Effective Date and ending on
December 31, 1997.
1.39 Qualified Spousal Waiver shall mean a Participant's written
election, delivered to the Plan Administrator, signed by the Participant's
Spouse, and witnessed by a notary public or an authorized Plan representative,
which consents to the payment of all or a specified part of the Participant's
benefit to a named Beneficiary other than the Participant's Spouse. Such
election may not be changed without Spousal consent (unless the consent
expressly permits designations by the Participant without further consent of
the Spouse). A Participant (but not the Participant's Spouse) may, however,
revoke a Qualified Spousal Waiver at any time prior to his Benefit Commencement
Date by way of a written signed statement to the Plan Administrator and a
Qualified Spousal Waiver shall not be effective at any time following delivery
of such a revocation to the Plan Administrator provided that such revocation is
received by the Plan Administrator prior to the Participant's Benefit
Commencement Date. If a Participant revokes a Qualified Spousal Waiver, the
Participant's benefits shall be payable under the terms and provisions of this
Plan as if no Qualified Spousal Waiver had ever been in existence.
1.40 Reemployment Commencement Date shall mean the first date
following a Period of Severance on which an Employee performs an Hour of
Service (as defined in subsection (a) of Section 1.24) for any member of the
Controlled Group.
1.41 Required Beginning Date shall, with respect to an individual,
mean April 1 of the calendar year following the later of the calendar year in
which the individual attains age 70 1/2 or the calendar year in which the
employee retires; provided, however, that, in the case of a Participant who is
a 5-percent owner with respect to the Plan Year ending in the calendar year in
which the individual attains age 70 1/2, the Required Beginning Date shall mean
April 1 of the calendar year following the calendar year in which the
individual attains age 70 1/2.
1.42 Rollover Contributions shall mean cash contributions, if any,
made by an Eligible Employee to the Plan which are described in Code Section
Section 402(c)(4), 403(a)(4) or 408(d)(3).
1.43 Rollover Contributions Account shall mean the Account of a
Participant to which are credited the Rollover Contributions made by the
Participant in a given Plan Year.
1.44 Severance from Service Date shall mean the earlier to occur
of:
(a) the date on which an Employee quits, retires, is
discharged or dies, or
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<PAGE> 20
(b) the first anniversary of the first day of a period of
absence from service in the case of an Employee:
(i) who remains absent from service (with or
without pay) with all members of the
Controlled Group for any reason other than
quitting, retirement, discharge or death
(e.g., vacation, holiday, sickness,
disability, leave of absence or layoff), and
(ii) who later returns to work as a full-time
Employee.
The Severance from Service Date of an Employee who is absent from service
beyond the first anniversary of the first day of absence from work for
maternity or paternity reasons is the second anniversary of the first day of
such absence, and in such a case the period between the first and second
anniversaries of the first day of absence from work is neither a Period of
Service nor a Period of Severance. For purposes of this Section, an absence
from work for maternity or paternity reasons means an absence:
(i) by reason of the pregnancy of the Employee,
(ii) by reason of a birth of a child of the Employee,
(iii) by reason of the placement of a child with the
Employee in connection with the adoption of such child by the
Employee, or
(iv) for purposes of caring for such child for a period
beginning immediately following such birth or placement.
1.45 Spouse shall mean the spouse of a Participant who was married
to that Participant in a civil or religious ceremony recognized under the laws
of the state where the marriage was contracted and whose marriage continued
until the earlier of the Participant's Benefit Commencement Date or the
Participant's date of death.
1.46 Surviving Spouse shall mean the surviving Spouse of a deceased
Participant. To the extent required by a qualified domestic relations order,
an alternate payee under such order shall be treated as the Surviving Spouse of
a deceased Participant. See Section 11.6 herein.
1.47 Trust shall mean the trust accompanying the Plan hereby
created.
1.48 Trust Agreement shall mean the agreement between the Trustee
and the Company creating the Trust accompanying the Plan.
1.49 Trust Fund shall mean the assets of the Trust held by the
Trustee pursuant to the provisions of the Trust Agreement and the Plan.
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<PAGE> 21
1.50 Trustee shall mean the entity, person or persons who have
entered into the Trust Agreement with the Company to act as trustee(s) of the
assets of the Plan.
1.51 Voluntary Contributions shall mean voluntary after-tax
Participant contributions made to this Plan.
1.52 Voluntary Contributions Account shall mean the Account of a
Participant to which are credited the Participant's Voluntary Contributions.
1.53 Year of Eligibility Service.
(a) A Year of Eligibility Service shall mean an
Eligibility Computation Period during which the Employer is credited
with at least 1,000 Hours of Service.
(b) For purposes of this Section, an Employee who renders
service as a common law employee of another member of the Controlled
Group which is not an Employer shall be credited with Hours of Service
for those hours that would be credited under the principles of Section
1.24 if the other Controlled Group member was an Employer. In
addition, in the case of a Leased Employee of any employing person or
entity described in the preceding sentence, employment with such
employer shall be considered employment with the Employer.
(c) For purposes of this Section, in any case in which
the Employer maintains a plan of a predecessor employer, service for
such predecessor shall be treated as service for the Employer in
accordance with Code Section 414(a) with respect to said Plan.
(d) Prior Service. An Employee on the Effective Date
shall receive credit for that number of Years of Eligibility Service
(as defined in Section 1.53 of the Equifax Inc. Employees 401(k)
Retirement and Savings Plan ("Equifax Plan")) credited to the Employee
under the Equifax Plan as of the day prior to the Effective Date.
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<PAGE> 22
ARTICLE II
ELIGIBILITY FOR PARTICIPATION
2.1 Initial Attainment of Participation Status.
(a) Employees as of Effective Date. Subject to the
special rules of Sections 2.2 through 2.5 below, all Employees who are
Eligible Employees as of the Effective Date, and who were Participants
in the Equifax Inc. Employees 401(k) Retirement and Savings Plan
immediately prior to the Effective Date shall participate hereunder as
of the Effective Date under the terms and conditions set forth herein.
Subject to the special rules of Sections 2.2 through 2.5 below, all
Employees who are Eligible Employees as of the Effective Date, and who
have satisfied the eligibility requirements under subsection (c) below
as of the Effective Date, shall become Participants hereunder as of
the Effective Date. All other Employees may become Participants
hereunder in accordance with subsection (b) below.
(b) Employees after Effective Date. Subject to the
special rules of Sections 2.2 through 2.5 below, all Employees who are
Eligible Employees, and who are not Participants on the Effective
Date, shall become Participants hereunder as of the beginning of the
first payroll period beginning after the date on which the Employee
satisfies the eligibility requirements set forth in subsection (c)
below (or as soon as practicable after said date but in no event later
than 6 months after such date), provided such Employee is still in the
service of an Employer as an Eligible Employee on such date.
(c) Eligibility Requirements. For purposes of this Plan,
the eligibility requirements for participation in this Plan shall be
as follows:
(i) An Employee must complete an Eligibility
Computation Period during which the Employee receives credit
for one Year of Eligibility Service.
(ii) An Employee must attain age 21.
(d) Leased Employees Excluded. Leased Employees shall
not be Eligible Employees and shall not be eligible to participate in
this Plan while they remain Leased Employees notwithstanding any
provision of this Plan to the contrary.
(e) Nonresident Aliens. Employees who are nonresident
aliens and who receive no earned income (within the meaning of Code
Section 911(d)(2)) from the Employer which constitutes income from
sources within the United States (within the meaning of Code Section
861(a)(3)) shall not be Eligible Employees and shall not be eligible
to participate in this Plan while they remain such notwithstanding any
provision of this Plan to the contrary.
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<PAGE> 23
(f) Non-Salaried Employees. Employees who are not
classified on the records of the Employer as "salaried employees" and
who are not in fact paid on a salaried basis shall not be Eligible
Employees and shall not be eligible to participate in this Plan while
they remain such notwithstanding any provision of this Plan to the
contrary.
2.2 Reemployment of Former Non-Participant Employees. If an
Employee terminates employment with the Controlled Group before becoming a
Participant and is reemployed by a Controlled Group member before incurring the
number of consecutive One-Year Periods of Severance specified in the next
sentence, he shall, upon being rehired by a member of the Controlled Group as
an Employee, receive credit for purposes of Years of Eligibility Service for
all service prior to his termination of employment, and may become a
Participant in accordance with Section 2.1 above, except that if the date such
Employee would become a Participant occurs during the Employee's absence from
service such Employee shall become a Participant as soon as administratively
practicable after becoming an Eligible Employee. An Employee who terminates
employment before becoming a Participant, and who is reemployed by a Controlled
Group member after incurring 5 consecutive One-Year Periods of Severance, shall
be treated as a new Employee for purposes of the Plan and his service completed
prior to such One-Year Periods of Severance shall be disregarded for purposes
of determining when he will become a Participant after his reemployment. The
aggregate number of Eligibility Computation Periods before such One-Year
Periods of Severance shall not include any Eligibility Computation Periods with
respect to which service of the Employee is disregarded under this Section by
reason of his prior One-Year Periods of Severance.
2.3 Reemployment of Former Participants. Any former Participant
who terminated employment with the Controlled Group shall become a Participant
hereunder as soon as administratively practicable after becoming an Eligible
Employee.
2.4 Transfers to/from Eligible Class.
(a) Exclusion After Participation. A Participant who
ceases to be an Eligible Employee, but who has not ceased to be an
Employee, shall not, except as otherwise specifically provided in this
Plan, share in any contributions under Section 3.1 of this Plan, and
shall not be entitled to make any contributions under Section 3.2 of
this Plan from the date of such ineligibility, until such Participant
again becomes an Eligible Employee. However, such Participant's
rights with respect to his existing Account balance shall be
preserved, he shall continue to earn Years of Eligibility Service, his
Period of Service shall continue to increase, and he shall be entitled
to receive distributions in accordance with Article VII.
(b) Participation After Exclusion. An Employee who has
not been an Eligible Employee but who becomes an Eligible Employee may
become a Participant hereunder as of the later of (i) the date on
which the Employee becomes an Eligible Employee, or (ii) as soon as
administratively possible following the date on which the Employee
satisfies the eligibility requirements set forth in Section 2.1(c)
(but in no event later than
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<PAGE> 24
6 months after such date), if the Employee is an Eligible Employee as
of such date, and if not, the date the Employee would have become a
Participant hereunder under Sections 2.2 or 2.3 above, as applicable.
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<PAGE> 25
ARTICLE III
CONTRIBUTIONS AND ALLOCATIONS
3.1 Employer Contributions. The Employer shall make contributions
to the Plan (all of which are hereby expressly conditioned on their
deductibility under Code Section 404) by making cash payments (or payments of
property acceptable to the Trustee if such payments (i) are purely voluntary,
(ii) do not relieve the Employer of an obligation to make contributions to this
Plan, and (iii) do not constitute prohibited exchanges under ERISA Section
406(a)(1)(A) or if such payments are described in ERISA Section 408(e)) to the
Trustee in one or more of the following methods:
(a) Elective Contributions.
(i) Amount. For each Plan Year the Employers
shall make Elective Contributions to this Plan in an amount
equal to the aggregate Elective Contributions specified by
Participants pursuant to their Election Directives, subject to
the limitations and restrictions of paragraph (v) below.
(ii) Allocation. Elective Contributions specified
by a Participant pursuant to his Election Directive shall,
subject to the limitations and restrictions of paragraph (v)
below, be allocated to such Participant's Elective
Contributions Account. The Participant's salary or wages from
the Employer shall be reduced accordingly.
(iii) Basic and Supplemental Elective
Contributions.
(A) Basic Elective Contributions.
Any Participant may specify an amount of
Basic Elective Contributions which shall not
exceed 6% of such Participant's Applicable
Compensation received during such Plan Year;
provided, however, that in the case of a
Participant who chooses to make Voluntary
Contributions under Section 3.2(a), the sum
of the Basic Elective Contributions and the
Basic Voluntary Contributions shall not
exceed 6% of such Participant's Applicable
Compensation received during the Plan Year.
(B) Supplemental Elective
Contributions. Any Participant who is not a
Highly Compensated Employee for any Plan Year
and who has elected the maximum amount of
Basic Elective Contributions under
subparagraph (A) above, may elect to specify
an amount of Supplemental Elective
Contributions which shall not exceed 10% of
such Participant's Applicable Compensation
received during such Plan Year; provided,
however,
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<PAGE> 26
that in the case of a Participant who chooses
to make Voluntary Contributions under Section
3.2(a), the sum of the Supplemental Elective
Contributions and Supplemental Voluntary
Contributions shall not exceed 10% of such
Participant's Applicable Compensation
received during the Plan Year.
(iv) Procedure for Making Elections. The Plan
Administrator shall have complete discretion to adopt and
revise procedures to be followed in making Elective
Contribution elections. Such procedures may include, but are
not limited to, the manner in which Election Directives may be
made, and the deadline for making Election Directives and for
requesting a modification or revision of an Elective
Contribution election; provided, however, that no election may
be made to defer as an Elective Contribution any amount of
Compensation that has already been paid to a Participant. Any
procedures adopted by the Plan Administrator shall be
communicated to Participants.
(v) Other Limitations Concerning Elective
Contributions. In addition to the other conditions and
limitations set forth in this Plan, Elective Contributions
which may, for a Plan Year, be otherwise made by a Participant
and allocated to his Account shall not be permitted, in the
case of each Highly Compensated Participant, if they would
cause the Plan to fail the nondiscrimination requirements
specified in Appendix III for such Plan Year, and, in the case
of each Participant, if they would cause the Plan to fail to
satisfy the limitations of Appendices II or VI for such Plan
Year. The Plan Administrator shall have complete discretion
to limit Elective Contributions, consistent with applicable
law, so that the requirements and limitations specified in
Appendices II, III and VI will be met.
(b) Matching Elective Contributions.
(i) Amount. For each Plan Year, the Employer
shall make Matching Elective Contributions to this Plan in an
amount equal to the aggregate of the amounts to be allocated
to Participants under paragraph (ii) below.
(ii) Allocation. Matching Elective Contributions
shall be allocated as of the date contributed, so that the
amount allocated shall equal that percentage, described in the
relevant exhibit hereto for the Employer in question, of the
Participant's Basic Elective Contributions (to the extent that
such contributions do not exceed 6% of such Participant's
Applicable Compensation) received during the relevant period
(excluding any Elective Contributions to the extent such
Elective Contributions are withdrawn under Section 7.9 hereof
during such Plan Year and excluding any Qualified Nonelective
Contributions or Qualified Matching Contributions treated as
Elective Contributions under Section 3.6(c) of Appendix III),
subject to the limitations of Sections 3.2, 3.3, 3.4, and 3.5
of Appendix III and Appendix VI of this Plan. The stated
percentage referred to in the first
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<PAGE> 27
sentence of this subsection and any other conditions or
provisions with respect to said contributions shall be set
forth in Exhibit A of this Plan with respect to each Employer
which elects to make Matching Elective Contributions. Exhibit
A may specify different percentages for different operating
divisions of an Employer.
(iii) Other Limitations Concerning Matching
Elective Contributions. In addition to the other conditions
and limitations set forth in this Plan, Matching Elective
Contributions which are, for a Plan Year, allocated to the
Matching Elective Contributions Account of a Participant who
is a Highly Compensated Employee, and which cause the Plan to
fail the nondiscrimination requirements specified in Appendix
III for such Plan Year shall be corrected pursuant to the
provisions of Appendix III. Furthermore, in the case of each
Participant, no Matching Elective Contributions shall be
allocated to a Participant's Matching Elective Contributions
Account which would cause the Plan to fail to satisfy the
limitations of Appendices II or VI.
(c) Matching Voluntary Contributions.
(i) Amount. For each Plan Year, the Employer
shall make Matching Voluntary Contributions to this Plan in an
amount equal to the aggregate of the amounts to be allocated
to Participants under paragraph (ii) below.
(ii) Allocation. Matching Voluntary Contributions
shall be allocated as of the date contributed, so that the
amount allocated shall equal that percentage, described in the
relevant exhibit hereto for the Employer in question, of the
Participant's Basic Voluntary Contributions (to the extent
that such contributions do not exceed 6% of such Participant's
Applicable Compensation) received during the relevant period
(excluding any Voluntary Contributions made in a lump sum
pursuant to Section 3.2(a)(iv) and excluding any Voluntary
Contributions that are withdrawn under Section 7.10 during the
Plan Year), subject to the limitations of Sections 3.2, 3.3,
3.4, and 3.5 of Appendix III and Appendix VI of this Plan.
The stated percentage referred to in the first sentence of
this subsection and any other conditions or provisions with
respect to said contributions shall be set forth in Exhibit A
of this Plan with respect to each Employer which elects to
make Matching Voluntary Contributions. Exhibit A may specify
different percentages for different operating divisions.
(iii) Other Limitations Concerning Matching
Voluntary Contributions. In addition to the other conditions
and limitations set forth in this Plan, Matching Voluntary
Contributions which are, for a Plan Year, allocated to the
Matching Voluntary Contributions Account of a Participant who
is a Highly Compensated Employee, and which cause the Plan to
fail the nondiscrimination requirements specified in Appendix
III for such Plan Year shall be corrected pursuant to the
provisions of Appendix III. Furthermore, in the case of each
Participant, no
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<PAGE> 28
Matching Voluntary Contributions shall be allocated to a
Participant's Matching Voluntary Contributions Account which
would cause the Plan to fail to satisfy the limitations of
Appendices II or VI.
(d) Company Profit-Sharing Contributions.
(i) Amount. Each Employer may, in lieu of or in
addition to the contributions described in subsections (a)
through (c) above, elect to make contributions on another
legally permissible basis to the Plan for the benefit of those
Participants who are employed by said Employer. In said
event, the President or other authorized officer of the
Employer shall execute a document describing the special
contribution formula which shall be reflected in Exhibit A to
this Plan.
(ii) Allocation. In the event that an Employer
shall elect to make contributions pursuant to subparagraph (i)
of this subsection (d), said contributions shall be allocated
to Participants' accounts as described in each case in Exhibit
A, which may contain any other special provisions or
definitions relevant thereto.
In no event shall the aggregate contributions made by the Employer
under this Section and Appendix I exceed the amount deductible for
federal income tax purposes under Code Section 404. All allocations
to be made under this Section shall be subject to the provisions of
Appendix V, if applicable.
3.2 Employee Contributions.
(a) Voluntary Contributions.
(i) Voluntary Contribution Elections. Each
Participant may, subject to the limitations and restrictions
of paragraph (v) below, elect through Election Directives to
make Voluntary Contributions to the Plan equal to (i) a
percentage of his or her Applicable Compensation, or (ii) a
fixed dollar amount of his or her Applicable Compensation,
whichever method is allowed by the Plan Administrator. Such
contributions, if any, shall be maintained in a separate
Voluntary Contributions Account for the Participant.
(ii) Basic and Supplemental Voluntary Contribution
Percentages.
(A) Basic Voluntary Contributions.
Any Participant may make an amount of Basic
Voluntary Contributions which shall not
exceed 6% of such Participant's Applicable
Compensation received during such Plan Year;
provided, however, that in the case of a
Participant who chooses to have the Employer
make Elective Contributions on his behalf
under Section 3.1, the sum of the Basic
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Elective Contributions and the Basic
Voluntary Contributions shall not exceed 6%
of such Participant's Applicable Compensation
received during the Plan Year.
(B) Supplemental Voluntary
Contributions. Any Participant who is not a
Highly Compensated Employee for any Plan Year
and who has elected the maximum amount of
Basic Voluntary Contributions under
subparagraph (A) above, may elect to make an
amount of Supplemental Voluntary
Contributions which shall not exceed 10% of
such Participant's Applicable Compensation
received during such Plan Year; provided,
however, that in the case of a Participant
who chooses to have the Employer make
Elective Contributions on his behalf under
Section 3.1, the sum of the Supplemental
Elective Contributions and Supplemental
Voluntary Contributions shall not exceed 10%
of such Participant's Applicable Compensation
received during the Plan Year.
(iii) Procedure for Making Elections. The Plan
Administrator shall have complete discretion to adopt and
revise procedures to be followed in making Voluntary
Contribution elections. Such procedures may include, but are
not limited to, the manner in which Election Directives may be
made, and the deadline for making Election Directives and for
requesting a modification or revision of a Voluntary
Contribution election. Any procedures adopted by the Plan
Administrator shall be set forth in writing and communicated
to Participants.
(iv) Other Limitations Concerning Voluntary
Contributions. In addition to the other conditions and
limitations set forth in this Plan, Voluntary Contributions
which may, for a Plan Year, be allocated to a Participant's
Voluntary Contributions Account shall not be permitted, in the
case of each Participant who is a Highly Compensated Employee,
if they would cause the Plan to fail the nondiscrimination
requirements specified in Appendix III for such Plan Year,
and, in the case of each Participant, if they would cause the
Plan to fail to satisfy the limitations of Appendices II or VI
for such Plan Year. The Plan Administrator shall have
complete discretion to limit Voluntary Contributions,
consistent with applicable law, so that the requirements and
limitations specified in Appendices II, III and VI will be
met.
(b) Rollover Contributions. Each Eligible Employee or
each Employee who would be an Eligible Employee except for the
requirements of Section 2.1(c), may, without regard to whether such
Eligible Employee is a Participant under this Plan and subject to the
consent of the Plan Administrator based on satisfying the requirements
of this subsection, make one or more Rollover Contributions which
shall be allocated to the
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<PAGE> 30
Eligible Employee's Rollover Contribution Account if the Rollover
Contribution consists solely of cash and is:
(i) all or any portion of a distribution which is
an "eligible rollover distribution" within the meaning of Code
Section 402(c)(4);
(ii) a distribution which is described in Code
Section 408(d)(3); or
(iii) all or any portion of a distribution which is
a rollover amount described in Code Section 403(a)(4).
The Plan Administrator shall have the right to reject any Rollover
Contribution which it determines in its sole judgment does not qualify
under the above-referenced provisions. Any Rollover Contributions
accepted by the Plan Administrator shall be promptly remitted to the
Trustee to be held in a Rollover Contributions Account for the
Eligible Employee's sole benefit, and shall be subject to all of the
terms and provisions of this Plan.
3.3 Return of Contributions. All contributions made to the
Trustee shall be irrevocable except as follows:
(a) Mistake of Fact. If an Employer contribution is made
by an Employer under a mistake of fact, the amount of such
contribution described in subsection (c) below shall be returned to
the Employer within one year after the payment of said contribution.
(b) Deductibility Condition. All contributions of the
Employer made to this Plan are hereby expressly conditioned on their
deductibility under Code Section 404; if an Employer contribution is
disallowed as a deduction under Code Section 404, the amount of the
contribution described in subsection (c) below may be returned to the
Employer within one year after the disallowance of the deduction.
(c) Amount Returned. For purposes of subsections (a) and
(b) above, the amount which may be returned to the Employer is the
excess of (i) the amount contributed over (ii) the amount that would
have been contributed had there not occurred a mistake of fact or a
mistake in determining the deduction. Earnings attributable to such
amount will not be returned to the Employer, but losses attributable
thereto will reduce the amount so returned.
3.4 Prior Plan Contributions. The Trustee is authorized and
directed to accept a direct transfer of assets to the Plan from the Trustee of
the Equifax Inc. Employees 401(k) Retirement and Savings Plan on behalf of each
individual who was, on the day prior to the Effective Date, a participant in
the Equifax Inc. Employees 401(k) Retirement and Savings Plan and who is on the
Effective Date either an active or a former employee of ChoicePoint Inc. or
another participating Employer in this Plan; provided that the transfer meets
the requirements of Code
23
<PAGE> 31
Section Section 401(a)(12), 414(l) and 411(d)(6), and the regulations
promulgated thereunder and that the transfer will result in the deferral of
taxation on the amount transferred to the Plan.
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ARTICLE IV
VESTING IN ACCOUNTS
4.1 Vesting of Accounts. All amounts allocated to a Participant's
Account shall at all times be and remain 100% vested and nonforfeitable, except
as provided in Section 11.9.
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ARTICLE V
ACCOUNTS AND INVESTMENTS
5.1 Separate Accounts. The Plan Administrator shall maintain
separate Accounts for each Participant to reflect each such Participant's
interest in the Plan attributable to each of the following:
(a) Basic Elective Contributions, if any, under Sections
1.15 and 3.1(a)(iii)(A) of this Plan.
(b) Matching Elective Contributions, if any, as defined
in Section 1.26 of this Plan.
(c) Basic Voluntary Contributions, if any, under Sections
1.51 and 3.2(a)(ii)(A) of this Plan.
(d) Matching Voluntary Contributions, if any, as defined
in Section 1.28 of this Plan.
(e) Supplemental Voluntary Contributions, if any, under
Sections 1.51 and 3.2(a)(ii)(B) of this Plan.
(f) Company Profit-Sharing Contributions, if any, under
Sections 1.9 and 3.1(d).
(g) ESOP Accounts, under Section 7.7 of Appendix VII.
(h) Rollover Contributions, if any, as defined in Section
1.42 of this Plan.
(i) Supplemental Elective Contributions, if any, under
Section 1.15 and 3.1(a)(iii)(B) of this Plan.
See also Section 1.2 of Appendix I.
5.2 Investment of Trust Fund.
(a) General Rule. The Trust Fund, and all contributions
thereto made under this Plan, shall be invested by the Trustee who
shall have exclusive authority and discretion to manage and control
the Trust Fund pursuant to the terms of the Trust Agreement, subject
to any investment directions allowed under subsection (b) below, and
made by the appropriate party as indicated in such subsection.
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(b) Investment Funds.
(i) Establishment of Funds. The Trustee shall,
at the written direction of the Plan Administrator, establish
one or more funds for the investment of the assets of the
Trust Fund, each of which has materially different risk and
return characteristics, including without limitation an
Employer Stock Fund.
(ii) Investment of Contributions.
(A) Automatic Investment. All amounts
in a Participant's ESOP Account, Company
Profit-Sharing Contributions Account, Matching
Elective Contributions Account, and Matching
Voluntary Contributions Account shall automatically
be invested initially in the Employer Stock Fund;
provided, however, that amounts transferred to this
Plan pursuant to Section 3.4 which are invested in
Equifax Stock shall remain so invested, subject to
Participant investment direction described in (B)
below and any other applicable provisions of this
Plan or the Trust.
(B) Investment Direction. Each
Participant, Beneficiary or alternate payee may
direct the investment of his Elective Contributions
Account (consisting of Basic Elective Contributions
and Supplemental Elective Contributions), Voluntary
Contributions Account (consisting of Basic Voluntary
Contributions, Supplemental Voluntary Contributions,
and Supplemental Voluntary Lump Sum Contributions),
and Rollover Contributions Account, if any, among the
funds provided under paragraph (i) above. After an
amount initially has been allocated to a Company
Profit-Sharing Contributions Account, a Participant
may also direct the investment of such an amount
among the funds provided under paragraph (i) above.
In addition, any Participant who has terminated
service with all Employers who are members of the
Controlled Group but who retains one or more Accounts
in the Plan may direct the investment of those
Accounts referred to in paragraph (ii)(A) above, as
well as his accounts identified in the preceding
sentence, among the investment choices available
under the Plan. The Plan Administrator shall
establish, and may alter at any time, rules,
procedures and limitations which shall govern such
Participant direction of investments and the timing
thereof, and shall provide all necessary forms and
instructions to Participants. Such rules, procedures
and limitations may restrict the frequency and timing
of such Participant directions. Such rules and
procedures shall be communicated to Employees.
(C) ERISA Section 404(c). The
provisions of this Section 5.2 shall be applied in a
manner consistent with United States Department of
Labor Regulations Section 2550.404c-1 (or any future
regulations of the United States
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<PAGE> 35
Department of Labor of similar import) so that this
Plan shall be an ERISA Section 404(c) plan.
(iii) Income or Loss. Any Account or portion
thereof of a Participant which is invested under paragraph
(ii) above in a certain fund shall only share in the gains or
losses of such fund, and shall not share in the gains or
losses of any other Trust Fund investment.
(iv) Expenses. Any Account or portion thereof of
a Participant which is invested pursuant to the Participant's
directions under paragraph (ii) above may be charged for the
reasonable expenses of such directed investing.
5.3 Trustee's Reliance. The Trustee may rely and act upon any
certificate, notice or direction (including notices and directions given
electronically, if the Plan's administrative procedures provide for such
notices or directions) of the Employer, Plan Administrator, Committee,
investment manager, Participant or Beneficiary, or a person authorized to act
on behalf of such person, that the Trustee reasonably believes to be genuine
and to have been given by the person or persons duly authorized to give such
certificate, notice or direction. The Trustee may continue to rely upon such
certificate, notice or direction until otherwise notified in accordance with
the provisions of the Plan and the administrative procedures under the Plan.
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ARTICLE VI
VALUATION OF PARTICIPANTS' ACCOUNTS
The value of a Participant's Accounts at any time shall be equal to
the aggregate value of the assets in such Accounts as they are invested as of
such time, and said values shall be determined daily. The Trustee, the Plan
Administrator or the Committee may adopt valuation procedures for equitably
valuing investments of a Participant's Accounts, and any such procedures shall
be communicated to Employees.
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ARTICLE VII
PAYMENT OF BENEFITS
7.1 Time of Payment of Benefits. If a Participant's employment
with all members of the Controlled Group is terminated for any reason other
than death, including becoming Disabled, retiring, or otherwise, the
Participant shall receive or commence receiving the entire vested amount in his
Plan Accounts (his "Benefit Amount") determined pursuant to the provisions of
Section 7.4 in accordance with the following:
(a) General Rule. Except as provided in subsections (b)
through (f) below, the Participant's Benefit Amount shall be paid (or
distribution shall commence) in a form chosen by the Participant in
accordance with Section 7.3 herein as soon as administratively
practicable following the later of (1) the date the Participant
attains his Normal Retirement Age or (2) the date the Participant
terminates employment with all members of the Controlled Group;
provided, however, that the Benefit Amount shall be paid (or
distribution shall commence) no later than the Required Beginning
Date.
(b) Later Distribution. Notwithstanding subsection (a)
above, the Participant may elect that his Benefit Amount be paid (or
distribution shall commence) in a form chosen by the Participant in
accordance with Section 7.3 as soon as administratively practicable
following any later date selected by the Participant; provided,
however, that the Benefit Amount shall be paid (or distribution shall
commence) no later than the Required Beginning Date.
(c) Consent to Earlier Distribution. Notwithstanding
subsection (a) above, the Participant may elect that his Benefit
Amount be paid (or that distribution shall commence) as soon as
administratively practicable following the date the Participant
terminates employment with all members of the Controlled Group, in a
form chosen by the Participant in accordance with Section 7.3.
(d) Automatic Cash-Outs. Notwithstanding subsections (a)
through (c) above, if the value of the Participant's Benefit Amount
does not exceed and has never at the time of a prior distribution
exceeded $3,500, the Participant's Benefit Amount shall automatically
be paid as soon as administratively practicable following the date of
the Participant's termination of employment with all members of the
Controlled Group, in the form of a single lump sum distribution. For
purposes of the preceding sentence, if the value of the Participant's
Benefit Amount is zero, the Participant shall be deemed to receive a
distribution of such benefit under this paragraph.
(e) Benefits Accrued After Required Beginning Date. If a
Participant has received all or a part of his Benefit Amount under the
preceding provisions of this subsection because his Required Beginning
Date occurred prior to his termination of
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<PAGE> 38
employment with all members of the Controlled Group, then the
Participant shall receive the appropriate amount, determined in
accordance with Appendix IV, of any subsequent Account balances which
he may accrue during any Plan Year under this Plan in accordance with
the provisions of Appendix IV.
(f) Optional Distribution Upon Attainment of Normal
Retirement Age. Notwithstanding any other provision herein, a
Participant who has attained Normal Retirement Age (as defined in
Section 1.30) and who continues in employment with a member of the
Controlled Group may elect to receive a distribution of all or a part
of his Benefit Amount. The Trustee shall disburse the distribution as
soon as administratively practicable after the date of the Plan
Administrator's receipt from the Participant of an application for the
distribution, in such form as the Plan Administrator may require.
Notwithstanding any provision of this Plan to the contrary, distribution of a
Participant's Benefit Amount must satisfy the provisions of Appendix IV.
7.2 Benefits Upon Death.
(a) Death Before Benefit Commencement Date. In the event
of the death of a Participant prior to his Benefit Commencement Date,
the Beneficiary of the Participant shall receive or commence receiving
all or the applicable portion of the entire amount in the
Participant's Plan Accounts designated for such Beneficiary under
subsection (c) below (such Beneficiary's "Benefit Amount") determined
pursuant to the provisions of Section 7.4 in accordance with the
following:
(i) General Rule. Except as provided in
paragraphs (ii) and (iii) below, the Beneficiary's Benefit
Amount shall be paid as soon as administratively practicable
following the date of the Participant's death and receipt by
the Plan Administrator of proof thereof, in a form chosen by
the Beneficiary in accordance with Section 7.3 herein.
(ii) Later Distribution. Notwithstanding
paragraph (i) above, the Beneficiary may elect that his
Benefit Amount be paid as soon as administratively practicable
following any later date elected by the Beneficiary (but not
later than the date 5 years after the date of death of the
Participant), in a form chosen by the Beneficiary in
accordance with Section 7.3.
(iii) Automatic Cash-Outs. Notwithstanding
paragraphs (i) and (ii) above, if the value of such Benefit
Amount does not exceed and has never at the time of a prior
distribution exceeded $3,500, the Beneficiary's Benefit Amount
shall automatically be paid as soon as administratively
practicable following the Participant's death and receipt by
the Plan Administrator of proof thereof, in the form of a
single lump sum distribution. For purposes of the preceding
sentence,
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if the value of the Participant's Benefit Amount is zero, the
Beneficiary shall be deemed to receive a distribution of such
benefit under this paragraph.
(b) Designation of Beneficiary.
(i) General Rules. The Beneficiary of a
Participant with respect to the entire vested amount in the
Participant's Accounts remaining at the Participant's death
shall be determined in accordance with Section 1.4 of this
Plan, unless the Participant has designated a Beneficiary or
Beneficiaries, which the Participant may designate pursuant to
the provisions of Section 1.4 and this Section 7.2(b).
However, no Beneficiary designated by the Participant shall be
valid unless (1) the Beneficiary designated by the Participant
is the Surviving Spouse, (2) the Participant has no Surviving
Spouse (or such Spouse cannot be located), or (3) the
Surviving Spouse of the Participant has consented to such
designation pursuant to a Qualified Spousal Waiver.
(ii) Designation of Multiple Beneficiaries. A
Participant may, consistent with paragraph (i) above,
designate more than one Beneficiary and, for each such
Beneficiary, may designate a percentage of the entire vested
amount in his Accounts to which such Beneficiary should become
entitled (such Beneficiary's "Benefit Amount") upon the
Participant's death. Each such Beneficiary shall be entitled
to receive his Benefit Amount determined pursuant to Section
7.4 in accordance with the provisions of subsection (a) above.
Unless otherwise specified by the Participant, any designation
by the Participant of multiple Beneficiaries shall be
interpreted as a designation by the Participant that each such
Beneficiary (if alive as of the Participant's date of death,
and if not, then the contingent Beneficiary under paragraph
(iii) below of such Beneficiary) should be entitled to an
equal percentage of the Participant's vested Account balances
upon the Participant's death.
(iii) Contingent Beneficiaries. A Participant may
designate contingent Beneficiaries to receive a Beneficiary's
Benefit Amount in the event such Beneficiary should predecease
the Participant; otherwise, in the event a Beneficiary
predeceases the Participant, then the person or those persons
specified in Section 1.4 of the Plan shall be deemed to be the
Beneficiary with respect to such deceased Beneficiary's
Benefit Amount, and shall receive the Benefit Amount to which
such Beneficiary would have been entitled hereunder under this
Section 7.2.
(c) Required Distributions and Forms of Payment.
Notwithstanding any provision of this Plan to the contrary,
distribution of a Beneficiary's Benefit Amount must satisfy the
provisions of Appendix IV.
7.3 Form of Payment of Benefits. Except as otherwise provided
herein, depending upon the Participant's or Beneficiary's Benefit Commencement
Date and the timing and manner
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of the Participant's termination of employment, the Participant or Beneficiary
may elect to receive benefits available under this Plan in a single lump sum
payment in cash or in common stock of the Company, or in any combination of the
two. To the extent that a Participant fails to elect in a timely manner the
form of payment of his Benefit from this Plan and the benefit must commence,
the Participant will have been deemed to have elected a single lump sum cash
distribution. Any method or methods of distribution chosen by a Participant or
Beneficiary must satisfy the requirements of Appendix IV.
7.4 Valuation of Accounts for Payments. The amount distributed to
the Participant or Beneficiary shall be determined using the Benefit Amount
valued as of the business day preceding the date of distribution. To the
extent that a distribution is made in the form of Company common stock from the
Employer Stock Fund, such distribution shall consist of the whole number of
shares of Company common stock held for the benefit of the Participant and cash
in lieu of fractional shares. To the extent that a distribution is made in the
form of Company common stock from assets invested in any other fund, such
distribution shall consist of the whole number of shares of Company common
stock which may be purchased by such assets as of the actual date such assets
are liquidated and cash in lieu of fractional shares.
7.5 Code Section 401(a)(14) Requirement. Unless a Participant
consents to later payment, the payment of benefits under the Plan to the
Participant shall begin not later than the 60th day after the close of the Plan
Year in which the latest of the following events occurs:
(a) The attainment by the Participant of age 65;
(b) The 10th anniversary of the date on which the
Participant commenced participation in the Plan; or
(c) The termination of the Participant's service with
the Controlled Group.
The failure of a Participant to consent to a distribution shall be deemed to be
an election to defer commencement of payment of benefits.
7.6 Code Section 411(a)(11) Consent Requirements.
(a) In General. Notwithstanding any provision of this
Plan to the contrary (including Section 7.5), unless one of the
exceptions in subsection (c) below is satisfied, no distribution may
be made or commence to a Participant unless the Participant has been
provided the notification required under subsection (b) below at the
time and in the manner indicated in such subsection, and has consented
in writing to the distribution after receiving such notification, with
such consent being given no less than 30 days and no more than 90 days
prior to his Benefit Commencement Date, except as provided in
subsection (b) below. To the extent permitted by applicable law, such
consent may be given by telephone or other electronic means of
communication if the Plan's administrative procedures provide for the
giving of consent by such means.
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<PAGE> 41
(b) Notification. The Plan Administrator shall notify
the Participant of the right, if any, to defer any distribution. Such
notification shall include a general description of the material
features, and an explanation of the relative values of, the optional
forms of benefit available, if any, under the Plan and shall inform
the Participant of his right to defer receipt of the distribution, and
shall be provided (by mail, posting or personal delivery) no less than
30 days and no more than 90 days prior to his Benefit Commencement
Date; provided, however, that a Participant may waive the right to
receive the notice no less than 30 days prior to the Benefit
Commencement Date; provided, further, that a Participant shall have
the opportunity to consider the decision of whether or not to elect a
distribution for at least 30 days after the notice is provided;
provided, further, that the Plan Administrator shall provide
information to the Participant clearly indicating that the Participant
has the right to the 30-day period for making the decision.
(c) Exceptions. This Section shall not be applicable to
the following distributions:
(i) Cash-Outs. If the value of a Participant's
entire Account balances does not and has not at the time of a
prior distribution ever exceeded $3,500, this Section shall
not be applicable to a distribution of such entire vested
Account balances as a single lump sum.
(ii) Immediately Distributable. If a distribution
is made on or after the Participant's attainment of his Normal
Retirement Age, this Section shall not be applicable to such
distribution.
(iii) Beneficiaries. If a distribution is made to
an alternate payee pursuant to a qualified domestic relations
order or to any other Beneficiary, this Section shall not be
applicable to such distribution.
(iv) Code Section Section 401(a)(9) and 415. If a
distribution is required to satisfy the provisions of Appendix
IV (Code Section 401(a)(9) required distribution rules) or
Appendix VI (Code Section 415 limitation on allocations), this
Section shall not be applicable to such distribution.
(v) Plan Termination. If a distribution is made
to the Participant upon termination of this Plan and no member
of the Controlled Group maintains any other defined
contribution plan (other than an employee stock ownership plan
as defined in Code Section 4975(e)(7)), this Section shall not
be applicable to such distribution if this Plan does not offer
an annuity option (purchased from a commercial provider).
(d) Application to Plan Provisions. To the extent that a
distribution is required by the terms and provisions of this Plan, but
this Section is applicable to the distribution and the distribution
therefore cannot be made, such distribution shall, except as otherwise
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provided, be made as soon as administratively practicable following
the date that this Section is no longer applicable to the
distribution.
7.7 Code Section 401(k)(2)(B) Restrictions. Notwithstanding any
provisions of this Plan to the contrary, a Participant's Elective Contributions
Account shall not be distributed prior to the earliest to occur of:
(a) the Participant's "separation from service" (as
defined in applicable guidance issued by the Internal Revenue
Service), retirement, death or disability;
(b) the Participant's attainment of age 59 1/2;
(c) the Participant's incurrence of a "hardship" (within
the meaning of Treas. Reg. Section 1.401(k)-1(d)(2)(iv));
(d) the termination of the Plan without establishment or
maintenance by the Employer of a successor plan (within the meaning of
Treas. Reg. Section 1.401(k)-1(d)(3));
(e) if the Employer is a corporation, the date of the
sale or other disposition by the Employer of the Participant to an
unrelated corporation of substantially all the assets used by the
Employer in a trade or business (within the meaning of Treas. Reg.
Section 1.401(k)-1(d)(4)); or
(f) if the Employer is a subsidiary of a corporation, the
date of the sale or other disposition by such corporation of its
interest in the Employer of the Participant to an unrelated entity or
individual (within the meaning of Treas. Reg. Section
1.401(k)-1(d)(4)).
For purposes of subsections (e) and (f) above, the selling corporation must
maintain this Plan after the sale or other disposition, the Participant must
continue employment with the asset purchaser or subsidiary (as applicable),
and, for purposes of subsections (d), (e) and (f) above, the distribution must
be a lump sum distribution meeting the requirements of Treas. Reg. Section
1.401(k)-1(d)(5). The provisions of this Section shall be interpreted in
accordance with the requirements of Code Section 401(k)(2)(B) and any
regulations promulgated thereunder.
7.8 Payments to Alternate Payees. See Section 11.6(b)(iii) for
special provisions which are applicable to payments to an alternate payee under
a qualified domestic relations order. A qualified domestic relations order may
not provide an alternate payee with a death benefit from this Plan except to
the extent consistent with Section 7.2 and, if applicable, except to the extent
such order requires that the alternate payee be treated as the Participant's
Surviving Spouse.
7.9 Withdrawals of Elective Contributions.
(a) General Rules. A Participant may apply to the Plan
Administrator for a hardship distribution of all or a portion of such
Participant's Elective Contributions
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Account balance, including only earnings on Elective Contributions credited to
the Participant's Elective Contributions Account under the Equifax Inc.
Employees 401(k) Retirement and Savings Plan as of December 31, 1988, if any.
A hardship distribution will be made to the Participant only if the Plan
Administrator determines that the Participant (A) has an immediate and heavy
financial need under subsection (b) below and (B) the distribution is necessary
to satisfy such need under subsection (c) below. A Participant shall be
limited to one withdrawal under subsections (a), (b), and (c) of this Section
7.9 per Plan Year, but may make multiple withdrawals under Section 7.9(d) and
Section 7.10 in any Plan Year. No partial withdrawal shall be permitted which
is less than $500 (or, if the total value of the Elective Contributions Account
balance, including only earnings on Elective Contributions credited to the
Participant's Elective Contributions Account under the Equifax Inc. Employees
401(k) Retirement and Savings Plan as of December 31, 1988, is less than $500,
which is less than such total value). No withdrawal may be made under this
Section until all possible withdrawals available under Section 7.10 have been
made.
(b) Immediate and Heavy Financial Need. A distribution
will be made on account of an immediate and heavy financial need of a
Participant if the distribution is on account of:
(i) Medical expenses described in Code Section
213(d) previously incurred by the Participant, the
Participant's spouse, or any dependents of the Participant (as
defined in Code Section 152) or amounts necessary for such
persons to obtain medical care;
(ii) Costs directly related to the purchase of a
principal residence for the Participant (including the down
payment but excluding mortgage payments);
(iii) Payment of tuition and related educational
fees for the next 12 months of post-secondary education for
the Participant, his spouse, children or dependents; or
(iv) The need to prevent the eviction of the
Participant from his or her principal residence or foreclosure
on the mortgage of the Participant's principal residence.
In determining the existence of an immediate and heavy financial need,
the provisions of Treas. Reg. Section 1.401(k)-1(d)(2)(iv)(A) shall
govern.
(c) Distribution Necessary to Satisfy Need. A
distribution will be deemed to be necessary to satisfy an immediate
and heavy financial need of a Participant if all of the following
requirements are satisfied:
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(i) The distribution is not in excess of the
amount of the immediate and heavy financial need of the
Participant;
(ii) The Participant has obtained all
distributions (other than hardship distributions) and all
nontaxable loans available under this Plan and all other plans
maintained by his or her Employer;
(iii) After receiving the hardship distribution,
the Participant shall be prohibited from making Elective
Contributions and Voluntary Contributions under this Plan and
elective contributions and employee contributions under any
other plan of his or her Employer or under an otherwise
legally enforceable agreement (including all qualified and
nonqualified deferred compensation, stock option and stock
purchase plans maintained by such Employer, but not including
health or welfare benefit plans or the mandatory employee
contribution portion of any defined benefit plan) for at least
12 months following receipt of the hardship distribution; and
(iv) Notwithstanding any contrary provisions of
this Plan, the maximum Elective Contributions pursuant to
Appendix II which may be otherwise made by the Participant for
the taxable year of the Participant following the taxable year
in which the Participant receives the hardship distribution
shall be reduced by the amount of the Participant's Elective
Contributions for the taxable year in which the Participant
received the hardship distribution.
In determining the extent of a distribution necessary to satisfy an
immediate and heavy financial need, the provisions of Treas. Reg.
Section 1.401(k)-1(d)(2)(iv)(B) shall govern.
(d) Distribution After Attainment of Age 59- 1/2. A
Participant who has attained the age of 59 1/2 may withdraw all or a
portion of his Elective Contributions Account, including earnings, if
any. Distribution shall be made to the Participant as soon as
administratively possible after the request is received. No partial
withdrawal shall be permitted which is less than $500 (or, if the
total value of the Elective Contributions Account, including earnings,
is less than $500, which is less than such total value). No
withdrawal may be made under this subsection (d) until all possible
withdrawals available under Section 7.10 have been made.
7.10 Voluntary Contribution and Rollover Contribution Withdrawals.
(a) General Rule. A Participant may, by filing a request
with the Plan Administrator, withdraw all or a portion of his
Voluntary Contribution Account balance, and then his Rollover
Contributions Account balance, including earnings, if any.
Distribution shall be made to the Participant as soon as
administratively possible after the request is received. No partial
withdrawal shall be permitted which is less than $500 (or, if the
total value of the Voluntary Contributions Account balance and the
Rollover
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Contributions Account balance, including earnings in each case, is
less than $500, which is less than such total value).
(b) Order of Disbursement. Disbursement of Voluntary
Contribution withdrawals shall be made first from Voluntary
Contributions made by the Participant prior to January 1, 1987 under
the Equifax Inc. Employees 401(k) Retirement and Savings Plan (but not
earnings thereon) and second from all other amounts in the Voluntary
Contributions Account (including Voluntary Contributions made by the
Participant after December 31, 1986, and earnings on all of the
Voluntary Contributions, whenever made). Next, disbursement of
withdrawals under this Section shall be made from a Participant's
Rollover Contributions Account, if any, and earnings thereon.
7.11 Code Section 401(a)(31) Requirement.
(a) General Rule. If a Participant or Surviving Spouse
of a Participant (or an alternate payee pursuant to a qualified
domestic relations order who is a Spouse or former Spouse of a
Participant) who is to receive a payment under this Article which is
an eligible rollover distribution (as defined below) elects (within
the 90 day period ending on the Benefit Commencement Date) to have
such distribution or a portion of such distribution paid directly to
an eligible retirement plan (as defined below) and specifies the
eligible retirement plan to which such distribution is to be paid,
such payment to be made to the Participant or Surviving Spouse (or
alternate payee) of a Participant shall be made in the form of a
direct lump sum cash transfer from the Trustee to the trustee of the
eligible retirement plan so specified in lieu of the payment otherwise
required by this Article. The preceding sentence shall only apply to
the extent that the eligible rollover distribution would be includible
in the Participant's or Surviving Spouse's (or alternate payee's)
gross income if not so transferred (determined without regard to Code
Section 402(c)).
(b) Definitions. For purposes of this Section, the
following terms shall have the meanings indicated:
(i) Eligible retirement plan shall mean:
(A) with respect to a Participant (or
alternate payee), an individual retirement account
described in Code Section 408(a), an individual
retirement annuity described in Code Section 408(b)
(other than an endowment contract), a qualified trust
which is a defined contribution plan and the terms of
which permit the acceptance of rollover
distributions, or an annuity plan described in Code
Section 403(a); or
(B) with respect to a Surviving Spouse
of a Participant, an individual retirement account
described in Code Section 408(a) or an individual
retirement annuity described in Code Section 408(b)
(other than an endowment contract).
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(ii) Eligible rollover distribution shall mean any
distribution to a Participant or Surviving Spouse (or
alternate payee) of a Participant of all or any portion of the
balance to the credit of such individual in this Plan;
provided, however, such term shall not include:
(A) any distribution which is one of a
series of substantially equal periodic payments (not
less frequently than annually) made for the life (or
life expectancy) of the Participant or his designated
Beneficiary or the joint lives (or joint life
expectancies) of the Participant and his designated
Beneficiary, or for a specified period of 10 years or
more;
(B) any distribution to the extent such
distribution is required by Appendix IV;
(C) the portion of any distribution that
is not includible in gross income; and
(D) any other distribution or portion of
a distribution to the extent such distribution is not
considered an eligible rollover distribution under
Treasury Regulations or other guidance issued by the
Internal Revenue Service.
(c) Satisfaction of Requirements. For purposes of this
Section, the Participant or Surviving Spouse (or alternate payee) of
the Participant electing the transfer must present sufficient evidence
in a timely manner to the Plan Administrator (or the Plan
Administrator's delegate) that the transferee plan satisfies the
definition of an eligible retirement plan set forth above. At a
minimum, the Participant or Surviving Spouse (or alternate payee) of
the Participant must state the name of the transferee plan and the
Plan Administrator of the Transferee Plan must represent that the
transferee plan is an eligible retirement plan (as defined in
paragraph (i) of subsection (b) above). The Participant or Surviving
Spouse (or alternate payee) of the Participant must also present such
additional documentation as the Plan Administrator may require which
shall be used to verify that the requirements of this Section have
been met. The Trustee, the Committee, the Plan Administrator, or any
Plan fiduciary shall have no duty to verify the authenticity of any
such evidence or documentation, and shall be entitled to rely on any
such evidence submitted by a Participant or Surviving Spouse (or
alternate payee) of the Participant, without questioning the
authenticity thereof, unless it is unreasonable to so rely.
Furthermore, in the event that the Trustee, the Committee, the Plan
Administrator or any Plan fiduciary shall have actual knowledge of an
issue relating to the transferee plan's ability to satisfy the
definition of an eligible retirement plan, such issue must be
expressly resolved in favor of the satisfaction of such definition by
the transferee plan by a ruling from the Internal Revenue Service or
by an opinion of legal counsel (chosen by the Participant or Surviving
Spouse (or alternate payee) of the Participant, but acceptable to
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the Committee) directed to the Trustee, the Plan, the Committee, the
Plan Administrator and any fiduciary of the Plan, before the transfer
can occur.
(d) Interpretation. The provisions of this Section shall
be interpreted in accordance with Code Section 401(a)(31), as added by
the Unemployment Compensation Amendments of 1992, and any regulations
or other guidance promulgated by the Internal Revenue Service
thereunder, and shall not be construed or interpreted in a manner
other than in strict compliance with such requirements.
(e) Application of Other Rules. For all purposes of this
Plan, the election by a Participant or Surviving Spouse (or alternate
payee) of a Participant of a transfer under this Section shall be
considered a payment or distribution under this Article as if the
amount transferred were paid directly to the Participant or Surviving
Spouse (or alternate payee).
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ARTICLE VIII
THE TRUST FUND AND THE TRUSTEE
8.1 Existence of Trust. The Company has entered into the Trust
Agreement with the Trustee designated by the Committee in the Trust Agreement
to hold the funds necessary to provide the benefits set forth in this Plan.
8.2 Exclusive Benefit Rule. The Trust Fund shall be received,
held in trust, and disbursed by the Trustee in accordance with the provisions
of the Trust Agreement and this Plan. No part of the Trust Fund shall be used
for or diverted to purposes other than for the exclusive benefit of
Participants and their Beneficiaries and the payment of reasonable expenses
attributable to the administration of the Plan in accordance with ERISA Section
404(a)(1)(A)(ii). For purposes of the preceding sentence, the use of the Trust
Fund to pay fees and expenses incurred in connection with the provision of
services is not a reasonable expense of administering the Plan if the payments
are made for the Employer's benefit or involve services for which the Employer
could reasonably be expected to bear the cost in the normal course of such
Employer's business or operations. In this regard, services provided in
conjunction with the establishment, termination or design of plans relate to
the business activities of the Employer and generally would not be "reasonable
expenses attributable to the administration of the Plan." No person shall have
any interest in, or right to, the Trust Fund or any part thereof, except as
specifically provided for in this Plan or the Trust Agreement, except as
provided in Section 3.3 (Return of Contributions). Notwithstanding the
preceding provisions of this Section, this Section shall be construed in
accordance with the requirements of Code Section 401(a)(2) and ERISA Section
403(c) and any regulations or other guidance promulgated thereunder, and shall
not be construed in a manner more restrictive than such requirements. Fees and
expenses which may be paid from the assets of the Trust Fund may include, where
otherwise appropriate, but not by way of limitation, the fees of counsel,
actuaries, investment managers, as well as software licensing fees and the
expenses of Employer personnel, where permitted by applicable law, for services
necessary to the administration of the Plan.
8.3 Removal or Resignation of Trustee. The Committee may remove
the Trustee at any time or the Trustee may resign at any time upon the notice
required by the terms of the Trust Agreement, and upon such removal or upon the
resignation of a Trustee, the Committee or the Plan Administrator shall appoint
a successor Trustee.
8.4 Powers of Trustee. The Trustee shall have the power to hold,
invest, reinvest, or to control and disburse the Trust Funds in accordance with
the provisions of the Trust Agreement and this Plan.
8.5 Integration of Trust Agreement. The Trust Agreement shall be
deemed to be a part of this Plan, and all rights of Participants or others
under this Plan shall be subject to the provisions of the Trust Agreement.
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8.6 Records and Accounts. The Trustee shall maintain accurate and
detailed records and accounts of all transactions of the Plan, which shall be
available at all reasonable times for inspection or audit by any person
designated by the Company, Committee or Plan Administrator and by any other
person or entity to the extent required by law.
8.7 Annual Reports. As soon as practicable following the close of
the Plan Year, the Trustee shall file with the Plan Administrator a written
report setting forth all transactions with respect to the Trust Fund during
such Plan Year and listing the assets of the Trust Fund and the market value
thereof at the close of the period covered by such report. The Trustee shall
also provide the Plan Administrator with such other information in its
possession as may be necessary for the Plan Administrator to conform with the
requirements of ERISA Section 103.
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ARTICLE IX
ADMINISTRATION
9.1 Allocation of Responsibility. The general administration of
the Plan and the responsibility for carrying out the provisions thereof will be
placed in the ChoicePoint Inc. Group Benefit Committee (the "Committee")
comprised of one or more members who shall be designated by the Compensation
and Benefits Committee of the Board of Directors of ChoicePoint Inc. ("Board
Committee"), and who shall serve at the pleasure of the Board Committee. In
the absence of such a designation, the Company shall carry out the
responsibilities of the Committee. The day to day operations and
administration of the Plan shall be carried out by a Plan Administrator
appointed by the Committee, if so appointed. The Committee may appoint more
than one Plan Administrator.
9.2 Administrative Expenses. The members of the Committee or the
Plan Administrator may employ financial, legal, or other counsel and engage
such clerical, financial, or other services as they may deem necessary for the
effective administration of the Plan and compliance with Federal and state
regulations. Said operating expenses and any other reasonable administrative
expenses will be paid out of the Trust Fund to the extent possible consistent
with Section 8.2 herein (Exclusive Benefit Rule), unless the Company elects (in
its sole discretion) to pay such expenses.
9.3 Committee Powers and Duties. The Committee shall have the
power to interpret and construe the Plan, to settle all questions arising from
the operation of the Plan, and to determine all questions of eligibility and
the status and rights of Participants, Beneficiaries and others. Final
determinations or actions of the Committee with respect to any questions
arising out of or in connection with the administration of the Plan will be
final and conclusive and binding upon all persons having an interest in the
Plan. The Committee may delegate to other persons, including the Plan
Administrator, all or such portion of their duties hereunder, other than those
granted to the Trustee under the Trust Agreement, as the Committee, in its sole
discretion, may decide.
9.4 Records and Reports. The Committee and the Plan
Administrator, respectively, will keep such accounts and records as it may deem
necessary or proper in the performance of its duties under the Plan.
9.5 Reporting and Disclosure. The Plan Administrator shall file
all reports and returns required to be filed by the Plan (other than those
which are the responsibility of the Trustee) with any governmental agency,
shall make all disclosures to Employees, Participants and Beneficiaries, and
shall make available for examination by said persons copies of all Plan
documents, descriptions, returns and reports as may be required by applicable
law or as specified herein.
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9.6 Fiduciaries and Named Fiduciaries. The Plan Administrator
shall be the "named fiduciar(ies)" under the Plan within the meaning of ERISA.
The Committee is a fiduciary under the Plan with respect to its
responsibilities set forth in this Article IX, with the division of
responsibilities between them as set forth in this Plan and the Trust
Agreement. The Trustee is a fiduciary under the Plan as to its
responsibilities set forth in the Trust Agreement.
9.7 Plan Administrator. One or more individuals selected by the
Committee shall serve as the Plan Administrator, who shall constitute the
"administrator" as that term is defined in ERISA Section 3(16)(A) and Code
Section 414(g), for the Plan. If no such appointment is made, the Committee
shall be the Plan Administrator hereunder. If more than one individual shall
have been designated as the Plan Administrator, each such individual shall have
the full power to act in said capacity on his or her own, and each reference to
Plan Administrator shall be deemed to mean any such person. The Plan
Administrator shall have all those responsibilities necessary to carry out the
day-to-day operations and administration of the Plan, including without
limitation:
(a) retaining legal counsel and financial or other
advisors,
(b) establishing rules for the administration of the
Plan,
(c) furnishing appropriate communications to
Participants, joint annuitants, and Beneficiaries,
filing reports with government agencies, and
complying with the reporting and disclosure
requirements of applicable law,
(d) appointing successor Trustees, as appropriate,
(e) maintaining the records of the Plan,
(f) amending the Plan in accordance with Section 10.2, and
(g) appointing investment managers and establishing
investment funds for the Plan.
9.8 Interpretation of the Plan and Findings of Facts. The
Committee shall have sole and absolute discretion to interpret the provisions
of the Plan (including, without limitation, by supplying omissions from,
correcting deficiencies in, or resolving inconsistencies or ambiguities in, the
language of the Plan), to determine the rights and status under the Plan of
Participants and other persons, to decide disputes arising under the Plan and
to make any determinations and findings with respect to the benefits payable
thereunder and the persons entitled thereto as may be required for the purposes
of the Plan. In furtherance of, but without limiting, the foregoing, the
Committee is hereby granted the following specific authorities, which it shall
discharge in its sole and absolute discretion in accordance with the terms of
the Plan (as interpreted, to the extent necessary, by the Committee):
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(a) To resolve all questions arising under the provisions
of the Plan as to any individual's entitlement to become a
Participant;
(b) To determine the amount of benefits, if any, payable
to any person under the Plan; and
(c) To conduct the review procedure specified in Section
11.5 (Claims Procedure).
All decisions of the Committee as to the facts of the case, as to the
interpretation of any provision of the Plan or its application to any case, and
as to any other interpretative matter or other determination or question under
the Plan shall be final and binding on all parties affected thereby, subject to
the provisions of Section 11.5 (Claims Procedure). The Committee, or at its
request the Plan Administrator, shall direct the Trustee relative to benefits
to be paid under the Plan and shall furnish the Trustee with any information
reasonably required by it for the purpose of paying benefits under the Plan.
The Committee may delegate to other persons, including the Plan Administrator,
all or such portion of their duties hereunder, other than those granted to the
Trustee under the Trust Agreement, as the Committee, in its sole discretion,
may decide.
9.9 Bonding, Insurance and Indemnity.
(a) Bonding. To the extent required under ERISA, the
Company will obtain, pay for and keep current a bond or bonds with
respect to each member of the Committee and the Plan Administrator,
and any other Employee who receives, handles, disburses, or otherwise
exercises custody or control of, any of the assets of the Plan.
(b) Insurance. The Company, in its discretion, may
obtain, pay for and keep current a policy or policies of insurance,
insuring each member of the Committee and the Plan Administrator, the
members of the board of directors of the Company and other Employees
to whom any fiduciary responsibility with respect to the
administration of the Plan has been delegated against any and all
costs, expenses and liabilities (including attorneys' fees) incurred
by such persons as a result of any act, or omission to act, in
connection with the performance of their duties, responsibilities and
obligations under the Plan and any applicable law.
(c) Indemnity. If the Company does not obtain, pay for
and keep current the type of insurance policy or policies referred to
in subsection (b) above, or if such insurance is provided but any of
the parties referred to in subsection (b) above incur any costs or
expenses which are not covered under such policies, then the Company
will indemnify and hold harmless, to the extent permitted by law, such
parties against any and all costs, expenses and liabilities (including
attorneys' fees) incurred by such parties in performing their duties
and responsibilities under this Plan, provided that such party or
parties were acting in good faith in what was reasonably believed to
have been the best interests of the Plan and its Participants.
Promptly upon receipt by an indemnified party
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under this Section, of notice of the commencement of any such action,
such indemnified party will, if a claim in respect thereof is to be
made against the Company or an Employer, notify the Company and, if
applicable, the Employer of the commencement thereof, but the omission
to so notify the Company or an Employer will not relieve the Company
from the liability hereunder, nor from any other liability which it
may have to such person. The Company and, if applicable, the Employer
shall be entitled to participate at their own expense in the defense
or to assume the defense of any action brought against any party
indemnified hereunder. In the event the Company elects to assume the
defense of any such suit, such defense shall be conducted by counsel
chosen by the Company, and the indemnified party shall bear the fees
and expenses of any additional counsel retained by him.
9.10 Committee and Plan Administrator Liability. Committee members
and the Plan Administrator shall use ordinary care and diligence in performing
their duties; however, to the extent permitted by ERISA or other applicable
law, no member shall be personally liable by virtue of any contract, agreement,
bond or other instrument made or executed by or for him as a Committee member
or as a Plan Administrator, nor for any loss unless due to his own willful
misconduct.
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ARTICLE X
AMENDMENT, TERMINATION, MERGER, CONSOLIDATION AND ADOPTION
10.1 Continuation of Plan. It is contemplated by the Company that
the Plan and Trust shall be maintained indefinitely, and that they shall
constitute a qualified plan under Code Section 401 and a tax-exempt trust under
Code Section 501, or any successor provisions. Nevertheless, the Company and
the Employers must necessarily reserve and do hereby reserve the rights of
amendment, termination and withdrawal as set forth in this Article. The
Company shall not be responsible to any party for the failure of the Plan or
Trust to meet the requirements for tax qualification.
10.2 Right to Amend Plan.
(a) Amendment by the Company. The Company reserves the
right, at any time, to modify or amend, in whole or in part, any or
all of the provisions of the Plan; in addition, the Company or the
Plan Administrator upon the advice of counsel, may specifically amend
the Plan, effective retroactively, if necessary or desirable to bring
the Plan into conformity with the Code, ERISA, and any applicable
regulations promulgated so that the Plan may continue to remain
qualified and the Trust may continue to remain tax-exempt, or for any
other purpose, subject to subsection (b) below. Any such amendment
shall be made by means of a written instrument, and shall be approved
by the Board of Directors of the Company or by a person or entity to
whom the Board has delegated said authority, or as provided above, by
the Plan Administrator.
(b) Restrictions on Amendments.
(i) Exclusive Benefit Rule. No modification or
amendment shall make it possible for Trust assets to be used
for, or diverted to, purposes other than the exclusive benefit
of Participants and their Beneficiaries in accordance with
Section 8.2 (Exclusive Benefit Rule) herein, except as
provided in Section 3.3 (Return of Employer Contributions).
(ii) Code Section 411(d)(6) Restrictions. No
amendment to the Plan shall be permitted that would have the
effect of decreasing the Account balances of any Participant.
Furthermore, no amendment shall be permitted that would have
the effect of eliminating or reducing an early retirement
benefit or a retirement-type subsidy (as defined in Treasury
regulations under Code Section 411(d)(6)(B)(i)) or, except as
permitted under Treasury regulations, eliminating an "optional
form of benefit" as defined in Treas. Reg. Section
1.411(d)-4(Q&A-1).
10.3 Right to Terminate Plan. The Company reserves the right, at
any time, to wholly or partially terminate the Plan.
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10.4 Merger, Consolidation, or Transfer of Assets.
(a) Code Section 401(a)(12) Restriction. The Plan shall
not be merged or consolidated with any other plan, and its assets and
liabilities may not be transferred to any other trust, unless each
Participant, immediately after the merger, consolidation or transfer
(if the Plan then is terminated), would receive a benefit which is
equal to or greater than the benefit he would have been entitled to
receive, and would be entitled to each benefit payment option to which
he would have been entitled, immediately before the merger,
consolidation or transfer (if the Plan is then terminated).
(b) Code Section 401(a)(11) Restriction. Subject to
subsection (c) below, this Plan may be the recipient of a transfer of
assets from, or may transfer assets to, another plan qualified under
Code Section 401(a) subject to the approval of the Company; provided,
however, in no event shall this Plan be the recipient of a direct or
indirect transfer of assets if such receipt would make this Plan a
"transferee plan" within the meaning of Treas. Reg. Section
1.401(a)-20(Q&A-5)(a), unless such assets are separately accounted for
(within the meaning of Treas. Reg. Section 1.401(a)-20(Q&A-5)(b)) and
are subject to the requirements of Code Section 411(a).
(c) Code Section 411(d)(6) Restriction. This Plan may be
the recipient of a transfer of assets from, or may transfer assets to,
another plan qualified under Code Section 401(a) in accordance with
subsection (b) above only if such transfer satisfies the provisions of
Treas. Reg. Section 1.411(d)-4(Q&A-3).
10.5 Adoption of Plan by Aggregated Code Section 414 Employers.
(a) Procedures for Adoption of Plan. This Plan may be
adopted by any member of the Controlled Group if the following
requirements are met:
(i) The member of the Controlled Group wishing to
become an Employer must adopt the Plan by the execution of a
formal resolution by such member's board of directors to adopt
this Plan, and either such resolution or a plan merger
amendment or an adoption agreement, as appropriate, shall
indicate the effective date of such adoption; and
(ii) Such document evidencing the adoption of the
Plan by the Controlled Group member must be delivered to and
accepted in writing by the Plan Administrator or approved by
resolution of the board of directors of the Company.
The plan merger agreement or adoption agreement with respect to a
participating Employer shall be considered a part of the Plan and
shall be maintained by the Plan Administrator in the permanent records
relating to the terms of the Plan. The documents referred to in
paragraphs (i) and (ii) above may, in addition to specifying the
Effective
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Date of the adoption, specify other provisions including, but not
limited to, credit for service prior to the effective date for
eligibility and vesting purposes. In the absence of any such special
provisions, the terms and provisions of this Plan shall control. Any
such special provisions referred to in Sections 3.1(b)(ii),
3.1(c)(ii), and 3.1(d)(i) also shall be reflected in Exhibit A, as
appropriate.
(b) Procedures for Withdrawal from Plan. Any Employer
may voluntarily withdraw from participating in the Plan, provided that
such discontinuance of participation is approved by the Company, the
Committee or the Plan Administrator. The Company or the Committee
unilaterally may terminate an adopting Employer's participation in the
Plan for:
(i) failure to provide requested information in
a timely manner;
(ii) failure to make timely contributions;
(iii) failure to cooperate with the Company or the
Committee in administering the Plan; or
(iv) any other reason that the Company or the
Committee deems appropriate.
(c) Transfer of Assets. Upon the voluntary withdrawal or
involuntary termination of an Employer's participation in the Plan,
the Committee shall determine the amount of assets and liabilities of
the Plan (if any) which shall be either held by the Trustee for the
benefit of the affected Participants, or transferred to a qualified
plan of the withdrawing Employer. The determination of the amount of
assets to be transferred to another qualified plan shall be made based
upon principles set forth in Code Section Section 401(a)(12) and
414(l) and the regulations promulgated thereunder. Any transfer of
assets and liabilities under this subsection (c) shall comply with the
provisions of Section 10.4 (Merger, Consolidation, etc.).
(d) Apportionment of Costs. The Company and all
Employers shall share in the costs of the Plan (other than those costs
paid from the Trust Fund in accordance with Section 9.2), including
but not limited to, the contributions to the Plan, the costs of the
Committee or the Plan Administrator, the costs of the consultants
(actuaries, accountants, attorneys, etc.) and various other direct and
indirect costs of operating the Plan which may initially be borne by
the Company or any Employer but which are determined by the Committee
or the Plan Administrator to be costs associated with the Plan. The
Committee or the Plan Administrator shall apportion these costs to the
Company and each Employer as it deems to be equitable.
(e) Cooperation. Each Employer shall cooperate fully
with the Company and the Committee or the Plan Administrator with
regard to all matters pertaining to the Plan.
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Any failure to cooperate will be grounds for the involuntary
termination of that Employer's participation in the Plan.
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ARTICLE XI
GENERAL PROVISIONS
11.1 Participant's Rights to Employment, Etc. Nothing contained in
the Plan or the establishment of the Trust, or any modification thereof, or the
creation of any fund or account, or the payment of any benefits, shall be
construed to give any Employee, whether or not a Participant, or any
Beneficiary, any rights to continued employment, any legal or equitable right
against an Employer, or any officer or employee thereof, or the Trustee, or its
agents or employees, except as herein provided. Nothing contained in this Plan
shall be deemed to interfere with the right of the Employer to discharge any
Participant or Employee at any time regardless of the effect which such
discharge shall have upon such individual as a Participant in the Plan.
11.2 No Guarantee of Interests. The Employer, the Committee, the
Plan Administrator and the Trustee do not guarantee the Trust Fund from any
loss or depreciation, nor do they guarantee any payment to any person. The
liability of the Trustee, the Employer, the Committee and the Plan
Administrator to make payments hereunder is limited to the available assets of
the Trust Fund.
11.3 Standard of Conduct. Any person who is a fiduciary with
respect to this Plan shall: (i) discharge his duties solely in the interest of
and for the exclusive purpose of providing benefits to Participants and their
Beneficiaries and defraying the reasonable administrative expenses of the Plan,
and shall conduct himself with the care, skill, prudence and diligence under
the circumstances then prevailing that a prudent man acting in a like capacity
and familiar with such matters would use in the conduct of an enterprise of a
like character and with like aims; (ii) act at all times in accordance with the
documents governing the Plan and Trust as they may be amended from time to
time; (iii) not engage in or allow the Plan or Trust to engage in any
transaction which is prohibited under ERISA Section 406 and which is not
allowed by ERISA Section 408 or is prohibited under Code Section 4975; (iv) not
knowingly participate in or conceal an act of another fiduciary under the Plan
which he knows to involve a breach of fiduciary duty within the meaning of
ERISA; and (v) make reasonable efforts under the circumstances to remedy a
breach of duty described in subsection (iv) discovered by him.
11.4 Allocation of Duties. All responsibilities for the operation
and administration of the Plan shall be allocated as follows:
(a) The Employer shall furnish to the Trustee information
with respect to service, eligibility, compensation, termination of
employment and other matters required or desirable for the purpose of
enabling the Trustee to carry out its duties and responsibilities
under this Plan and Trust, and the Trustee may rely upon such
information as conclusive proof of any fact or matter. The Employer
shall also transmit to the Trustee
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all Employer and Employee contributions under the Plan, and the
Company shall determine the amount of all such contributions.
(b) The Committee shall have those duties and
responsibilities set forth in Article IX.
(c) The Trustee shall have responsibility for managing
and administering the Trust Fund subject to the terms and provisions
of this Plan and the Trust Agreement. The Trustee shall have
responsibility for making benefit payments.
(d) The Plan Administrator shall have all those
responsibilities necessary to carry out the day-to- day operations and
administration of the Plan, including without limitation:
(i) retaining legal counsel and financial or
other advisers,
(ii) establishing rules for the administration of
the Plan,
(iii) furnishing appropriate communications to
Participants and Beneficiaries, filing
reports with government agencies, and
complying with the reporting and disclosure
requirements of applicable law,
(iv) appointing successor Trustees, as
appropriate,
(v) maintaining the records of the Plan,
(vi) approving hardship withdrawals in accordance
with Section 7.9, and rollover contributions,
(vii) directing the Trustee with respect to the
establishment of investment funds under
Section 5.2(b), and
(viii) amending the Plan in accordance with Section
10.2.
11.5 Claims Procedure.
(a) Filing a Claim. All claims and requests for benefits
under the Plan shall be directed to the attention of the Plan
Administrator in writing. The writing must be reasonably calculated
to bring the claim to the attention of the Plan Administrator.
(b) Notification of Denial. If the Plan Administrator
determines that any individual who has claimed a right to receive
benefits under the Plan (the "claimant") is not entitled to receive
all or any part of the benefits claimed, the claimant shall be
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<PAGE> 60
informed in writing of the specific reason or reasons for the denial,
with specific reference to pertinent Plan provisions on which the
denial is based, a description of any additional material or
information necessary for the claimant to perfect the claim and an
explanation of why said material or information is necessary and a
description of the review procedures set forth in subsection (d)
below.
(c) Timing of Notification. The claimant shall be so
notified of the Plan Administrator's decision within 90 days after the
receipt of the claim, unless special circumstances require an
extension of time for processing the claim. If such an extension of
time for processing is required, the Plan Administrator shall furnish
the claimant written notice of the extension prior to the termination
of the initial 90-day period. In no event shall said extension exceed
a period of 90 days from the end of said initial period. The
extension notice shall indicate the special circumstances requiring an
extension of time and the date by which the Plan Administrator expects
to render a final decision. If for any reason, the claimant is not
notified within the period described above, the claim shall be deemed
denied and the claimant may then request review of said denial,
subject to the provisions of subsection (d) below.
(d) Review Procedures. The claimant or his duly
authorized representative may, within 60 days after notice of the Plan
Administrator's decision, request a review of said decision, review
pertinent documents and submit in writing to the Committee issues and
comments and such further information as will, in the claimant's
opinion, establish his rights to such benefits.
(e) Timing of Final Decision. The Committee's final
decision shall include specific references to the pertinent Plan
provisions on which the decision is based, and shall be transmitted to
the claimant by certified mail within 60 days of receipt of claimant's
request for such review, unless special circumstances require a
further extension of time for processing, in which case a decision
shall be rendered as soon as possible, but not later than 120 days
after receipt of a request for review. If such an extension of time
for review is required because of special circumstances, written
notice of the extension shall be furnished to the claimant prior to
the commencement of the extension. If the Committee holds regularly
scheduled meetings at least quarterly, in lieu of the time period
described above, the Committee's decision on review shall be made by
no later than the date of the meeting of the Committee which
immediately follows its receipt of the request for review, unless said
request is filed within 30 days preceding the date of said meeting in
which case a decision shall be made no later than the date of the
second meeting following its receipt of said request for review. If
special circumstances require a further extension of time for
processing, a decision shall be rendered not later than the third
meeting of the Committee following its receipt of the request for
review. If a decision on review is not furnished within the time
period described above, the claim shall be deemed denied on review.
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<PAGE> 61
11.6 Nonalienation or Assignment; QDRO's.
(a) Spendthrift Clause. Except as provided in subsection
(b) below, none of the benefits under the Plan is subject to the
claims of creditors of Participants or their Beneficiaries, and will
not be subject to attachment, garnishment, or any other legal process
whatsoever. Neither a Participant nor his Beneficiaries may assign,
sell, borrow on (except in the case of a Plan loan if authorized under
this Plan), or otherwise encumber any of his beneficial interest in
the Plan and Trust Fund, nor shall any such benefits be in any manner
liable for or subject to the deeds, contracts, liabilities,
engagements, or torts of any Participant or Beneficiary.
(b) Qualified Domestic Relations Orders.
(i) General Rule. The provisions of subsection
(a) above shall not apply to a "qualified domestic relations
order," as defined in Code Section 414(p) and ERISA Section
206(d)(3), or any other domestic relations order permitted to
be treated as a "qualified domestic relations order" by the
Plan Administrator under the provisions of the Retirement
Equity Act of 1984. The Plan Administrator shall establish a
written procedure to determine the qualified status of
domestic relations orders and to administer distributions
under such qualified orders. To the extent provided under a
"qualified domestic relations order," a former Spouse of a
Participant shall be treated as the Spouse or Surviving Spouse
for all purposes under the Plan.
(ii) QDRO Procedures.
(A) Procedure Upon Receipt. Upon
receiving a domestic relations order, the Plan
Administrator shall notify all affected Participants
and any alternate payees (spouse, former spouse,
child or other dependent of the Participant, named in
the order) that the order has been received. The
Plan Administrator shall also notify the affected
Participants and alternate payees of its procedure
for determining whether the domestic relations order
is qualified.
(B) Procedure During Determination.
During the period the Plan Administrator is
determining the qualified status of the order, the
Plan Administrator shall separately account for the
amount (if any) that would be payable to an alternate
payee under this order (if it were a qualified
domestic relations order) during this period. If the
Plan Administrator determines the order is a
qualified domestic relations order during the
18-month period commencing on the date the first
payment would be required under the qualified
domestic relations order, then the alternate payee
shall receive payment from the separate account. If
the Plan Administrator cannot make a determination of
the order's qualified status
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<PAGE> 62
during this 18-month period (or determines the order
is not a qualified domestic relations order), then
the Trustee shall return the amounts in the separate
account to the account of the affected Participant as
if no court order had been received.
(iii) QDRO Payouts.
(A) Payment Upon Receipt of QDRO.
Notwithstanding any provision of this Plan to the
contrary, any amounts of a Participant's vested
Account balances which, due to the receipt of a
domestic relations order determined to be a qualified
domestic relations order under paragraph (ii) above,
become the vested Account balances of an alternate
payee under such order shall be distributed in the
form of a single lump-sum payment in cash to the
alternate payee as of the earliest date on which such
amounts can be accurately determined and paid,
subject to any provisions of the qualified domestic
relations order to the contrary as to a different
time of payment. No written consent of the alternate
payee shall be required for this distribution
pursuant to Treas. Reg. Section 1.411(a)-11(c)(6).
(B) Subsequent Additional Amounts. The
preceding subparagraph (A) shall apply to any amounts
of a Participant's vested Account balances which, due
to the receipt of a domestic relations order
determined to be a qualified domestic relations order
under subsection (b) above, become the vested Account
balances of an alternate payee under such order after
a payment under subparagraph (A) above due to
allocation of contributions or earnings, or any other
reason.
(C) Special Effective Date. This
paragraph (iii) shall not be effective until the
first day of the month following the month during
which a favorable determination letter has been
issued by the Internal Revenue Service upon this Plan
with this provision included.
(iv) Status of Alternate Payee. An alternate
payee under a qualified domestic relations order shall be
entitled to all rights of a Beneficiary hereunder except as
otherwise specified herein.
11.7 Plan Continuance Voluntary. Although it is the intention of
the Employer that this Plan shall be continued and that contributions shall be
made regularly, this Plan is entirely voluntary on the part of the Employer,
and the continuance of the Plan and the payments hereunder are not assumed as a
contractual obligation of the Employer.
11.8 Payments to Minors and Others. In making any distribution to
or for the benefit of any minor or incompetent Participant or Beneficiary, or
any other Participant or Beneficiary who, in the opinion of the Plan
Administrator, is incapable of properly using, expending,
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<PAGE> 63
investing, or otherwise disposing of such distribution, the Plan Administrator,
in its sole and complete discretion may, but need not, order the Trustee to
make such distribution to a legal or natural guardian or other relative of such
minor or court appointed committee of any incompetent Participant or
Beneficiary, or to any adult with whom such person temporarily or permanently
resides; and any such guardian, committee, relative, or other person shall have
full authority and discretion to expend such distribution for the use and
benefit of such person; and the receipt of such guardian, committee, relative,
or other person shall be a complete discharge to the Trustee, the Plan
Administrator, the Committee and this Plan, without any responsibility on the
part of the Committee, the Plan Administrator or the Trustee to see to the
application of amounts so distributed.
11.9 Location of Payee; Unclaimed Benefits. In the event that all,
or any portion, of the distribution payable to a Participant or Beneficiary
hereunder shall, at the expiration of a reasonable time after it has become
payable, remain unpaid solely by reason of the inability of the Plan
Administrator or the Committee, after sending a registered letter, return
receipt requested, to the last known address of such person, and after further
diligent effort (including requests to the Internal Revenue Service under
Policy Statement P-1-187), to ascertain the whereabouts of such person, the
amount so distributable shall be paid pursuant to the terms and provisions of
the Plan as if the Participant or Beneficiary is deceased. If, for any reason,
no Beneficiary or contingent Beneficiary can be found, the amount so
distributable shall be forfeited and shall be used to reduce the contributions
to the Plan. In the event a proper payee is located subsequent to the benefit
being forfeited, the benefit shall be restored, and the Employer shall make
special contributions to this Plan for such purpose.
11.10 Governing Law. This Plan shall be administered in the United
States of America, and its validity, construction, and all rights hereunder
shall be governed by the laws of the United States under ERISA. To the extent
that ERISA shall not be held to have preempted local law, the Plan shall be
administered under the laws of the State of Georgia. If any provision of the
Plan shall be held invalid or unenforceable, the remaining provisions hereof
shall continue to be fully effective.
11.11 Correction of Participants' Accounts. If an error or omission
is discovered in the Accounts of a Participant, or in the amount distributed to
a Participant, the Plan Administrator will make such equitable adjustments in
the records of the Plan as may be necessary or appropriate to correct such
error or omission as of the Plan Year in which such error or omission is
discovered; provided, however, that if the error is discovered within the last
60 days of a Plan Year, then the corrective action may be completed in the
following Plan Year. Further, the Employer may, in its discretion, make a
special contribution to the Plan which will be allocated by the Plan
Administrator only to the Account of one or more Participants to correct such
error or omission.
11.12 Action of Employer, Committee and Plan Administrator. Except
as may be specifically provided, any action required or permitted to be taken
by the Employer, Committee,
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<PAGE> 64
or the Plan Administrator may be taken on behalf of such person by any entity
or individual who has been delegated the proper authority.
11.13 Employer Records. Records of the Employer or of Equifax Inc.
as to an Employee's or Participant's period of employment, termination of
employment and the reason therefor, leaves of absence, reemployment,
compensation, and elections or designations under this Plan will be conclusive
on all persons, unless determined by the Committee to be incorrect.
11.14 Gender and Number. Wherever applicable, the masculine pronoun
shall include the feminine pronoun, the singular shall include the plural and
the plural shall include the singular.
11.15 Headings. The titles in this Plan are inserted for
convenience of reference; they constitute no part of the Plan, and are not to
be considered in the construction hereof.
11.16 Liability Limited. To the extent permitted by ERISA and other
applicable law, neither the Committee, nor any member thereof, nor the Plan
Administrator nor the Employer shall be liable for any acts of omission or
commission in administering the Plan, except for his or its own individual,
willful misconduct. The Employer, Plan Administrator and each member of the
Committee shall be entitled to rely conclusively on all tables, valuations,
certificates, opinions and reports which shall be furnished by an actuary,
accountant, trustee, insurance company, counsel or other expert who shall be
employed or engaged by the Committee, Plan Administrator or the Employer.
11.17 Prohibited Discrimination. This Plan shall be operated and
administered in a uniform and consistent manner with respect to all
Participants and in a manner which does not discriminate in favor of Highly
Compensated Employees.
11.18 Legal References. Any references in this Plan to a provision
of law which is, subsequent to the Effective Date of this Plan, revised,
modified, finalized or redesignated, shall automatically be deemed a reference
to such revised, modified, finalized or redesignated provision of law.
11.19 Electronic Means of Communication. Whenever, under this Plan,
a Participant or Beneficiary is required or permitted to make an election,
provide a notice, give a consent, request a distribution, or otherwise
communicate with the Employer, the Committee, the Plan Administrator, the
Trustee or a delegate of any of them, to the extent permitted by law, the
election, notice, consent, distribution request or other communication may be
transmitted by means of telephonic or other electronic communication, if the
administrative procedures under the Plan provide for such means of
communication.
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This Plan has been executed as of the Effective Date by ChoicePoint
Inc.
CHOICEPOINT INC.
By:
-------------------------------------
Title:
----------------------------------
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<PAGE> 66
APPENDICES
<PAGE> 67
APPENDIX I
ADDITIONAL DISCRETIONARY EMPLOYER CONTRIBUTIONS
1.1 Employer Contributions. In addition to the contributions
described in Article III of the Plan, the Employers may, in the sole discretion
of, and at the election of, the Company, make contributions to the Plan (all of
which are hereby expressly conditioned on their deductibility under Code
Section 404) by making cash payments (or payments of property acceptable to the
Trustee if such payments (i) are purely voluntary, (ii) do not relieve the
Employer of an obligation to make contributions to this Plan, and (iii) do not
constitute prohibited exchanges under ERISA Section 406(a)(1)(A)) to the
Trustee in one or more of the following methods:
(a) Qualified Nonelective Contributions.
(i) Amount. For each Plan Year the
Employers may make Qualified Nonelective Contributions to
this Plan in an amount which shall be determined solely
in the discretion of the Company, and which may be used
to satisfy any of the nondiscrimination tests of Appendix
III of this Plan.
(ii) Allocation. Qualified
Nonelective Contributions for a Plan Year shall be
allocated as of the last day of such Plan Year to the
Qualified Nonelective Contributions Account of each
Participant who has satisfied the eligibility
requirements of Section 2.1(c) and who is not a Highly
Compensated Participant ("QNEC Participant") as follows:
Qualified Nonelective Contributions shall be allocated
first to the Account of the QNEC Participant whose
Compensation (as defined in Section 3.6(c)) is the
lowest, in an amount equal to the lesser of (A) the
amount that will enable the Plan to satisfy the Deferral
Percentage Test under Section 3.1 or the Contribution
Percentage Test under Section 3.2, or (B) the maximum
amount that may be allocated for the Plan Year to the
individual's Account under Appendix VI. If, after the
allocation of Qualified Nonelective Contributions
described in the preceding sentence, the Deferral
Percentage Test or the Contribution Test is not met, this
process shall be repeated (allocating Qualified
Nonelective Contributions to QNEC Participants with
successively higher Compensation (as defined in Section
3.6(c)) until the Plan satisfies the Deferral Percentage
Test or the Contribution Test, as the case may be, for
the year.
(iii) Vesting and Distribution Restrictions.
Qualified Nonelective Contributions shall be at all times
nonforfeitable and may not be distributed from the Plan
before one of the following events:
(A) the Employee's retirement, death,
disability, or separation from
service;
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(B) the Employee's attainment of
the age of 59-1/2;
(C) financial hardship of the
Employee (determined in
accordance with the standards
of Section 7.9 of the Plan);
(D) the termination of the Plan;
(E) the date of the sale or other
disposition by ChoicePoint Inc.
or another corporation that is
a member of the Controlled
Group of substantially all of
the assets used by such
corporation in a trade or
business of the corporation to
an unrelated corporation,
provided that the purchaser
does not maintain this Plan and
this Plan is not merged or
consolidated with, and no
assets or liabilities are
transferred from the Plan to, a
plan maintained by the
purchaser, and provided that
the Employee continues
employment with the purchaser
of assets or with the
subsidiary immediately
following the sale or other
disposition;
(F) the date of the sale or other
disposition by ChoicePoint Inc.
or another corporation that is
a member of the Controlled
Group of its interest in
a subsidiary to an unrelated
entity or individual; provided
that the purchaser does not
maintain this Plan and this Plan
is not merged or consolidated
with, and no assets or
liabilities are transferred from
the Plan to, a plan maintained
by the purchaser, and provided
that the Employee continues
employment with the purchaser of
assets or with the subsidiary
immediately following the sale
or other disposition;
(b) Qualified Matching Contributions.
(i) Amount. For each Plan Year the
Employers may make Qualified Matching Contributions to
this Plan in an amount which shall be determined solely
in the discretion of the Company, and which may be used
to satisfy the nondiscrimination tests of Appendix III of
this Plan.
(ii) Allocation. Qualified Matching
Contributions for a Plan Year shall be allocated as of
the last day of such Plan Year to the Qualified Matching
Contributions Account of each Allocation Participant who
is not a Highly Compensated Participant in proportion to
the ratio which the sum of
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his or her Voluntary Contributions and Elective
Contributions for such Plan Year bears to the total of
the sum of all such contributions of all such Allocation
Participants for such Plan Year.
(iii) Vesting and Distribution
Restrictions. Qualified Matching Contributions shall be
at all times nonforfeitable and may not be distributed
from the Plan before one of the events enumerated in
Section 1.1(a)(iii) of this Appendix I.
In no event shall the aggregate contributions made by the Employer under this
Section exceed the amount deductible under Code Section 404. All allocations
to be made under this Section shall be subject to the provisions of Appendix V
of this Plan, if applicable, and the provisions of Appendix VI.
1.2 Separate Accounts. The Plan Administrator shall maintain
separate Accounts for each Participant to reflect each such Participant's
interest in the Plan attributable to each of the following, in addition to the
separate Accounts maintained under the provisions of Section 5.1 of the Plan:
(a) Qualified Nonelective Contributions, if any,
as defined in this Appendix.
(b) Qualified Matching Contributions, if any, as
defined in this Appendix.
1.3 Definitions. For purposes of this Appendix, the
following words and phrases shall have the meanings set forth in this Section
unless a different meaning is clearly required by the context:
(a) Compensation.
(i) General Definition. Subject to
paragraphs (ii) through (v) below, Compensation for a
Plan Year with respect to an Employee shall mean "wages"
as defined in Code Section 3401(a) for purposes of income
tax withholding at the source but determined without
regard to any rules that limit the remuneration included
in wages based on the nature or location of the
employment or the services performed and all other
payments of compensation (in the course of an Employer's
trade or business) for which an Employer is required to
furnish the Employee a written statement under Code
Section Section 6041(d), 6051(a)(3) and 6052 which are
paid by an Employer to such Employee during such Plan
Year.
(ii) Safe Harbor Exclusions.
Notwithstanding the provisions of paragraph (i) above,
none of the following items shall be included in the
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definition of Compensation, whether or not includible in
taxable gross income:
(A) reimbursement or other expense
allowances;
(B) fringe benefits (cash and
noncash);
(C) moving expenses;
(D) deferred compensation; and
(E) welfare benefits.
(iii) Salary Reduction Arrangements.
Notwithstanding the preceding paragraphs of this Section,
Compensation shall include any amount which is
contributed by an Employer pursuant to a salary reduction
agreement and which is not includible in the gross income
of the Employee under Code Section Section 125,
402(e)(3), 402(h) or 403(b).
(iv) Limitation. The annual
Compensation of each Employee taken into account in
determining contributions or benefits under the Plan for
any Plan Year shall not exceed the dollar amount in
effect under Code Section 401(a)(17) for the calendar
year in which the Plan Year begins. Such dollar amount
is $160,000, as adjusted by the Secretary of the Treasury
for increases in the cost of living, in accordance with
applicable law. If the Plan determines Compensation for
a period of time that contains fewer than 12 calendar
months, the above limitation is to be proportionately
reduced; provided, however, no proration is required for
Employees who are covered under the Plan for less than 1
full year if the contributions under the Plan are based
on Compensation for a period of at least 12 months.
(b) Qualified Matching Contributions shall mean
Employer contributions made to this Plan so that the Plan will satisfy
one of the nondiscrimination tests set forth in Appendix III, and
allocated to certain Participants who are not Highly Compensated
Employees based upon their Voluntary Contribution and Elective
Contribution elections.
(c) Qualified Matching Contributions Account
shall mean the Account of a Participant to which are credited any
Qualified Matching Contributions allocated to the Participant.
(d) Qualified Nonelective Contributions shall
mean Employer contributions made to this Plan so that the Plan will
satisfy one of the nondiscrimination tests set forth in Appendix III,
and allocated to certain Participants who are not Highly Compensated
Employees based upon their Compensation.
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(e) Qualified Nonelective Contributions Account
shall mean the Account of a Participant to which are credited any
Qualified Nonelective Contributions allocated to the Participant.
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APPENDIX II
CODE Section 402(g) LIMITATIONS AND CORRECTION OF EXCESS DEFERRALS
2.1 Code Section 402(g) Limitations. Notwithstanding any
provision of this Plan to the contrary, a Participant shall not be allowed to
elect to make, and may not make, Elective Contributions which, in the aggregate
during a calendar year, exceed the maximum amount specified in Code Section
402(g)(1), as adjusted pursuant to Code Section Section 402(g)(4) and (5),
applicable for such calendar year.
2.2 Identification of Excess Deferrals and Correction.
(a) Correcting Distributions. To the extent that
a Participant elects during a calendar year to make Elective Deferrals
under a combination of this Plan and some other plan, arrangement or
annuity in excess of the maximum amount specified in Code Section
402(g)(1), as adjusted pursuant to Code Section 402(g)(4) and (5),
applicable to such calendar year, the Plan Administrator, on his own
initiative or upon written request of the Participant received by
March 1 of the following calendar year, shall direct the Trustee to
distribute, on or after January 1 of such following calendar year, but
in no event later than April 15 of such following calendar year, to
such Participant the portion of such Participant's Elective
Contributions made during the calendar year which the Plan
Administrator determines should be considered an Excess Deferral or
which the Participant has designated as an Excess Deferral in such
written request, together with income or loss allocable to such
portion pursuant to subsection (b) below. Simultaneously therewith,
the Matching Elective Contributions attributable to such portion of
the Participant's Elective Contributions made during the calendar year
shall be forfeited and held in a suspense account to be used to reduce
the amount of future Matching Elective Contributions.
(b) Allocable Income or Loss. For purposes of
subsection (a) above, the income or loss allocable to the portion of a
Participant's Elective Contributions made during a calendar year which
constitutes an Excess Deferral or which the Participant has designated
as an Excess Deferral shall, at any relevant time, be determined by
the formula:
income or loss = ( E ) x I
---
D
For purposes of applying the formula, E is the Excess Deferral;
D is the balance in the Participant's Elective Contributions Account as
of the beginning of the calendar year plus the amount of the
Participant's Elective Contributions for the calendar year; and I is
the income or loss for the calendar year allocable to the Participant's
total Elective Contributions for all years of participation.
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(c) Coordination with other Provisions. Any
Elective Contributions designated as an Excess Deferral under
subsection (b) above which are returned to the Participant pursuant to
subsection (b) shall nonetheless be included as Elective Contributions
for purposes of the Deferral Percentage Test specified in Section
3.1(a) of Appendix III of this Plan unless such Participant is not a
Highly Compensated Participant, and may be distributed without regard
to any notice or consent otherwise required by the terms of this Plan.
The portion of a Participant's Elective Contributions made during a
calendar year which has been designated as an Excess Deferral and
which is to be distributed under subsection (b) above shall be reduced
by any excess contributions (as determined under Section 3.3(c) of
Appendix III of this Plan) previously distributed under Section 3.3(a)
of Appendix III of this Plan or recharacterized under Section 3.3(b)
of Appendix III of this Plan with respect to such Participant for the
Plan Year beginning with or within such calendar year.
2.3 Definitions. For purposes of this Appendix, the
following words and phrases shall have the meanings set forth in this Section
unless a different meaning is clearly required by the context:
(a) Elective Deferrals shall mean:
(i) Any elective contribution (as
defined in Treas. Reg. Section 1.401(k)-1(g)(3)) by a
given individual under any qualified cash or deferred
arrangement (as defined in Code Section 401(k)) to the
extent such contribution is not includible in the
individual's gross income for the taxable year on account
of Code Section 402(e)(3).
(ii) Any employer contribution on
behalf of a given individual to a simplified employee
pension (as defined in Code Section 408(k)) to the extent
such contribution is not includible in the individual's
gross income for the taxable year on account of Code
Section 402(h)(1)(B).
(iii) Any employer contribution on
behalf of a given individual to an annuity contract under
Code Section 403(b) pursuant to a salary reduction
agreement (within the meaning of Code Section
3121(a)(5)(D)) to the extent such contribution is not
includible in the individual's gross income for the
taxable year on account of Code Section 403(b).
(iv) Any elective employer
contribution under Code Section 408(p)(2)(A)(i).
(b) Excess Deferrals shall mean Elective
Deferrals made by a Participant for a calendar year in excess of the
maximum amount specified in Code Section 402(g)(1), as adjusted
pursuant to Code Section Section 402(g)(4) and (5), applicable for
such calendar year.
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APPENDIX III
CODE Section Section 401(k) and (m) NONDISCRIMINATION REQUIREMENTS
3.1 Limitation of Elective Deferrals. Notwithstanding any
provision of this Plan to the contrary, the Deferral Percentage Test in this
Section must be satisfied for each Plan Year.
(a) Deferral Percentage Test. The Deferral
Percentage Test shall be satisfied for any Plan Year if the Average
Actual Deferral Percentage for the Eligible Highly Compensated
Employees for such Plan Year does not exceed the greater of (i) or
(ii) as follows:
(i) The Average Actual Deferral
Percentage for the prior Plan Year for the Eligible
Employees who are not Highly Compensated Employees times
1.25; or
(ii) The lesser of:
(A) The Average Actual Deferral
Percentage for the prior Plan Year for the
Eligible Employees who are not Highly
Compensated Employees times 2; or
(B) The Average Actual Deferral
Percentage for the prior Plan Year for the
Eligible Employees who are not Highly
Compensated Employees plus two percentage
points.
(b) Compensation. For purposes of this Section,
Compensation shall mean Compensation as defined in this Appendix,
except that Compensation of an Employee shall not include the
Compensation of such Employee during a period that the Employee is not
an Eligible Employee with respect to the Plan.
(c) Plan Aggregation Rules. In the case of an
Eligible Highly Compensated Employee who is eligible to participate in
more than one cash or deferred arrangement of the Controlled Group,
the Actual Deferral Percentage for such Employee shall be calculated
by treating all the cash or deferred arrangements in which the
Eligible Highly Compensated Employee is eligible to participate
(including this Plan) as one arrangement; provided, however, that
plans that are not permitted to be aggregated under Treas. Reg.
Section 1.401(k)-1(b)(3)(ii)(B) shall not be aggregated for this
purpose. Furthermore, if any plan of the Controlled Group which is
subject to Code Section 401(k) is aggregated with this Plan for
purposes of Code Section Section 401(a)(4) and 410(b), then all
elective contributions (as defined in Treas. Reg. Section
1.401(k)-1(g)(3)) under such plan and this Plan shall be aggregated in
applying the limitations of this Section.
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(d) Failure to Satisfy Test. If this Plan does
not or may not satisfy the Deferral Percentage Test of subsection (a)
above for a Plan Year, the Plan Administrator shall take such action
permitted under Sections 3.3 and 3.5 of this Appendix as the Plan
Administrator, in its sole discretion, shall determine necessary in
order to ensure that the Plan satisfies such test for the Plan Year.
(e) Recordkeeping. The Plan Administrator shall,
on behalf of the Employer, maintain such records as are necessary to
demonstrate compliance with the Deferral Percentage Test of subsection
(a) above for each Plan Year, including the extent to which any
Qualified Nonelective Contributions and Qualified Matching
Contributions are treated as Elective Contributions under Section
3.6(c) of this Appendix.
3.2 Limitation of Employee and Employer Matching
Contributions. Notwithstanding any provision of this Plan to the contrary, the
Contributions Percentage Test in this Section must be satisfied for each Plan
Year.
(a) Contribution Percentage Test. The
Contribution Percentage Test shall be satisfied for any Plan Year if
the Average Contribution Percentage for the Eligible Highly
Compensated Employees for such Plan Year does not exceed the greater
of (i) or (ii) as follows:
(i) The Average Contribution
Percentage for the prior Plan Year for the Eligible
Employees who are not Highly Compensated Employees times
1.25; or
(ii) The lesser of:
(A) The Average Contribution
Percentage for the prior Plan Year for the
Eligible Employees who are not Eligible
Highly Compensated Employees times 2; or
(B) The Average Contribution
Percentage for the prior Plan Year for the
Eligible Employees who are not Eligible
Highly Compensated Employees plus two
percentage points.
(b) Compensation. For purposes of this Section,
Compensation shall mean Compensation as defined in this Appendix,
except that Compensation of an Employee shall not include the
Compensation of such Employee during a period that the Employee is not
an Eligible Employee with respect to this Plan.
(c) Plan Aggregation. In the case of an Eligible
Highly Compensated Employee who is eligible to participate in two or
more plans of the Controlled Group to which employee contributions
(within the meaning of Treas. Reg. Section 1.401(m)-1(f)(6)) or
matching contributions (within the meaning of Treas. Reg. Section
1.401(m)-1(f)(12)), or both
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are made, all such contributions on behalf of such Eligible Highly
Compensated Employee must be aggregated for purposes of determining
such Employee's Contribution Percentage; provided, however, that plans
which are not permitted to be aggregated under Treas. Reg. Section
1.401(m)-1(b)(3)(ii) shall not be aggregated for this purpose.
Furthermore, if any plan of the Controlled Group which is subject to
Code Section 401(m) is aggregated with this Plan for purposes of Code
Section Section 410(b) and 401(a)(4), then all employee contributions
(as defined in the preceding sentence) and all matching contributions
(as defined in the preceding sentence) under such plan and this Plan
shall be aggregated in applying the limitations of this Section.
(d) Failure to Satisfy Test. If this Plan does
not or may not satisfy the Contribution Percentage Test of subsection
(a) above for a Plan Year, the Plan Administrator shall take such
action permitted under Sections 3.3 and 3.5 of this Appendix as the
Plan Administrator, in its sole discretion, shall determine necessary
in order to ensure that the Plan satisfies such test for the Plan
Year.
(e) Recordkeeping. The Plan Administrator shall,
on behalf of the Employer, maintain such records as are necessary to
demonstrate compliance with the Contribution Percentage Test of
subsection (a) above for each Plan Year, including the extent to which
any Qualified Nonelective Contributions and Qualified Matching
Contributions are treated as "ACP Contributions" under Section 3.6(a)
of this Appendix, and the extent to which any Elective Contributions
are recharacterized under Section 3.3(b) of this Appendix.
3.3 Corrections Required by Discrimination Tests. If the
Deferral Percentage Test of Section 3.1 of this Appendix, the Contribution
Percentage Test of Section 3.2 of this Appendix and/or the special limitation
of Section 3.4 of this Appendix are not satisfied for a Plan Year, the Plan
Administrator, in its discretion, may use any combination of the methods in
subsections (a) and (b) below to satisfy any one or more of these tests or
limitations, except as otherwise provided below:
(a) Distribution.
(i) Correcting Distributions. To
the extent necessary to satisfy the Applicable Test for
any Plan Year in which such test is not satisfied, the
Plan Administrator shall direct the Trustee to distribute
to Highly Compensated Participants a portion (determined
in the manner set forth in subsections (c) and/or (d)
below) of their Applicable Contributions, together with
income allocable to such portions, after the close of
such Plan Year, but in no event later than the close of
the following Plan Year.
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(ii) Allocable Income or Loss. For
purposes of paragraph (i) above, the income or loss
allocable to the portion of a Participant's Applicable
Contributions made during a Plan Year shall, at any
relevant time, be determined by the following formula:
income or loss = ( E ) x I
D
For purposes of applying the formula, E is the portion of
such Participant's Applicable Contributions made during
the Plan Year; D is the balance in the Participant's
Account consisting of Applicable Contributions as of the
end of the Plan Year reduced by the gain allocated to
such total amount for the Plan Year and increased by the
loss allocable to such total amount for the Plan Year;
and I is the income or loss for the Plan Year allocable
to the Participant's total Applicable Contributions.
(b) Recharacterization.
(i) Correcting Recharacterization.
To the extent necessary to satisfy the Deferral
Percentage Test of Section 3.1 of this Appendix for any
Plan Year in which such test is not satisfied, the excess
contributions of a Highly Compensated Participant may be
recharacterized by the Plan Administrator as deemed
Voluntary Contributions of such Participant, and shall be
allocated to the Participant's Voluntary Contributions
Account. The amount of excess contributions
recharacterized under this paragraph (i) shall be reduced
by any Excess Deferrals previously distributed to the
Participant under Appendix II of this Plan for the
Participant's taxable year ending with or within such
Plan Year. Recharacterization under this paragraph (i)
must occur on or before 2 1/2 months after the close of
the Plan Year to which the recharacterization relates,
and is deemed to occur on the date on which the last of
those Highly Compensated Participants with excess
contributions to be recharacterized is notified in
accordance with paragraph (ii) below. Recharacterization
with respect to a Participant may not occur to the extent
that recharacterized excess contributions, in combination
with Voluntary Contributions made by the Participant,
exceed the limitations on Voluntary Contributions
applicable to the Participant (determined prior to the
application of Section 3.2 of this Appendix) or to the
extent that such contributions would cause the Plan to
fail the Contribution Percentage Test of Section 3.2 of
this Appendix. Simultaneously therewith, the Matching
Elective Contributions attributable to the excess
contributions during such Plan Year which are so
recharacterized shall be reallocated to the Participant's
Matching Voluntary Contributions Account.
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(ii) Procedure for
Recharacterization. The Plan Administrator shall report
recharacterized excess contributions as Voluntary
Contributions by timely providing such forms as the
Internal Revenue Service may require to the Employer and
affected Employees and timely taking such other action as
the Internal Revenue Service may require. The Plan
Administrator shall account for such recharacterized
excess contributions as Voluntary Contributions for
purposes of Code Section Section 72 and 6047.
(iii) Treatment of Deemed Voluntary
Contributions. Deemed Voluntary Contributions shall be
treated as Elective Contributions for all purposes under
this Plan except for purposes of satisfying the Deferral
Percentage Test of Section 3.1 of this Appendix and for
purposes of Code Section 401(a)(4), in accordance with
Treas. Reg. Section 1.401(k)-1(f)(3)(ii) and (iv);
provided, however, any Elective Contributions which are
so recharacterized under this subsection (b) shall not be
treated as Voluntary Contributions for purposes of
Section 3.1(c) of this Plan.
(c) Determination of Excess Contributions. For
purposes of paragraphs (a) and (b) above, the relevant portion of a
Highly Compensated Participant's ADP Contributions for a Plan Year
shall be equal to such Participant's excess contributions for such
Plan Year. The excess contributions of a Highly Compensated
Participant for a Plan Year are determined by reducing the Elective
Contributions of the Highly Compensated Participant with the highest
dollar amount of Elective Contributions to the extent required to (i)
enable the Plan to satisfy the Deferral Percentage Test of Section 3.1
of this Appendix or (ii) cause such Highly Compensated Participant's
dollar amount of Elective Contributions to equal the dollar amount of
Elective Contributions of the Highly Compensated Participant(s) with
the next highest dollar amount of Elective Contributions, whichever
first occurs. This process is repeated until the Plan satisfies the
Deferral Percentage Test of Section 3.1 of this Appendix.
Simultaneously therewith, the Matching Elective Contributions
attributable to the excess contributions during such Plan Year shall
be forfeited and held in a suspense account to be used to reduce the
amount of future Employer contributions.
(d) Determination of Excess Aggregate
Contributions. For purposes of paragraph (a) above, the relevant
portion of a Highly Compensated Participant's ACP Contributions for a
Plan Year shall be equal to such Participant's excess aggregate
contributions for such Plan Year. The excess aggregate contributions
of a Participant for a Plan Year are determined as follows:
(i) First, the unmatched Voluntary
Contributions and then the matched Voluntary
Contributions along with their corresponding Matching
Voluntary Contributions, of the Highly Compensated
Participant with the highest dollar amount of ACP
Contributions are reduced, pro rata, to the extent
required to (1) enable the Plan to satisfy the
Contribution Percentage
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Test of Section 3.2 of this Appendix or (2) cause such
Highly Compensated Participant's dollar amount of ACP
Contributions to equal the dollar amount of ACP
Contributions of the Highly Compensated Participant(s)
with the next highest dollar amount of ACP Contributions,
whichever first occurs. This process is repeated until
the Plan satisfies the Contribution Percentage Test of
Section 3.2 of this Appendix or until the Voluntary
Contributions and the Matching Voluntary Contributions of
all Highly Compensated Participants have been reduced to
zero.
(ii) If the Plan does not satisfy
the Contribution Percentage Test after the application of
paragraph (i) above, the Matching Elective Contributions
of the Highly Compensated Participant with the highest
dollar amount of ACP Contributions are reduced, pro rata,
to the extent required to (1) enable the Plan to satisfy
the Contribution Percentage Test of Section 3.2 of this
Appendix or (2) cause such Highly Compensated
Participant's dollar amount of ACP Contributions to equal
the dollar amount of ACP Contributions of the Highly
Compensated Participant(s) with the next highest dollar
amount of ACP Contributions, whichever first occurs.
This process is repeated until the Plan satisfies the
Contribution Percentage Test of Section 3.2 of this
Appendix or until the Matching Elective contributions of
all Highly Compensated Participants have been reduced to
zero.
(iii) If the Plan does not satisfy
the Contribution Percentage Test after application of
paragraphs (i) and (ii) above, the remaining ACP
Contributions of the Highly Compensated Participant with
the highest dollar amount of ACP Contributions are
reduced pro rata to the extent required to (1) enable the
Plan to satisfy the Contribution Percentage Test of
Section 3.2 of this Appendix or (2) cause such Highly
Compensated Participant's dollar amount of ACP
Contributions to equal the dollar amount of ACP
Contributions of the Highly Compensated Participant with
the next highest dollar amount of ACP Contributions,
whichever first occurs. This process is repeated until
the Plan satisfies the Contribution Percentage Test of
Section 3.2 of this Appendix.
(iv) With respect to paragraphs (i)
through (iii) above, any ACP Contributions which are
determined to be excess aggregate contributions and which
are to be reduced shall be distributed pursuant to
subsection (a) if such contributions are vested, and
shall be forfeited and held in a suspense account to be
used to reduce the amount of future Employer
Contributions if not vested.
(e) Coordination With Other Provisions. Excess
contributions to be distributed under subsection (a) or
recharacterized under subsection (b) with respect to a Participant for
a Plan Year shall be reduced by any correcting distributions under
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Appendix II of this Plan previously made to such Participant for the
calendar year ending with or within such Plan Year. Distributions
under subsection (a) above may be made without regard to any notice or
consent otherwise required by the terms of this Plan. The
determination of the amount of excess aggregate contributions under
subsection (d) with respect to a Plan Year shall be made after
determining the excess contributions, if any, to be treated as deemed
Voluntary Contributions due to recharacterization for such Plan Year.
3.4 Multiple Use of Alternative Limitation. The provisions
of this Section shall only apply if one or more Highly Compensated Employees of
the Employer are Eligible Employees with respect to both a cash or deferred
arrangement (including this Plan) subject to Code Section 401(k) and a plan of
the Employer (including this Plan) subject to Code Section 401(m).
Furthermore, for this Section to apply, the Average Actual Deferral Percentage
for the Eligible Highly Compensated Employees during the Plan Year must be
greater than 125% of the Average Actual Deferral Percentage for the Eligible
Employees who are not Highly Compensated Employees, and the Average
Contribution Percentage for the Eligible Highly Compensated Employees during
the Plan Year must be greater than 125% of the Average Contribution Percentage
for the Eligible Employees who are not Highly Compensated Employees.
(a) Special Limitation. In addition to the other
conditions and limitations herein, for any Plan Year, the sum of the
Average Actual Deferral Percentage for the Eligible Highly Compensated
Employees and the Average Contribution Percentage for the Eligible
Highly Compensated Employees shall not exceed the greater of:
(i) the sum of (A) 1.25 multiplied
by the greater of the relevant Average Actual Deferral
Percentage or the relevant Average Contribution
Percentage, and (B) 2% plus the lesser of the relevant
Average Actual Deferral Percentage or the relevant
Average Contribution Percentage; provided, however, this
sum shall not exceed twice the lesser of the relevant
Average Actual Deferral Percentage or the relevant
Average Contribution Percentage; or
(ii) the sum of (A) 1.25 multiplied
by the lesser of the relevant Average Actual Deferral
Percentage or the relevant Average Contribution
Percentage, and (B) 2% plus the greater of the relevant
Average Actual Deferral Percentage or the relevant
Average Contribution Percentage; provided, however, this
sum shall not exceed twice the greater of the relevant
Average Actual Deferral Percentage or the relevant
Average Contribution Percentage.
For purposes of this subsection (a), the term "relevant Average Actual
Deferral Percentage" means the Average Actual Deferral Percentage for
the Eligible Employees who are not Highly Compensated Employees under
the cash or deferred arrangement subject to Code Section 401(k) for
the plan year, and the term "relevant Average Contribution
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Percentage" means the Average Contribution Percentage for the
Eligible Employees who are not Highly Compensated Employees under the
Plan subject to Code Section 401(m) for the plan year beginning with or
within the plan year of the arrangement subject to Code Section 401(k).
(b) Coordination with Other Provisions. For
purposes of this Section, the Actual Deferral Percentage and the
Contribution Percentage of the Eligible Highly Compensated Employees
shall be determined after use of any Qualified Nonelective
Contributions and Qualified Matching Contributions to meet the
Deferral Percentage Test pursuant to Section 3.6(c) of this Appendix
and after use of Qualified Nonelective Contributions to meet the
Contribution Percentage Test pursuant to Section 3.6(a) of this
Appendix. Furthermore, the Actual Deferral Percentage and the
Contribution Percentage of the Eligible Highly compensated Employees
shall be determined after any corrective distribution of excess
deferrals pursuant to Appendix II of this Plan, or any corrective
distribution of excess contributions and excess aggregate
contributions pursuant to Section 3.3(a) of this Appendix and after
any recharacterization of excess contributions pursuant to Section
3.3(b) of this Appendix.
(c) Plan Aggregation. If the Controlled Group
maintains two or more cash or deferred arrangements subject to Code
Section 401(k) which are not aggregated for purposes of Section 3.1(d)
of this Appendix or if the Controlled Group maintains two or more
plans subject to Code Section 401(m) which are not aggregated for
purposes of Section 3.2(d) of this Appendix, the provisions of
subsection (a) above shall apply separately with respect to each such
plan and cash or deferred arrangement; provided, however, that plans
which are not permitted to be aggregated under Treas. Reg. Section
1.401(k)-1(b)(3)(ii)(B) or Treas. Reg. Section 1.401(m)-1(b)(3)(ii)
shall not be aggregated for this purpose. Furthermore, if any plan of
the Controlled Group which is subject to Code Section Section 401(k)
and/or (m) is aggregated with this Plan for purposes of Code Section
Section 410(b) and 401(a)(4), then all elective contributions (as
defined in Treas. Reg. Section 1.401(k)-1(g)(3)), employee
contributions (as defined in Treas. Reg. Section 1.401(m)-1(f)(6)) and
all matching contributions (as defined in Treas. Reg. Section
1.401(m)-1(f)(12)) under such plan and this Plan shall be aggregated
in applying the limitations of this Section.
(d) Correcting Distributions. To the extent
necessary to satisfy the special limitation of subsection (a) above
for any Plan Year in which the special limitation is not satisfied,
the Plan Administrator shall first reduce the Contribution Percentage
of the Eligible Highly Compensated Employees by correcting
distributions in accordance with Section 3.3 of this Appendix, and
then shall reduce the Actual Deferral Percentages of the Eligible
Highly Compensated Employees by correcting distributions or
recharacterization in accordance with Section 3.3 of this Appendix.
If an excess contribution arises under this subsection of this Plan
and is recharacterized as a deemed Voluntary Contribution, such amount
shall be treated as an excess aggregate contribution.
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3.5 Discretionary Cutbacks to Satisfy Discrimination Tests.
In addition to those powers granted the Plan Administrator elsewhere herein,
the Plan Administrator shall have the power to reduce the Elective Contribution
election and/or Voluntary Contribution election of any Highly Compensated
Participant at any time during a Plan Year if the Plan Administrator, in his
sole discretion and based on current contribution data available, determines
that the Deferral Percentage Test of Section 3.1 of this Appendix, the
Contribution Percentage Test of Section 3.2 of this Appendix, and/or the
special limitation of Section 3.4 of this Appendix for such Plan Year may not
be satisfied. Any such reductions shall be made to the extent necessary in the
opinion of the Plan Administrator to satisfy the Deferral Percentage Test, the
Contribution Percentage Test, and/or the special limitation, whichever is
applicable, and shall be made by reducing the Elective Contribution election
and/or the Voluntary Contribution election of Highly Compensated Participants.
3.6 Definitions. For purposes of this Appendix, the
following words and phrases shall have the meanings set forth in this Section
unless a different meaning is clearly required by the context:
(a) ACP Contributions shall mean the sum of
Qualified Matching Contributions to the extent that such
contributions are not treated as Elective Contributions under Treas.
Reg. Section 1.401(k)-1(b)(5) and Section 3.6(c) of this Appendix,
Matching Elective Contributions, Matching Voluntary Contributions,
Voluntary Contributions (including any excess contributions of a Highly
Compensated Employee which are recharacterized as deemed Voluntary
Contributions under the provisions of this Appendix), Elective
Contributions which are recharacterized under Section 3.3(b) of this
Appendix and, to the extent that the Plan Administrator elects
(uniformly with respect to all Eligible Employees) to treat the
following contributions as "matching contributions" under Treas. Reg.
Section 1.401(m)-1(b)(5) and this subsection and such contributions are
not treated as Elective Contributions under Treas. Reg. Section
1.401(k)-1(b)(5) and Section 3.6(c) of this Appendix, Qualified
Nonelective Contributions. Any Qualified Nonelective Contributions
which the Plan Administrator elects to treat as "matching
contributions" or any Qualified Matching Contributions treated as "ACP
Contributions" under the preceding sentence must not discriminate in
favor of Highly Compensated Employees within the meaning of Code
Section 401(a)(4) and must satisfy the provisions of Treas. Reg.
Section 1.401(m)-1(b). Any Elective Contributions which are
recharacterized under Section 3.3(b) of this Appendix shall not be
treated as Voluntary Contributions for purposes of Section 3.1(c) of
this Plan.
(b) Actual Deferral Percentage of an Employee
shall be obtained by dividing the amount of "ADP Contributions"
credited to the Account of such Eligible Employee during such Plan
Year by the Eligible Employee's Compensation for the Plan Year,
calculated to the nearest one-hundredth of one percent. The Actual
Deferral Percentage of an Eligible Employee who has no "ADP
Contributions" credited to his Account during a Plan Year shall be
zero for such Plan Year.
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(c) ADP Contributions shall mean the sum of
Elective Contributions and, to the extent that the Plan Administrator
elects (uniformly with respect to all Eligible Employees) to treat the
following contributions as Elective Contributions under Treas. Reg.
Section 1.401(k)-1(b)(3) and this subsection, Qualified Nonelective
Contributions and Qualified Matching Contributions. Any Qualified
Nonelective Contributions or Qualified Matching Contributions which
the Plan Administrator elects to treat as Elective Contributions under
the preceding sentence must not discriminate in favor of Highly
Compensated Employees within the meaning of Code Section 401(a)(4),
and will not be treated as an Elective Contribution for purposes of
Section 3.1(b) of this Plan.
(d) Applicable Test shall mean the Deferral
Percentage Test of Section 3.1 of this Appendix or the Contribution
Percentage Test of Section 3.2 of this Appendix, whichever is
applicable given the context.
(e) Applicable Contributions shall mean:
(i) if the Applicable Test is the
Deferral Percentage Test, "ADP Contributions," or
(ii) if the Applicable Test is the
Contribution Percentage Test, "ACP Contributions."
(f) Average Actual Deferral Percentage of a group
of Employees shall, for a Plan Year, mean the average of the Actual
Deferral Percentages calculated separately for each Employee in the
group.
(g) Average Contribution Percentage of a group of
Employees shall, for a Plan Year, mean the average of the Contribution
Percentages calculated separately for each Employee in the group.
(h) Compensation shall mean the amount of wages,
as defined in Code Section 3401(a), and all other amounts of
compensation which are paid to an Employee by the Employer and for
which the Employer is required to furnish the Employee a written
statement under Code Section Section 6041(d), 6051(a)(3) and 6052.
In addition, Compensation includes any Elective Contributions or any
other contributions made by the Employer on behalf of an Employee
pursuant to a deferral election under an employee benefit plan
containing a cash or deferred arrangement under Code Section 401(k)
or any other amounts which would have been received as cash but for an
election to receive benefits under a cafeteria plan meeting the
requirements of Code Section 125; provided, however, that only
Compensation paid with respect to the portion of a Plan Year during
which an Employee is an Eligible Employee and has satisfied the
eligibility requirements of Section 2.1 shall be taken into account;
provided, further, that the annual Compensation of each Employee taken
into account in determining contributions or benefits under the Plan
for any Plan Year shall not exceed the dollar amount in effect under
Code Section 401(a)(17) for the calendar
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year in which the Plan Year begins. Such applicable dollar amount is
$160,000, as adjusted by the Secretary of the Treasury for increases
in the cost of living, in accordance with applicable law.
(i) Contribution Percentage of an Eligible
Employee shall be obtained by dividing the amount of "ACP
Contributions" credited to the Account of such Employee during such
Plan Year by the Eligible Employee's Compensation for the Plan Year,
calculated to the nearest one-hundredth of one percent. The
Contribution Percentage of an Eligible Employee who has no "ACP
Contributions" credited to his Account during a Plan Year shall be
zero for such Plan Year.
(j) Eligible Employee.
(i) Code Section 401(k) Provisions.
Solely for purposes of applying the discrimination tests
in this Appendix associated with ADP Contributions, the
determination of whether an Employee is an Eligible
Employee shall be made on the basis of Treas. Reg.
Section 1.401(k)-1(g)(4).
(ii) Code Section 401(m) Provisions.
Solely for purposes of applying the discrimination tests
in this Appendix associated with ACP Contributions, the
determination of whether an Employee is an Eligible
Employee shall be made on the basis of Treas. Reg.
Section 1.401(m)-1(f)(4).
(k) Eligible Highly Compensated Employee shall
mean an Eligible Employee who is also a Highly Compensated Employee.
(l) Highly Compensated Participant shall mean a
Participant who is a Highly Compensated Employee.
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APPENDIX IV
REQUIRED DISTRIBUTIONS
4.1 General Rules. The requirements of this Article shall
apply to any distribution of a Participant's interest made on or after the
Participant's first Distribution Calendar Year and will take precedence over
any provisions of this Plan which are less restrictive; provided, however, that
the forms of distribution that are specified under the provisions of this Plan
other than this Appendix IV shall be the only forms of distribution under this
Plan; provided, further, that this Appendix IV shall serve only to accelerate,
and never to defer, the time of distribution of a Participant's interest under
this Plan. All distributions required under this Article shall be determined
and made in accordance with Code Section 401(a)(9) and the regulations
promulgated thereunder, including the minimum distribution incidental benefit
requirement of Treas. Reg. Section 1.401(a)(9)-2.
4.2 Required Distribution Rule. The entire interest of a
Participant must be distributed or begin to be distributed no later than the
Participant's Required Beginning Date.
4.3 Limits on Distribution Periods. As of the first
Distribution Calendar Year, distributions, if not made in a single-sum, may
only be made over one of the following periods (or a combination thereof),
subject to the provisions of Section 4.4(b) of this Appendix:
(a) The life of the Participant;
(b) The life of the Participant and a Designated
Beneficiary;
(c) A period certain not extending beyond the
life expectancy of the Participant; or
(d) A period certain not extending beyond the
joint and last survivor expectancy of the Participant and a Designated
Beneficiary.
4.4 Death Distribution Provisions.
(a) Distribution Beginning Before Death. If the
Participant dies after distribution of his interest has begun, the
remaining portion of such interest will continue to be distributed at
least as rapidly as under the method of distribution being used prior
to the Participant's death.
(b) Distribution Beginning After Death. If the
Participant dies before distribution of his interest begins,
distributions of the Participant's entire interest shall be completed
by December 31 of the calendar year containing the 5th anniversary of
the
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Participant's death, except to the extent that an election is made to
receive distributions in accordance with paragraphs (i) or (ii) below:
(i) If any portion of the
Participant's interest is payable to a Designated
Beneficiary, distributions may be made over the life of,
or over a period certain not greater than the life
expectancy of, the Designated Beneficiary commencing on
or before December 31 of the calendar year immediately
following the calendar year in which the Participant
died;
(ii) If the Designated Beneficiary
is the Participant's Surviving Spouse, the date
distributions are required to begin in accordance with
paragraph (i) above shall not be earlier than the later
of (A) December 31 of the calendar year immediately
following the calendar year in which the Participant died
and (B) December 31 of the calendar year in which the
Participant would have attained age 70 1/2.
If the Participant has not made an election pursuant to this Section
by the time of his or her death, the Participant's Designated
Beneficiary must elect the method of distribution no later than the
earlier of (i) December 31 of the calendar year in which distribution
would be required to begin under this Section, or (ii) December 31 of
the calendar year which contains the 5th anniversary of the date of
death of the Participant. If the Participant has no Designated
Beneficiary, or if the Designated Beneficiary does not elect a method
of distribution, distribution of the Participant's entire interest
must be completed by December 31 of the calendar year containing the
5th anniversary of the Participant's death.
(c) Special Rule for Spouse. For purposes of
subsection (b) above, if the Surviving Spouse dies after the
Participant, but before payments to such Spouse begin, the provisions
of subsection (b), with the exception of paragraph (ii) therein, shall
be applied as if the Surviving Spouse were the Participant.
(d) Special Rule for Certain Minor Beneficiaries.
For purposes of this Section, any amount paid to a child of the
Participant will be treated as if it had been paid to the Surviving
Spouse if the amount becomes payable to the Surviving Spouse when the
child reaches the age of majority.
(e) Date Distribution Commences. For purposes of
this Section, distribution of a Participant's interest is considered
to begin on the Participant's Required Beginning Date (or, if
subsection (c) above is applicable, the date distribution is required
to begin to the Surviving Spouse pursuant to subsection (b) above).
If distribution in the form of an annuity described in Section 4.5(a)
of this Appendix irrevocably commences to the Participant before the
Required Beginning Date, the date distribution is considered to begin
is the date distribution actually commences.
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4.5 Determination of Amount to be Distributed Each Year.
(a) General Requirements for Annuities. If the
Participant's interest is to be paid in the form of annuity
distributions under the Plan, payments under the annuity shall satisfy
the following requirements:
(i) The annuity distributions must
be paid in periodic payments made at intervals not longer
than one year;
(ii) The distribution period must be
over a life (or lives) or over a period certain not
longer than a life expectancy (or joint life and last
survivor expectancy) described in Code Section Section
401(a)(9)(A)(ii) or 401(a)(9)(B)(iii), whichever is
applicable;
(iii) The life expectancy (or joint
life and last survivor expectancy) for purposes of
determining the period certain shall be determined
without recalculation of life expectancy;
(iv) Once payments have begun over a
period certain, the period certain may not be lengthened
even if the period certain is shorter than the maximum
permitted.
(v) Payments must either be
nonincreasing or increase only as follows:
(A) With any percentage increase
in a specified and generally recognized
cost-of-living index;
(B) To the extent of the
reduction to the amount of the Participant's
payments to provide for a survivor benefit
upon death, but only if the beneficiary whose
life was being used to determine the
distribution period described in the previous
Section of this Article dies and the payments
continue otherwise in accordance with that
section over the life of the Participant;
(C) To provide cash refunds of
Employee contributions (if any) upon the
Participant's death; or
(D) Because of an increase in
benefits under the Plan.
(vi) If the annuity is a life
annuity (or a life annuity with a period certain not
exceeding 20 years), the amount which must be distributed
on or before the Participant's Required Beginning Date
(or, in the case of
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distributions after the death of the Participant, the
date distributions are required to begin pursuant to
Section 4.4 of this Appendix) shall be the payment which
is required for one payment interval. The second payment
need not be made until the end of the next payment
interval even if that payment interval ends in the next
calendar year. Payment intervals are the periods for
which payments are received, e.g., bimonthly, monthly,
semi-annually, or annually.
(vii) If the annuity is a period
certain annuity without a life contingency (or is a life
annuity with a period certain exceeding 20 years)
periodic payments for each Distribution Calendar Year
shall be combined and treated as an annual amount. The
amount which must be distributed by the Participant's
Required Beginning Date (or, in the case of distributions
after the death of the Participant, the date
distributions are required to begin pursuant to Section
4.4 of this Appendix) is the annual amount for the first
Distribution Calendar Year. The annual amount for other
Distribution Calendar Years, including the annual amount
for the calendar year in which the Participant's Required
Beginning Date (or the date distributions are required to
begin pursuant to Section 4.4 of this Appendix) occurs,
must be distributed on or before December 31 of the
calendar year for which the distribution is required.
(viii) Unless the Participant's Spouse
is the Designated Beneficiary, if the Participant's
interest is being distributed in the form of a period
certain annuity without a life contingency, the period
certain as of the beginning of the first distribution
calendar year may not exceed the applicable period
determined using the table set forth in Treas. Reg.
Section 1.401(a)(9)-2(Q&A-5).
(ix) If the Participant's interest
is being distributed in the form of a joint and survivor
annuity for the joint lives of the Participant and a
nonspouse Beneficiary, annuity payments to be made on or
after the Participant's Required Beginning Date to the
Designated Beneficiary after the Participant's death must
not at any time exceed the applicable percentage of the
annuity payment for such period that would have been
payable to the Participant using the table set forth in
Treas. Reg. Section 1.401(a)(9)-2(Q&A-6).
(b) Additional Allocations After Required
Beginning Date. If the form of distribution is an annuity made in
accordance with this Section, any additional benefits accruing to the
Participant after his or her Required Beginning Date shall be
distributed as a separate and identifiable component of the annuity
beginning with the first payment interval ending in the calendar year
immediately following the calendar year in which such amount accrues.
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(c) General Requirements for Individual Accounts.
Any part of the Participant's interest which is in the form of an
individual account shall be distributed in a manner satisfying the
requirements of Code Section 401(a)(9) and the regulations thereunder.
(d) General Requirements for
Non-Annuity/Non-Single Sum Distributions. If the Participant's
interest is to be distributed in other than a single sum or an
annuity, the following minimum distribution rules shall apply on or
after the Required Beginning Date:
(i) If a Participant's Benefit is
to be distributed over (A) a period not extending beyond
the life expectancy of the Participant or the joint life
and last survivor expectancy of the Participant and the
Participant's Designated Beneficiary or (B) a period not
extending beyond the life expectancy of the Designated
Beneficiary, the amount required to be distributed for
each calendar year, beginning with distributions for the
first distribution calendar year, must at least equal the
quotient obtained by dividing the Participant's Benefit
by the applicable life expectancy.
(ii) The amount to be distributed
each year, beginning with distributions for the first
Distribution Calendar Year shall not be less than the
quotient obtained by dividing the Participant's Benefit
by the lesser of (A) the applicable life expectancy or
(B) if the Participant's Spouse is not the Designated
Beneficiary, the applicable divisor determined from the
table set forth in Treas. Reg. Section
1.401(a)(9)-2(Q&A-4). Distributions after the death of
the Participant shall be distributed using the applicable
life expectancy in paragraph (i) above as the relevant
divisor without regard to Treas. Reg. Section
1.401(a)(9)-2.
(iii) The minimum distribution
required for the Participant's first Distribution
Calendar Year must be made on or before the Participant's
Required Beginning Date. The minimum distribution for
other calendar years, including the minimum distribution
for the Distribution Calendar Year in which the
Participant's Required Beginning Date occurs, must be
made on or before December 31 of that Distribution
Calendar Year.
4.6 Transitional Rule.
(a) Notwithstanding the other requirements of
this Article, distribution on behalf of any Participant, including a
5-percent owner, may be made in accordance with all of the following
requirements (regardless of when such distribution commences):
(i) The distribution is one which
would not have disqualified the Plan under Code Section
401(a)(9) as in effect prior to amendment by the Deficit
Reduction Act of 1984.
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(ii) The distribution is in
accordance with a method of distribution designated by
the Participant whose interest in the Plan is being
distributed or, if the Participant is deceased, by a
Beneficiary of such Participant.
(iii) Such designation was in
writing, was signed by the Participant or the
Beneficiary, and was made before January 1, 1984.
(iv) The Participant had accrued a
benefit under the Plan as of December 31, 1983.
(v) The method of distribution
designated by the Participant or the Beneficiary
specifies the time at which distribution will commence,
the period over which distributions will be made, and in
the case of any distribution upon the Participant's
death, the Beneficiaries of the Participant listed in
order of priority.
(b) A distribution upon death will not be covered
by this transitional rule unless the information in the designation
contains the required information described above with respect to the
distributions to be made upon the death of the Participant.
(c) If a designation is revoked, any subsequent
distribution must satisfy the requirements of Code Section 401(a)(9)
and the regulations thereunder. If a designation is revoked
subsequent to the date distributions are required to begin, the Trust
must distribute by the end of the calendar year following the calendar
year in which the revocation occurs the total amount not yet
distributed which would have been required to have been distributed to
satisfy Code Section 401(a)(9) and the regulations thereunder, but for
the TEFRA Section 242(b)(2) election. For calendar years beginning
after December 31, 1988, such distributions must meet the minimum
distribution incidental benefit requirements in Treas. Reg. Section
1.401(a)(9)-2. Any changes in the designation will be considered to
be a revocation of the designation. However, the mere substitution or
addition of another Beneficiary (one not named in the designation)
under the designation will not be considered to be a revocation of the
designation, so long as such substitution or addition does not alter
the period over which distributions are to be made under the
designation, directly or indirectly (for example,by altering the
relevant measuring life). In the case in which an amount is
transferred or rolled over from one plan to another plan, the rules in
Treas. Reg. Section 1.401(a)(9)-1(Q&A J-2 and Q&A J-3) shall apply.
4.7 Definitions. For purposes of this Article, the following
terms and phrases shall have the meanings indicated below:
(a) Distribution Calendar Year. A calendar year
for which a minimum distribution is required. For distributions
beginning before the Participant's death, the first Distribution
Calendar Year is the calendar year immediately preceding the calendar
year
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which contains the Participant's Required Beginning Date. For
distributions beginning after the Participant's death, the first
Distribution Calendar Year is the calendar year in which distributions
are required to begin pursuant to Section 4.4 of this Appendix.
(b) Designated Beneficiary. The individual(s)
who is (are) designated as the Beneficiary under the Plan by the terms
of the Plan or by an affirmative election by the Participant (and/or
the Participant's Spouse). Designated Beneficiaries must be
identifiable (within the meaning of Treas. Reg. Section
1.401(a)(9)-1(D-2)) as of the Participant's Required Beginning Date,
or as of the Participant's death, and at all subsequent times.
(c) Applicable Life Expectancy. The life
expectancy (or joint and last survivor expectancy) calculated using
the attained age of the Participant (or Designated Beneficiary) as of
the Participant's (or Designated Beneficiary's) birthday in the
applicable calendar year reduced by one for each calendar year which
has elapsed since the date life expectancy was first calculated. If
life expectancy is being recalculated, the applicable life expectancy
shall be the life expectancy as so recalculated. The applicable
calendar year shall be the first Distribution Calendar Year, and if
life expectancy is being recalculated, such succeeding calendar year.
If annuity payments commence before the Required Beginning Date, the
applicable calendar year is the year such payments commence. If
distribution is in the form of an immediate annuity purchased after
the Participant's death with the Participant's remaining interest, the
applicable calendar year is the year of purchase.
(d) Life Expectancy. Life expectancy and joint
and last survivor expectancy are computed by use of the expected
return multiples in Tables V and VI of Treas. Reg. Section 1.72-9.
Unless otherwise elected by the Participant (or Spouse, in the case of
distributions described in Section 4.4(b)(ii) of this Appendix) by the
time distributions are required to begin, life expectancies shall be
recalculated annually. Such election shall be irrevocable as to the
Participant (or Spouse) and shall apply to all subsequent years. The
life expectancy of a nonspouse Beneficiary may not be recalculated.
(e) Participant's Benefit.
(i) General Rule. The Account
balance as of the last Valuation Date in the calendar
year immediately preceding the Distribution Calendar Year
(valuation calendar year) increased by the amount of any
contributions or forfeitures allocated to the Account
balance as of dates in the valuation calendar year after
the Valuation Date and decreased by distributions made in
the valuation calendar year after the Valuation Date.
(ii) Exception for Second
Distribution Calendar Year. For purposes of paragraph
(i) above, if any portion of the minimum distribution for
the first Distribution Calendar Year is made in the
second Distribution Calendar Year on or before the
Required Beginning Date, the amount of the
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minimum distribution made in the second Distribution
Calendar Year shall be treated as if it had been made in
the immediately preceding Distribution Calendar Year.
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APPENDIX V
SPECIAL RULES APPLICABLE TO TOP HEAVY PLAN YEARS
5.1 Top-Heavy Provisions. If and only if, for any Plan Year,
this Plan is a Top-Heavy Plan, the following provisions shall apply for such
Plan Year notwithstanding any other provisions of this Plan to the contrary:
(a) Minimum Allocation.
(i) For any Plan Year in which this
Plan is a Top-Heavy Plan, except as otherwise provided in
paragraph (iii) below, the contributions and forfeitures
of members of the Controlled Group allocated on behalf of
any Participant (A) who is not a Key Employee and (B) who
was employed by an Employer on the last day of such Plan
Year shall not be less than the lesser of 3% of such
Participant's Compensation or, in the case where no
member of the Controlled Group has a defined benefit plan
which designates this Plan to satisfy Code Section 416,
the largest percentage of contributions and forfeitures
of members of the Controlled Group, as a percentage of
the Key Employee's Compensation, allocated on behalf of
any Key Employee for that year. The minimum allocation
is determined without regard to any Social Security
contribution. This minimum allocation shall be made even
though, under other Plan provisions, the Participant
would not otherwise be entitled to receive an allocation,
or would have received a lesser allocation for the year
because of (i) the Participant's failure to complete
1,000 Hours of Service (or any equivalent provided in the
Plan), or (ii) the Participant's failure to make
Voluntary Contributions or Elective Contributions to the
Plan if applicable, or (iii) the Participant's
Compensation is less than a stated amount.
(ii) For purposes of computing the
minimum allocation, Compensation shall mean Compensation
as defined in Section 1.3(a)(i) of Appendix I, limited
pursuant to Section 1.3(a)(iv) of Appendix I.
(iii) The provision in paragraph (i)
above shall not apply to any Participant to the extent
the Participant is covered under any other plan or plans
of a member of the Controlled Group and the Employer has
provided that the minimum allocation or benefit
requirement applicable to Top-Heavy Plans under Code
Section 416(c) will be met in the other plan or plans.
(iv) For purposes of this subsection
(a), Elective Contributions of Key Employees shall be
taken into account, but Elective
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Contributions of Employees who are not Key Employees
shall not be taken into account.
(v) For purposes of this subsection
(a), any Qualified Nonelective Contributions shall be
taken into account; however, Qualified Matching
Contributions, Matching Voluntary Contributions and
Matching Elective Contributions shall not be taken into
account.
(b) Minimum Vesting. For any Plan Year in which
this Plan is a Top-Heavy Plan, the following minimum vesting schedule
will automatically apply in place of the vesting provisions otherwise
specified in the Plan:
<TABLE>
<CAPTION>
YEARS OF VESTING SERVICE VESTED PERCENTAGE OF THE
EARNED BY THE PARTICIPANT IN
PARTICIPANT FORFEITABLE ACCOUNTS
- ---------------------------------------------------------------------
<S> <C>
Less than 3 Years 0% vested
3 or more Years 100% vested
</TABLE>
The minimum vesting schedule applies to all accrued benefits within
the meaning of Code Section 411(a)(7) including benefits accrued
before the effective date of Code Section 416 and benefits accrued
before the Plan became Top-Heavy, except those attributable to
Voluntary Contributions or Elective Contributions, or those forfeited
before the Plan became Top-Heavy. Further, no decrease in a
Participant's nonforfeitable percentage may occur in the event the
Plan's status as Top-Heavy changes for any Plan Year. However, this
subsection (b) does not apply to the Account balances of any Employee
who does not have an Hour of Service (as defined in subsection (a) of
Section 1.24) after the Plan has initially become Top-Heavy and such
Employee's Account balance attributable to contributions and
forfeitures of members of the Controlled Group will be determined
without regard to this subsection (b).
5.2 Top-Heavy Special Definitions. For purposes of this
Article, the following terms shall have the following meanings:
(a) Top-Heavy Ratio.
(i) If a member of the Controlled
Group maintains one or more defined
contribution plans (including any simplified
employee pension plan) and a member of the
Controlled Group has never maintained any
defined benefit plan which during the 5- year
period ending on the Determination Date(s)
has or had accrued benefits, the Top-Heavy
Ratio for this Plan alone, or for the
Required or Permissive Aggregation Group as
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appropriate, is a fraction, the numerator of which is the sum of the
account balances of all Key Employees under the aggregated defined
contribution plan or plans as of the Determination Date(s) (including
any part of any Account balance distributed in the 5-year period
ending on the Determination Date(s)), and the denominator of which is
the sum of all Account balances (including any part of any Account
balance distributed in the 5-year period ending on the Determination
Date(s)) of all Participants as of the Determination Date(s), both
computed in accordance with Code Section 416 and the regulations
thereunder. Both the numerator and the denominator of the Top-Heavy
Ratio are adjusted to reflect any contribution not actually made as of
the Determination Date but which is required to be taken into account
on that date under Code Section 416 and the regulations thereunder.
(ii) If a member of the Controlled
Group maintains one or more defined contribution plans (including any
simplified employee pension plan) and a member of the
Controlled Group maintains or has maintained one or more defined
benefit plans which during the 5-year period ending on the
Determination Date(s) has or had any accrued benefits, the Top-Heavy
Ratio for any Required or Permissive Aggregation Group, as
appropriate, is a fraction, the numerator of which is the sum of
account balances under the aggregated defined contribution plan or
plans for all Key Employees, determined in accordance with paragraph
(i) above, and the Present Value of accrued benefits under the
aggregated defined benefit plans for all Key Employees, as of the
Determination Date(s), and the denominator of which is the sum of the
account balances under the aggregated defined contribution plans for
all Participants, as determined in accordance with paragraph (i)
above, and the Present Value of accrued benefits under the aggregated
defined benefit plans for all Participants as of the Determination
Date(s), all determined in accordance with Code Section 416 and the
regulations thereunder. Both the numerator and the denominator of the
Top-Heavy Ratio are adjusted by adding back the amount of any
distribution of an account balance or an accrued benefit made in the
5-year period ending on the Determination Date and any contribution
not actually made but required to be taken into account under Code
Section 416 as of the Determination Date.
(iii) For purposes of this subsection
(a), the value of account balances and the Present Value
of accrued benefits will be determined as of the most
recent Valuation Date that falls within or ends with the
12-month period ending on the Determination Date, except
as provided in Code Section 416 and the regulations
thereunder for the first and second plan years of a
defined benefit plan. The account balances and accrued
benefits of a Participant who is not a Key Employee but
who was a Key Employee in a prior year will be
disregarded. If an individual has not performed an Hour
of Service for any Employer maintaining the Plan at any
time during the 5-year period ending
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on the Determination Date, any accrued benefit for such
individual (and the account of such individual) shall not be taken into
account in determining the Top-Heavy Ratio. The calculation of the
Top-Heavy Ratio, and the extent to which distributions, rollovers, and
transfers are taken into account will be made in accordance with Code
Section 416 and the regulations thereunder. Elective Contributions and
Voluntary Contributions will be taken into account for purposes of
computing the Top-Heavy Ratio. When aggregating plans, the value of
Account balances and accrued benefits will be calculated with reference
to the Determination Dates that fall within the same calendar year.
(iv) The accrued benefit of any
Employee (other than a Key Employee) shall be determined
(A) under the method which is used for accrual purposes
for all plans of the Controlled Group, or (B) if there is
no method described in clause (A), as if such benefit
accrued not more rapidly than the slowest accrual rate
permitted under Code Section 411(b)(1)(C).
(b) Permissive Aggregation Group. The Required
Aggregation Group of plans plus any other plan or plans of the
Controlled Group which, when considered as a group with the Required
Aggregation Group, would continue to satisfy the requirements of Code
Section Section 401(a)(4) and 410.
(c) Required Aggregation Group. (i) Each
qualified plan of the Controlled Group in which at least one Key
Employee participates or participated at any time during the
determination period (as defined in subsection (f) below) regardless
of whether the plan has terminated, and (ii) any other qualified plan
of the Controlled Group which enables a plan described in (i) to meet
the requirements of Code Section Section 401(a)(4) or 410.
(d) Determination Date. For any Plan Year
subsequent to the first Plan Year, the last day of the preceding Plan
Year. For the first Plan Year of the Plan, the last day of that year.
(e) Present Value. For purposes of establishing
Present Value to compute the Top-Heavy Ratio, any accrued benefit in a
defined benefit plan shall be discounted only for mortality and
interest based on the interest rate and mortality table used by the
defined benefit plan for determining the actuarial present value of
actuarially equivalent benefits unless the defined benefit plan
specifically defines alternative interest and mortality assumptions to
be used in determining the Top-Heavy Ratio. If more than one defined
benefit plan must be aggregated, the assumptions used will be the
assumptions applicable to the defined benefit plan that has the
greatest value of assets as of the Valuation Date coincident with or
immediately preceding the Determination Date.
(f) Key Employee. Any Employee or former
Employee (and the Beneficiaries of such Employee) who at any time
during the determination period was an
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officer of a member of the Controlled Group if such individual's
annual Compensation from members of the Controlled Group exceeds 50%
of the dollar limitation under Code Section 415(b)(1)(A), an owner (or
a person considered an owner under Code Section 318) of one of the 10
largest interests in the Employer if such individual's Compensation
from members of the Controlled Group exceeds 100% of the dollar
limitation under Code Section 415(c)(1)(A), a 5-percent owner of the
Employer, or a 1-percent owner of the Employer who has an annual
Compensation from members of the Controlled Group of more than
$150,000. Annual Compensation for this purpose means Compensation as
defined in Section 1.3(a)(i) of Appendix I, but including amounts
contributed by a member of the Controlled Group pursuant to a salary
reduction agreement which are excludable from gross income under Code
Section Section 125, 402(e)(3), 402(h) or 403(b). The determination
period is the Plan Year containing the Determination Date and the 4
preceding Plan Years. The determination of who is a Key Employee will
be made in accordance with Code Section 416(i)(1) and the regulations
thereunder.
(g) Top-Heavy Plan. This Plan is a Top-Heavy
Plan for any Plan Year if any of the following conditions exist:
(i) If the Top-Heavy Ratio for this
Plan exceeds 60% and this Plan is not part of any
Required Aggregation Group or Permissive Aggregation
Group of plans.
(ii) If this Plan is a part of a
Required Aggregation Group of plans but not part of a
Permissive Aggregation Group and the Top-Heavy Ratio for
the group of plans exceeds 60%.
(iii) If this Plan is a part of a
Required Aggregation Group and part of a Permissive
Aggregation Group of plans and the Top-Heavy Ratio for
the Permissive Aggregation Group exceeds 60%.
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APPENDIX VI
CODE Section 415 LIMITATIONS ON ALLOCATIONS
6.1 General Rules.
(a) Limitation. The Annual Additions which may
be credited to a Participant's Accounts under this Plan for any
Limitation Year will not exceed the Maximum Permissible Amount reduced
by the Annual Additions credited to a Participant's accounts under any
other defined contribution plans (as defined in Code Section 414(i)),
individual medical accounts (as defined in Code Section 415(l)(2)) and
welfare benefit funds (as defined in Code Section 419(e)) maintained
by the Employer for the same Limitation Year. If the Annual Additions
with respect to the Participant under other defined contribution
plans, individual medical accounts and welfare benefit funds
maintained by the Employer, if any, are less than the Maximum
Permissible Amount and the Employer contribution that would otherwise
be contributed or allocated under this Plan to the Participant's
Accounts under this Plan would cause the Annual Additions for the
Limitation Year to exceed this limitation, the amount contributed or
allocated to this Plan will be reduced so that the Annual Additions
under all such plans, accounts and funds for the Limitation Year
(including this Plan) will equal the Maximum Permissible Amount. If
the Annual Additions with respect to the Participant under such other
defined contribution plans, individual medical accounts and welfare
benefit funds in the aggregate are equal to or greater than the
Maximum Permissible Amount, no amount will be contributed or allocated
to the Participant's Accounts under this Plan for the Limitation Year.
(b) Use of Estimated Compensation. Prior to
determining the Participant's actual Compensation for the Limitation
Year, the Employer may determine the Maximum Permissible Amount for a
Participant on the basis of a reasonable estimation of the
Participant's Compensation for the Limitation Year, uniformly
determined for all Participants similarly situated. As soon as is
administratively feasible after the end of the Limitation Year, the
Maximum Permissible Amount for the Limitation Year will be determined
on the basis of the Participant's actual Compensation for the
Limitation Year.
(c) Allocation of Excess Amounts Among Plans,
Funds and Accounts. If, pursuant to subsection (b) above or as a
result of the allocation of forfeitures, a reasonable error in
determining the amount of Elective Deferrals a Participant may make,
or such other facts and circumstances as may be allowed by the
Internal Revenue Service, a Participant's Annual Additions under this
Plan and such other plans, accounts and funds (if any) would result in
an Excess Amount for a Limitation Year, the Excess Amount will be
deemed to consist of the Annual Additions arising under this Plan
first, and then, to
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the extent necessary, shall be deemed to consist of Annual Additions
made under other qualified defined contribution plans of the Employer.
(d) Disposition of Excess Amounts. Any Excess
Amount attributed to this Plan will be disposed of as follows:
(i) Any Voluntary Contributions and
then any Elective Contributions (and earnings thereon)
will be returned to the Participant, and any Matching
Elective Contributions or Matching Voluntary
Contributions associated with such returned Elective
Contributions or Voluntary Contributions will, if the
Participant is covered by the Plan at the end of the
Limitation Year, be used to reduce contributions made
pursuant to Section 3.1 of this Plan which would be
allocated to such Participant in the next Limitation
Year, and each succeeding Limitation Year if necessary,
or will, if the Participant is not covered by the Plan at
the end of the Limitation Year, be held unallocated in a
suspense account, to the extent such aggregated
contributions would reduce the Excess Amount. The
suspense account will be applied to reduce future
contributions made pursuant to Section 3.1 of this Plan
which would be allocated to remaining Participants in the
next Limitation Year, and each succeeding Limitation Year
if necessary.
(ii) If a suspense account is in
existence at any time during a Limitation Year pursuant
to this subsection, it will not participate in the
allocation of the Trust's investment gains and losses.
If a suspense account is in existence at any time during
a particular Limitation Year, all amounts in the suspense
account must be allocated and reallocated to
Participants' Accounts before any contributions made
pursuant to Section 3.1 of this Plan or any Voluntary
Contributions may be made to the Plan for that Limitation
Year. Except as provided in paragraph (i) above, Excess
Amounts may not be distributed from the Plan to
Participants or former Participants.
(e) Other Defined Benefit Plans. If the Employer
maintains, or at any time maintained, one or more defined benefit
plans covering any Participant in this Plan, the sum of the
Participant's Defined Benefit Fraction and Defined Contribution
Fraction will not exceed 1.0 in any Limitation Year. The foregoing
limitation will be met by reducing pro rata the Projected Annual
Benefit under one or more of such qualified defined benefit plans.
6.2 Adjustments for Top Heavy Plan. For purposes of
computing the Defined Benefit Plan Fraction and the Defined Contribution Plan
Fraction, the "125%" factor in subsections (c)(i) and (e)(i) of Section 6.3 of
this Appendix shall be decreased to 100% if:
(a) The Plan is Super Top-Heavy; or
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(b) The Plan is Top-Heavy (whether or not Super
Top-Heavy) and the Plan and any other plans maintained by the Employer
do not provide the additional minimum accrued benefit described in
Code Section 416(h)(2)(A).
For purposes of this Section, the Plan is "Super Top-Heavy" if it would
continue to be Top-Heavy if the 60% tests in the definition of Top-Heavy in
Section 5.2(g) of Appendix V were changed to 90% tests.
6.3 Applicable Definitions. For purposes of this Article,
the following terms shall have the following meanings:
(a) Annual Additions shall mean the sum of the
following amounts allocated to a Participant's accounts for any
Limitation Year:
(i) contributions made by the Employer;
(ii) contributions made by the Participant;
(iii) forfeitures;
(iv) amounts allocated to an
individual medical benefit account, as defined in Code
Section 415(l)(2), which is part of a pension or annuity
plan maintained by the Employer; and
(v) amounts derived from contributions
paid or accrued which are attributable to
post-retirement medical benefits allocated to a separate
account of a Key Employee, as defined in Code Section
419A(d)(3), under a welfare benefit fund, as defined in
Code Section 419(e), maintained by the Employer.
For this purpose, any Excess Amount applied under subsection (d) of
Section 6.1 above in the Limitation Year to reduce Employer
contributions will be considered Annual Additions for such Limitation
Year; however, any nonvested amount restored to a Participant's
Accounts following his reemployment shall not be deemed an Annual
Addition, and any corrective allocation pursuant to Section 11.11 will
be considered an Annual Addition for the Limitation Year to which it
relates. Annual Additions for any Limitation Years beginning before
January 1, 1987, shall not be recomputed to treat all Employee
contributions as Annual Additions. Contributions do not fail to be
Annual Additions merely because such contributions are excess
deferrals (as defined in Code Section 402(g)(2)(A)), excess
contributions (as defined in Code Section 401(k)(8)(B)) or excess
aggregate contributions (as defined in Code Section 401(m)(6)(B)), or
merely because such excess deferrals and excess contributions are
corrected through distribution or recharacterization, except that
excess deferrals which are timely corrected by distribution shall not
be treated as Annual Additions. Excess aggregate contributions
attributable to
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<PAGE> 101
amounts other than employee contributions, including forfeited
matching contributions, shall be counted as Annual Additions even if
distributed. For purposes of this subsection (a), the provisions of
Treas. Reg. Section 1.415-6(b) shall govern.
(b) Compensation shall mean the amount of wages,
as defined in Code Section 3401(a), and all other amounts of
compensation which are paid to an Employee by the Employer and for
which the Employer is required to furnish the Employee a written
statement under Code Section Section 6041(d), 6051(a)(3) and 6052
(determined without regard to any rules that limit the remuneration
included in wages based on the nature or location of the employment or
the services performed).
(c) Defined Benefit Fraction shall mean a
fraction, the numerator of which is the sum of the Participant's
Projected Annual Benefits under all the defined benefit plans (whether
or not terminated) maintained by the Employer, and the denominator of
which is the lesser of (i) 125% of the dollar limitation determined
for the Limitation Year under Code Section Section 415(b) and (d) or
(ii) 140% of the Highest Average Compensation including any
adjustments under Code Section 415(b). However, notwithstanding the
above, if the Participant was a participant as of the first day of the
first Limitation Year beginning after December 31, 1986, in one or
more defined benefit plans maintained by the Employer which were in
existence on May 6, 1986, the denominator of this fraction will not be
less than 125% of the sum of the annual benefits under such plans
which the Participant had accrued as of the close of the last
Limitation Year beginning before January 1, 1987, disregarding any
changes in the terms and conditions of the Plan after May 5, 1986.
The preceding sentence applies only if the defined benefit plans
individually and in the aggregate satisfied the requirements of Code
Section 415 for all Limitation Years beginning before January 1, 1987.
(d) Defined Contribution Dollar Limitation shall
mean $30,000, or if greater, 1/4 of the defined benefit dollar
limitation set forth in Code Section 415(b)(1) as in effect for the
Limitation Year.
(e) Defined Contribution Fraction shall mean a
fraction, the numerator of which is the sum of the Annual Additions to
the Participant's accounts under all the defined contribution plans
(whether or not terminated) maintained by the Employer for the current
and all prior Limitation Years, (including the Annual Additions to
this and all other qualified plans, whether or not terminated,
maintained by the Employer and the Annual Additions attributable to
all welfare benefit funds, as defined in Code Section 419(e), and
individual medical benefit accounts, as defined in Code Section
415(l)(2), maintained by the Employer), and the denominator of which
is the sum of the maximum aggregate amounts for the current and all
prior Limitation Years of service with the Employer (regardless of
whether a defined contribution plan was maintained by the Employer).
The maximum aggregate amount in any Limitation Year is the lesser of
(i) 125% of the dollar limitation in effect under Code Section
415(c)(1)(A) or (ii) 35% of the Participant's Compensation for such
year. However, notwithstanding the above, if the Participant was a
Participant as of the
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end of the first day of the first Limitation Year beginning after
December 31, 1986, in one or more defined contribution plans
maintained by the Employer which were in existence on May 6, 1986, the
numerator of this fraction will be adjusted if the sum of this
fraction and the Defined Benefit Fraction would otherwise exceed 1.0
under the terms of this Plan. Under the adjustment, an amount equal
to the product of (1) the excess of the sum of the fractions over 1.0
times (2) the denominator of this fraction, will be permanently
subtracted from the numerator of this fraction. The adjustment is
calculated using the fractions as they would be computed as of the end
of the last Limitation Year beginning before January 1, 1987, and
disregarding any changes in the terms and conditions of the plan made
after May 6, 1986, but using the Code Section 415 limitation
applicable to the first Limitation Year beginning on or after January
1, 1987. The Annual Addition for any Limitation Year beginning before
January 1, 1987, shall not be recomputed to treat all Employee
contributions as Annual Additions.
(f) Employer shall mean, solely for purposes of
this Article, the Employer and all members of a controlled group of
corporations (as defined in Code Section 414(b) as modified by Code
Section 415(h)), all commonly controlled trades or businesses (as
defined in Code Section 414(c) as modified by Code Section 415(h)) or
affiliated service groups (as defined in Code Section 414(m)) of which
the Employer is a part, and any other entity required to be aggregated
with the Employer pursuant to regulations under Code Section 414(o).
(g) Excess Amount shall mean the excess of the
Participant's Annual Additions for the Limitation Year over the
Maximum Permissible Amount.
(h) Highest Average Compensation shall mean the
average compensation for the three consecutive calendar years with the
Employer that produces the highest average. In lieu of calendar
years, a plan may use any 12 month period provided such period is
uniformly and consistently applied.
(i) Limitation Year shall mean the Plan Year. If
the Limitation Year is amended to a different 12-consecutive-month
period, the new Limitation Year must begin on a date within the
Limitation Year in which the amendment is made, and the provisions of
Treas. Reg. Section 1.415-2(b)(4)(iii) shall apply for the shortened
Limitation Year.
(j) Maximum Permissible Amount shall mean the
maximum Annual Addition that may be contributed or allocated to a
Participant's Account under the Plan for any Limitation Year. The
Maximum Permissible Amount shall be the lesser of:
(i) the Defined Contribution Dollar
Limitation, or
(ii) 25% of the Participant's
Compensation for the Limitation Year.
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The compensation limitation referred to in paragraph (ii) above shall
not apply to any contribution for medical benefits (within the meaning
of Code Section 401(h) or Code Section 419A(f)(2)) which is otherwise
treated as an annual addition under Code Section Section 415(l)(1) or
419A(d)(2). If a short Limitation Year is created because of an
amendment changing the Limitation Year to a different 12
consecutive-month period, the Maximum Permissible Amount will not
exceed the Defined Contribution Dollar limitation multiplied by the
following fraction:
number of months in the short Limitation Year
---------------------------------------------
12
(k) Projected Annual Benefit shall mean the
annual retirement benefit (adjusted to an actuarially equivalent
straight life annuity if such benefit is expressed in a form other
than a straight life annuity or qualified joint and survivor annuity)
to which the Participant would be entitled under the terms of the Plan
assuming:
(i) the Participant will continue
employment until normal retirement age under the Plan (or
current age, if later), and
(ii) the Participant's Compensation
for the current Limitation Year and all other relevant
factors used to determine benefits under the Plan will
remain constant for all future Limitation Years.
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APPENDIX VII
SPECIAL PROVISIONS FOR EMPLOYER SECURITIES
7.1 Limitations on TRASOP Securities. Notwithstanding any
provisions of this Plan to the contrary, all TRASOP securities (as that term is
defined in Treas. Reg. Section 1.46-8(b)(5)) held by the Trustee, which shall
include those securities transferred to the Equifax Inc. Employees 401(k)
Retirement and Savings Plan from the Equifax Inc. Employees Stock Ownership
Plan (the "ESOP") pursuant to its termination on January 1, 1989, shall be
accounted for separately from any other contributions to this Plan, as required
by Treas. Reg. Section 1.46-8(d)(4), and shall not be used to satisfy any loan
made to the Plan or be used as collateral for any loan made to the Plan, should
any such loans ever be made, as required by Treas. Reg. Section 1.46-8(d)(5).
Furthermore, TRASOP securities held by the Trustee shall not be used as
payment, directly or indirectly, for "start-up expenses" (as that term is
defined in Treas. Reg. Section 1.46-8(e)(6)(i)) or for "administrative
expenses" (as that term is defined in Treas. Reg. Section 1.46-8(e)(7)(i)).
7.2 Form of Distribution. Notwithstanding any provisions of
this Plan to the contrary, any Participant in this Plan who was a Member in the
ESOP prior to January 1, 1989 shall, when otherwise entitled to distribution of
his Account balances attributable to, and transferred from, the ESOP under the
terms and provisions of this Plan, be entitled to elect that his ESOP Account
be distributed in the form of Common Stock. In the event of such an election,
fractional shares allocated to such Participant's ESOP Account, if any, shall
nonetheless be paid in cash. Absent such an election, distribution of the
portion of such Participant's ESOP Account consisting of Common Stock shall be
made in cash in an amount equal to the fair market value of the Common Stock in
such Participant's ESOP Account which is to be distributed.
7.3 TRASOP Securities must Remain in Plan. Notwithstanding
any provisions of this Plan to the contrary, no Common Stock (i) which was
transferred to this Plan from the ESOP, and (ii) which was allocated under the
ESOP to the Account of a Participant who was a Member in the ESOP prior to
January 1, 1989, shall be distributed from such Participant's ESOP Account
under this Plan before the end of the 84th month beginning after the month in
which the Common Stock was allocated, except in the following situations:
(a) the termination of this Plan;
(b) the death, disability or separation from
service of such Participant;
(c) a distribution to such Participant or his
Beneficiary is required by Code Section 401(a)(9) and cannot be made
except by violation of the above-mentioned holding period rule;
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<PAGE> 105
(d) a transfer of such Participant to the
employment of an acquiring employer from the employment of the selling
employer in the case of:
(i) a sale to the acquiring
employer of substantially all of the assets used by the
selling employer in a trade or business conducted by the
selling employer, or
(ii) the sale of substantially all
of the stock of a subsidiary of the employer; or
(e) with respect to the stock of a selling
corporation, a disposition of such selling corporation's interest in a
subsidiary when such Participant continues employment with said
subsidiary.
7.4 Voting Rights. Notwithstanding any provisions of this
Plan to the contrary, the Trustee shall deliver or cause to be delivered to
each Participant, or, in the event of such Participant's death, to his
Beneficiary, any and all notices, financial statements, proxies and proxy
soliciting material, relating to Common Stock in his ESOP Account and any other
of his Accounts under this Plan, if any, and shall notify each such Participant
or Beneficiary of each occasion for the exercising of voting rights (or of
warrants, options or other rights to purchase Common Stock) within a reasonable
time before said rights are to be exercised, which notification shall include
all the information that the issuer of such Common Stock distributes to
shareholders regarding the exercise of said rights. Said Participant or
Beneficiary shall have the right to direct the Trustee as to the exercise of
all voting rights with respect to Common Stock in his Accounts. In the absence
of any such direction, the Trustee may not vote said shares. To the extent
possible, the Trustee shall combine fractional shares of Common Stock in the
Accounts of Participants or their Beneficiaries and shall vote the resulting
whole shares of Common Stock to reflect the direction of said Participants or
Beneficiaries.
7.5 Allocation of Earnings. All dividends or other
distributions or earnings paid with respect to Common Stock allocated to and
held in Participants' ESOP Accounts shall be reinvested in Common Stock and
credited to Participants with ESOP Accounts pro rata in proportion to the
number of shares (including fractional shares) in each such Participant's ESOP
Account as of the record date for payment of said dividends or other
distributions or earnings, notwithstanding other provisions of this Plan
requiring contrary allocations or deductions for expenses of the Plan or of the
Trustee prior to allocation.
7.6 Common Stock. For purposes of this Article, "Common
Stock" shall mean common stock issued by Equifax Inc., or a corporation which
is a member of a "controlled group of corporations" which includes Equifax Inc.
(within the meaning of Code Section 1563(a), determined without regard to Code
Section 1563(a)(4) and (e)(3)(C)) and with voting power and dividend rights no
less favorable than the voting power and dividend rights of other common stock
issued by Equifax Inc. or such other corporation; provided, however, that
effective on the date of the distribution of all of the shares of common stock
of ChoicePoint Inc. by Equifax Inc. to the
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<PAGE> 106
holders of the common stock of Equifax Inc., "Common Stock" shall mean common
stock issued by ChoicePoint Inc. or a corporation which is a member of a
controlled group of corporations which includes ChoicePoint Inc.
7.7 ESOP Accounts. For purposes of this Article, "ESOP
Account" shall mean the separate Account established under this Plan for that
portion of a Participant's benefit which has been transferred to the Equifax
Inc. Employees 401(k) Retirement and Savings Plan from the ESOP pursuant to
its termination on January 1, 1989, and all earnings associated therewith.
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<PAGE> 107
EXHIBIT A
TO
CHOICEPOINT INC. 401(K) PROFIT SHARING PLAN
Pursuant to Sections _______________ of the Plan, the participating
Employers listed in the schedule below have elected to have the following
special provisions apply to their Employees, as indicated in the second column
of the schedule below.
Adopting Employers Special Provisions
---------------------------- ----------------------------
Approved:
-------------------------------
PLAN ADMINISTRATOR
Date:
-----------------------------------
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<PAGE> 1
Exhibit 10.03
DISTRIBUTION AGREEMENT
PLAN OF REORGANIZATION AND DISTRIBUTION
DISTRIBUTION AGREEMENT ("Agreement") dated as of July 31, 1997 by and
between Equifax Inc., a Georgia corporation ("Equifax"), and ChoicePoint Inc.,
a Georgia corporation ("ChoicePoint").
RECITALS
A. ChoicePoint is a wholly-owned subsidiary of Equifax formed for
the purpose of taking title to the stock of certain Equifax subsidiaries, the
assets and liabilities of which constitute the businesses of Equifax's
Insurance Services Group ("ISG").
B. The Board of Directors of Equifax has determined that it is in
the best interests of Equifax and its shareholders to transfer and assign to
ChoicePoint effective at and after the Effective Time (as defined herein) and
as a contribution to the capital of ChoicePoint, the capital stock of the
Equifax subsidiaries that currently operate the ISG businesses and to receive
in exchange therefor shares of ChoicePoint Common Stock (as defined herein).
C. The Board of Directors of Equifax has further determined that
it is in the best interests of Equifax and its shareholders to transfer, sell
and assign substantially all of the assets and substantially all of the
liabilities of CUE UK (as defined herein) to ChoicePoint.
D. The Board of Directors of Equifax has further determined that
it is in the best interests of Equifax and its shareholders to make a
distribution (the "Distribution") to the holders of Equifax Common Stock (as
defined herein) of all of the outstanding shares of ChoicePoint Common Stock at
the rate of one share of ChoicePoint Common Stock for every ten shares of
Equifax Common Stock outstanding as of the Record Date (as defined herein).
E. The parties intend that the Distribution not be taxable to
Equifax or its shareholders pursuant to Section 355 of the Code (as defined
herein).
F. The parties have determined that it is necessary and desirable
to set forth the principal corporate transactions required to effect the
Distribution and to set forth other agreements that will govern certain other
matters following the Distribution.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual agreements and covenants contained in this Agreement and other good and
valuable consideration the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
<PAGE> 2
ARTICLE I
DEFINITIONS
Section 1.01 Definitions. As used herein, the following terms
have the following meaning:
"Acrofax" means Acrofax, Inc., a wholly-owned subsidiary of
Equifax organized under the laws of the country of Canada.
"Action" means any claim, suit, arbitration, inquiry,
proceeding or investigation by or before any court, governmental or other
regulatory or administrative agency or commission or any other tribunal.
"Ancillary Agreements" means all of the written agreements,
instruments, understandings, assignments and other arrangements entered into in
connection with the transactions contemplated hereby, including, without
limitation, the Employee Benefits Agreement, the Transition Support Agreement,
the Intercompany Information Services Agreement, the Intellectual Property
Agreement, the CUE UK Agreements, the Tax Sharing and Indemnification Agreement
and the Real Estate Agreements.
"Assets" means all properties, rights, contracts, leases and
claims, of every kind and description, wherever located, whether tangible or
intangible, and whether real, personal or mixed.
"Assumed Debt" means that certain $29 million Liability of
Equifax under its discretionary credit lines assumed by ChoicePoint pursuant to
this Agreement.
"ChoicePoint Articles" means the articles of incorporation of
ChoicePoint in the form filed as an exhibit to the Form S-1 at the time it
becomes effective.
"ChoicePoint Assets" means (a) the capital stock of Osborn,
EGSS and Services to be transferred at or prior to the Effective Time by
Equifax to ChoicePoint, (b) all Assets of CUE UK (other than as provided in the
CUE UK Agreements) to be sold by Equifax Europe UK, Ltd. to ChoicePoint Ltd. at
or prior to the Effective Time pursuant to the CUE UK Agreements, (c)
ChoicePoint's rights under the CUE UK Agreements, and (d) all Assets that are
(i) owned of record or held in the name of a member of the ChoicePoint Group at
the Effective Time, (ii) treated for internal financial reporting purposes of
Equifax prior to the Effective Time or on the ISG Balance Sheet as owned by a
member of the ChoicePoint Group, or (iii) at the Effective Time used
exclusively by one or more members of the ChoicePoint Group.
"ChoicePoint Business" means the business now or formerly
conducted by ISG.
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<PAGE> 3
"ChoicePoint Bylaws" means the bylaws of ChoicePoint in the
form filed as an exhibit to the Form S-1 at the time it becomes effective.
"ChoicePoint Common Stock" means the outstanding shares of
common stock, $.10 par value, of ChoicePoint.
"ChoicePoint Group" means ChoicePoint, Osborn, EGSS, Services,
ChoicePoint Ltd., any of their respective subsidiaries and any subsidiary or
division of any member of the Equifax Group that is included in the operations
of the ChoicePoint Business and is included in the results of the ChoicePoint
Business for internal financial reporting purposes.
"ChoicePoint Liabilities" means (a) Liabilities of any member
of the ChoicePoint Group under this Agreement or any Ancillary Agreement, (b)
except as otherwise expressly provided in this Agreement or any Ancillary
Agreement, Liabilities incurred in connection with the conduct or operation of
the ChoicePoint Business (including any acquired businesses) or the ownership
or use of the ChoicePoint Assets, whether arising before, at or after the
Effective Time, (c) Liabilities arising under or in connection with the Form
S-1, except to the extent such Liabilities arise out of or are based upon
information included in the section of the Form S-1 entitled "Summary - Equifax
Inc.", (d) except as otherwise expressly provided in this Agreement or any
Ancillary Agreement, Liabilities set forth on the ISG Balance Sheet, (e) except
as otherwise provided in this Agreement or any Ancillary Agreement, Liabilities
of the Equifax Group or the ChoicePoint Group relating to a Sold ISG Business
or arising out of the sale thereof, (f) any and all Liabilities assumed by
ChoicePoint or another member of the ChoicePoint Group under the CUE UK
Agreements, (g) the Assumed Debt and (h) any Liabilities relating to or arising
out of the acquisition (whether through an acquisition of stock or assets or a
merger, share exchange or other form of business combination) of any business
prior to the Effective Time by any member of the ChoicePoint Group, except to
the extent such Liabilities arise out of or are based upon the issuance of
securities of Equifax in any such business combination transaction.
"ChoicePoint Ltd." means ChoicePoint Ltd., a wholly-owned
subsidiary of Services incorporated under the laws of the United Kingdom for
the purpose of acquiring substantially all of the Assets and assuming
substantially all of the Liabilities of CUE UK.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission.
"CUE UK" means the Equifax Insurance Services division of
Equifax Europe UK, Ltd.
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<PAGE> 4
"CUE UK Agreements" means the Business Transfer Agreement and
other related deeds, agreements, assignments, titles and notes relating to
certain Assets and certain Liabilities of CUE UK, each entered into at or prior
to the Effective Time between Equifax Europe UK Ltd. and ChoicePoint Ltd., as
amended from time to time.
"Distribution" is defined in the recitals to this Agreement.
"Distribution Agent" means SunTrust Bank, Atlanta, in its
capacity as agent for Equifax in connection with the Distribution.
"Distribution Date" means the date upon which the Distribution
shall be effective, as determined by the Board of Directors of Equifax.
"ECIS" means Equifax Credit Information Services, Inc., a
wholly-owned subsidiary of Equifax organized under the laws of the State of
Georgia.
"Effective Time" means 5:00 p.m. Atlanta time on July 31,
1997.
"EGSS" means Equifax Government and Special Systems, Inc., a
wholly-owned subsidiary of Equifax.
"Employee Benefits Agreement" means the Employee Benefits
Agreement entered into at or prior to the Effective Time between Equifax and
ChoicePoint, as amended from time to time.
"Equifax Business" means the business now or formerly
conducted by Equifax and its present and former subsidiaries, joint ventures
and partnerships, other than the ChoicePoint Business.
"Equifax Common Stock" means the outstanding shares of common
stock, $1.25 par value, of Equifax.
"Equifax Group" means Equifax and its subsidiaries, joint
ventures and partnerships, excluding any member of the ChoicePoint Group.
"Equifax Liabilities" means (i) Liabilities of any member of
the Equifax Group under this Agreement or any Ancillary Agreement, and (ii)
Liabilities, other than ChoicePoint Liabilities, incurred in connection with
the operation of the Equifax Business, whether arising before, at or after the
Effective Time.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Form S-1" means the registration statement on Form S-1 filed
by ChoicePoint with the Commission to effect the registration of the
distribution of the
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<PAGE> 5
ChoicePoint Common Stock pursuant to the Securities Act, as such registration
statement may be amended from time to time.
"Group" means the Equifax Group or the ChoicePoint Group, as
the context so requires.
"Guaranteed ChoicePoint Liabilities" means the ChoicePoint
Liabilities on which any member of the Equifax Group is an obligor by reason of
any guarantee or contractual commitment.
"Guaranteed Equifax Liabilities" means the Equifax Liabilities
on which any member of the ChoicePoint Group is an obligor by reason of any
guarantee or contractual commitment.
"Indemnifiable Loss" means any and all damage, loss, liability
and expense (including, without limitation, reasonable expenses of
investigation and reasonable attorneys' fees and expenses) in connection with
any and all Actions or threatened Actions.
"Intellectual Property Agreement" means the Intellectual
Property Agreement entered into at or prior to the Effective Time between
Equifax and ChoicePoint, as amended from time to time.
"Intercompany Information Services Agreement" means the
Intercompany Information Services Agreement entered into at or prior to the
Effective Time between Equifax and ChoicePoint, as amended from time to time.
"ISG Balance Sheet" means the consolidated balance sheet of
ISG as of July 31, 1997, which balance sheet shall be prepared by Equifax on a
basis consistent with Equifax's historical practices for the preparation of
monthly divisional balance sheets.
"Liabilities" means any and all claims, debts, liabilities and
obligations, absolute or contingent, matured or not matured, liquidated or
unliquidated, accrued or unaccrued, known or unknown, whenever arising,
including all costs and expenses relating thereto, and including, without
limitation, those debts, liabilities and obligations arising under this
Agreement or any Ancillary Agreement, any law, rule, regulation, action, order
or consent decree of any governmental entity or any award of any arbitrator of
any kind, and those arising under any contract, commitment or undertaking.
"Osborn" means Osborn Laboratories, Inc., a wholly-owned
subsidiary of Equifax organized under the laws of the State of Delaware.
"Prime Rate" means the prime rate of interest as determined
from time to time by SunTrust Bank, Atlanta.
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<PAGE> 6
"Prospectus" means the prospectus to be sent to each holder of
Equifax Common Stock in connection with the Distribution.
"Rabbi Trust" means the trust established by Equifax pursuant
to that certain trust agreement dated December 29, 1989.
"Real Estate Agreements" means all subleases, releases,
assignments, consents and agreements relating to the division of real property
and interests therein between members of the Equifax Group and members of the
ChoicePoint Group entered into at or prior to the Effective Time, in each case
as amended from time to time.
"Record Date" means the date designated by Equifax's Board of
Directors as the record date for determining the shareholders of Equifax
entitled to receive the Distribution.
"Revolving Credit Agreement" means the Revolving Credit
Agreement among various lenders and ChoicePoint, which provides for up to $250
million of availability.
"Securities Act" means the Securities Act of 1933, as amended.
"Services" means Equifax Services Inc., a wholly-owned
subsidiary of Equifax organized under the laws of the State of Georgia.
"Sold ISG Business" means any of the Assets or businesses
related to the ChoicePoint Business formerly owned, directly or indirectly, by
Equifax and heretofore sold.
"Stock Benefit Trust" means the Equifax Inc. Stock Benefit
Trust.
"Tax" shall have the meaning given to such term in the Tax
Sharing and Indemnification Agreement.
"Tax Sharing and Indemnification Agreement" means the Tax
Sharing and Indemnification Agreement entered into at or before the Effective
Time between Equifax and ChoicePoint, as amended from time to time.
"Transition Support Agreement" means the Transition Support
Agreement entered into at or prior to the Effective Time between Equifax and
ChoicePoint, as amended from time to time.
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<PAGE> 7
ARTICLE II
REORGANIZATION; CONVEYANCE OF CERTAIN ASSETS; ASSUMPTION OF
CERTAIN LIABILITIES; CERTAIN PAYMENTS; AND TRANSITION
ARRANGEMENTS
Section 2.01 Reorganization.
(a) At or before the Effective Time, Equifax shall
transfer to ECIS all of the capital stock of Acrofax.
(b) At or before the Effective Time, Equifax shall
contribute to ChoicePoint all of the issued and outstanding capital stock of
Osborn, EGSS and Services in exchange for a number of shares of ChoicePoint
Common Stock that when combined with the shares of ChoicePoint Common Stock
already owned by Equifax shall equal approximately 14,700,000.
(c) Immediately after the transaction described in
paragraph 2.01(b) above, ChoicePoint shall transfer all of the issued and
outstanding shares of capital stock of Osborn and EGSS to Services.
(d) At or before the Effective Time, Services shall cause
ChoicePoint Ltd. to be formed under the laws of the United Kingdom. At or
before the Effective Time and pursuant to the terms of the CUE UK Agreements,
ChoicePoint Ltd. shall purchase substantially all of the Assets and assume
substantially all of the Liabilities of CUE UK in a transaction that is
intended to be taxable under the Code.
Section 2.02 Conveyance of Assets; Discharge of Liabilities. Except
as otherwise expressly provided herein or in any of the Ancillary Agreements:
(a) At the Effective Time (i) all ChoicePoint Assets are
intended to be and shall become Assets of the ChoicePoint Group, (ii) all
ChoicePoint Liabilities are intended to be and shall become the Liabilities of
the ChoicePoint Group, and (iii) all other Assets and Liabilities of Equifax
and its subsidiaries are intended to be and shall remain exclusively the Assets
and Liabilities of the Equifax Group.
(b) At the Effective Time, ChoicePoint shall assume and
shall thereafter timely pay and discharge the Assumed Debt.
(c) At the Effective Time, Equifax agrees to transfer or
cause to be transferred to ChoicePoint or to such other members of the
ChoicePoint Group as ChoicePoint may designate all right, title and interest of
the Equifax Group in and to all of the ChoicePoint Assets.
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<PAGE> 8
(d) At the Effective Time, ChoicePoint agrees to transfer
or cause to be transferred to Equifax or to such other member of the Equifax
Group as Equifax may designate all right, title and interest of the ChoicePoint
Group in and to all Assets that are not ChoicePoint Assets.
(e) ChoicePoint agrees that at and after the Effective
Time it will assume and timely pay and discharge all of the ChoicePoint
Liabilities.
(f) Equifax agrees that at and after the Effective Time
it will assume and timely pay and discharge all of the Equifax Liabilities.
(g) In the event that any conveyance of an Asset required
hereby is not effected at or before the Effective Time, the obligation to
transfer such Asset shall continue past the Effective Time and shall be
accomplished as soon thereafter as practicable.
(h) If any Asset may not be transferred by reason of the
requirement to obtain the consent of any third party and such consent has not
been obtained by the Effective Time, then such Asset shall not be transferred
until such consent has been obtained, and Equifax and ChoicePoint, as the case
may be, shall cause the owner of such Asset to use all reasonable efforts to
provide to the appropriate member of the other Group all the rights and
benefits under such Asset and cause such owner to enforce such Asset for the
benefit of such member. Both parties shall otherwise cooperate and use all
reasonable efforts to provide the economic and operational equivalent of an
assignment or transfer of the Asset.
(i) From and after the Effective Time, each party shall
promptly transfer or cause the members of its Group promptly to transfer to the
other party or the appropriate member of the other party's Group, from time to
time, any property received that is an Asset of the other party or a member of
its Group. Without limiting the foregoing, funds received by a member of one
Group upon the payment of accounts receivable that belong to a member of the
other Group shall be transferred to the other Group by wire transfer not more
than five business days after receipt of such payment.
(j) Except as expressly set forth in this Agreement or
any Ancillary Agreement, instrument or document contemplated by this Agreement
or any Ancillary Agreement, neither any member of the Equifax Group nor any
member of the ChoicePoint Group has made or shall be deemed to have made any
representation or warranty as to (i) the Assets, business or Liabilities
retained, transferred or assumed as contemplated hereby or thereby, (ii) any
consents or approvals required in connection with the transfer or assumption by
such party of any Asset or Liability contemplated by this Agreement, (iii) the
value or freedom from any lien, claim, equity or other encumbrance of, or any
other matter concerning, any Assets of such party or (iv) the absence of any
defenses or right of setoff or freedom from counterclaim with respect to any
claim or other Asset of such party. EXCEPT AS MAY BE EXPRESSLY SET FORTH IN
THIS AGREEMENT
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OR ANY ANCILLARY AGREEMENT, ALL ASSETS WERE, OR ARE BEING, TRANSFERRED, OR ARE
BEING RETAINED ON A "AS IS," "WHERE IS" BASIS AND THE RESPECTIVE TRANSFEREES
WILL BEAR THE ECONOMIC AND LEGAL RISKS THAT ANY CONVEYANCE SHALL PROVE TO BE
INSUFFICIENT TO VEST IN THE TRANSFEREE A TITLE THAT IS FREE AND CLEAR OF ANY
LIEN, CLAIM, EQUITY OR OTHER ENCUMBRANCE.
Section 2.03 Ancillary Agreements. At the Effective Time, Equifax
and ChoicePoint will execute and deliver:
(a) A duly executed Employee Benefits Agreement;
(b) A duly executed Tax Sharing and Indemnification
Agreement;
(c) A duly executed Intercompany Information Services
Agreement;
(d) A duly executed Transition Support Agreement;
(e) A duly executed Intellectual Property Agreement;
(f) Duly executed copies of the CUE UK Agreements;
(g) Duly executed copies of the Real Estate Agreements;
and
(h) Such other agreements, leases, documents or
instruments as the parties may agree are
necessary or desirable in order to achieve the
purposes hereof.
Section 2.04 Issuance of ChoicePoint Common Stock. At the Effective
Time and in exchange for the transfer by Equifax to ChoicePoint of the stock
and assets as provided above, ChoicePoint will issue and deliver to Equifax a
certificate representing approximately 14,700,000 shares of ChoicePoint Common
Stock constituting all the shares to be distributed as provided in Section 3.03
below.
Section 2.05 Resignations. On the Distribution Date, ChoicePoint
will deliver or cause to be delivered to Equifax resignations of each person
who will be an employee of ChoicePoint from and after the Distribution Date and
who is an officer or director of Equifax or any of its subsidiaries or
affiliates not constituting a member of the ChoicePoint Group immediately prior
to the Distribution Date.
Section 2.06 Conduct of ChoicePoint Pending Distribution.
(a) Prior to the Distribution Date, ChoicePoint shall
not, without the prior consent of Equifax, make any press release concerning
the Distribution and shall use its best efforts not to take any action which
may prejudice or delay the consummation of the Distribution. Prior to the
Distribution Date, ChoicePoint further agrees to regularly
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apprise Equifax of public announcements to or the dissemination of materials
for financial analysts or other persons relating to its business and the
Distribution.
(b) Prior to the Distribution Date, the business of
ChoicePoint shall be operated for the sole benefit of Equifax as ChoicePoint's
sole shareholder; provided however, that upon consummation of the Distribution,
the business of ChoicePoint shall be deemed to have been operated for the sole
benefit of ChoicePoint and its new shareholders, as of and after the Effective
Time. If the Distribution occurs, any amounts advanced or contributed by
Equifax to ChoicePoint after the Effective Time shall be repaid by ChoicePoint,
together with the payments prescribed by Section 8.03 hereof, on the
Distribution Date.
Section 2.07 Revolving Credit Agreement. ChoicePoint shall use all
reasonable efforts promptly to obtain, and to satisfy all conditions for
borrowing under the Revolving Credit Agreement in an amount sufficient to allow
ChoicePoint to conduct the business of ChoicePoint after the Distribution Date.
Section 2.08 Guaranteed ChoicePoint and Equifax Liabilities.
(a) ChoicePoint shall use all reasonable efforts
(excluding payment of money) to obtain as promptly as practicable after the
Distribution Date the release of Equifax from its obligations with respect to
Guaranteed ChoicePoint Liabilities. In no event shall any member of the
ChoicePoint Group extend the term of any Guaranteed ChoicePoint Liabilities
(such as by exercising an option to renew a lease) or modify any such
Guaranteed ChoicePoint Liability, in either instance in any way that would
increase the liability guaranteed thereunder unless the guarantee of Equifax is
released as to any extended or modified liability obligations under such
Guaranteed ChoicePoint Liabilities or Equifax otherwise consents in writing.
(b) Equifax shall use all reasonable efforts (excluding
payment of money) to obtain as promptly as practicable after the Distribution
Date the release of ChoicePoint from its obligations with respect to Guaranteed
Equifax Liabilities. In no event shall any member of the Equifax Group extend
the term of any Guaranteed Equifax Liabilities (such as by exercising an option
to renew a lease) or modify any such Guaranteed Equifax Liability, in either
instance in any way that would increase the liability guaranteed thereunder
unless the guarantee of ChoicePoint is released as to any extended or modified
liability obligations under such Guaranteed Equifax Liabilities or ChoicePoint
otherwise consents in writing.
(c) In the event that Equifax is required to pay any
Guaranteed ChoicePoint Liabilities, without limiting any of Equifax's rights
and remedies against ChoicePoint under this Agreement or otherwise, in order to
secure ChoicePoint's indemnity obligations to Equifax hereunder in respect of
such Guaranteed ChoicePoint Liabilities, Equifax shall be entitled to all the
rights of the payee in any property of any
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<PAGE> 11
member of the ChoicePoint Group pledged as security for such Guaranteed
ChoicePoint Liabilities.
(d) In the event that ChoicePoint is required to pay any
Guaranteed Equifax Liabilities, without limiting any of ChoicePoint's rights
and remedies against Equifax under this Agreement or otherwise, in order to
secure Equifax's indemnity obligations to ChoicePoint hereunder in respect of
such Guaranteed Equifax Liabilities, ChoicePoint shall be entitled to all the
rights of the payee in any property of any member of the Equifax Group pledged
as security for such Guaranteed Equifax Liabilities.
Section 2.09 Insurance.
(a) If the Distribution occurs, ChoicePoint will use its
best efforts to procure and maintain directors' and officers' liability
insurance coverage at least equal to the amount of Equifax's current directors'
and officers' insurance coverage with respect to directors and officers of
Equifax who will become directors and officers of ChoicePoint as of the
Distribution Date for acts as directors and officers of members of the
ChoicePoint Group for periods from and after the Distribution Date.
(b) If the Distribution occurs, Equifax will use its best
efforts to maintain directors' and officers' liability insurance coverage at
least equal to the amount of Equifax's current directors' and officers'
liability insurance coverage for a period of five years from the Distribution
Date with respect to the directors and officers of Equifax who will become
directors and officers of members of the ChoicePoint Group as of the
Distribution Date for acts as directors and officers of members of the Equifax
Group during periods prior to the Distribution Date.
ARTICLE III
THE DISTRIBUTION
Section 3.01 Cooperation Prior to the Distribution.
(a) Equifax and ChoicePoint shall prepare, and Equifax
shall mail to the holders of Equifax Common Stock, the Prospectus, which shall
set forth appropriate disclosure concerning ChoicePoint, the Distribution and
any other appropriate matters. Equifax and ChoicePoint shall also prepare, and
ChoicePoint shall file with the Commission, the Form S-1, which shall include
the Prospectus. Equifax and ChoicePoint shall use all reasonable efforts to
cause the Form S-1 to become effective under the Securities Act.
(b) Equifax shall, as the sole shareholder of
ChoicePoint, approve and adopt the ChoicePoint employee benefit plans
contemplated by the Employee Benefits Agreement and Equifax and ChoicePoint
shall cooperate in preparing, filing with the Commission under the Securities
Act and causing to become effective not later than the
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<PAGE> 12
Distribution Date any registration statements or amendments thereto that are
appropriate to reflect the establishment of or amendments to any employee
benefit plan of ChoicePoint contemplated by the Employee Benefits Agreement,
including without limitation, the Form S-8 with respect thereto, except that
ChoicePoint shall not be required to file with the Commission prior to the
Distribution Date any registration statements relating to any grantor trusts
that may be contemplated by the Employee Benefits Agreement.
(c) Equifax and ChoicePoint shall take all such action as
may be necessary or appropriate under the securities or blue sky laws of states
or other political subdivisions of the United States in connection with the
transactions contemplated by this Agreement or any Ancillary Agreement.
(d) ChoicePoint shall prepare, file and use its best
efforts to cause to be approved prior to the Record Date, the application to
permit listing of the ChoicePoint Common Stock on the New York Stock Exchange.
(e) Equifax and ChoicePoint shall take all such actions
as may be deemed necessary to secure a favorable ruling from the IRS that the
Distribution is not taxable to Equifax or its shareholders pursuant to Section
355 of the Code.
Section 3.02 Equifax Board Action; Conditions Precedent to the
Distribution. Equifax's Board of Directors, or a duly appointed committee
thereof, shall, in its sole discretion, establish the Record Date and the
Distribution Date and any appropriate procedures in connection with the
Distribution. In no event shall the Distribution occur unless the following
conditions shall have been satisfied:
(a) all necessary regulatory approvals shall have been
received;
(b) the Form S-1 shall have become effective under the
Securities Act;
(c) the ChoicePoint Board of Directors, as named in the
Form S-1, shall have been elected by Equifax, as sole shareholder of
ChoicePoint, and the ChoicePoint Articles and ChoicePoint Bylaws shall have
been adopted and be in effect;
(d) the ChoicePoint Common Stock shall have been approved
for listing on the New York Stock Exchange, subject to official notice of
issuance;
(e) Equifax shall have received a favorable ruling from
the IRS that the Distribution will not be taxable to Equifax or its
shareholders pursuant to Section 355 of the Code;
(f) ChoicePoint shall have entered into the Revolving
Credit Agreement;
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<PAGE> 13
(g) ChoicePoint (or its appropriate subsidiary) shall
have performed fully its (or their) obligations under Section 2.02; and
(h) no order, injunction or decree issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing
consummation of the Distribution shall be in effect.
Section 3.03 The Distribution. On or before the Distribution Date,
subject to satisfaction or waiver of the conditions set forth in this
Agreement, Equifax shall deliver to the Distribution Agent a certificate or
certificates representing all of the then outstanding shares of ChoicePoint
Common Stock held by the Equifax Group, endorsed in blank, and shall instruct
the Distribution Agent, except as otherwise provided in Sections 3.04 and 3.05,
to distribute to each holder of record of Equifax Common Stock on the Record
Date one share of ChoicePoint Common Stock for each ten shares of Equifax
Common Stock so held either by crediting the holder's brokerage account or by
delivering a certificate or certificates representing such shares. ChoicePoint
agrees to provide all certificates for shares of ChoicePoint Common Stock that
the Distribution Agent shall require in order to effect the Distribution.
Section 3.04 Fractional Shares. The Distribution Agent shall not
distribute any fractional share of ChoicePoint Common Stock. The Distribution
Agent shall aggregate all such fractional shares and sell them in an orderly
manner after the Distribution Date in the open market and, after completion of
such sales, distribute a pro rata portion of the proceeds from such sales,
based upon the average gross selling price of all such ChoicePoint Common
Stock, less a pro rata portion of the aggregate brokerage commissions payable
in connection with such sales, to each holder of Equifax Common Stock who would
otherwise have received a fractional share of ChoicePoint Common Stock.
Section 3.05 Stock Trusts. The Distribution Agent shall not
distribute in the Distribution any shares of ChoicePoint Common Stock to the
Stock Benefit Trust or the Rabbi Trust.
ARTICLE IV
INDEMNIFICATION
Section 4.01 ChoicePoint Indemnification of the Equifax Group. If
the Distribution occurs, on and after the Distribution Date, ChoicePoint shall
indemnify, defend and hold harmless each member of the Equifax Group, and each
of their respective directors, officers, employees and agents (the "Equifax
Indemnitees") from and against any and all Indemnifiable Losses incurred or
suffered by any of the Equifax Indemnitees and arising out of, or due to, (a)
the failure of ChoicePoint or any member of the ChoicePoint Group to pay,
perform or otherwise discharge, any of the ChoicePoint Liabilities and (b) any
untrue statement or alleged untrue statement of any material fact contained in
the
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<PAGE> 14
preliminary or final Form S-1, the preliminary or final Prospectus or any
amendment or supplement thereto or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading (other than the information provided by
Equifax contained in the Section entitled "Equifax Inc." of the preliminary or
final Form S-1, the preliminary or final Prospectus or any amendment or
supplement thereto).
Section 4.02 Equifax Indemnification of ChoicePoint Group. If the
Distribution occurs, on and after the Distribution Date, Equifax shall
indemnify, defend and hold harmless each member of the ChoicePoint Group and
each of their respective directors, officers, employees and agents (the
"ChoicePoint Indemnitees") from and against any and all Indemnifiable Losses
incurred or suffered by any of the ChoicePoint Indemnitees and arising out of,
or due to, (a) the failure of Equifax or any member of the Equifax Group to
pay, perform or otherwise discharge, any of the Equifax Liabilities and (b) any
untrue statement or alleged untrue statement of any material fact contained in
the Section entitled "Equifax Inc." of the preliminary or final Form S-1, the
preliminary or final Prospectus or any amendment or supplement thereto or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading.
Section 4.03 Contribution. In circumstances in which the indemnity
agreements provided for in Sections 4.01(b) and 4.02(b) are unavailable or
insufficient, for any reason, to hold harmless an indemnified party in respect
of any Indemnifiable Losses, each indemnifying party, in order to provide for
just and equitable contribution, shall contribute to the amount paid or payable
by such indemnified party as a result of such Indemnifiable Losses, in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party or parties on the one hand and the indemnified party on the other in
connection with the statements or omissions or alleged statements or omissions
that resulted in such Indemnifiable Losses, as well as any other relevant
equitable considerations. The relative fault of the parties shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by ChoicePoint or
Equifax, the parties' relative intents, knowledge, access to information and
opportunity to correct or prevent such statement or omission, and any other
equitable considerations appropriate in the circumstances.
Section 4.04 Insurance and Third Party Obligations. No insurer or
any other third party shall be, by virtue of the foregoing indemnification
provisions, (a) entitled to a benefit it would not be entitled to receive in
the absence of such provisions, (b) relieved of the responsibility to pay any
claims to which it is obligated, or (c) entitled to any subrogation rights with
respect to any obligation hereunder.
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<PAGE> 15
ARTICLE V
INDEMNIFICATION PROCEDURES
Section 5.01 Notice and Payment of Claims. If any Equifax or
ChoicePoint Indemnitee (the "Indemnified Party") determines that it is or may
be entitled to indemnification by a party (the "Indemnifying Party") under
Article V (other than in connection with any Action or claim subject to Section
5.02), the Indemnified Party shall deliver to the Indemnifying Party a written
notice specifying, to the extent reasonably practicable, the basis for its
claim for indemnification and the amount for which the Indemnified Party
reasonably believes it is entitled to be indemnified. After the Indemnifying
Party shall have been notified of the amount for which the Indemnified Party
seeks indemnification, the Indemnifying Party shall, within 30 days after
receipt of such notice, pay the Indemnified Party such amount in cash or other
immediately available funds (or reach agreement with the Indemnified Party as
to a mutually agreeable alternative payment schedule) unless the Indemnifying
Party objects to the claim for indemnification or the amount thereof. If the
Indemnifying Party does not give the Indemnified Party written notice objecting
to such claim and setting forth the grounds therefor within the same 30 day
period, the Indemnifying Party shall be deemed to have acknowledged its
liability for such claim and the Indemnified Party may exercise any and all of
its rights under applicable law to collect such amount. Any amount owed under
this Section 5.01 that is past due shall bear interest at a simple rate of
interest per annum equal to the Prime Rate plus 2%.
Section 5.02 Notice and Defense of Third Party Claims. Promptly
following the earlier of (a) receipt of notice of the commencement by a third
party of any Action against or otherwise involving any Indemnified Party or (b)
receipt of information from a third party alleging the existence of a claim
against an Indemnified Party, in either case, with respect to which
indemnification may be sought pursuant to this Agreement (a "Third Party
Claim"), the Indemnified Party shall give the Indemnifying Party written notice
thereof. The failure of the Indemnified Party to give notice as provided in
this Section 5.02 shall not relieve the Indemnifying Party of its obligations
under this Agreement, except to the extent that the Indemnifying Party is
prejudiced by such failure to give notice. Within 30 days after receipt of
such notice, the Indemnifying Party shall by giving written notice thereof to
the Indemnified Party, (a) acknowledge, as between the parties hereto,
liability for, and at its option assumption of the defense of such Third Party
Claim at its sole cost and expense or (b) object to the claim of
indemnification set forth in the notice delivered by the Indemnified Party
pursuant to the first sentence of this Section 5.02 setting forth the grounds
therefor; provided that if the Indemnifying Party does not within the same 30
day period give the Indemnified Party written notice acknowledging liability
and electing to assume the defense or objecting to such claim and setting forth
the grounds therefor, the Indemnifying Party shall be deemed to have
acknowledged, as between the parties hereto, its liability to the Indemnified
Party for such Third Party Claim. Any contest of a Third Party Claim as to
which the Indemnifying Party has elected to assume the defense shall be
conducted by attorneys employed by the
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<PAGE> 16
Indemnifying Party and reasonably satisfactory to the Indemnified Party;
provided that the Indemnified Party shall have the right to participate in such
proceedings and to be represented by attorneys of its own choosing at the
Indemnified Party's sole cost and expense. If the Indemnifying Party assumes
the defense of a Third Party Claim, the Indemnifying Party may settle or
compromise the claim without the prior written consent of the Indemnified
Party; provided that the Indemnifying Party may not agree to any such
settlement pursuant to which any remedy or relief, other than monetary damages
for which the Indemnifying Party shall be responsible hereunder, shall be
applied to or against the Indemnified Party, without the prior written consent
of the Indemnified Party, which consent shall not be unreasonably withheld. If
the Indemnifying Party does not assume the defense of a Third Party Claim for
which it has acknowledged liability for indemnification under Article V, the
Indemnified Party may require the Indemnifying Party to reimburse it on a
current basis for its reasonable expenses of investigation, reasonable
attorney's fees and reasonable out-of-pocket expenses incurred in defending
against such Third Party Claim and the Indemnifying Party shall be bound by the
result obtained with respect thereto by the Indemnified Party; provided that
the Indemnifying Party shall not be liable for any settlement effected without
its consent, which consent shall not be unreasonably withheld. The
Indemnifying Party shall pay to the Indemnified Party in cash the amount for
which the Indemnified Party is entitled to be indemnified (if any) within 15
days after the final resolution of such Third Party Claim (whether by the final
nonappealable judgment of a court of competent jurisdiction or otherwise), or,
in the case of any Third Party Claim as to which the Indemnifying Party has not
acknowledged liability, within 15 days after such Indemnifying Party's
objection has been resolved by settlement, compromise or the final
nonappealable judgment of a court of competent jurisdiction.
ARTICLE VI
EMPLOYEE MATTERS
Section 6.01 Employees. Unless otherwise agreed upon by Equifax and
ChoicePoint, no employees who have previously provided services for both the
Equifax Group and the ChoicePoint Group will become employees of ChoicePoint
after the Effective Time.
Section 6.02 Employee Benefits Agreement. All matters relating to or
arising out of any employee benefit, compensation or welfare arrangement in
respect of any present and former employee of the Equifax Group or the
ChoicePoint Group shall be governed by the Employee Benefits Agreement, except
as may be expressly stated herein. In the event of any inconsistency between
the Employee Benefits Agreement and this Agreement or any Ancillary Agreement,
the Employee Benefits Agreement shall govern.
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ARTICLE VII
TAX MATTERS
Section 7.01 Tax Sharing and Indemnification Agreement. All matters
relating to Taxes shall be governed exclusively by the Tax Sharing and
Indemnification Agreement, except as may be expressly stated herein. In the
event of any inconsistency between the Tax Sharing and Indemnification
Agreement and this Agreement or any other Ancillary Agreement, the Tax Sharing
and Indemnification Agreement shall govern.
ARTICLE VIII
ACCOUNTING MATTERS
Section 8.01 Allocation of Prepaid Items and Reserves. All prepaid
items and reserves that have been maintained by Equifax on a consolidated basis
but that relate in part to assets or liabilities of the ChoicePoint Group shall
be allocated between Equifax and ChoicePoint as determined by Equifax in its
reasonable discretion.
Section 8.02 Accounting Treatment of Assets Transferred and
Liabilities Assumed.
(a) The transfer by Equifax of the shares of capital
stock of Osborn, EGSS and Services to ChoicePoint pursuant to this Agreement
shall constitute a contribution by Equifax to the capital of ChoicePoint.
(b) The transfer by Equifax Europe UK, Ltd. of
substantially all of the Assets and Liabilities of CUE UK to ChoicePoint Ltd.
shall be treated as a sale and purchase.
Section 8.03 Intercompany Accounts. On or before the Distribution
Date, Equifax shall prepare and deliver to ChoicePoint a preliminary ISG
Balance Sheet which shall set forth good faith estimates of all intercompany
account balances between members of the Equifax Group and members of the
ChoicePoint Group as of the Effective Time. On the Distribution Date, all
estimated account balances set forth on the preliminary ISG Balance Sheet shall
be paid in full by ChoicePoint to Equifax. Within 30 business days after the
Effective Time, Equifax shall prepare and deliver to ChoicePoint a final ISG
Balance Sheet which shall set forth all intercompany account balances between
members of the Equifax Group and members of the ChoicePoint Group as of the
Effective Time. Within ten business day after the delivery of the final ISG
Balance Sheet, Equifax shall pay to ChoicePoint or ChoicePoint shall pay to
Equifax, as the case may be, the difference between the estimated account
balances set forth on the preliminary ISG Balance Sheet and the final account
balances set forth on the final ISG Balance Sheet. Any disputes arising from
the adjustments required by the final ISG Balance Sheet shall be resolved in
accordance with Section 15.10 hereof.
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ARTICLE IX
DATA, PRODUCTS AND SERVICES
Section 9.01 Intercompany Information Services Agreement. All
matters relating to the ownership of and the right to use data owned or
maintained by any member of the Equifax Group or the ChoicePoint Group shall be
governed exclusively by the Intercompany Information Services Agreement, except
as maybe expressly stated herein. In the event of any inconsistency between
the Intercompany Information Services Agreement, the Intellectual Property
Agreement and this Agreement or any Ancillary Agreement, the Intercompany
Information Services Agreement shall govern.
ARTICLE X
INTELLECTUAL PROPERTY
Section 10.01 Intellectual Property Agreement. All matters relating
to the ownership and right to use intellectual property, other than data, shall
be governed exclusively by the Intellectual Property Agreement. In the event
of any inconsistency between the Intellectual Property Agreement and this
Agreement or any Ancillary Agreement, the Intellectual Property Agreement shall
govern.
ARTICLE XI
TRANSITION SUPPORT
Section 11.01 Transition Support Agreement. All matters relating to
the provision of support by the Equifax Group to the ChoicePoint Group after
the Effective Time shall be governed exclusively by the Transition Support
Agreement, except as may be expressly stated herein. In the event of any
inconsistency between the Transition Support Agreement and this Agreement or
any Ancillary Agreement, the Transition Support Agreement shall govern.
ARTICLE XII
REAL PROPERTY MATTERS
Section 12.01 Real Estate Agreements. All matters relating to real
property to be owned, leased, occupied or shared by the Equifax Group or the
ChoicePoint Group after the Effective Time shall be governed by the Real Estate
Agreements. In the event of any inconsistency between the Real Estate
Agreements and this Agreement or any Ancillary Agreement, the Real Estate
Agreements shall govern.
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ARTICLE XIII
INFORMATION
Section 13.01 Provision of Corporate Records. As soon as practicable
following the Effective Time, Equifax and ChoicePoint shall each arrange for
the provision to the other of existing corporate documents (e.g. minute books,
stock registers, stock certificates, documents of title, contracts, etc.) in
its possession relating to the other or its business and affairs or to any
other entity that is part of such other's respective Group or to the business
and affairs of such other entity.
Section 13.02 Access to Information. From and after the Effective
Time, Equifax and ChoicePoint shall each afford the other and its accountants,
counsel and other designated representatives reasonable access (including using
reasonable efforts to give access to persons or firms possessing information)
and duplicating rights during normal business hours to all records, books,
contracts, instruments, computer data and other data and information in its
possession relating to the business and affairs of the other or a member of its
Group (other than data and information subject to an attorney/client or other
privilege), insofar as such access is reasonably required by the other
including, without limitation, for audit, accounting and litigation purposes.
Section 13.03 Litigation Cooperation. Equifax and ChoicePoint shall
each use reasonable efforts to make available to the other, upon written
request, its officers, directors, employees and agents, and the officers,
directors, employees and agents of its subsidiaries, as witnesses to the extent
that such persons may reasonably be required in connection with any legal,
administrative or other proceedings arising out of the business of the other,
or of any entity that is part of the others' respective Group, prior to the
Effective Time in which the requesting party or one of its subsidiaries may
from time to time be involved.
Section 13.04 Retention of Records. Except as otherwise required by
law or agreed to in writing, each party shall, and shall cause the members of
its Group to, retain all information relating to the other's business in
accordance with the past practice of such party. Notwithstanding the
foregoing, either party may destroy or otherwise dispose of any information at
any time in accordance with the corporate record retention policy maintained by
such party with respect to its own records.
Section 13.05 Confidentiality. Each party shall, and shall cause
each member of its Group to, hold and cause its directors, officers, employees,
agents, consultants and advisors to hold, in strict confidence, unless
compelled to disclose by judicial or administrative process or, in the opinion
of its counsel, by other requirements of law, all information concerning the
other party (except to the extent that such information can be shown to have
been (a) in the public domain through no fault of such disclosing party or (b)
later lawfully acquired after the Effective Time on a non-confidential basis
from other sources by the disclosing party), and neither party shall release or
disclose such
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information to any other person, except its auditors, attorneys, financial
advisors, bankers and other consultants and advisors who shall be advised of
the provisions of this Section 13.05 and be bound by them. Each party shall be
deemed to have satisfied its obligation to hold confidential information
concerning or supplied by the other party if it exercises the same care as it
takes to preserve confidentiality for its own similar information.
ARTICLE XIV
INTEREST ON PAYMENTS
Section 14.01 Interest. Except as otherwise expressly provided in
this Agreement or an Ancillary Agreement, all payments by one party to the
other under this Agreement or any Ancillary Agreement shall be paid, by Company
check or wire transfer of immediately available funds to an account in the
United States designated by the recipient, within 30 days after receipt of an
invoice or other written request for payment setting forth the specific amount
due and a description of the basis therefor in reasonable detail. Any amount
remaining unpaid beyond its due date, including disputed amounts that are
ultimately determined to be payable, shall bear interest at a rate of simple
interest per annum equal to the Prime Rate plus 2%.
ARTICLE XV
MISCELLANEOUS
Section 15.01 Expenses. Except as specifically provided in this
Agreement or any Ancillary Agreement, all costs and expenses incurred in
connection with the preparation, execution, delivery and implementation of this
Agreement and the Ancillary Agreements and with the consummation of the
transactions contemplated by this Agreement (including transfer taxes and the
fees and expenses of the Distribution Agent and of all counsel, accountants and
financial and other advisors) shall be paid by Equifax. Without limiting the
foregoing, Equifax shall pay the legal, filing, accounting, printing and other
expenses in connection with the preparation, printing and filing of the Form
S-1.
Section 15.02 Notices. All notices and communications under this
Agreement shall be deemed to have been given (a) when received, if such notice
or communication is delivered by facsimile, hand delivery or overnight courier,
and, (b) three (3) business days after mailing if such notice or communication
is sent by United States registered or certified mail, return receipt
requested, first class postage prepaid. All notices and communications, to be
effective, must be properly addressed to the party to whom the same is directed
at its address as follows:
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If to Equifax, to:
Equifax Inc.
1600 Peachtree Street, N.W.
Atlanta, GA 30309
Attention: Bruce S. Richards
Corporate Vice President and General Counsel
Fax: (404) 885-8682
with a copy to:
Thomas F. Chapman
President and Chief Operating Officer
Equifax Inc.
1600 Peachtree Street, N.W.
Atlanta, GA 30309
Fax: (404) 885-8766.
If to ChoicePoint, to:
ChoicePoint Inc.
1000 Alderman Drive
Alpharetta, GA 30005
Attention: J. Michael de Janes, Esq.
Fax: (770) 752-5939
with a copy to:
Derek V. Smith
President and Chief Executive Officer
ChoicePoint Inc.
1000 Alderman Drive
Alpharetta, GA 30005
Fax: (770) 752-6243.
Either party may, by written notice delivered to the other party in accordance
with this Section 15.02, change the address to which delivery of any notice
shall thereafter be made.
Section 15.03 Amendment and Waiver. This Agreement may not be
altered or amended, nor may any rights hereunder be waived, except by an
instrument in writing executed by the party or parties to be charged with such
amendment or waiver. No waiver of any terms, provision or condition of or
failure to exercise or delay in exercising any rights or remedies under this
Agreement, in any one or more instances, shall be deemed to be, or construed
as, a further or continuing waiver of any such term, provision,
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<PAGE> 22
condition, right or remedy or as a waiver of any other term, provision or
condition of this Agreement.
Section 15.04 Entire Agreement. This Agreement, together with the
Ancillary Agreements, constitutes the entire understanding of the parties
hereto with respect to the subject matter hereof, superseding all negotiations,
prior discussions and prior agreements and understandings relating to such
subject matter. To the extent that the provisions of this Agreement are
inconsistent with the provisions of any Ancillary Agreement, the provisions of
such Ancillary Agreement shall prevail with respect to the subject matter
hereof.
Section 15.05 Parties in Interest. Neither of the parties hereto may
assign its rights or delegate any of its duties under this Agreement without
the prior written consent of each other party. This Agreement shall be binding
upon, and shall inure to the benefit of, the parties hereto and their
respective successors and permitted assigns. Nothing contained in this
Agreement, express or implied, is intended to confer any benefits, rights or
remedies upon any person or entity other than members of the Equifax Group and
the ChoicePoint Group and the Equifax Indemnitees and ChoicePoint Indemnitees
under Articles IV and V hereof.
Section 15.06 Further Assurances and Consents. In addition to the
actions specifically provided for elsewhere in this Agreement, each of the
parties hereto will use its reasonable efforts to (a) execute and deliver such
further instruments and documents and take such other actions as any other
party may reasonably request in order to effectuate the purposes of this
Agreement and to carry out the terms hereof and (b) take, or cause to be taken,
all actions, and do, or cause to be done, all things, reasonably necessary,
proper or advisable under applicable laws, regulations and agreements or
otherwise to consummate and make effective the transactions contemplated by
this Agreement, including, without limitation, using its reasonable efforts to
obtain any consents and approvals, make any filings and applications and remove
any liens, claims, equity or other encumbrance on an Asset of the other party
necessary or desirable in order to consummate the transactions contemplated by
this Agreement; provided that no party hereto shall be obligated to pay any
consideration therefor (except for filing fees and other similar charges) to
any third party from whom such consents, approvals and amendments are requested
or to take any action or omit to take any action if the taking of or the
omission to take such action would be unreasonably burdensome to the party or
its Group or the business thereof.
Section 15.07 Severability. The provisions of this Agreement are
severable and should any provision hereof be void, voidable or unenforceable
under any applicable law, such provision shall not affect or invalidate any
other provision of this Agreement, which shall continue to govern the relative
rights and duties of the parties as though such void, voidable or unenforceable
provision were not a part hereof.
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<PAGE> 23
Section 15.08 Governing Law. This Agreement shall be construed in
accordance with, and governed by, the laws of the State of Georgia, without
regard to the conflicts of law rules of such state.
Section 15.09 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original instrument, but
all of which together shall constitute but one and the same Agreement.
Section 15.10 Disputes.
(a) All disputes arising from or in connection with this
Agreement, whether based on contract, tort, statute or otherwise, including,
but not limited to, disputes in connection with claims by third parties
(collectively, "Disputes"), shall be resolved only in accordance with the
provisions of this Section 15.10; provided, however, that nothing contained
herein shall preclude either party from seeking or obtaining (i) injunctive
relief to prevent an actual or threatened breach of any of the provisions of
this Agreement, or (ii) equitable or other judicial relief to enforce the
provisions of this Section 15.10 hereof or to preserve the status quo pending
resolution of Disputes hereunder.
(b) Either party may give the other party written notice
of any Dispute not resolved in the normal course of business. Within 10 days
after delivery of the notice of a Dispute, the receiving party shall submit to
the other a written response. The notice and the response shall include a
statement of such party's position and a summary of arguments supporting that
position and the name and title of the executive who will represent that party
and of any other person who will accompany such executive in resolving the
Dispute. Within twenty (20) days after delivery of the first notice, the
executives of both parties shall meet at a mutually acceptable time and place,
and thereafter as often as they reasonably deem necessary, and shall negotiate
in good faith to attempt to resolve the Dispute. All reasonable requests for
information made by one party to the other will be honored.
(c) If the Dispute has not been resolved by negotiation
within sixty (60) days of the first party's notice, the Dispute shall be
submitted, upon application of either party, for resolution by binding
arbitration in accordance with the Commercial Arbitration Rules of the American
Arbitration Association (the "Rules"). Arbitration shall be by a single
arbitrator experienced in the matters that are at issue in the Dispute, which
arbitrator shall be selected by the parties in accordance with the Rules. The
arbitration shall be conducted in Atlanta, Georgia (or at any other place
agreed upon by the parties and the arbitrator). The decision of the arbitrator
shall be final and binding as to all matters at issue in the Dispute; provided,
however, if necessary such decision may be enforced by either party in any
court of law having jurisdiction over the parties or the subject matter of the
Dispute. Unless the arbitrator shall assess the costs and expenses of the
arbitration proceeding and of the parties differently, each party shall pay its
costs and
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<PAGE> 24
expenses incurred in connection with the arbitration proceeding, and the costs
and expenses of the arbitrator shall be shared equally by the parties.
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the day and year first above written.
EQUIFAX INC.
By:
----------------------------
CHOICEPOINT INC.
By:
----------------------------
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<PAGE> 1
EXHIBIT 10.04
DRAFT OF JUNE 27, 1997
EQUIFAX / CHOICEPOINT
EMPLOYEE BENEFITS AGREEMENT
<PAGE> 2
INDEX TO EMPLOYEE BENEFITS AGREEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 1: DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Other Definitions . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE 2: CHANGE IN OWNERSHIP . . . . . . . . . . . . . . . . . . . . . . . 4
2.1 Transfer of IIS Group Subsidiary Employees . . . . . . . . . . . . 4
2.2 Conditions of Employment . . . . . . . . . . . . . . . . . . . . . 4
2.3 Certain Payroll Deductions . . . . . . . . . . . . . . . . . . . . 4
ARTICLE 3: EMPLOYEE BENEFIT PLANS . . . . . . . . . . . . . . . . . . . . . . 5
3.1 Welfare Benefit Plans . . . . . . . . . . . . . . . . . . . . . . 5
3.2 Accrued Vacation Liability . . . . . . . . . . . . . . . . . . . . 7
3.3 Equifax Inc. U.S. Retirement Income Plan . . . . . . . . . . . . . 8
3.4 401(k) Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.5 Deferred Compensation Plans . . . . . . . . . . . . . . . . . . . 10
3.6 Stock Benefits Trust . . . . . . . . . . . . . . . . . . . . . . . 11
3.7 VEBA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.8 Stock Options and SARs; Restricted Stock . . . . . . . . . . . . . 12
3.9 Flexible Spending Accounts . . . . . . . . . . . . . . . . . . . . 13
3.10 Various Liabilities . . . . . . . . . . . . . . . . . . . . . . . 14
3.11 COBRA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.12 Performance Share Plan . . . . . . . . . . . . . . . . . . . . . . 14
3.13 Community Service Associate Program . . . . . . . . . . . . . . . 15
3.14 Certain Arrangements for Non-U.S. Operations . . . . . . . . . . . 15
3.15 Special Provisions Respecting CDB Infotek . . . . . . . . . . . . 15
ARTICLE 4: INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.1 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.2 Procedure for Indemnification . . . . . . . . . . . . . . . . . . 16
4.3 Employee Liability . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE 5: MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.1 Binding Agreement . . . . . . . . . . . . . . . . . . . . . . . . 17
5.2 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.4 No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.5 Entire Agreement; Amendment . . . . . . . . . . . . . . . . . . . 17
5.6 Sharing of Information . . . . . . . . . . . . . . . . . . . . . . 18
5.7 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.8 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.9 No Third Party Beneficiaries . . . . . . . . . . . . . . . . . . . 18
5.10 Legal Enforceability . . . . . . . . . . . . . . . . . . . . . . . 18
5.11 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.12 Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C>
ANNEX I LIST OF EMPLOYEES . . . . . . . . . . . . . . . . . . . . . . . . . 20
ANNEX II LIST OF EXHIBITS . . . . . . . . . . . . . . . . . . . . . . . . . 21
ANNEX III CANADIAN EMPLOYEES . . . . . . . . . . . . . . . . . . . . . . . . . 23
ANNEX IV INACTIVE EMPLOYEES . . . . . . . . . . . . . . . . . . . . . . . . . 24
</TABLE>
<PAGE> 4
EMPLOYEE BENEFITS AGREEMENT
THIS EMPLOYEE BENEFITS AGREEMENT ("Agreement") is made as of
June __, 1997. The parties ("Parties") to this Agreement are EQUIFAX INC., a
Georgia corporation ("Equifax"), and ChoicePoint Inc., a Georgia corporation
("ChoicePoint").
RECITALS
WHEREAS, pursuant to the terms of that certain Distribution
Agreement dated ____________, 1997 ("Distribution Agreement"), Equifax has
agreed to distribute to its shareholders the stock of ChoicePoint, to which it
has transferred the stock of those companies which constitute its insurance
services group, (the "Business") effective as of the Stock Distribution Date;
WHEREAS, ChoicePoint will employ directly certain persons who
were employed by Equifax or by direct or indirect Subsidiaries (as defined
herein) of Equifax, and the companies which will be owned by ChoicePoint will
employ or continue to employ certain persons who have participated in employee
benefit programs sponsored by Equifax;
WHEREAS, the Parties desire to set forth the terms and
conditions pursuant to which ChoicePoint shall provide employee benefits to
those employees of ChoicePoint and its subsidiaries who currently are employed
in connection with the Business, including the arrangements for transition in
the provision of said benefits from plans and programs sponsored by Equifax for
its own employees and those of its subsidiaries to plans sponsored directly by
ChoicePoint for its employees and those of its subsidiaries.
NOW, THEREFORE, in consideration of the foregoing and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Parties agree as follows:
<PAGE> 5
ARTICLE 1
DEFINITIONS
1.1 General. As used in this Agreement, capitalized
terms defined immediately after their use shall have the respective meanings
thereby provided, and the following terms shall have the following meanings
(such meanings to be equally applicable to both the singular and plural forms
of the terms defined):
Action: any demand, action or cause of action,
claim, suit, arbitration, inquiry, subpoena, discovery request, proceeding or
investigation by or before any court or grand jury, any governmental or other
regulatory or administrative agency or commission or any arbitration tribunal
related to, arising out of or resulting from any Employee Liability.
Affiliate: with respect to any specified person, a
person that, directly or indirectly, through one or more intermediaries,
controls, or is controlled by, or is under common control with, such specified
person; provided, that Equifax and ChoicePoint shall not be deemed to be
Affiliates of each other for purposes of this Agreement.
Code: the Internal Revenue Code of 1986, as it may
be amended or recodified from time to time.
Deferred Compensation Plans: the Equifax Inc.
Supplemental Executive Retirement Plan and the Equifax Inc. Deferred
Compensation Plan.
Controlled Group: two or more business entities
affiliated within the meaning of Code Sections 414(b), 414(c), 414(m) and/or
414(o).
Employee Benefit Plans: (i) any severance,
disability, cafeteria, bonus, stock option, stock appreciation, stock purchase,
deferred compensation, or similar types of plans, agreements, policies or
arrangements that currently are established, maintained or contributed to by
Equifax or a Subsidiary for the benefit of any former or present Employees or
their beneficiaries, dependents or spouses, and (ii) any employee welfare and
employee pension benefit plans (as such terms are defined in Section 3(1) and
3(2), respectively, of ERISA) which are applicable to former or present
Employees or their beneficiaries, dependents or spouses, and that currently are
established, maintained or contributed to by Equifax or any Subsidiary.
2
<PAGE> 6
Employer/Labor Law: any federal, state, local or
municipal law (including common law), statute, ordinance, regulation, order,
decree, judgment, decision, ruling, permit or authorization (each as may be in
effect, applicable and binding, from time to time) relating or applicable to
the work place or to the employer/employee relationship including, without
limitation, any of the foregoing relating or applicable to wage and hour
claims, collective bargaining and labor laws, ERISA-governed employee benefit
and welfare plans, federal, state and local tax withholding and payment rules
and regulations, workers'compensation and similar laws, accrued vacation
statutes, and sexual harassment and anti-discrimination laws.
Employee Liability: any and all debts, charges,
liabilities, warranties and obligations (of any nature or type whatsoever
regardless of when arising), whether accrued, contingent or reflected on a
balance sheet including, without limitation, liability for administrative,
civil or criminal penalties or forfeitures, and attorneys' fees or other costs
of defending an Action or a claim of Employee Liability under any
Employee/Labor Law.
Employees: the Equifax and the Subsidiary Employees.
ERISA: the Employee Retirement Income Security Act
of 1974, as amended.
Efx Employee: any employee of Equifax (including any
employee on authorized leave of absence, sick pay leave or short-term
disability), who during the six full calendar months following the Stock
Distribution Date, is requested by ChoicePoint (with the consent of Equifax) to
be transferred from Equifax to ChoicePoint. Each Efx Employee who is
transferred to ChoicePoint shall be identified in a separate letter from
Equifax to ChoicePoint.
IIS Group Subsidiary: Equifax Services Inc., Equifax
Government and Special Systems, Inc., Equifax Commercial Specialists Division,
Osborn Laboratories (Canada), Inc., PRC Corporation Inc., Osborn Laboratories,
Inc., The Kit Factory, Inc., ChoicePoint Ltd., Professional Test
Administrators, Inc., Mid-American Technologies, Inc., CDB Infotek, Intellisys,
Inc., Charles E. Simon & Company and Innovative Data Services, Inc.
IIS Group Employees: any employee of ChoicePoint or
an IIS Group Subsidiary (including any employee on authorized leave of absence,
sick pay leave, short-term disability or long-term disability), who is employed
as of June 30, 1997.
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<PAGE> 7
Stock Distribution Date: The date of the
distribution by Equifax to its shareholders of the Stock of ChoicePoint.
Subsidiary: any corporation at least seventy per
cent (70%) of the stock of which is owned directly or indirectly by Equifax.
1.2 Other Definitions. Capitalized terms not
specifically defined herein shall have the meanings ascribed thereto in the
Distribution Agreement.
ARTICLE 2
CHANGE IN OWNERSHIP
2.1 Transfer of IIS Group Subsidiary Employees. The
Parties acknowledge that Equifax shall transfer to ChoicePoint all of the
issued and outstanding capital stock of the IIS Group Subsidiaries. Such stock
transfers shall result in each IIS Group Subsidiary becoming (or remaining) a
wholly-owned subsidiary or division of ChoicePoint, and shall operate as a
transfer of all of the IIS Group Subsidiary Employees to ChoicePoint on a
consolidated or Controlled Group basis. In the case of CDB Infotek, said
ownership may be less than 100%.
2.2 Conditions of Employment. (a) Prior to the
Distribution Date ChoicePoint may make an offer of employment to certain
Employees who have been or will be identified to Equifax; (b) nothing in this
Agreement shall require either ChoicePoint or Equifax to employ any person who
declines employment with ChoicePoint; and (c) Section 2.1 shall not be
interpreted to prohibit or otherwise restrict ChoicePoint from terminating the
employment of any employee, or from changing the salary or wage range, grade
level or location of employment of any employee, in accordance with
ChoicePoint's personnel policies and procedures following June 30, 1997, or
from making an offer of employment to any Employee following the Distribution
Date. Without limiting the generality of Section 5.9 hereof, no Employee or
other person shall have any rights as a third party beneficiary under this
Agreement.
2.3 Certain Payroll Deductions. Effective as of June 30,
1997 (or, if later, as of the date of an Efx Employee's transfer to
ChoicePoint), to the extent (if any) required by applicable law and to the
extent disclosed by Equifax in accordance with this paragraph, ChoicePoint will
assume Equifax's obligation to comply with any garnishment order applicable to
such Efx Employee. Furthermore, if an Efx Employee who transfers to
ChoicePoint has any outstanding liability or obligation to Equifax (for
example, salary advances) which existed on June 30, 1997 (or, if later, as of
the date of such Efx Employee's transfer to ChoicePoint) which has resulted in
a special payroll deduction for such Efx Employee, then, to the extent
permitted under applicable law, ChoicePoint will withhold such amounts for
Equifax's benefit from the Efx Employee's compensation. Equifax will provide
the special payroll deduction information or garnishment information 30 days
prior to the date ChoicePoint assumes payroll processing responsibility for an
Efx Employee.
4
<PAGE> 8
to ChoicePoint has any outstanding liability or obligation to Equifax (for
example, salary advances) which existed on June 30, 1997 (or, if later, as of
the date of such Efx Employee's transfer to ChoicePoint) which has resulted in
a special payroll deduction for such Efx Employee, then, to the extent
permitted under applicable law, ChoicePoint will withhold such amounts for
Equifax's benefit from the Efx Employee's compensation. Equifax will provide
the special payroll deduction information or garnishment information 30 days
prior to the date ChoicePoint assumes payroll processing responsibility for an
Efx Employee.
ARTICLE 3
EMPLOYEE BENEFIT PLANS
3.1 Welfare Benefit Plans.
(a) On or before June 30, 1997 ChoicePoint shall
establish, effective as of such date, certain welfare benefit plans for
employees who are salaried employees, including the following: (i) a medical
and dental plan, (ii) flexible spending accounts (FSAs) covering health care
and dependent care, (iii) life and accident insurance plans, (iv) a sick leave
policy, (v) a vacation and holiday policy, and (vi) a Code Section 125
cafeteria plan. The terms and provisions of such plans including, without
limitation, coverage and co-pay requirements, shall be determined in the sole
discretion of ChoicePoint; provided, however, that ChoicePoint shall use its
best efforts to ensure that any medical plan it adopts shall contain no
limitation on coverage for preexisting conditions of employees, with respect to
those IIS Group Employees and Efx Employees who were on said date participants
in the corresponding Equifax plans and who had satisfied any pre-existing
condition limitation imposed by the Equifax plan in question. IIS Group
Employees and Efx Employees shall be credited in the ChoicePoint medical and
dental plans on and after June 30, 1997 for purposes of any deductibles or
out-of-pocket maximum provisions for amounts paid by such employees under the
Equifax medical/dental Employee Benefit Plans. Copies of said plans are
attached as Exhibit A hereto, although they (and any other ChoicePoint plans
attached as exhibits) may be revised or amended in ChoicePoint's discretion.
(b) ChoicePoint will also use its best efforts to provide
life insurance (without underwriting) to salaried IIS Group Employees and
salaried Efx Employees in the same policy amounts as existed for and had been
elected by them pursuant to the Equifax group universal life insurance plan as
of June 30,
5
<PAGE> 9
1997. A copy of the ChoicePoint group universal life insurance plan is
attached as Exhibit B hereto.
(c) ChoicePoint will provide salaried IIS Group Employees
and salaried Efx Employees with credit for service with Equifax or any
Affiliate for purposes of meeting the eligibility period under ChoicePoint's
group short-term disability plan. A copy of the ChoicePoint short-term
disability plan is attached as Exhibit C hereto.
(d) Equifax will arrange for the distribution to
ChoicePoint of a portion of the premium deposit account held by the carrier for
the Equifax group long-term disability insurance; said portion will be that
percentage of said account which is the same as the premiums for said insurance
under the Equifax plan during the immediate past calendar quarter paid by
ChoicePoint and the IIS Group Subsidiaries divided by the entire premiums paid
under said plan during said quarter. A copy of the ChoicePoint long-term
disability plan is attached as Exhibit D hereto.
(e) Any IIS Group Employee who is receiving benefits
under the Equifax Inc. Short-Term Disability Plan ("Equifax STDP") at June 30,
1997 and any Efx Employee who is receiving benefits under such plan at the date
of his or her transfer to ChoicePoint will continue to receive benefits under
the ChoicePoint Inc. Short-Term Disability Plan under the material provisions
contained in the Equifax STDP in effect on June 30, 1997 (as those provisions
are interpreted by ChoicePoint) in its role as a fiduciary of said plan until
they are no longer deemed to be disabled under said provisions or until said
benefits end according to the terms of said Equifax STDP. ChoicePoint will be
responsible for the administration of claims relating to IIS Group Employees
who are disabled employees, under the ChoicePoint Inc. Short-Term Disability
Plan.
(f) Any IIS Group Employee who was receiving long-term
disability benefits under the Equifax group long-term disability plan, or who
was disabled as of June 30, 1997 but had not yet satisfied the qualification
period for said plan, will become the liability of the ChoicePoint long-term
disability benefit plan as of July 1, 1997, for the duration of said
disability, according to the terms of and as limited by said plan. ChoicePoint
will be credited by the long-term disability carrier (UNUM) with both the
claims experience and premium history of IIS Group Employees as of June 30,
1997, under the Equifax long-term disability plan.
(g) ChoicePoint will be responsible for the provision of
post-retirement medical and death benefits with respect to events occurring or
claims incurred after June 30, 1997 for any
6
<PAGE> 10
IIS Group Employees, or former employees of an IIS Group Subsidiary, who had
qualified for said benefits as of June 30, 1997.
(h) ChoicePoint will be responsible for any
post-employment medical coverage with respect to claims incurred after June 30,
1997, for disabled IIS Group Employees or disabled former employees of an IIS
Group Subsidiary who had qualified for said benefits as of June 30, 1997.
(i) Equifax agrees to provide to ChoicePoint the data
described on Annex III on each COBRA participant, retiree, disabled employee or
other inactive employee who is a former employee (or dependent) of an IIS Group
Subsidiary and who participated in any Employee Benefit Plan prior to June 30,
1997. For purposes of this Agreement a "COBRA participant" is an employee or
former employee who has elected continuation coverage under a group health plan
pursuant to Code Section 4980B and Part 6 of Title I of ERISA. The parties
acknowledge that this information does not exist in complete electronic file
format; Equifax will use its best efforts to provide such information from
available sources.
(j) In the event that Equifax receives any premium
payments for health and/or welfare benefits from IIS Group Employees or former
employee of an IIS Group Subsidiary who is participating in ChoicePoint's
respective benefit plans covering any period of coverage subsequent to June 30,
1997, Equifax will forward said amount to ChoicePoint within two (2) weeks of
said receipt.
(k) Equifax will provide ChoicePoint with a copy of
existing data base containing historical claim data with respect to IIS Group
Employees or former employee of an IIS Group Subsidiary who is participating in
ChoicePoint's respective benefit plans and their dependents as to the medical
and dental benefits provided pursuant to Equifax-sponsored plans as of June 30,
1997, and will provide copies of future such information as received from the
plans' recordkeeper.
(l) Equifax will provide ChoicePoint with copies of the
historical eligibility files for IIS Group Employees or former employee of an
IIS Group Subsidiary who is participating in ChoicePoint's respective benefit
plans under the Equifax medical and welfare benefits plan, including HMO's,
dental, vision and long-term disability benefits.
3.2 Accrued Vacation Liability. ChoicePoint shall credit
all IIS Group Employees and Efx Employees for any accrued vacation and sick
leave earned but not taken by such employees,
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<PAGE> 11
while they were Employees, in the current year through June 30, 1997 or, if
later, through the date of such Employee's transfer to ChoicePoint. Any such
accrued vacation and sick leave shall be credited in accordance with the paid
vacation policy and sick leave policy adopted by ChoicePoint in accordance with
Section 3.1 above; provided, however, that ChoicePoint shall be solely
responsible for payment of, and shall indemnify, defend, reimburse and hold
Equifax and its Affiliates harmless from and against, any accrued vacation or
sick leave payoff liability to any IIS Group Employee or Efx Employee incurred
by or imposed upon Equifax under its current vacation policy or sick leave
policy or under any applicable state or local law or statute. Notwithstanding
the foregoing, nothing in this provision shall be deemed to abrogate the
provisions of the Tax Sharing and Indemnification Agreement entered into
between Equifax and ChoicePoint, and in the event of a conflict between said
agreements, the Tax Sharing and Indemnification Agreement shall control.
3.3 Equifax Inc. U.S. Retirement Income Plan.
IIS Group Employees who, as of the Stock Distribution
Date and Efx Employees who as of the date of their transfer to ChoicePoint, are
participants in the Equifax Inc. U.S. Retirement Income Plan shall be deemed
for all purposes terminated participants thereunder, shall be fully vested in
their benefits accrued thereunder, and shall receive a distribution of their
vested accrued benefits pursuant to the terms of such plan. Distributions
shall be made in accordance with the applicable provisions of Internal Revenue
Service G.C.M. 39824, with the intention that benefits be paid as soon as
practicable after the Stock Distribution Date to persons for whom the
equivalent lump sum amount is $3500 or less, and as soon as practicable upon
request in accordance with the terms of the plan to persons who have satisfied
the requirements for early retirement, or automatically to those who have
satisfied the requirements for normal retirement thereunder. Equifax will
provide said persons with necessary explanations, calculations and forms
pertaining to any relevant elections thereunder. Equifax will amend said plan
to confirm the vesting and distribution provisions of this section in
accordance with the amendment attached hereto as Exhibit G.
3.4 401(k) Plan.
(a) ChoicePoint shall establish, prior to June 30, 1997,
a defined contribution plan and trust intended to be qualified under Sections
401(a) and 501(a) of the Code and which allows for employee salary deferrals as
provided in Section 401(k) of the Code (the "ChoicePoint 401(k) Plan"), which
is
8
<PAGE> 12
intended to be a "spinoff" plan from the Equifax Inc. 401(k) Retirement and
Savings Plan. Said plan will provide credit for services rendered to any
member of the Equifax controlled group of businesses (within the meaning of
Code Section 414(b) and (c)) prior to June 30, 1997, for purposes of any
eligibility requirements. A copy of the ChoicePoint 401(k) Plan and its
accompanying trust agreement is attached as Exhibit E hereto.
(b) As soon as practicable after the establishment of the
ChoicePoint 401(k) Plan as provided in Section 3.4(a) above, but no later than
June 30, 1997, or such later date as is agreed to by Equifax and ChoicePoint,
the vested account balances of all IIS Group Employees/participants in the
Equifax Inc. 401(k) Retirement and Savings Plan (the "Equifax 401(k) Plan")
shall be transferred to the ChoicePoint 401(k) Plan pursuant to a
trustee-to-trustee transfer in accordance with applicable rules and regulations
under ERISA and the Code, including Code Section 414(l). Until said transfer,
IIS Group Employee/participants shall continue to be able to exercise customary
investment discretion over their accounts in the Equifax 401(k) Plan. A "black
out" period will be imposed on the respective plans in accordance with
requirements of the Trustees of both the Equifax 401(k) Plan and the
ChoicePoint 401(k) Plan, for purposes of account reconciliation related to the
division of the Equifax 401(k) Plan. Equifax shall cause the trustee of the
Equifax 401(k) Plan to take such steps (such as establishing the cost basis of
shares) as may be necessary or helpful in effecting the trustee-to-trustee
transfer. The amount of the assets transferred shall be equal to the aggregate
of the account balances of all IIS Group Employees/participants. In addition,
and as part of such trustee-to- trustee transfer, Equifax shall cause the
unallocated company contribution account held in the Equifax 401(k) Plan to be
bifurcated, and a portion transferred to the trustee of the ChoicePoint 401(k)
Plan. Said account shall be allocated between the ChoicePoint 401(k) Plan and
the Equifax 401(k) Plan based on the relative participant contributions (for
participants who are Equifax Employees compared with those who are IIS Group
Employees) actually transferred by Equifax and the members of its Controlled
Group to the Equifax 401(k) Plan for the portion of the 1997 plan year ending
on June 30, 1997 and eligible for a match under the Equifax 401(k) Plan. All
assets transferred hereunder shall be in the form of ChoicePoint stock, cash or
such other assets as ChoicePoint may specify and the trustees of both the
Equifax 401(k) Plan and the ChoicePoint 401(k) Plan consent.
(c) ChoicePoint will, prior to the end of its remedial
amendment period for the ChoicePoint 401(k) Plan, apply for an IRS
determination letter stating that the ChoicePoint 401(k) Plan satisfies the
requirements of qualification under Code Section
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401(a) since its inception, and will take all actions necessary to obtain such
determination letter.
(d) Equifax and ChoicePoint will each provide for a stock
fund, initially invested primarily in the common stock of the other company, in
their respective 401(k) plans as of the Stock Distribution Date. The stock in
said fund will be liquidated, and the proceeds reinvested according to the
agreement of the parties and the trustee(s) of said plans, which agreement
shall be in writing. In the absence of any such agreement, however, such
liquidation may not commence until the second anniversary of the Distribution
Date and shall extend over a period of at least six (6) months. Each party
agrees to cooperate with the other when either party decides to liquidate the
investment fund that is invested in the common stock of the other party. To
the extent permissible under applicable law (including the Code and ERISA),
each party agrees to provide the other party the right of first refusal to
purchase its own stock from the selling plan, at fair market value in
accordance with the provisions of ERISA. Each party also agrees to give the
other party 3 months' advance notice of such decision to liquidate. At a
minimum, the participants in each such 401(k) plan will be permitted to retain
their investments in the other company's common stock fund and may elect to
transfer their investment out of such stock fund; this provision shall neither
require nor prohibit either plan allowing new investments in such common stock
fund.
(e) In order to ameliorate the effect of the elimination
of possible future benefit accruals under the Equifax Inc. U.S. Retirement
Income Plan for IIS Group Employees and Efx Employees who were participants in
said plan as of June 30, 1997, ChoicePoint will, prior to December 31, 1997,
create an age-weighted or similarly designed defined contribution pension
program, either as part of the ChoicePoint 401(k) Plan or as a separate plan
(either of which is referred to as the "Replacement Plan") pursuant to which
accounts for those IIS Group Employees and Efx Employees who were participants
in the Equifax Inc. U.S. Retirement Income Plan at the Stock Distribution Date
shall be established to receive additional contributions from ChoicePoint for
said purpose, and not in excess of those permitted by applicable laws. To
facilitate the funding of the Replacement Plan and in recognition of the
reduction of future pension liabilities to IIS Group Employees and Efx
Employees, Equifax will transfer to ChoicePoint on the day prior to the Stock
Distribution Date the amount of Thirteen Million Dollars.
3.5 Deferred Compensation Plans. Effective as of the
Stock Distribution Date or, if later, the date of the applicable Employee's
transfer to ChoicePoint, ChoicePoint will assume all
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liabilities of Equifax under the Deferred Compensation Plans with respect to
IIS Group Employees and members of the Board of Directors of ChoicePoint and
who consent in writing to the substitution of ChoicePoint for Equifax as the
employer under such plans; to the extent applicable, said liability shall be
calculated by applying the actuarial equivalence factors set forth on Schedule
C to the Equifax Inc. Supplemental Executive Retirement Plan for the purposes
of determining the actuarial equivalent lump sum representing any accrued
benefits for said Employees under said plan. ChoicePoint may, in its sole
discretion, establish ongoing deferred compensation plans in forms similar to
or different from any one or more of the Deferred Compensation Plans and may
combine its obligations under this Section with its obligations under such
newly established plans, if any; provided, however, that, to the extent
ChoicePoint assumes a liability hereunder, ChoicePoint shall be solely
responsible for payment of, and shall indemnify, defend, reimburse and hold
Equifax and its Affiliates harmless from and against, any such liability under
the Deferred Compensation Plans to any Employee who becomes an IIS Group
Employee and who has consented in writing to the substitution of ChoicePoint
for Equifax as the employer under the Deferred Compensation Plans. ChoicePoint
will establish a rabbi trust for the purpose of "funding" this obligation. A
copy of ChoicePoint's deferred compensation plan and rabbi trust is attached
hereto as Exhibit H. Equifax will amend its rabbi trust to require the trustee
to waive its rights to the distribution of ChoicePoint common stock otherwise
payable with respect to the Equifax common stock held in said trust. A copy of
said amendment and the required corporate resolution is attached hereto as
Exhibit I.
3.6 Stock Benefits Trust. Equifax will amend the Equifax
Inc. Stock Benefits Trust to require the trustee to waive its rights to the
distribution of ChoicePoint common stock otherwise payable with respect to the
Equifax common stock held in said trust. A copy of said amendment and the
required corporate resolution is attached hereto as Exhibit J. ChoicePoint
will establish its own stock benefits trust. A copy of the ChoicePoint stock
benefits trust is attached as Exhibit K hereto.
3.7 VEBA. Equifax will cause the trustee of its
Voluntary Employees Beneficiary Association ("VEBA") to transfer to the trustee
of a Code Section 501(c)(9) trust to be established by ChoicePoint a pro rata
portion of the reserve maintained for retiree death benefit payments based upon
the pro rata liability for Equifax's post-retirement life insurance liability.
With regard to the outstanding liabilities associated with any claims filed
subsequent to June 30, 1997 for eligible services incurred prior to June 30,
1997 by Participants in the
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Equifax Major Medical Plan (including medical, dental, and vision coverages)
will be the responsibility of said Plan and the VEBA. The VEBA contains
reserves for incurred but not reported claims and for claims filed but not
paid, and is funded on a current basis; therefore the transaction contemplated
by the Distribution Agreement will not require an allocation of such reserves.
Claims incurred by IIS Group Employees prior to June 30, 1997 will be
administered and paid by ChoicePoint and Equifax shall reimburse ChoicePoint
for such payments, no later than 2 weeks after delivery of detailed supporting
documentation of such payments in the form indicated in Exhibit O. A copy of
ChoicePoint's Code Section 501(c)(9) trust is attached as Exhibit L hereto.
3.8 Stock Options and SARs; Restricted Stock.
a. (i) All options held by IIS Group Employees issued
under the Equifax Inc. Omnibus Stock Incentive Plan, the 1993 Employee Stock
Incentive Plan and the 1995 Employee Stock Incentive Plan (the "Equifax Option
Plans"), to the extent vested, will remain exercisable according to their terms
(as adjusted in accordance with sub- paragraph (ii) below) notwithstanding the
stock distribution; said options, to the extent not vested and therefore not
exercisable on the Stock Distribution Date, will be cancelled on the Stock
Distribution Date. A copy of ChoicePoint's stock option plan (the "ChoicePoint
Omnibus Plan") is attached as Exhibit M hereto. Those cancelled options will be
replaced by ChoicePoint under its ChoicePoint Omnibus Plan. Such options shall
retain the same aggregate intrinsic value as described below:
The ChoicePoint Omnibus Plan shall provide for the replacement of all
cancelled options as of the Stock Distribution Date with options for
ChoicePoint stock ("Replacement Options") on the same material terms and
conditions as the Equifax Option Plans, except with respect to the adjustment
for number of shares and price referred to below:
A. The number of Replacement Options for each affected IIS Group
Employee will be determined by dividing the number of
unexercised Equifax Inc. options on the Stock Distribution
Date by the ratio calculated as the Fair Market Value of each
share of ChoicePoint stock divided by the Fair Market Value of
Equifax stock prior to the Stock Distribution Date.
B. The Replacement Options exercise price shall be calculated by
multiplying the exercise
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price of the Equifax Inc. option prior to the Stock Distribution Date by the
ratio of Fair Market Value of ChoicePoint stock divided by the Fair Market
Value of Equifax stock prior to the Stock Distribution Date.
(ii) All options held by the Employees of Equifax Inc., and all vested
options held by IIS Group Employees issued under the Equifax Option Plans shall
be adjusted ("Adjusted Options") to retain the same aggregate intrinsic value
as described below:
A. The number of Adjusted Options for each affected employee will
be determined by dividing the number of unexercised Equifax
options on the Stock Distribution Date by the ratio calculated
as the Fair Market Value of each share of Equifax Inc. stock
after the Stock Distribution Date divided by the Fair Market
Value of Equifax Inc. stock prior to the Stock Distribution
Date.
B. The Adjusted Option exercise price shall be determined by
multiplying the exercise price of the Equifax Inc. option,
prior to the Stock Distribution Date, by the ratio of Fair
Market Value of Equifax Inc. stock after the Stock
Distribution Date divided by the Fair Market Value of Equifax
Inc. stock prior to the Stock Distribution Date.
For purposes of this section, in the case of the ChoicePoint stock,
Fair Market Value is the low sale price of the ChoicePoint stock on
the first regular trading day after the Stock Distribution Date. In
the case of the Equifax Inc. stock, (i) Fair Market Value prior to the
Stock Distribution Date is the closing price of Equifax Inc. stock on
the Stock Distribution Date, and (ii) Fair Market Value after the
Stock Distribution Date is the low sale price of Equifax Inc. stock on
the day after the Stock Distribution Date.
(iii) Notwithstanding the foregoing provisions of subparagraphs (i)
and (ii), any options which are vested as of the Stock Distribution Date and
which are held by those senior executives of ChoicePoint who are identified on
Exhibit N hereto will not become Adjusted Options as described in (ii) above,
but will be cancelled and replaced with ChoicePoint Options as described in (i)
above to the extent that said senior executive so elects. Any such election
may apply to all or any portion of said vested options, and shall be delivered
in writing to the
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Corporate Secretary of Equifax, Inc. no later than the Stock Distribution Date.
b. Any restricted stock of Equifax Inc. held by IIS
Group Employees shall be handled by agreement between the parties.
3.9 Flexible Spending Accounts. Effective as of June 30,
1997 (or such later date as agreed to by Equifax and ChoicePoint), ChoicePoint
shall establish three plans substantially in the same form as the following
three plans currently maintained by Equifax: The Equifax Inc. Dependent Care
Flexible Spending Account Plan, The Equifax Inc. Health Care Flexible Spending
Account Plan, and The Equifax Inc. Flexible Benefits Plan (see Exhibit A
hereto). As soon as practicable following June 30, 1997 (or such later date as
agreed to by Equifax and ChoicePoint), an amount of cash equal to the existing
spending account balances for IIS Group Employees and Efx Employees will be
transferred from the Equifax plans to the ChoicePoint plans. For purposes of
the preceding sentence, negative balances in accounts under the Health Care
Flexible Spending Account Plan shall be taken into account as negative numbers
(and accordingly shall reduce the amount of cash to be transferred) when
determining the amount of cash to be transferred.
3.10 Various Liabilities. Equifax acknowledges that the
transaction contemplated by the Distribution Agreement will not result in
Equifax being liable for any severance pay to an Employee.
3.11 COBRA. Equifax shall be responsible for complying
with the requirement of Code Section 4980B and Part 6 of Title I of ERISA with
respect to any Employee in its group health plan and their "qualified
beneficiaries" whose "qualifying event" (as such terms are defined in Code
Section 4980B) occurs on or prior to June 30, 1997 or, if later, through the
date of such Employee's transfer to ChoicePoint. ChoicePoint shall be
responsible for complying with the requirements of Code Section 4980B and Part
6 Title I of ERISA with respect to any IIS Group Employee and his or her
"qualified beneficiaries" whose "qualifying event" (as such terms are defined
in Code Section 4980B) occurs after June 30, 1997 (or, if later, after the date
of such Employee's transfer to ChoicePoint). ChoicePoint shall be responsible
for providing COBRA coverage with respect to former employees of ChoicePoint
Inc. or an IIS Group Subsidiary and to their qualified beneficiaries,
subsequent to June 30, 1997.
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3.12 Performance Share Plan. Equifax will take the
actions required, including any necessary plan amendment, to provide that all
IIS Group Employees or Efx Employees who are participants in Plan 15
(1995-1997) of the Equifax Inc. Performance Share Plan on the Stock
Distribution Date shall be treated as if they had remained employed by Equifax
Inc. pursuant to the provisions of said plan for the entire period. The effect
of this treatment shall be that each such employee will receive 100% of the
payment he or she would have been ultimately entitled to receive under "Plan
15" of said plan at the expiration of the performance period of the outstanding
grants. Said payment shall be made in cash, and not in shares of Equifax Inc.
stock, at the conclusion of the relevant performance period. Any other
outstanding grants shall be cancelled. The Equifax Compensation Committee
shall also revise the performance goals for the plan, for awards previously
granted but not yet earned, to reflect the spinoff of a substantial portion of
the company and a consequent change in certain anticipated measuring
techniques. The Equifax Inc. Management Compensation Committee has adopted
resolutions in order to effect this treatment under the Equifax, Inc.
Performance Share Plan.
3.13 Community Service Associate Program. Any employee of
ChoicePoint or an IIS Group Subsidiary who is a participant in the Equifax Inc.
Community Service Associate Program shall be transferred to the employment of
Equifax or a Subsidiary (which is not an IIS Group Subsidiary) on or before the
Stock Distribution Date, and shall continue to participate in said program
according to its terms.
3.14 Certain Arrangements for Non-U.S. Operations.
a. United Kingdom.
Those persons who become employees of ChoicePoint
Ltd. on or after the Stock Distribution Date shall be eligible to participate
in the Equifax Europe, UK Ltd. Money Purchase Pension Plan through December 31,
1997. ChoicePoint Ltd. shall fund the cost of said participation, which shall
include the actual contributions to said plan as well as an agreed-upon
reimbursement for administrative services incurred by Equifax Europe, UK Ltd.
as a consequence of this accommodation.
b. Canada.
For a period of up to 18 months from the Stock
Distribution Date, Equifax Canada will provide to ChoicePoint the services of
those employees identified on Annex III hereto, and ChoicePoint will reimburse
Equifax Canada for the compensation, including the cost of benefits provided
under Equifax Canada's
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current employee benefit plans. The parties will undertake in good faith to
enter into an employee leasing agreement, with respect to said employees, with
mutually agreeable terms.
3.15 Special Provisions Respecting CDB Infotek
The definition of Subsidiary includes entities, at least 70%
of which are owned by a parent company, for the purposes of including CDB
Infotek ("CDB") as a Subsidiary. CDB is a Subsidiary of Equifax Inc., directly
or indirectly, and is an IIS Group Subsidiary. The parties acknowledge,
however, that CDB has not adopted, and the employees of CDB do not participate
in any Employee Benefit Plans, nor will CDB adopt any such plans maintained by
ChoicePoint immediately after the Stock Distribution Date. However, CDB is
expected to adopt the ChoicePoint employee benefit plans as of January 1, 1998,
or at a time subsequent thereto in ChoicePoint's discretion. Consequently, the
provisions of this Agreement with respect to Subsidiaries, IIS Group
Subsidiaries and employees of same shall be read in said context, with the
intention, for example, that the transfer of any Efx Employees from Equifax to
CDB pursuant to this Agreement would result in the transition of benefits as
described herein, to the extent practical given the employee benefit plans
maintained by CDB at the time.
ARTICLE 4
INDEMNIFICATION
4.1 Indemnification. In addition to the indemnity
obligations set forth in Sections 3.2 and 3.5 hereof, ChoicePoint agrees to
indemnify, defend, reimburse and hold harmless Equifax and its Affiliates, and
the officers, directors, employees, agents and representatives of Equifax and
its Affiliates (each, an "Indemnified Party"), from and against any and all
Actions, assessments, losses, damages, liabilities, costs and reasonable
expenses including, without limitation, interest penalties, fines, excise taxes
and reasonable attorneys' fees and expenses, asserted against or imposed upon
or incurred by any Indemnified Party which result from, arise out of or are
related to any failure by ChoicePoint to comply with the terms of this Employee
Benefits Agreement.
Equifax agrees to indemnify, defend reimburse and hold
harmless ChoicePoint and its Affiliates, and the officers, directors,
employees, agents and representatives of said companies (each, an "Indemnified
Party"), from and against any and all Actions, assessments, losses, damages,
liabilities, costs and reasonable expenses including, without limitation,
interest
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penalties, fines, excise taxes and reasonable attorneys' fees and expenses,
asserted against or imposed upon or incurred by any Indemnified Party which
result from, arise out of or are related to any failure on the part of Equifax
to comply with the terms of this Employee Benefits Agreement.
4.2 Procedure for Indemnification. In the event any
action, suit or proceeding is brought against an Indemnified Party pursuant to
this Article 4 or Sections 3.2 and 3.5 hereof, the Parties shall comply with
and be subject to the indemnifi-cation procedures set forth in the Distribution
Agreement.
4.3 Employee Liability. Except as specified herein,
ChoicePoint shall not assume Employee Liability of Equifax.
ARTICLE 5
MISCELLANEOUS
5.1 Binding Agreement. This Agreement is binding upon
and is for the benefit of the Parties hereto and their respective successors
and permitted assigns.
5.2 Assignment. No Party to this Agreement shall convey,
assign or otherwise transfer any of its rights or obligations under this
Agreement without the express written consent of the other Party hereto in its
sole and absolute discretion. No assignment of this Agreement shall relieve
the assigning Party of its obligations hereunder.
5.3 Notices. All notices or other communications
required or permitted to be given hereunder shall be made pursuant to the
notice provisions set forth in the Distribution Agreement.
5.4 No Waiver. No delay on the part of any Party hereto
in exercising any right, power or privilege hereunder shall operate as a
waiver, nor shall any waiver on the part of any Party of any right, power or
privilege operate as a waiver of any other right, power or privilege hereunder,
nor shall any single or partial exercise of any right, power or privilege
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege hereunder. The rights and remedies herein provided
are cumulative and are not exclusive of any rights or remedies which the
Parties hereto may otherwise have at law or in equity.
5.5 Entire Agreement; Amendment. This Agreement, and the
agreements and other documents referred to herein, shall
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<PAGE> 21
constitute the entire agreement between the Parties with respect to the subject
matter hereof and shall supersede all prior agreements, understandings,
statements or representations, oral or in writing, of the Parties relating
thereto. This Agreement may be modified or amended only by written agreement
of the Parties. In addition to the foregoing, on and after the Stock
Distribution Date, any amendment to this Agreement must, in the case of
ChoicePoint, be approved by one of its elected officers and in the case of
Equifax, be approved by one of its elected officers. The employee benefit
plans and policies which are attached as Exhibits to this Agreement may be
amended by their sponsoring companies in any manner which they, in good faith,
determine to be necessary or desirable.
5.6 Sharing of Information. Equifax and ChoicePoint
recognize that each of them will require certain information and data regarding
employees of the other company or its subsidiaries. Each agrees to provide the
information requested by the other in good faith, and on a reasonably prompt
basis. The requesting party shall be required to pay a reasonable amount for
administrative expenses incurred by the supplying party in preparing the
requested information. Such information will include but not be limited to
that which is required for testing benefit plans for coverage, maximum benefit
and contribution limitations, annual reports, and year-end or other periodic
valuations. Such information shall be subject to the confidentiality
provisions under section 15.05 of the Distribution Agreement.
5.7 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute a single instrument.
5.8 Governing Law. This Agreement shall be governed by
and construed and enforced in accordance with the laws of the State of Georgia
(regardless of the laws that might otherwise govern under applicable principles
of conflicts of laws) as to all matters including, without limitation, matters
of validity, construction, effect, performance and remedies.
5.9 No Third Party Beneficiaries. This Agreement is
solely for the benefit of the Parties hereto and is not intended to confer upon
any other person any rights or remedies hereunder.
5.10 Legal Enforceability. Any provision of this
Agreement which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof. Any
such
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prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
5.11 Interpretation. The Article and Section headings
contained in this Agreement are solely for the purpose of reference, are not
part of the agreement of the Parties and shall not in any way affect the
meaning or interpretation of this Agreement. The parties have made a good
faith effort in this Agreement to provide for these issues involving employee
benefits in the transaction which can be reasonably foreseen. The parties
acknowledge that other such issues may arise, and they agree to work in good
faith to resolve any differences in light of the general philosophy that all
matters involving Equifax benefit plans are the responsibility of Equifax
except that ChoicePoint intends to be responsible, on an ongoing basis, for the
administration and expense of those benefits which ChoicePoint has determined
to continue for the IIS Group Employees after June 30, 1997.
5.12 Resolution. Any disputes between the parties based
upon, related to, or arising in connection with this Agreement shall be
resolved in accordance with the dispute resolution procedure set forth in
section 17.10 of the Distribution Agreement.
IN WITNESS WHEREOF, the Parties hereto have caused this
Agreement to be executed and delivered as of the day and year first above
written.
Equifax Inc.
By:
----------------------------------
Its: Corporate Vice President -
Human Resources and Administration
ChoicePoint Inc.
By:
----------------------------------
Its: Chief Financial Officer
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<PAGE> 1
EXHIBIT 10.05
TRANSITION SUPPORT AGREEMENT
THIS AGREEMENT for the performance of corporate services is executed
and made effective as of July 31, 1997, between Equifax Inc., a Georgia
corporation ("Equifax"), and ChoicePoint Inc. , a Georgia corporation
("ChoicePoint").
WHEREAS, Equifax, through the operation of its Insurance Services
Group, is engaged in the business of providing information for insurance
underwriting purposes;
WHEREAS, the Board of Directors of Equifax has determined that it
would be advisable and in the best interests of Equifax and its shareholders
for Equifax to contribute its insurance services businesses, operations, assets
and liabilities (collectively, the "Business") to ChoicePoint in exchange for
ChoicePoint common stock and to thereafter distribute all of the outstanding
shares of ChoicePoint's common stock on a pro rata basis to the holders of
Equifax's common stock (the "Distribution") pursuant to a Distribution
Agreement, dated as of the date hereof, between Equifax and ChoicePoint (the
"Distribution Agreement");
WHEREAS, the parties intend that the transactions described herein
will be effective at the Effective Time (as defined in the Distribution
Agreement); and
WHEREAS, the parties hereto deem it to be appropriate and in the best
interests of the parties that they provide certain services to each other on
the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual promises contained
herein and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
1. Description of Services.
(a) Equifax shall, subject to the terms and provisions of
this Agreement: (i) provide ChoicePoint with general services of a financial,
technical, commercial, administrative and/or advisory nature, with respect to
the Business, as set forth on Exhibits A through H hereto and (ii) render such
other specific services as ChoicePoint may from time to time reasonably
request, subject to Equifax's sole discretion and its being in a position to
supply such additional services at the time of such request.
(b) ChoicePoint shall, subject to the terms and
provisions of this Agreement: (i) provide Equifax with services as set forth
on Exhibit I hereto and (ii) render such other services as Equifax may from
time to time reasonably request, subject to ChoicePoint's sole discretion and
its being in a position to supply such additional services at the time of the
request.
<PAGE> 2
Each of Equifax and ChoicePoint, as the case may be, shall use
commercially reasonable efforts to transition from using the services provided
by the other under this Agreement on or prior to the termination of the
original term for the provision of such services.
2. Consideration for Services. ChoicePoint shall pay Equifax for
all the services described on Exhibits A through H and Equifax shall pay
ChoicePoint for all the services described on Exhibit I at the rates specified
on each such exhibit.
3. Terms of Payment. Within fifteen (15) business days after the
end of each month during the term of this Agreement, Equifax will submit a
written invoice to ChoicePoint and ChoicePoint will submit a written invoice to
Equifax for service fees for the immediately preceding month together with an
accounting of the charges for the immediately preceding month's services.
Within five (5) business days after the receipt of such invoices, Equifax and
ChoicePoint, as the case may be, will remit payment of the full amount of such
invoices to the other in the manner provided below. Interest shall accrue at a
rate of 8% per annum on any amounts not received by the party providing the
service hereunder within five (5) business days after receipt by the other of
the invoice. The amount of any monthly service fee shall be prorated to
correspond with the portion of a given month for which services were actually
rendered.
4. Method of Payment. All amounts payable by ChoicePoint and
Equifax for the services rendered by the other pursuant to their Agreement
shall be remitted to Equifax or ChoicePoint, as the case may be, in United
States dollars in the form of a wire transfer.
5. WARRANTIES. THIS IS A SERVICE AGREEMENT. EXCEPT AS EXPRESSLY
STATED IN THIS AGREEMENT, THERE ARE NO EXPRESS WARRANTIES OR GUARANTIES,
INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY, TITLE
AND FITNESS FOR A PARTICULAR PURPOSE.
6. Liability; Indemnification; Dispute Resolution.
(a) In no event shall either Equifax or ChoicePoint have
any liability, whether based on contract, tort (including, without limitation,
negligence), warranty or any other legal or equitable grounds, for any
punitive, consequential, special, indirect or incidental loss or damage
suffered by the other arising from or related to this Agreement, including
without limitation, loss of data, profits, interest or revenue, or interruption
of business, even if the party providing the services hereunder is advised of
the possibility of such losses or damages.
(b) The limitations set forth in Section 6(a) above shall
not apply to liabilities which may arise as the result of willful misconduct or
gross negligence of the party providing the services hereunder.
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<PAGE> 3
(c) Effective as of the date of this Agreement,
ChoicePoint shall indemnify, defend and hold harmless Equifax and its
affiliates and their respective directors, officers, employees and agents (the
"Equifax Indemnitees") from and against any and all damage, loss, liability and
expense (including, without limitation, reasonable expenses of investigation
and reasonable attorneys' fees and expenses in connection with any and all
actions or threatened actions) ("Indemnifiable Losses") incurred or suffered by
any of the Equifax Indemnitees arising from, related to or associated with (i)
Equifax's furnishing or failure to furnish the services provided for in this
Agreement, other than liabilities arising out of the willful misconduct or
gross negligence of the Equifax Indemnitees and (ii) the gross negligence or
willful misconduct of ChoicePoint in furnishing or failing to furnish the
services to be provided by ChoicePoint in this Agreement, provided however, in
no event shall ChoicePoint be obligated to indemnify the Equifax Indemnitees
(taken together) under this Section 6(c) for Indemnifiable Losses arising out
of ChoicePoint's gross negligence in an amount in excess of three times the
service fee charged for the category of service related to the Indemnifiable
Loss in the month in which the act or failure to act by ChoicePoint that gave
rise to such Indemnifiable Loss occurs.
(d) Effective as of the date of this Agreement, Equifax
shall indemnify, defend and hold harmless ChoicePoint and its affiliates and
their respective directors, officers, employees and agents (the "ChoicePoint
Indemnitees") from and against any and all Indemnifiable Losses incurred or
suffered by any of the ChoicePoint Indemnitees arising from, related to or
associated with (i) ChoicePoint's furnishing or failure to furnish the services
provided for in this Agreement, other than liabilities arising out of the
willful misconduct or gross negligence of the ChoicePoint Indemnitees, and (ii)
the gross negligence or willful misconduct of Equifax in furnishing or failing
to furnish the services to be provided by Equifax to ChoicePoint in this
Agreement, provided however, in no event shall Equifax be obligated to
indemnify the ChoicePoint Indemnitees (taken together) under this Section 6(d)
for Indemnifiable Losses arising out of Equifax's gross negligence in an amount
in excess of three times the service fee charged for the category of service
related to the Indemnifiable Loss in the month in which the act or failure to
act by Equifax that gave rise to such Indemnifiable Loss occurs.
(e) Any disputes arising under this Agreement shall be
resolved in accordance with Section 15.10 of the Distribution Agreement.
7. Termination.
(a) Each category of service provided under this
Agreement shall terminate at the end of the period set forth on Exhibit J,
provided that certain categories of service identified on Exhibit J may be
extended for one 90 day period at the request of the party receiving the
service.
(b) Notwithstanding Section 7(a) above, either Equifax or
ChoicePoint may, at its option, upon no less than sixty (60) days prior written
notice to the other (or
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<PAGE> 4
such other period as the parties may mutually agree in writing), direct the
other to no longer provide a particular category of service.
(c) Notwithstanding Sections 7(a) and 7(b) above, this
Agreement may be terminated in its entirety in accordance with the following:
(i) Upon written agreement of the parties;
(ii) By either ChoicePoint or Equifax for material
breach by the other of any of the terms hereof if the breach is not
cured within thirty (30) calendar days after written notice of breach
is delivered to the breaching party;
(iii) By either ChoicePoint or Equifax, upon
written notice to the other if the other shall become insolvent or
shall make an assignment of substantially all of its assets for the
benefit of creditors, or shall be placed in receivership,
reorganization, liquidation or bankruptcy;
(iv) By Equifax, upon written notice to
ChoicePoint, if, for any reason, the ownership or control of
ChoicePoint or any of ChoicePoint's operations, becomes vested in, or
is made subject to the control or direction of, any direct competitor
of Equifax, but such termination shall be applicable only with respect
to services provided by Equifax to the portion of ChoicePoint's
businesses that has been affected by the change in control.
(v) By ChoicePoint, upon written notice to
Equifax, if for any reason, the ownership or control of Equifax or any
of Equifax's operations becomes vested in, or is made subject to the
control or direction of, any direct competitor of ChoicePoint, but
such termination shall be applicable only with respect to services
provided by ChoicePoint to the portion of Equifax's business that has
been affected by the change in control.
(d) Upon any termination pursuant to Sections 7(b) and
7(c) above, Equifax and ChoicePoint shall be compensated for all services
performed to the date of termination in accordance with the provisions of this
Agreement and Equifax and ChoicePoint, as the case may be, will consider hiring
certain employees of the other identified by the other prior to the termination
to the extent that Equifax or ChoicePoint, as the case may be, does not
contract with third parties to provide the services rendered by Equifax or
ChoicePoint pursuant to this Agreement.
8. Amendment. This Agreement may be modified or amended only by
the agreement of the parties hereto in writing, duly executed by the authorized
representatives of each party.
9. Force Majeure. Any delays in or failure of performance by
Equifax or ChoicePoint shall not constitute a default hereunder if and to the
extent such delay or
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<PAGE> 5
failure of performance is caused by occurrences beyond the reasonable control
of Equifax or ChoicePoint, as the case may be, including, but not limited to:
acts of God or the public enemy; compliance with any order or request of any
governmental authority; acts of war; riots or strikes or other concerted acts
of personnel; or any other causes beyond the reasonable control of Equifax or
ChoicePoint, whether or not of the same class or kind as those specifically
named above.
10. Assignment. This Agreement shall not be assignable by either
party hereto without the prior written consent of the other party hereto. When
duly assigned in accordance with the foregoing, this Agreement shall be binding
upon and shall inure to the benefit of the assignee.
11. Confidentiality. Each party shall hold and cause its
directors, officers, employees, agents, consultants and advisors to hold, in
strict confidence, unless compelled to disclose by judicial or administrative
process or, in the opinion of its counsel, by other requirements of law, all
information concerning the other party (except to the extent that such
information can be shown to have been (a) in the public domain through no fault
of such disclosing party or (b) later lawfully acquired after the Effective
Time on a non-confidential basis from other sources by the disclosing party),
and neither party shall release or disclose such information to any other
person, except its auditors, attorneys, financial advisors, bankers and other
consultants and advisors who shall be advised of the provisions of this Section
11 and be bound by them.
12. Notices. All notices and communications under this Agreement
shall be deemed to have been given (a) when received, if such notice or
communication is delivered by facsimile, hand delivery or overnight courier,
and (b) three (3) business days after mailing if such notice or communication
is sent by United States registered or certified mail, return receipt
requested, first class postage prepaid. All notices and communications, to be
effective, must be properly addressed to the party to whom the same is directed
at its address as follows:
If to Equifax, to:
Equifax Inc.
1600 Peachtree Street, N.W.
Atlanta, GA 30309
Attention: Bruce S. Richards
Corporate Vice President and General Counsel
Fax: (404) 885-8682
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<PAGE> 6
with a copy to:
Thomas F. Chapman
President and Chief Operating Officer
Equifax Inc.
1600 Peachtree Street, N.W.
Atlanta, GA 30309
Fax: (404) 885-8766.
If to ChoicePoint, to:
ChoicePoint Inc.
1000 Alderman Drive
Alpharetta, GA 30005
Attention: J. Michael de Janes, Esq.
Fax: (770) 752-5939
with a copy to:
Derek V. Smith
President and Chief Executive Officer
ChoicePoint Inc.
1000 Alderman Drive
Alpharetta, GA 30005
Fax: (770) 752-6243.
Either party may, by written notice delivered to the other party in accordance
with this Section 12, change the address to which delivery of any notice shall
thereafter be made.
13. Waiver. The failure of either party at any time or times to
enforce or require performance of any provision hereof shall in no way operate
as a waiver or affect the right of such party at a later time to enforce the
same.
14. Severability. The provisions of this Agreement are severable
and should any provision hereof be void or unenforceable under any applicable
law, such provision shall not affect or invalidate any other provision of this
Agreement, which shall continue to govern the relative rights and duties of the
parties as though such void or unenforceable provision were not a part hereof.
15. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF GEORGIA.
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<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
EQUIFAX INC.
By:
---------------------------------
Name:
Title:
CHOICEPOINT INC.
By:
---------------------------------
Name:
Title:
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<PAGE> 1
EXHIBIT 10.06
INTERCOMPANY INFORMATION SERVICES AGREEMENT
BETWEEN EQUIFAX INC.
AND
CHOICEPOINT INC.
DATED JULY ____, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II INFORMATION SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.1. Information Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.2. Supplemental Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 2.3. Mutual Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 2.4. FCRA Certification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE III FEES AND PAYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 3.1. Fees and Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 3.2. Payment Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 3.3. Disputed Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 3.4. Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 3.5. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE IV REPRENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE V LIMITATION ON ACTIONS AND LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 5.1. Covenant Not to Sue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 5.2. Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 5.3. Limitation of Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE VI INDEMINIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 6.1. Choice Point Indemnification of the Equifax Group . . . . . . . . . . . . . . . . . . . . . . . 14
Section 6.2. Equifax Indemnification of the Choice Point Group . . . . . . . . . . . . . . . . . . . . . . . 14
Section 6.3. Insurance and Third Party Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE VII INDEMNIFICATION PROCEDURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 7.1. Notice and Payment of Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 7.2. Notice and Defense of Third Party Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE VIII CONFIDENTIALITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 8.1. Exclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 8.2. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 8.3. Employee Confidentiality Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 8.4. Rights and Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 8.5. Competitive Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 8.6. No Implied Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE IX CONTINUED ASSISTANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 9.1. Continued Assistance and Transition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 9.2. Litigation Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
</TABLE>
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<TABLE>
<S> <C>
ARTICLE X TERM AND TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 10.1. Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 10.2. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 10.3. Effect of Termination and Expiration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE XI MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 11.1. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 11.2. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 11.3. Amendment and Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 11.4. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 11.5. Parties in Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 11.6. Further Assurances and Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 11.7. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 11.8. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 11.9. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 11.10. Disputes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 11.11. Force Majeure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
</TABLE>
ii
<PAGE> 4
THIS INTERCOMPANY INFORMATION SERVICES AGREEMENT dated as of
_________, 1997, is entered into by EQUIFAX INC., a Georgia corporation
("Equifax"), and CHOICEPOINT INC., a Georgia corporation ("ChoicePoint").
BACKGROUND
A.ChoicePoint is a wholly owned subsidiary of Equifax formed among
other reasons for the purposes of receiving and conducting the business of the
ChoicePoint Group (as defined below) and taking title to the intellectual
property assets and assuming the associated liabilities related to the business
operations of the ChoicePoint Group.
B. A.The transfer of such business, assets and liabilities, as
well as other assets, will be effected pursuant to the Distribution Agreement
(as defined below).
C. A.The parties intend that the Distribution (as defined in the
Distribution Agreement) not be taxable to Equifax or its shareholders pursuant
to Section 355 of the Code (as defined below).
D.Equifax and its Affiliates (as defined below) provide various
Information Services (as defined below) to each other and to their respective
customers. Prior to the Distribution, Equifax and its Affiliates utilized both
common resources and discrete, commercial products purchased from one another
in the conduct of their respective businesses. At and after the Effective
Time, Equifax and ChoicePoint desire to purchase from each other and their
Group members certain Information Services for their own use and for resale to
their Group customers.
E.The parties have determined that it is necessary and desirable to
set forth the arrangements required to effect the purchase and sale of their
respective Information Services to the members of each Group and to set forth
their other agreements that will govern certain other matters regarding the
parties' respective purchase and sale of Information Services following the
Distribution.
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
agreements and covenants contained in this Agreement, and other valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
the parties, each party agrees for itself and jointly and severally with each
member of its Group, and will cause each member of its Group to agree jointly
and severally with it, as follows:
<PAGE> 5
ARTICLE I
DEFINITIONS
Section 1.1. Definitions.
As used herein, the following terms have the following meanings:
(a) "Action" means any claim, suit, arbitration, inquiry,
proceeding or investigation by or before any court, governmental or other
regulatory or administrative agency or commission or any other tribunal.
(b) "Affiliate" means, with respect to a party, any corporation,
partnership (general or limited), limited liability corporation, joint venture
or other form of business entity that controls, is controlled by or is under
common control with that party; and "control" means (i) either directly or
indirectly owning or having the right to vote ownership interests possessing a
majority of the aggregate voting power of all ownership interests of that
entity, or (ii) having the power to control and direct, either directly or
indirectly, the business and affairs of that entity or to elect or appoint the
person (or if more than one, a majority of the persons) who is responsible for
the management and control of the business and affairs of that entity.
(c) "Agreement" means the terms and conditions of this
Intercompany Information Services Agreement and the Exhibits attached hereto.
(d) "Ancillary Agreements" means all of the written agreements,
instruments, understandings, assignments or other arrangements entered into in
connection with the transactions contemplated hereby and in the Distribution
Agreement, including without limitation, the Distribution Agreement, the
Employee Benefits Agreement, the Transition Support Agreement, the Intellectual
Property Agreement, the CUE UK Agreements, the Tax Sharing and Indemnification
Agreement, and the Real Estate Agreements.
(e) "ChoicePoint Business" means the businesses conducted by the
members of the ChoicePoint Group as of the Effective Time.
(f) "ChoicePoint Group" means the entities set forth on Exhibit A.
(g) "ChoicePoint Indemnitees" has the meaning given in Section
6.2.
(h) "ChoicePoint Liabilities" means all unsatisfied Liabilities
incurred attendant with the purchase of Information Services from the Equifax
Group under this Agreement, whether arising before, on or after the Effective
Time.
(i) "ChoicePoint Products" means those products, services and
deliverables offered for sale by the ChoicePoint Group to the Equifax Group, in
its sole discretion from time to time.
2
<PAGE> 6
(j) "Code" means the Internal Revenue Code of 1986, as amended.
(k) "Company Information" means collectively the Proprietary
Information and the Confidential Information of the disclosing party. Company
Information also includes information that has been disclosed to Equifax or any
of its Affiliates prior to the Effective Time, or to any member of either Group
after the Effective Time, by a third party subject to an obligation to treat
such information as confidential or secret.
(l) "Confidential Information" means any and all confidential
company business information of the disclosing party that does not constitute
Proprietary Information and that is the subject of efforts by the disclosing
party that are reasonable under the circumstances to maintain its secrecy and
confidentiality, including without limitation, the Provider Information, the
existence and nature of the relationship between the parties including, without
limitation, the prices set forth in the Exhibits to this Agreement, employees
of the disclosing party, and any and all additional information disclosed by
the disclosing party to the receiving party as a result of the receiving
party's access to and presence at the disclosing party's facilities.
(m) "Consumer Credit Information" means information pertaining to
(i) a consumer's identification and credit accounts, including but not limited
to, the identity of the credit grantor, the type of account, the credit limit,
the transaction history of the account, the payment history of the account, and
other action taken by the consumer or the credit grantor with respect to the
account, such as the closing or writing off of the account, credit file
inquiries or collection items, or (ii) the consumer's check transactions,
including their check transaction history and instances where the consumer has
written checks that were not honored by the consumer's drawee, or (iii) public
record items regarding a consumer, including without limitation, judgments, tax
liens, and bankruptcy filings, or (iv) analytical or predictive scores based on
any or all of the above.
(n) "Consumer Insurance Information" means consumer-specific
information (i) not already available to the Equifax Group from its databases
and those of its System Affiliates and (ii) which, upon delivery to the End
User, is to be used in connection with the offering of insurance products to
consumers.
(o) "Consumer Report" has the meaning given in the FCRA.
(p) "Consumer Reporting Agency" has the meaning given in the FCRA.
(q) "DAT" means a personal computer or direct access terminal.
(r) "Designated ChoicePoint Member" means a member of the
ChoicePoint Group, as designated by ChoicePoint in its sole discretion from
time to time.
(s) "Designated Equifax Member" means a member of the Equifax
Group, as designated by Equifax in its sole discretion from time to time.
3
<PAGE> 7
(t) "Direct Damages" means actual, direct damages incurred by the
claiming party which include, by way of example but without limitation, the
costs to correct any deficiencies in the Information Services rendered by
Provider and similar damages, but "Direct Damages" shall not include (A) loss
of interest, profit or revenue of the claiming party or (B) incidental,
consequential, special or indirect damages suffered by the claiming party and
shall not include punitive or exemplary damages suffered by the claiming party
arising from or related to this Agreement, even if such party has been advised
of the possibility of such losses or damages.
(u) "Disputes" has the meaning given in Section 11.10.
(v) "Distribution" has the meaning given in the Distribution
Agreement.
(w) "Distribution Agreement" means that certain Distribution
Agreement entered into on or prior to the Distribution Date between Equifax and
ChoicePoint, as amended from time to time.
(x) "Distribution Date" means the business day as of which the
Distribution shall be effective, as determined by the Board of Directors of
Equifax.
(y) "Effective Time" means 5:00 p.m. Eastern Daylight Time on July
31, 1997.
(z) "End User" means a Recipient or its Subscriber, which Person
will use a given item of Provider Information, or on whose behalf such
information will be used, in making a business decision concerning the subject
of such information.
(aa) "Equifax Business" means the businesses now or formerly
conducted by Equifax and its present and former Affiliates, other than the
ChoicePoint Business, at the Effective Time.
(bb) "Equifax Group" means Equifax and its Affiliates existing at
the Effective Time and as modified from time to time thereafter, excluding all
members of the ChoicePoint Group.
(cc) "Equifax Indemnitees" has the meaning given in Section 6.1.
(dd) "Equifax Liabilities" means all unsatisfied Liabilities
incurred attendant with the purchase of Information Services from the
ChoicePoint Group under this Agreement whether arising before, on or after the
Effective Time.
(ee) "Equifax Products" means those products, services and
deliverables offered for sale by the Equifax Group to the ChoicePoint Group in
its sole discretion from time to time.
(ff) "FCRA" means the federal Fair Credit Reporting Act, 15 U.S.C.
Section 1681, et. seq.
(gg) "Group" means the ChoicePoint Group and/or the Equifax Group.
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<PAGE> 8
(hh) "Indemnifiable Loss" means any and all damage, loss, liability
and expense (including, without limitation, reasonable expenses of
investigation and reasonable attorneys' fees and expenses) in connection with
any and all Actions or threatened Actions.
(ii) "Indemnified Party" has the meaning given in Section 7.1.
(jj) "Indemnifying Party" has the meaning given in Section 7.1.
(kk) "Information Services" means those on-line and off-line
computer-based information databases, the inspection services, reporting
services, processing services, and transmission services provided by either
party or the members of its respective Group pursuant to this Agreement,
including without limitation, the ChoicePoint Products, Equifax Products and
Provider Information.
(ll) "Intellectual Property Agreement" means that certain
Intellectual Property Agreement entered into on or prior to the Distribution
Date between Equifax and ChoicePoint, as amended from time to time.
(mm) "Liabilities" means any and all claims, debts, liabilities and
obligations, absolute or contingent, matured or not matured, liquidated or
unliquidated, accrued or unaccrued, known or unknown, whenever arising, with
respect to a specified object, matter, contract, commitment or undertaking,
including without limitation, all debts, liabilities and obligations arising
under any law, rule, regulation, action, order or consent decree of any
governmental entity or any award of any arbitrator of any kind, related thereto
and those arising under any contract, commitment or undertaking relating to
such specified object, matter, contract, commitment or undertaking.
(nn) "Non-Consumer Reporting Agency" means a Recipient that will
resell a given item of Provider Information that is not a Consumer Report .
(oo) "Permissible Purposes" means one of the permitted purposes for
which a Consumer Report may be provided pursuant to the FCRA.
(pp) "Person" means any individual, entity (whether or not formed
as a corporation, sole proprietorship, partnership, limited liability company
or other form of entity and whether or not conducting its affairs for profit),
and any governmental entity or agency.
(qq) "Prime Rate" means the prime rate of interest as determined
from time to time by SunTrust Bank, Atlanta.
(rr) "Proprietary Information" means all non-public information,
whether tangible or intangible, related to the services or business of the
disclosing party that (i) derives economic value, actual or potential, from not
being generally known to or readily ascertainable by another Person who can
obtain economic value from its disclosure or use; and (ii) is the subject of
efforts
5
<PAGE> 9
by the disclosing party that are reasonable under the circumstances to maintain
its secrecy, including without limitation, (A) marking any information reduced
to tangible form clearly and conspicuously with a legend identifying its
confidential or proprietary nature; (B) identifying any oral communication as
confidential immediately before, during, or after such oral communication; or
(C) otherwise treating such information as confidential or secret. Assuming
the criteria in clauses (i) and (ii) above are met, Proprietary Information
includes information, without regard to form, including but not limited to,
technical and nontechnical data, databases, formulas, patterns, designs,
compilations, computer programs and software, devices, inventions, methods,
techniques, drawings, processes, financial data, financial plans, product
plans, lists of actual or potential customers and suppliers (which are not
commonly known by or available to the public), research, development, and
existing and future products.
(ss) "Provider" means any member of either Group when providing
Information Services to the members of the other Group pursuant to this
Agreement.
(tt) "Provider Information" means information regarding any Person,
at the individual or aggregated levels, contained in any ChoicePoint Product or
Equifax Product, respectively, offered to any member of the other party's
Group, including without limitation, Consumer Credit Information and Consumer
Insurance Information.
(uu) "Recipient" means any member of either Group when acquiring
Information Services from the other Group pursuant to this Agreement.
(vv) "Representatives" means, individually and collectively,
officers, directors, employees, agents, and/or independent contractors of each
member of the Group.
(ww) "Subscriber" means any customer of a Recipient which obtains
Provider Information from Recipient; provided, however, that a Subscriber will
be deemed to be a "Qualified Subscriber" only if the Subscriber meets the
criteria therefor set forth in the Provider's Supplemental Agreement in effect
from time to time, as amended and/or modified by the Provider.
(xx) "Supplemental Agreements" means the Equifax Group's
supplemental terms and conditions set forth in Exhibit D and the ChoicePoint
Group's supplemental terms and conditions set forth in Exhibit E, as amended
from time to time during the term of this Agreement.
(yy) "System Affiliate" means a Person that is not an Affiliate of
Equifax that has entered into a written agreement with Equifax Credit
Information Services, Inc. regarding the provision of consumer reporting
services through the automated credit service known as "The Automated Credit
Reporting Online Package".
(zz) "Third Party Claim" has the meaning given in Section 7.2.
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ARTICLE II
INFORMATION SERVICES
Section 2.1. Information Services.
(a) During the term hereof, each provision of Information Services
by any member of one Group to any member of the other Group will be subject to
the terms and conditions of this Agreement and the Supplemental Agreements
applicable to the elements comprising the Information Services as amended
and/or modified from time to time during the term of this Agreement by the
Provider, whether such provision arises independently of any prior or
subsequent contractual obligation. The Information Services which are provided
by members of one Group to the members of the other Group as of the
Distribution Date are set forth on Exhibits B and C.
(b) The parties acknowledge that the Information Services to be
provided by the Equifax Group may contain Provider Information owned by the
Equifax Group as well as by System Affiliates, and that the Equifax Group can
only provide Information Services containing information owned by its System
Affiliates to the extent that the System Affiliates authorize the provision of
such information and subject to the applicable charges to be paid by, and
payment terms for, the ChoicePoint Group as established by the applicable
System Affiliate.
(c) The parties have each exerted their best efforts to identify
each type of Information Service presently provided by the members of one Group
to the members of the other Group and to address such Information Services in
this Agreement. The parties acknowledge that there may be Information Services
provided by the members of one Group to the members of the other Group which
are not addressed in this Agreement, but agree that all such services are
intended to be governed by this Agreement. Moreover, the parties agree: that
the Information Services provided may require adjustments during the term of
this Agreement to reflect the evolving business and operations of each Group
and applicable law; that the relationship memorialized by this Agreement is
dynamic in nature and will evolve as the operating and business environment of
each Group changes and evolves; and that the scope of the Information Services
that will be provided during the term and the corresponding fees charged and
payment terms extended by the parties may need to be modified to reflect the
foregoing. The parties agree to cooperate and negotiate with each other in
good faith in order to modify this Agreement as appropriate to give effect to
the intent of the parties and to satisfy the requirements of each party, as
described in Sections 2.1(a) and (d).
(d) For the one hundred-eighty (180) days following the Effective
Time, each party shall have the right to inventory, validate and update any
information and the services, products and deliverables that comprise the
Information Services that are reflected in or omitted from this Agreement and
attached Exhibits. If the parties determine that this Agreement or the
Exhibits hereto contain discrepancies from the intent of this Agreement, this
Agreement and/or Exhibits
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shall be promptly changed, modified, updated and adjusted to correct such
discrepancies, so that this Agreement and/or Exhibits will be correct and
accurately reflect the Information Services, and attendant charges and payment
terms, provided by one Group to the other Group at the Effective Time. In the
event that either party discovers such an omission from this Agreement or a
discrepancy from the intent hereof: (a) that party will immediately notify the
other party and the parties will promptly negotiate in good faith to establish
the specific terms and conditions applicable to such Information Services; (b)
this Agreement will govern the general terms and conditions applicable to the
provision of such Information Services; and (c) the Provider will not cease to
provide such Information Services, unless the parties are unable to agree upon
the specific terms and conditions applicable to such Information Services. If
either party disputes the existence of a discrepancy identified by the other
party, the parties will submit the matter for dispute resolution as specified
in Section 11.10.
(e) During the ninety (90) day period following the Effective
Time, the parties will negotiate in good faith to establish mutually agreed
operational procedures to effect the delivery of the Information Services and
to establish performance standards for the delivery of the Information
Services.
Section 2.2. Supplemental Agreements.
The terms and conditions applicable to any given provision of
Information Services pursuant to this Agreement will vary depending on (a)
whether such Information Services are regulated pursuant to the FCRA or other
law or regulation, (b) the type of Information Services purchased, (c) the role
in which the Recipient purchases such Information Services, including without
limitation, as a Non-Consumer Reporting Agency, Consumer Reporting Agency or
End User, (d) the purpose for which the Recipient's Subscriber ordered the
products, services and deliverables based upon such Information Services, and
(e) the third party limitations and restrictions applicable to the provisions
of the Information Services by the Provider. Accordingly, the terms and
conditions applicable to any given acquisition of Information Services by any
Recipient pursuant to this Agreement are supplemented by the terms and
conditions of the Supplemental Agreement(s) with respect to the type of
Information Services purchased, the role in which the Recipient purchases such
Information Services and the purpose for which the Recipient's Subscriber
ordered the products, services and deliverables that are based upon such
Information Services, as such Supplemental Agreement(s) is modified and/or
amended from time to time during the term of this Agreement by the Provider.
In the event of a conflict between the terms and conditions set forth in the
body of this Agreement and the specific terms and conditions regarding
provisions required by law or regulation, the type of Information Services, the
role of Recipient and/or use of particular Information Services set forth in
the Provider's Supplemental Agreement, the terms and conditions set forth in
the body of this Agreement will be controlling. In the event that any
provision contained in Articles III, IV, V, VI, VII, VIII, X and/or XI
conflicts with and/or overlaps in subject matter with any provision contained
in the Supplemental
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Agreements, the terms and conditions set forth in the body of this Agreement
will prevail and be controlling.
Section 2.3. Mutual Obligations.
(a) ChoicePoint and Equifax hereby covenant and agree that, for
the one-year period following the Effective Time, the ChoicePoint Group, except
for CDB Infotek and its subsidiaries, will obtain all of its requirements for
Consumer Credit Information except for the check transaction information and
the public record information described in Section 1.1(l)(ii) and (iii), from
the Equifax Group and the Equifax Group shall provide to the ChoicePoint Group
Consumer Credit Information to fulfill the ChoicePoint Group's requirements
therefor; subject to the exceptions set forth in Section 2.3(c).
(b) ChoicePoint and Equifax covenant and agree that, for the
one-year period following the Effective Time, the Equifax Group will obtain all
of its requirements for the types of driver's license and motor vehicle
information contained in the ChoicePoint Group's products known as "Motor
Vehicle Registry (MVR)" and/or "Additional Drivers Data (ADD)" ("Driver
Information") from the ChoicePoint Group and the ChoicePoint Group will provide
such information to the Equifax Group, subject to the exceptions set forth in
Section 2.3(c) below.
(c) Notwithstanding anything to the contrary contained in this
Section 2.3, the ChoicePoint Group may obtain its requirements for Consumer
Credit Information and/or the Equifax Group may obtain its Driver Information
requirements from other sources if:
(i) the Provider has no file on the consumer, or does not
otherwise have the requested information readily available in its
databases; or
(ii) the Recipient's customer requests that the
information be obtained from a source other than the Provider, despite
the Recipient's recommendation to the customer that the information be
obtained from the Provider; or
(iii) the Recipient's customer or the product in which the
Provider's information is to be included requires that such
information be available with respect to all or substantially all of
the geographic parts of the United States at a uniform price for all
such information and the Provider is unable or unwilling to provide
information with respect to all such geographic parts at such uniform
price; provided, however, that the Provider shall respond to
Recipient's request for such information within a reasonable period of
time not to exceed ten (10) calendar days after Provider's receipt of
Recipient's request; or
(iv) the Recipient also obtains such information from the
Provider; provided, however, if one of the exceptions set forth in
subsections (i) through (iii) above applies, the Recipient does not
have to obtain such information from the Provider; or
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(v) the Provider does not allow the information
requested by the Recipient to be used in reports of the type or for
the customers in question.
(d) Notwithstanding anything to the contrary contained in this
Section 2.3, the Equifax Group will not be obligated to provide Consumer Credit
Information to the ChoicePoint Group for sale to customers of the Equifax
Group.
(e) ChoicePoint and Equifax hereby covenant and agree that if the
Equifax Group makes a material change regarding its sources of supply of public
record information for the United States, Equifax will offer to ChoicePoint the
right to provide such public record information to the Equifax Group under
terms and conditions as mutually agreed. If ChoicePoint and Equifax can
mutually agree on commercially competitive terms and conditions for the
provision of public record information to the Equifax Group, including without
limitation, price, quantity, quality and delivery terms, within a reasonable
period of time not to exceed thirty (30) days after delivery of notice of
Equifax's intent to change its sources of supply to ChoicePoint, then the
Equifax Group will obtain public record information from the ChoicePoint Group
in accordance with such mutually agreed terms and conditions. Notwithstanding
anything to the contrary contained herein, Equifax and ChoicePoint hereby
specifically acknowledge and agree that this Section 2.3(e) shall not apply to
the Equifax Group's ability to exercise any right of first refusal it may have
to acquire any of its public record information vendors pursuant to a
contractual agreement that exists as of the Effective Time with such vendors
and/or its ability to obtain all or any portion of public record information
from such vendor as to which Equifax exercises such right of first refusal.
ChoicePoint hereby covenants and agrees not to directly or indirectly make an
offer to purchase or otherwise solicit the purchase of such public record
information vendors during the one- year period following the Effective Time.
Section 2.4. FCRA Certification.
ChoicePoint and Equifax each certify, and shall ensure that each
member of the ChoicePoint Group and Equifax Group shall certify that it will
order Provider Information that constitutes a Consumer Report only for use for
a Permissible Purpose in accordance with the FCRA, as amended from time to
time.
ARTICLE III
FEES AND PAYMENT
Section 3.1. Fees and Charges.
Each Recipient will pay the Provider for all Information Services
supplied to such Recipient according to the rates set forth on Exhibits B and C
during the initial one-year term of this Agreement and according to such rates
as are subsequently established by the Provider from time to time thereafter.
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Section 3.2. Payment Terms.
Each Recipient shall pay all invoices for Information Services
requested by such Recipient within thirty (30) days after the date of each
invoice.
Section 3.3. Disputed Amounts.
In the event that a member of either Group disputes the accuracy or
applicability of a charge or credit by a member of the other Group, such member
will notify Equifax or ChoicePoint, respectively, of such dispute prior to the
date on which the charge is to be paid or the credit issued or as soon as
practicable after the discrepancy has been discovered after the applicable
invoice is paid or credit is issued. The parties will investigate and resolve
such disputes using the dispute resolution process provided in Section 11.10 of
this Agreement. Any undisputed amounts contained on the invoice will be paid
pursuant to Section 3.2. The party responsible for paying the disputed amount
or issuing the disputed credit shall place the disputed amount in an escrow
account until such dispute is resolved. Upon resolution of the dispute, the
party in whose favor the dispute was resolved shall be paid any interest having
accrued on the escrow monies and each party shall pay the escrow fees
attributable to the disputed amount in an inverse proportion to the percentage
of the disputed amount paid to each party.
Section 3.4. Interest
Any and all amounts not paid when due shall bear interest on a day to
day basis from the due date to the date of payment (both dates inclusive) at
the lower rate of one and one-half percent (1 1/2%) per month or the highest
rate allowable under applicable law.
Section 3.5. Taxes.
All fees and charges payable under this Agreement are exclusive of all
federal, state and local sales, excise, use, value added and similar taxes not
measured by the income of Provider, which taxes shall be the sole
responsibility of Recipient and shall be paid by Recipient at the rate and in
the manner prescribed by applicable law and Section 3.2 hereof; provided,
however, if required by applicable law, Provider shall separately itemize such
taxes on Provider's invoice to Recipient, Recipient shall pay the amount of
such taxes to Provider and Provider shall remit such amount to the applicable
taxing authority. In lieu thereof, Recipient shall furnish Provider with a
properly executed tax exemption certificate acceptable to the applicable taxing
authority.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The parties and each Recipient and Provider recognize that every
business decision represents an assumption of risk and that neither party, nor
the members of either party's Group,
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in furnishing the Information Services to the other Group underwrites or
assumes the other's risk in any manner. NEITHER PARTY, NOR ANY MEMBER OF EITHER
PARTY'S GROUP NOR ANY OF ITS INFORMATION SOURCES, GUARANTEES OR WARRANTS THE
CORRECTNESS, COMPLETENESS, CURRENTNESS, MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE OF THE INFORMATION SERVICES PROVIDED TO ANY MEMBER OF THE
OTHER PARTY'S GROUP. NEITHER PARTY, NOR ANY OF ITS REPRESENTATIVES,
INFORMATION SOURCES, LICENSORS, SYSTEM AFFILIATES OR MEMBERS OF ITS RESPECTIVE
GROUP WILL BE LIABLE TO ANY OTHER PARTY OR ANY OF ITS REPRESENTATIVES,
INFORMATION SOURCES, LICENSORS, SYSTEM AFFILIATES OR MEMBERS OF THE OTHER
PARTY'S GROUP FOR ANY LOSS OR INJURY ARISING OUT OF, OR CAUSED IN WHOLE OR IN
PART BY, ITS ACTS OR OMISSIONS IN PROCURING, COMPILING, COLLECTING,
INTERPRETING, PROCESSING, REPORTING OR TRANSMITTING ANY INFORMATION OR THE
INFORMATION SERVICES, EVEN IF DUE TO NEGLIGENCE. THE INFORMATION SERVICES ARE
PROVIDED ON AN "AS IS" BASIS.
No Provider makes any warranties whatsoever in connection with the
performance of the DAT, or any other means of communication or provision of the
Information Services from one party to the other, and no Provider will be
responsible for transmission distortion, interruptions or failures of the DAT,
or any other means of communication or provision of the Information Services,
or of any Information Services. Each Recipient will ensure a secure means of
delivery of Provider Information, unless otherwise agreed by the Provider, and
will not deliver such information by means of any publicly accessible network
(including without limitation, the Internet) without Provider's express written
permission.
ARTICLE V
LIMITATION ON ACTIONS AND LIABILITIES
Section 5.1. Covenant Not to Sue.
Each member of each Group covenants not to sue or maintain any claim,
cause of action, demand, cross-action, counterclaim, third-party action or
other form of pleading against a Provider, a Provider's Representatives,
sources of information, affiliated Credit Reporting Agencies, and/or System
Affiliates (if applicable) arising out of or relating in any way to the
accuracy or inaccuracy and/or validity or invalidity of any of the Provider
Information, even if caused by the negligence of any such Person; provided,
however, this Section shall not be applicable if the injury is caused by the
intentional misconduct of such Person.
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Section 5.2. Release.
Each member of each Group recognizes that the accuracy of any Provider
Information furnished is not warranted or guaranteed by the Provider thereof
for any purpose, and releases the Provider and the Provider's Representatives,
sources of information, affiliated Credit Reporting Agencies and System
Affiliates (if applicable) from all liability in connection with the accuracy
or inaccuracy and/or validity or invalidity of the Provider Information and
from any and all charge, damage, loss and/or expense suffered by Recipient
resulting directly or indirectly from such matters, even if caused by the
negligence of any such Person; provided, however, this Section shall not be
applicable if the injury is caused by the intentional misconduct of such
Person. Each member of each Group shall include in its agreements with its
Subscribers and End Users a release concerning the information received from
Provider substantially in the form of the foregoing release obligation
contained in this Section 5.2.
Section 5.3. Limitation of Liability.
(a) Unless specifically provided to the contrary in this
Agreement, neither party shall, nor shall any member of the party's respective
Group, have any liability to the other party for any damages other than Direct
Damages whether based on contract, tort (including without limitation, that
caused by negligence, but excluding intentional misconduct), warranty,
guarantee or any other legal or equitable grounds. The liability of any member
of either Group to the other Group arising out of or resulting from a breach by
such member and/or its Representatives of its obligations under this Agreement
shall not exceed the Direct Damages incurred by the Recipient as a result of
such event.
(b) The limitations set forth in Section 5.3(a) shall not apply
to:
(i) Any failure by any member of either Group to pay fees
and expenses for the Information Services that are due and payable
hereunder up to the effective date of the termination of the
Agreement;
(ii) Claims arising under Section 5.1 (Covenant Not to
Sue) and/or Section 5.2 (Release);
(iii) Indemnification obligations under Article VI; and
(iv) Any incident or event resulting in damages, charges
and/or losses caused by the action or inaction of a member of either
Group constituting intentional misconduct.
(c) Except as set forth in Sections 6.1 and 6.2, neither party nor
the members of its Group shall be liable for any damages to the other party or
the members of its Group if and to the extent caused by the failure of such
other party or the members of its Group to perform its responsibilities under
this Agreement.
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(d) NOTWITHSTANDING ANYTHING TO THE CONTRARY IN ANY SECTION OF
THIS AGREEMENT EXCEPT THIS SECTION 5.3, INCLUDING ANY AND ALL FUTURE AMENDMENTS
AND ADDENDA, NEITHER PARTY, NOR ANY OF ITS REPRESENTATIVES, INFORMATION
SOURCES, LICENSORS, SYSTEM AFFILIATES OR MEMBERS OF ITS RESPECTIVE GROUP WILL
BE RESPONSIBLE FOR CONSEQUENTIAL, INCIDENTAL, INDIRECT, EXEMPLARY OR SPECIAL
DAMAGES, INCLUDING LOST PROFITS, WHETHER OR NOT THE OTHER PARTY HAS BEEN
INFORMED OF OR MIGHT OTHERWISE HAVE ANTICIPATED OR FORESEEN THE POSSIBILITY OF
SUCH DAMAGES.
ARTICLE VI
INDEMNIFICATION
Section 6.1. ChoicePoint Indemnification of the Equifax Group.
If the Distribution occurs, on and after the Distribution Date,
ChoicePoint shall indemnify, defend and hold harmless each member of the
Equifax Group and each of their respective Representatives (the "Equifax
Indemnitees") from and against any and all Indemnifiable Losses incurred or
suffered by any of the Equifax Indemnitees and arising out of or in connection
with (a) any breach of Sections 5.1 (Covenant Not to Sue) or 5.2 (Release) by
a member of the ChoicePoint Group, or (b) breach of Section 8.2
(Confidentiality); except such damages, loss, liability and expense resulting
from the willful misconduct of a member of the Equifax Group.
Section 6.2. Equifax Indemnification of the ChoicePoint Group.
If the Distribution occurs, on and after the Distribution Date,
Equifax shall indemnify, defend and hold harmless each member of the
ChoicePoint Group and each of their respective Representatives (the
"ChoicePoint Indemnitees") from and against any all Indemnifiable Losses
incurred or suffered by any of the ChoicePoint Indemnitees and arising out of
or in connection with (a) any breach of Sections 5.1 (Covenant Not to Sue) or
5.2 (Release) by a member of the Equifax Group, or (b) breach of Section 8.2
(Confidentiality); except such damages, loss, liability and expense resulting
from the willful misconduct of a member of the ChoicePoint Group.
Section 6.3. Insurance and Third Party Obligations.
No insurer or any other third party shall be (a) entitled to a benefit
it would not be entitled to receive in the absence of the foregoing
indemnification provisions, (b) relieved of the responsibility to pay any
claims to which it is obligated, or (c) entitled to any subrogation rights with
respect to any obligation hereunder.
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ARTICLE VII
INDEMNIFICATION PROCEDURES
Section 7.1. Notice and Payment of Claims.
If any Equifax or ChoicePoint Indemnitee (the "Indemnified Party")
determines that it is or may be entitled to indemnification by a party (the
"Indemnifying Party") under Article VI (other than in connection with any
Action or claim subject to Section 7.2), the Indemnified Party shall deliver to
the Indemnifying Party a written notice specifying, to the extent reasonably
practicable, the basis for its claim for indemnification and the amount for
which the Indemnified Party reasonably believes it is entitled to be
indemnified. After the Indemnifying Party shall have been notified of the
amount for which the Indemnified Party seeks indemnification, the Indemnifying
Party shall, within thirty (30) days after receipt of such notice, pay the
Indemnified Party such amount in cash or other immediately available funds (or
reach agreement with the Indemnified Party as to a mutually agreeable
alternative payment schedule) unless the Indemnifying Party objects to the
claim for indemnification or the amount thereof. If the Indemnifying Party
does not give the Indemnified Party written notice objecting to such claim and
setting forth the grounds therefor within the same thirty (30) day period, the
Indemnifying Party shall be deemed to have acknowledged its liability for such
claim and the Indemnified Party may exercise any and all of its rights under
applicable law to collect such amount. Any amount owed under this Section 7.1
that is past due shall bear interest at a simple rate of interest per annum
equal to the Prime Rate plus 2%.
Section 7.2. Notice and Defense of Third Party Claims.
(a) Promptly following the earlier of (i) receipt of notice of the
commencement by a third party of any Action against or otherwise involving any
Indemnified Party or (ii) receipt of information from a third party alleging
the existence of a claim against an Indemnified Party, in either case, with
respect to which indemnification may be sought pursuant to Article VI of this
Agreement (a "Third Party Claim"), the Indemnified Party shall give the
Indemnifying Party written notice thereof. The failure of the Indemnified
Party to give notice as provided in this Section 7.2 shall not relieve the
Indemnifying Party of its obligations under this Agreement, except to the
extent that the Indemnifying Party is prejudiced by such failure to give
notice. Within thirty (30) days after receipt of such notice, the Indemnifying
Party shall by giving written notice thereof to the Indemnified Party, (i)
acknowledge, as between the parties hereto, liability for, and at its option,
assumption of the defense of such Third Party Claim at its sole cost and
expense or (ii) object to the claim of indemnification set forth in the notice
delivered by the Indemnified Party pursuant to the first sentence of this
Section 7.2 setting forth the grounds therefor; provided that if the
Indemnifying Party does not within the same thirty (30) day period give the
Indemnified Party written notice acknowledging liability and electing to assume
the defense or objecting to such claim and setting forth the grounds therefor,
the Indemnifying Party
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shall be deemed to have acknowledged, as between the parties hereto, its
liability to the Indemnified Party for such Third Party Claim.
(b) Any contest of a Third Party Claim as to which the
Indemnifying Party has elected to assume the defense shall be conducted by
attorneys employed by the Indemnifying Party and reasonably satisfactory to the
Indemnified Party; provided that the Indemnified Party shall have the right to
participate in such proceedings and to be represented by attorneys of its own
choosing at the Indemnified Party's sole cost and expense. If the Indemnifying
Party assumes the defense of a Third Party Claim, the Indemnifying Party may
settle or compromise the claim without the prior written consent of the
Indemnified Party; provided that the Indemnifying Party may not agree to any
such settlement pursuant to which any remedy or relief, other than monetary
damages for which the Indemnifying Party shall be responsible hereunder, shall
be applied to or against the Indemnified Party, without the prior written
consent of the Indemnified Party, which consent shall not be unreasonably
withheld.
(c) If the Indemnifying Party does not assume the defense of a
Third Party Claim for which it has acknowledged liability for indemnification
that arises under Article VI, the Indemnified Party may require the
Indemnifying Party to reimburse it on a current basis for its reasonable
expenses of investigation, reasonable attorneys' fees and reasonable
out-of-pocket expenses incurred in defending against such Third Party Claim and
the Indemnifying Party shall be bound by the result obtained with respect
thereto by the Indemnified Party; provided that the Indemnifying Party shall
not be liable for any settlement effected without its consent, which consent
shall not be unreasonably withheld. The Indemnifying Party shall pay to the
Indemnified Party in cash the amount for which the Indemnified Party is
entitled to be indemnified (if any) within fifteen (15) days after the final
resolution of such Third Party Claim (whether by settlement, compromise, or the
final nonappealable judgment of a court of competent jurisdiction or
otherwise), or, in the case of any Third Party Claim as to which the
Indemnifying Party has not acknowledged liability, within fifteen (15) days
after such Indemnifying Party's objection has been resolved by settlement,
compromise or the final nonappealable judgment of a court of competent
jurisdiction.
ARTICLE VIII
CONFIDENTIALITY
Section 8.1. Exclusions.
Notwithstanding anything to the contrary contained in this Agreement, "
Company Information" does not include any information that (a) is already known
to the receiving party at the time it is disclosed to the receiving party by the
disclosing party; or (b) before being divulged by the receiving party (i) has
become generally known to the public through no wrongful act of the receiving
party; (ii) has been rightfully received by the receiving party from a third
party without restriction on disclosure and without, to the knowledge of the
receiving party, a breach of
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an obligation of confidentiality running directly or indirectly to the
disclosing party; (iii) has been approved for release to the general public by
a written authorization of the disclosing party; (iv) has been independently
developed by the receiving party without use, directly or indirectly, of
Company Information received from the disclosing party; or (v) has been
furnished to a third party by the disclosing party without restrictions on the
third party's rights to disclose the information.
Section 8.2. Confidentiality.
(a) Each party acknowledges, and shall cause each member of its
Group to acknowledge, that it is in possession of significant confidential or
proprietary information concerning the business operations and tangible and
intangible property of the members of the other Group.
(b) Each party shall, and shall ensure that each member of its
Group shall, (i) receive and hold the Company Information of the other party in
trust and in strictest confidence; (ii) protect such Company Information from
disclosure and in no event take any action causing, or fail to take the action
necessary in order to prevent, any such Company Information to lose its
character as Company Information; (iii) exercise at a minimum the same care it
would exercise to protect its own Company Information; and (iv) not use,
reproduce, distribute, disclose, or otherwise disseminate the Company
Information of the other party except as authorized pursuant to this Agreement
and in the Supplemental Agreements attached hereto, as amended from time to
time, or any Ancillary Agreement, or except pursuant to a requirement of a
governmental agency or of law, without similar restrictions or other
protections against public disclosure; provided, however, the receiving party
must first give written notice of such required disclosure to the disclosing
party, take reasonable steps to allow the disclosing party to seek to protect
the confidentiality of the Company Information required to be disclosed, make a
reasonable effort to obtain a protective order requiring that the Company
Information so disclosed be used only for the purposes for which disclosure is
required, and shall disclose only that part of the Company Information which,
in the written opinion of its legal counsel, it is required to disclose. In no
event shall the receiving party exercise less than a reasonable standard of
care to keep confidential the Company Information. Any and all reproductions
of such Company Information must prominently contain a confidential legend.
(c) The receiving party may make disclosures of the Company
Information of the disclosing party only to Representatives of the receiving
party (i) who have a specific need to know such information; and (ii) who the
receiving party has obligated under a written agreement to hold such Company
Information in trust and in strictest confidence and otherwise to comply with
the terms and provisions of this Agreement. ChoicePoint and Equifax agree, and
shall ensure that each member of its respective Group agrees, to monitor each
such Representative, enforce such agreements with its Representatives, and,
upon request by the other party, promptly to
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furnish to the other party a list of the receiving party's Representatives
having had access to such Company Information.
(d) Within thirty (30) days following the receipt of a written
request from the disclosing party, the receiving party must deliver to the
disclosing party all tangible materials containing or embodying the disclosing
party's Company Information applicable to a triggering event, together with a
certificate executed by the president or any vice president of the receiving
party certifying that all such materials in the receiving party's possession
have been delivered to the disclosing party or, at the disclosing party's
option, certify that all such materials in the receiving party's possession
have been destroyed. For the purposes of this Section 8, a "triggering event"
means the cessation of the provision of an Information Service by the
disclosing party to the receiving party under this Agreement or the termination
of the Agreement.
(e) The covenants of confidentiality set forth in this Agreement
(i) will apply after the Effective Time to all Company Information disclosed to
the receiving party before and after the Distribution Date and (ii) will
continue and must be maintained from the Effective Time through the termination
of the relationship under this Agreement between Equifax and ChoicePoint and
(A) with respect to Proprietary Information, at any and all times after the
termination of the relationship under this Agreement between Equifax and
ChoicePoint during which such Proprietary Information retains its status as a
"trade secret" under applicable law; and (B) with respect to Confidential
Information, for the shorter of a period equal to two (2) years after
termination of the relationship under this Agreement between Equifax and
ChoicePoint, or until such Confidential Information no longer qualifies as
confidential under applicable law.
Section 8.3. Employee Confidentiality Agreements.
The members of the Group have entered into confidentiality and
non-disclosure agreements with their respective employees. To the extent that
any employee during or after employment violates such agreement and such
violation is or may in the future be to the detriment of the other party's
Group, at the written request of the affected party, the other Party shall
promptly take remedial measures with such employee if and to the extent
reasonable under the circumstances to preserve the value of the Information
Services and to enforce its obligations hereunder. The party employing the
affected employee shall have the unilateral right to determine the forum for,
the manner of proceeding in, and legal counsel for such action and shall be
entitled to any damages or other relief against such employee awarded in such
action to the extent related to such party's Information Services or business.
Each party shall bear all of its own out-of-pocket costs of pursuing such
action and the other party shall cooperate in connection therewith.
Section 8.4. Rights and Remedies.
(a) If either party, or any member of the Group, should breach or
threaten to breach any of the provisions of this Article VIII, the
non-breaching party, in addition to any other remedies it may have at law or in
equity, will be entitled to a restraining order, injunction, or other
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similar remedy in order to specifically enforce the provisions of this Article
VIII. Each party specifically acknowledges, and shall cause each member of its
respective Group, to acknowledge that money damages alone would be an
inadequate remedy for the injuries and damage that would be suffered and
incurred by the non-breaching party as a result of a breach of any of the
provisions of this Article VIII. In the event that either party, or a member
of such party's Group, should seek an injunction hereunder, the other party
hereby waives, and shall cause each member of its Group to waive, any
requirement for the submission of proof of the economic value of any Company
Information or the posting of a bond or any other security.
(b) The receiving party shall notify the disclosing party upon
discovery of any unauthorized use or disclosure of Company Information, or any
other breach of Article VIII of this Agreement by the receiving party, or any
Representative of the receiving party's Group, and will cooperate with the
disclosing party in every reasonable way to help the disclosing party regain
possession of its Company Information and prevent its further unauthorized use
or disclosure. The receiving party shall be responsible for the acts of any
Representative of its Group that are in violation of this Article VIII.
Section 8.5. Competitive Activities.
Subject to the rights and obligations set forth in Section 2.3 and
Article VIII, each party understands and acknowledges that the other party's
Group may now market or have under development products that are competitive
with products or services now offered or that may be offered by it and/or the
members of its Group, and the parties' communications hereunder will not serve
to impair the right of either party or any member of its respective Group to
independently develop, make, use, procure, or market products or services now
or in the future that may be competitive with those offered by the other
party's Group, nor require either party and/or the members of its Group to
disclose any planning or other information to the other party.
Section 8.6. No Implied Rights.
All Company Information is and shall remain the property of the
disclosing party and/or the member of its respective Group. By disclosing
Company Information to the receiving party's Group, the disclosing party and/or
the members of its respective Group do(es) not grant any express or implied
rights or license to the receiving party's Group to or under any patents,
patent applications, inventions, copyrights, trademarks, trade secret
information, or other intellectual property rights heretofore or hereafter
possessed by the disclosing party and/or the members of its respective Group.
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ARTICLE IX
CONTINUED ASSISTANCE
Section 9.1. Continued Assistance and Transition.
(a) Following the Effective Time, Equifax and ChoicePoint shall,
and shall cause each member of the Group to, cooperate in the orderly purchase
and sale of Information Services hereunder. From time to time, at Equifax's or
ChoicePoint's request and without further consideration, the other party shall,
and shall cause each member of the other party's Group, as applicable, to
execute, acknowledge and deliver such documents, instruments or assurances and
take such other action as the requesting party may reasonably request to more
effectively evidence compliance with the Supplemental Agreements applicable to
the purchase and sale of Information Services as reflected in the Supplemental
Agreements for the applicable Information Services in effect from time to time,
as amended and/or modified by the Provider.
Section 9.2. Litigation Cooperation.
(a) Upon written request, Equifax and ChoicePoint shall, and shall
cause each member of its Group to, use reasonable efforts to make available to
the other its Representatives as witnesses or consultants to the extent that
such persons may reasonably be required in connection with any legal,
administrative or other proceedings, with respect to the Information Services
provided thereby, arising out of the business of the other party or of any
member of the other party's Group prior to the Distribution Date in which the
requesting party or any member of its Group may from time to time be involved,
at the cost and expense of the requesting party.
(b) Equifax and ChoicePoint shall, and shall cause each member of
its respective Group, to use reasonable efforts to notify the other if it
learns of a potential or actual third party claim related to the Information
Services provided pursuant to this Agreement to be brought against any member
of the other's Group.
ARTICLE X
TERM AND TERMINATION
Section 10.1. Term.
(a) The term of this Agreement shall commence at the Effective
Time and shall continue for one (1) year and shall be automatically renewed for
separate, successive one-year periods, unless terminated in accordance with
Section 10.2.
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Section 10.2. Termination.
(a) Either party may terminate this Agreement upon at least ninety
(90) days written notice given prior to the expiration of the then-current
one-year term.
(b) Either party may terminate this Agreement:
(i) by giving notice to the other if the other party
shall have failed within thirty (30) days after the receipt of written
notice to remedy any material breach of this Agreement set forth in
the notice;
(ii) if the other Party becomes insolvent, or is unable to
pay its debts as due, or enters into or files or has filed or
commenced against it a petition, arrangement, action or other
proceeding seeking relief or protection under the bankruptcy laws of
the United States or any similar laws of the United States or any
State of the United States or of any other country or jurisdiction, or
has a trustee, receiver or liquidator appointed for all or a
substantial part of its assets.
(c) In addition, either party may cease to provide an Information
Service to the other party's group at any time upon thirty (30) days written
notice to the other party or a shorter time if necessary if, in such party's
reasonable judgment, continuation of the Information Service becomes
impossible, impractical, or undesirable due to legal, economic, or policy
constraints or circumstances.
Section 10.3. Effect of Termination and Expiration.
Upon termination or expiration of the term of this Agreement, all
rights and obligations of the parties under this Agreement will immediately
cease and terminate (except for the rights and obligations pursuant to Articles
IV (Representations and Warranties), V (Limitations on Actions and
Liabilities), VI (Indemnification), VII (Indemnification Procedures), and VIII
(Confidentiality) and XI (Miscellaneous) and Sections 9.2 and 10.3, and the
definitions required thereby which will survive such termination or
expiration), and neither party will have any further obligation to the other
party with respect to this Agreement, except for (a) fees and reimbursable
expenses payable to the other party accrued but unpaid at the date of
termination or expiration, and (b) the provisions of this Agreement which are
specifically designated herein as surviving such termination or expiration.
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ARTICLE XI
MISCELLANEOUS
Section 11.1. Expenses.
Except as specifically provided in this Agreement or any Ancillary
Agreement, all costs and expenses incurred in connection with the preparation,
execution, delivery and implementation of this Agreement and the Ancillary
Agreements shall be paid by Equifax.
Section 11.2. Notices.
All notices and communications under this Agreement shall be deemed to
have been given (a) when received, if such notice or communication is delivered
by facsimile, hand delivery or overnight courier, or (b) three (3) business
days after mailing if such notice or communication is sent by United States
registered or certified mail, return receipt requested, first class postage
prepaid. All notices and communications, to be effective, must be properly
addressed to the party to whom the same is directed at its address as follows:
If to Equifax, to:
Equifax Inc.
1600 Peachtree Street, N.W.
Atlanta, GA 30309
Attention: Bruce S. Richards
Corporate Vice President and General Counsel
Fax: (404) 885-8682
with a copy to:
Thomas F. Chapman
President and Chief Operating Officer
Fax: (404) 885-8766
If to ChoicePoint, to:
ChoicePoint Inc.
1000 Alderman Drive
Alpharetta, GA 30005
Attention: J. Michael de Janes, Esq.
Fax: (770) 752-5939
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with a copy to:
Derek V. Smith
President and Chief Executive Officer
Fax: (770) 752-6243
Either party may, by written notice delivered to the other party in accordance
with this Section 11.2, change the address to which delivery of any notice
shall thereafter be made.
Section 11.3. Amendment and Waiver.
This Agreement may not be altered or amended, nor may any rights
hereunder be waived, except by an instrument in writing executed by the party
or parties to be charged with such amendment or waiver. No waiver of any
terms, provision or condition of or failure to exercise or delay in exercising
any rights or remedies under this Agreement, in any one or more instances,
shall be deemed to be, or construed as, a further continuing waiver of any such
term, provision, condition, right or remedy or as a waiver of any other terms,
provision or condition of this Agreement.
Section 11.4. Entire Agreement.
This Agreement and Exhibits constitute the entire understanding of the
parties hereto with respect to the subject matter hereof, superseding all
negotiations, prior discussions and prior agreements and understandings
relating to such subject matter.
Section 11.5. Parties in Interest.
Neither of the parties hereto may assign its rights or delegate any of
its duties under this Agreement without the prior written consent of each other
party. This Agreement shall be binding upon, and shall inure to the benefit
of, the parties hereto and their respective successors and permitted assigns.
Nothing contained in this Agreement, express or implied, is intended to confer
any benefits, rights or remedies upon any person or entity other than members
of the Equifax Group and the ChoicePoint Group and the Equifax Indemnitees and
ChoicePoint Indemnitees under Articles VI and VII hereof.
Section 11.6. Further Assurances and Consents.
In addition to the actions specifically provided for elsewhere in this
Agreement, each of the parties hereto will use its reasonable efforts to (a)
execute and deliver such further instruments and documents and take such other
actions as any other party may reasonably request in order to effectuate the
purposes of this Agreement and to carry out the terms hereof and (b) take, or
cause to be taken, all actions, and do, or cause to be done, all things
reasonably necessary, proper or advisable under applicable laws, regulations
and agreements or otherwise to consummate and
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make effective the transactions contemplated by this Agreement, including
without limitation, using its reasonable efforts to obtain any consents and
approvals and to make any filings and applications necessary or desirable in
order to consummate the transactions contemplated by this Agreement; provided
that no party hereto shall be obligated to pay any consideration therefor
(except for filing fees and other similar charges) to any third party from whom
such consents, approvals and amendments are requested or to take any action or
omit to take any action if the taking of or the omission to take such action
would be unreasonably burdensome to the party or its respective Group or the
business thereof.
Section 11.7. Severability.
The provisions of this Agreement are severable and should any
provision hereof be void, voidable or unenforceable under any applicable law,
such provision shall not affect or invalidate any other provision of this
Agreement, which shall continue to govern the relative rights and duties of the
parties as though such void, voidable or unenforceable provision were not a
part hereof.
Section 11.8. Governing Law.
This Agreement shall be construed in accordance with, and governed by,
the laws of the State of Georgia, without regard to the conflicts of law rules
of such state.
Section 11.9. Counterparts.
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original instrument, but all of which together shall
constitute but one and the same Agreement.
Section 11.10. Disputes.
(a) All disputes arising from or in connection with this
Agreement, whether based on contract, tort, statute or otherwise, including,
but not limited to, disputes in connection with claims by third parties
(collectively, "Disputes"), shall be resolved only in accordance with the
provisions of this Section 11.10; provided, however, that nothing contained
herein shall preclude either party from seeking or obtaining (i) injunctive
relief to prevent an actual or threatened breach of any of the provisions of
this Agreement, or (ii) equitable or other judicial relief to enforce the
provisions of this Section 11.10 hereof or to preserve the status quo pending
resolution of Disputes hereunder.
(b) Either party may give the other party written notice of any
Dispute not resolved in the normal course of business. Within ten (10) days
after delivery of the notice of a Dispute, the receiving party shall submit to
the other a written response. The notice and the response shall include a
statement of such party's position and a summary of arguments supporting that
position
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and the name and title of the executive who will represent that party and of
any other person who will accompany such executive in resolving the Dispute.
Within twenty (20) days after delivery of the first notice, the executives of
both parties shall meet at a mutually acceptable time and place, and thereafter
as often as they reasonably deem necessary, and shall negotiate in good faith
to attempt to resolve the Dispute. All reasonable requests for information
made by one party to the other will be honored.
(c) If the Dispute has not been resolved by negotiations within
sixty (60) days of the first party's notice, the Dispute shall be submitted,
upon application of either party, for resolution by binding arbitration in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association (the "Rules"). Arbitration shall be by a single arbitrator
experienced in the matters that are at issue in the Dispute, which arbitrator
shall be selected by the parties in accordance with the Rules. The arbitration
shall be conducted in Atlanta, Georgia (or at any other place agreed upon by
the parties and the arbitrator). The decision of the arbitrator shall be final
and binding as to all matters at issue in the Dispute; provided, however, if
necessary such decision may be enforced by either party in any court of law
having jurisdiction over the parties or the subject matter of the Dispute.
Unless the arbitrator shall assess the costs and expenses of the arbitration
proceeding and of the parties differently, each party shall pay its costs and
expenses incurred in connection with the arbitration proceeding, and the costs
and expenses of the arbitrator shall be shared equally by the parties.
(d) Notwithstanding anything to the contrary in this Section
11.10, the Presidents of Equifax and ChoicePoint shall have the authority to
stay the time periods set forth in this Section 11.10 upon mutual agreement to
take such action.
(e) The parties agree to continue performing their respective
obligations under the Agreement while the Dispute is being resolved unless and
until such obligations are terminated or expire in accordance with the
provisions of the Agreement.
(f) Neither party will be compensated for any time or expense
related to the Dispute resolution process. Each party will treat the existence
and results of the dispute resolution process as Company Information of the
party. Neither party may disclose the existence of the Dispute, evidence
taken, resulting opinions or settlements of the Dispute hereunder without the
prior written consent signed by the other party. This prohibition shall not
apply to disclosures to counsel, made in documents filed with a court or
required by law.
Section 11.11. Force Majeure.
Neither party will be liable for any loss or damage due to causes
beyond its control, including, but not limited to, fire, accident, labor
difficulty, war, power or transmission failures, riot, Acts of God or changes
in laws and regulations, provided that the affected party must (a) promptly
notify the other party in writing and furnish all relevant information
concerning the event
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of force majeure; (b) use reasonable efforts to avoid or remove the cause of
its non-performance; and (c) proceed to perform its obligations with dispatch
when such cause is removed.
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the day and year first above written.
EQUIFAX INC.
By:
-------------------------------
Title:
----------------------------
Date:
-----------------------------
CHOICEPOINT INC.
By:
-------------------------------
Title:
----------------------------
Date:
-----------------------------
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<PAGE> 1
Exhibit 10.7
TAX SHARING AND INDEMNIFICATION AGREEMENT
THIS TAX SHARING AND INDEMNIFICATION AGREEMENT ("Agreement") is
entered into as of July __, 1997, by and between Equifax Inc., a Georgia
corporation ("Equifax"), and ChoicePoint Inc., a Georgia corporation
("Controlled").
WHEREAS, Equifax is the common parent and Controlled is currently a
member of an "affiliated group", as that term is defined in Section 1504 of the
Code, which currently files consolidated federal income tax returns; and
WHEREAS, Controlled is a holding company and a wholly-owned
subsidiary of Equifax; and
WHEREAS, Controlled owns or will own prior to the Distribution 100% of
the stock of Equifax Services Inc., a Georgia corporation ("Services"), which
carries on the business, primarily throughout the United States and the United
Kingdom, of compiling various underwriting, claims, and other information for
inclusion in reports sold primarily to life and health, property and casualty,
and commercial insurance customers; and
WHEREAS, that certain Distribution Agreement Plan of Reorganization
and Distribution, dated July __, 1997, by and between Equifax and Controlled,
and any exhibits thereto (the "Plan"), provides for the distribution to the
holders of Equifax common stock all of the outstanding shares of the common
stock of Controlled; and
WHEREAS, as a consequence of the Distribution, Controlled will no
longer be a subsidiary of Equifax and will no longer be a member of Equifax's
affiliated group; and
WHEREAS, pursuant to Treas. Reg. Section 1.1502-6, Equifax and each
subsidiary which was a member of Equifax's affiliated group during any part of
a consolidated return year is severally liable for the consolidated federal
income tax liability of that group for such year; and
WHEREAS, the Equifax Group and the Controlled Group desire to set
forth their rights and obligations with respect to foreign, federal, state and
local taxes due for periods both before and after the Distribution and with
respect to certain tax and other liabilities that may be asserted in connection
with the Distribution;
NOW THEREFORE, Equifax on behalf of itself and members of the Equifax
Group and Controlled, on behalf of itself and members of the Controlled Group,
in consideration of the mutual covenants contained herein, agree as follows:
<PAGE> 2
ARTICLE I
DEFINITIONS
For purposes of this Agreement, the following definitions shall apply:
1.1 Affiliated Group means an affiliated group of corporations within
the meaning of Section 1504(a) (determined without regard to the exceptions
contained in Section 1504(b)) of the Code for the taxable period in question.
1.2 Code means the Internal Revenue Code of 1986, as amended from
time to time.
1.3 Consolidated Returns means the consolidated United States federal
income tax returns of the affiliated group of which Equifax is the common
parent for consolidated return years beginning before the Date of Distribution
and any consolidated, combined or similar state income tax returns of any
members of the Equifax Group for taxable years beginning before the Date of
Distribution (including, in each case, any amendments thereto).
1.4 Controlled Group means (i) with respect to any period prior to the
Date of Distribution, Controlled, Services, PRC Corporation, Inc., Osborn
Laboratories, Inc. ("Osborn"), Professional Test Administrators, Inc., Equifax
Government and Special Systems, Inc., ChoicePoint Ltd. and each of Osborn's
wholly owned subsidiaries, and (ii) with respect to any period on or after the
Date of Distribution, the Affiliated Group of which Controlled or any successor
of Controlled is the common parent.
1.5 Date of Distribution or Distribution Date means the date Equifax
ceases to own 80% of the vote and value of the stock of Controlled within the
meaning of Section 1504 of the Code.
1.6 Distribution shall mean the distribution by Equifax of all of the
stock of Controlled to Equifax shareholders pursuant to the Plan.
1.7 Effective Time means 5:00 p.m. EDT on July 31, 1997.
1.8 Equifax Group means, for each taxable period, the Affiliated Group
of which Equifax or any successor of Equifax is the common parent, provided,
however, Equifax Group shall not include the Controlled Group.
1.9 Expenses means out-of-pocket expenses and shall not include any
overhead or indirect costs.
1.10 Fifty Percent Acquisition or 50% Acquisition means an acquisition
by 1 or more persons of fifty percent or more of the vote or value of the stock
of either Equifax or Controlled where the Parties fail to prove that such
acquisition is not part of the same
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overall plan or series of related transactions that includes the Distribution;
provided, however, that an acquisition shall constitute a 50% Acquisition only
if such acquisition causes the nonacquired Party to be taxed under subsequently
enacted legislation. For purposes of determining whether a 50% Acquisition has
occurred, an acquisition of assets of Equifax or Controlled (e.g., pursuant to
a reorganization described in subparagraphs (A), (C) or (D) of section
368(a)(1) of the Code) shall be treated as an acquisition of stock to the
extent provided by subsequently enacted legislation.
1.11 Final Determination means the final resolution of liability for
any Tax for a taxable period (i) by IRS Form 870 or 870-AD (or any successor
forms thereto), on the date of acceptance by or on behalf of the IRS, or by a
comparable form under the laws of other jurisdictions, except that a Form 870
or 870-AD, successor form, or comparable form that reserves the right of the
taxpayer to file a claim for refund and/or the right of the Taxing Authority to
assert a further deficiency shall not constitute a Final Determination; (ii) by
a decision, judgment, decree, or other order by a court of competent
jurisdiction which has become final and unappealable; (iii) by a closing
agreement or offer in compromise under Section 7121 or 7122 of the Code or any
subsequently enacted corresponding provisions of the Code, or comparable
agreements under the laws of other jurisdictions; (iv) by an allowance of a
refund or credit in respect of an overpayment of Tax, but only after the
expiration of all periods during which such refund may be recovered (including
by way of offset) by the Tax imposing jurisdiction; or (v) by any other final
disposition by reason of the expiration of the applicable statute of
limitations.
1.12 IRS means the Internal Revenue Service.
1.13 Party means either of the parties to this Agreement.
1.14 Plan is defined in the recitals to this Agreement.
1.15 Restructuring Taxes means any Taxes incurred in connection with
(i) the contribution of the stock of Services, the stock of EGSS, the stock of
Osborn and certain other assets to Controlled, including the assumption of
liabilities related thereto (the "Contribution"), or (ii) the distribution of
the stock of Controlled pursuant to the Plan including, without limitation, any
transfer Taxes or any Tax imposed pursuant to or as a result of Section 311 of
the Code. If the Distribution otherwise qualifies under Section 355 of the Code
and, following the Distribution, a Party enters into a 50% Acquisition, then
any Taxes imposed upon the other Party shall constitute "Restructuring Taxes."
1.16 Tainting Act means any breach, caused by one or more members of
the Controlled Group (or their less than wholly-owned subsidiaries), of any
written representation or other statement given in connection with an IRS
letter ruling or legal opinion obtained by Equifax (relating to the
Contribution or Distribution) or contained in Section 2.6.
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1.17 Tax or Taxes means all forms of taxation, whenever created or
imposed, whether domestic or foreign, and whether imposed by a nation,
locality, municipality, government, state, federation, or other body (a "Taxing
Authority"), and without limiting the generality of the foregoing shall include
net income, alternative or add-on minimum tax, gross income, sales, use,
franchise, gross receipts, value added, ad valorem, profits, license, payroll,
withholding, social security, unemployment insurance, employment, property,
transfer, recording, excise, severance, stamp, occupation, premium, windfall
profit, custom duty, or other tax, governmental fee or other like assessment or
charge of any kind whatsoever, together with any related interest, penalties or
other additions to tax, or additional amounts imposed by any such Taxing
Authority. For purposes of this Agreement, Taxes are "attributable" to a member
of the Controlled Group or the Equifax Group if such Taxes are imposed as a
result of, or in connection with, the income, assets, employees, or business
operations of such member. The fact that a member of the Controlled Group or
the Equifax Group prepared or filed a return with respect to any Taxes is not
relevant in determining whether such Taxes are "attributable" to such member.
1.18 Tax Benefit means any Tax Item which decreases Taxes paid or
payable.
1.19 Tax Controversy means any audit, examination, dispute, suit,
action, litigation or other judicial or administrative proceeding by or against
the IRS or any other Taxing Authority.
1.20 Tax Item means any item of income, gain, loss, deduction, credit,
recapture of credit or any other item, including, but not limited to, an
adjustment under Code Section 481 resulting from a change in accounting method,
which increases or decreases Taxes paid or payable.
1.21 Tax Returns means all reports, estimates, declarations of
estimated tax, information statements, returns or other documents required or
permitted to be filed with a Taxing Authority in connection with any Taxes,
including but not limited to requests for extensions of time, information
statements and reports, claims for refund, and amended returns.
ARTICLE II
PRE-EFFECTIVE TIME, POST-EFFECTIVE TIME, AND OTHER TAX LIABILITIES
2.1 Equifax Group.
(a) Current and Prior Periods. Except as otherwise provided in this
Agreement, Equifax shall pay, on a timely basis, all Taxes attributable to the
Equifax Group that are imposed for the portion of the taxable year 1997 that
includes and precedes the Effective Time (the "1997 Equifax Taxes") and for all
periods ending prior to the Effective Time. Equifax hereby assumes all such
liability and shall indemnify and hold harmless Controlled and any member of
the Controlled Group from and against any share
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or amount of the 1997 Equifax Taxes and all Taxes attributable to the Equifax
Group that are imposed for periods ending on or prior to the Effective Time.
(b) Future Periods. Except as otherwise provided in this Agreement,
Equifax shall pay, on a timely basis, all Taxes attributable to the Equifax
Group that are imposed for any period beginning after the Effective Time (and,
to the extent not already included in this sentence, all Taxes attributable to
the Equifax Group that are imposed for the portion of the taxable year 1997
following the Effective Time), and shall indemnify and hold harmless Controlled
and any member of the Controlled Group from and against all such Taxes.
(c) NonCalendar Years. If a taxable year of a member of the
Equifax Group with respect to a particular Tax is not the calendar year, then
all Taxes attributable to such member imposed for calendar year 1996 and 1998
shall be included in subsections 2.1(a) and 2.1(b), respectively, to the extent
not already included in those subsections.
2.2 Controlled Group.
(a) Current and Prior Periods. Except as otherwise provided
in this Agreement, Controlled shall pay, on a timely basis, all Taxes
attributable to the Controlled Group that are imposed for the portion of the
taxable year 1997 that includes and precedes the Effective Time (the "1997
Controlled Taxes") and for all periods ending on or prior to the Effective
Time. Controlled hereby assumes all such liability and shall indemnify and hold
harmless Equifax and any member of the Equifax Group from and against any share
or amount of the 1997 Controlled Taxes and all Taxes attributable to the
Controlled Group that are imposed for periods ending on or prior to the
Effective Time.
(b) Future Periods. Controlled shall pay, on a timely basis,
all Taxes attributable to the Controlled Group that are imposed for any period
beginning on or after the Effective Time (and, to the extent not already
included in this sentence, all Taxes attributable to the Controlled Group that
are imposed for the portion of the taxable year 1997 following the Effective
Time), and shall indemnify and hold harmless Equifax and any member of the
Equifax Group from and against all such Taxes.
(c) Indemnification for Basket Amount and Amount in Excess of
Basket. Notwithstanding anything contained in subsection 2.2(a) to the
contrary, Equifax shall indemnify and hold Controlled harmless for any
additional Taxes paid by Controlled, including additional 1997 Controlled
Taxes, in excess of the Basket Amount resulting from an examination by a Taxing
Authority, where such Taxes are attributable to the Controlled Group and are
imposed for any period that precedes the Effective Time. If, for any reason,
any such additional Taxes are paid to the Taxing Authority by Equifax,
Controlled agrees to indemnify and hold Equifax harmless for any such Taxes
(minus any Tax Benefit received by Equifax resulting from such payments, plus
any additional Taxes resulting from such indemnification) up to the Basket
Amount. For purposes of this subsection 2.2(c) only, the terms "Taxes" and
"1997 Controlled Taxes" as defined in this
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Agreement shall not include net income, sales, use, or alternative minimum
taxes. In no event shall the sum of any such additional Taxes paid by
Controlled and any indemnity payments made by Controlled under this subsection
2.2(c) exceed the Basket Amount. In determining the amount, if any, of an
indemnification obligation by Controlled under this subsection 2.2(c) in the
case where both Equifax and Controlled pay a portion of such additional Taxes,
the additional Taxes paid by Controlled shall be considered and applied against
the Basket Amount first. The Basket Amount in each case shall be $2 million
plus the Tax Benefit, if any, allowable to Controlled resulting from such
payments, reduced by any Taxes incurred as a result of the receipt by
Controlled of indemnification pursuant to this subsection 2.2(c). Payments
required to be made pursuant to this subsection 2.2(c) shall be made in
immediately available funds within thirty (30) days after written demand
therefor from the other Party.
(d) NonCalendar Years. If a taxable year of a member of the
Controlled Group with respect to a particular Tax is not the calendar year,
then all Taxes attributable to such member imposed for calendar year 1996 and
1998 shall be included in subsections 2.1(a) and 2.1(b), respectively, to the
extent not already included in those subsections.
2.3 Restructuring Taxes.
(a) Generally. Except as otherwise provided in subsections
(b), (c), or (d) hereof, Equifax shall pay, and shall indemnify and hold
harmless Controlled and any member of the Controlled Group from and against,
any and all Restructuring Taxes.
(b) Payment/Indemnification for Tainting Acts. Anything in
this Article II to the contrary notwithstanding, Controlled shall pay, and
shall indemnify and hold Equifax harmless from and against, (i) any
Restructuring Taxes, (ii) any liability resulting from a decision that Equifax
is liable to Equifax's or Controlled's shareholders because of a Final
Determination that the Distribution is taxable, and (iii) any additional Taxes
described in Section 7.4 and related Expenses payable by Equifax by reason of
the receipt of a payment from (or the payment by) Controlled described in this
subsection 2.3(b), but in any case only to the extent such Restructuring Taxes
or liability to shareholders is due exclusively to a Tainting Act.
(c) Payment/Indemnification for Combined Breach. Anything in
this Article II to the contrary notwithstanding, in the event of a Final
Determination that Restructuring Taxes are due to a Taxing Authority and such
Restructuring Taxes are caused by both a Tainting Act, and a breach, caused
solely by any member of the Equifax Group, of any written representation or
statement given in connection with an IRS letter ruling or legal opinion
obtained by Equifax or contained in Section 2.6 of this Agreement, or,
alternatively, such Restructuring Taxes are caused in part by one or more
members of the Equifax Group and in part by one or more members of the
Controlled Group (or their less than wholly-owned subsidiaries), then the
liability of Equifax and Controlled for any Restructuring Taxes arising from
such Final Determination and any liability to
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shareholders arising from such Final Determination shall be borne fifty percent
(50%) by Equifax and fifty percent (50%) by Controlled. Each Party, jointly and
severally with its Affiliated Group, agrees to pay and to indemnify and hold
the other Party harmless from and against the amount of Restructuring Taxes and
liability to shareholders allocated to such first Party under this subsection
2.3(c).
(d) Payment/Indemnification Absence of Any Breach. Anything
in this Article II to the contrary notwithstanding, in the event of a Final
Determination that Restructuring Taxes are due to a Taxing Authority and such
Restructuring Taxes are not caused by (i) a Tainting Act, (ii) a breach, caused
by any member of the Equifax Group, of any representation given in connection
with an IRS letter ruling obtained by Equifax or contained in Section 2.6 of
this Agreement, or (iii) a combined breach described in subsection 2.3(c), then
the liability of Equifax and Controlled for any Restructuring Taxes arising
from such Final Determination and any liability to shareholders arising from
such Final Determination shall be borne ninety percent (90%) by Equifax and ten
percent (10%) by Controlled. Each Party, jointly and severally with its
Affiliated Group, agrees to pay and to indemnify and hold the other Party
harmless from and against the amount of Restructuring Taxes and liability to
shareholders allocated to such first Party under this subsection 2.3(d).
2.4 Payment of 1997 Controlled Estimated Tax Liabilities. Controlled
shall pay to Equifax an amount equal to the estimated aggregate amount of Taxes
that would be owed by the Controlled Group for taxable year 1997 where such
Taxes must be paid by Equifax as part of a Consolidated Return (the "1997
Controlled Estimated Tax Liabilities"). Such estimated amount shall be computed
in a manner consistent with the intercompany allocation of consolidated federal
and state tax liabilities applied in prior periods. Notwithstanding the above,
such estimated amount shall not include amounts related to separate returns
filed on a combined unitary basis, except to the extent consistent with how the
tax liabilities on such returns were allocated in prior years. Payment of the
1997 Controlled Estimated Tax Liabilities is due on or before the tenth (10th)
day after receipt by Controlled of the applicable computations prepared by
Equifax.
2.5 Adjustment of 1997 Controlled Estimated Tax Liabilities. Upon the
filing of the Equifax Group's 1997 Consolidated Returns, the 1997 Controlled
Estimated Tax Liabilities as of the Distribution Date shall be restated and
adjusted by Equifax based upon information then available. An adjusting payment
shall be made by Equifax or Controlled as is required by any restatement or
adjustment of the 1997 Controlled Estimated Tax Liabilities. Such payment is
due on or before the tenth (10th) day after receipt by Controlled of the
applicable computations prepared by Equifax.
2.6 Representations and Covenants. Each of Equifax and Controlled
represents to the other that neither it nor its representatives have knowingly
misstated or omitted a material fact in connection with Equifax obtaining an
IRS letter ruling or a legal opinion relating to the Distribution or
Contribution. In addition, each of Equifax and Controlled represents to the
other that (i) it is not currently engaged in any negotiations
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<PAGE> 8
involving a transaction that, if consummated, would constitute a 50%
Acquisition, and (ii) it will neither engage in negotiations nor consummate a
business combination that constitutes a 50% Acquisition. Each of Equifax and
Controlled represents to the other that it has not and will not do anything
that would cause the Distribution or the Contribution to be taxable under
federal or state income tax laws. Further, Controlled agrees that, for two
years following the Distribution, it will not issue any Controlled stock,
options to acquire Controlled stock or any other equity instrument until it has
received an opinion of counsel to the effect that such issuance will not
adversely affect the ruling or opinion regarding the Distribution or
Contribution obtained by Equifax and the board of directors of Controlled has
approved of such issuance. In approving of such an issuance, the board of
directors of Controlled will consider relevant factors, including
representations made to the IRS to obtain the ruling, the actual IRS ruling
issued, and current IRS policy regarding Revenue Procedure 96-39, 1996-1 I.R.B.
33.
ARTICLE III
REFUNDS OF TAXES
Each Party shall be entitled to retain or be paid all refunds of Tax
received, whether in the form of payment, credit or otherwise, from any Taxing
Authority with respect to any Tax Returns filed or to be filed by such Party in
accordance with Article V of this Agreement, provided, however, Controlled
shall be entitled to retain or be paid all such refunds with respect to any
Taxes to the extent such Taxes exclusively pertain to property or operations of
the Controlled Group. Notwithstanding anything contained in this Article III to
the contrary, Equifax shall be entitled to be paid and to retain, and
Controlled shall not be entitled to retain and shall be required to pay over to
Equifax, any refunds of Tax received to the extent (i) Equifax indemnified
Controlled for the Taxes attributable to such refunds, or (ii) Equifax paid to
the Taxing Authority the Taxes attributable to such refunds and Equifax has not
been indemnified by Controlled.
ARTICLE IV
CARRYBACKS FROM SEPARATE RETURN YEARS
4.1 General. Anything herein to the contrary notwithstanding, with the
prior written consent of Equifax, which consent may not be unreasonably
withheld, the Controlled Group may elect to carry back to any taxable period
beginning before the Date of Distribution any tax attribute, including without
limitation, any net operating or other loss or credit, arising in any taxable
period beginning after the Date of Distribution which the Controlled Group may
properly elect to carry back for federal income tax purposes or combined state
tax purposes to a Consolidated Return. With respect to any such carryback,
Equifax agrees to file such claims for refund and other returns as may be
required to claim the tax refunds attributable to such carryback items and to
pay promptly after receipt to Controlled the cash amount of any refunds of
Taxes, including the cash amount of any interest resulting from the utilization
of such attributes, after taking into consideration any resulting increase or
decrease in the Tax liability of any member of the
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<PAGE> 9
Equifax Group. To the extent authorized by law, Equifax shall act as collection
agent for the Controlled Group with respect to any such refund.
4.2 Review and Expenses. The amount of any carryback by the Controlled
Group shall be reviewed and approved (on the basis of tax information contained
in Controlled's tax return) by Equifax's certified public accountants as to the
amount and validity of such carryback. Controlled agrees to reimburse Equifax
for its reasonable Expenses incurred in reviewing, filing and securing any
Controlled refund claims hereunder.
4.3 Subsequent Disallowance. In the event that any tax attribute for
which Equifax has made a payment pursuant to Section 4.1 is subsequently
reduced or disallowed, Controlled shall indemnify Equifax and hold it harmless
from any Tax liability, including interest and penalties, incurred by reason of
such reduction or disallowance.
ARTICLE V
TAX RETURN PREPARATION
5.1 Consolidated Returns.
(a) Equifax shall prepare and timely file all Consolidated
Returns. Controlled shall have a reasonable period under the circumstances to
review the 1996 and 1997 Consolidated Returns. The Consolidated Returns shall
be prepared and filed by Equifax in compliance with applicable tax laws and on
a basis that is consistent with any IRS letter ruling or legal opinion obtained
by Equifax in connection with the Distribution or Contribution and, subject to
the foregoing, consistent with Equifax's prior Consolidated Returns.
(b) Controlled shall be responsible for preparing all
information relating to the Controlled Group necessary for Equifax to prepare
and file the Consolidated Returns. Such information shall include the annual
federal and state, if any, tax work preparation package, necessary to enable
Equifax to prepare the Consolidated Returns, completed and delivered to Equifax
on or before the same deadline imposed upon other Equifax business units. Such
information shall be used as the basis for Equifax's preparation of the
Consolidated Returns.
(c) Controlled and the Controlled Group shall agree to any
election or consent reasonably requested by Equifax in connection with such
Consolidated Returns and further agree not to elect to be excluded from any
such return.
(d) Controlled and the Controlled Group agree to cooperate
with Equifax, at Equifax's expense, in the preparation of any valuation studies
or other reports which are appropriate or necessary for the preparation of the
Consolidated Returns.
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<PAGE> 10
5.2 Other Pre-Distribution Returns. All other Tax Returns of any
member of the Equifax Group or the Controlled Group for periods beginning
before the Distribution Date shall be filed by Equifax, except that any such
Tax Returns pertaining exclusively to property or operations of the Controlled
Group shall be filed by Controlled. Notwithstanding anything contained in this
Section 5.2, Equifax shall continue to file all Tax Returns of the members of
the Controlled Group for periods beginning before the Distribution Date if the
Tax Return for such period is required to be filed on or prior to the Date of
Distribution. Controlled shall have a reasonable period under the circumstances
to review each such return.
5.3 Post-Distribution Returns. All Tax Returns of any member of the
Controlled Group for periods beginning on or after the Distribution Date shall
be filed by Controlled, and all Tax Returns of any member of the Equifax Group
for periods beginning on or after the Distribution Date shall be filed by
Equifax.
5.4 Cooperation; Exchange of Information. Each Party shall be
responsible for the timely submission to the other Party of information of
which it has knowledge regarding any Tax Item which may properly be included in
any Tax Return to be filed by the other Party, and shall provide any and all
other information and documentation (including, but not by way of limitation,
working papers and schedules) reasonably requested by the other Party for use
in connection with the preparation and filing of any Tax Returns.
ARTICLE VI
TAX CONTROVERSIES AND RECORDS.
6.1 Tax Controversies.
(a) Except as otherwise provided in this Article VI, Equifax
shall have full responsibility in handling, settling or contesting any Tax
Controversy involving a Tax Return for which it has filing responsibility
hereunder (and, in any event, shall have full responsibility in handling,
settling or contesting any Tax Controversy involving (i) Restructuring Taxes,
or (ii) Taxes for which Equifax could be liable pursuant to subsection 2.2(c)
hereof) and, except as provided in this subsection 6.1(a), Controlled shall
have full responsibility in handling, settling or contesting any Tax
Controversy involving a Tax Return for which it has filing responsibility, and
any costs incurred in handling, settling or contesting any Tax Controversy
shall be borne by the Party having full responsibility therefor. For purposes
of this subsection 6.1(a), Equifax shall be treated as potentially liable for
Taxes pursuant to subsection 2.2(c), notwithstanding the fact that the amount
of such Taxes involved in the controversy is or becomes less than the Basket
Amount.
(b) The Party responsible for any Tax Controversy shall use
all reasonable efforts (taking into consideration all relevant facts and
circumstances known to
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the Party) to resist any deficiency assertions by any Taxing Authority
regardless of which Party is ultimately responsible for any such Tax under this
Agreement.
(c) Each Party shall give prompt notice to the other of any
communication with the IRS or other Taxing Authority which may affect any Tax
Item attributable to the other Party. Each Party shall give prompt notice to
the other of any communication with the IRS or other Taxing Authority which
relates to a Tax Controversy for which the other Party is responsible
hereunder. Equifax shall notify Controlled promptly of any communication with
the IRS or other Taxing Authority relating in whole or in part to (i)
Restructuring Taxes for which Controlled could be liable pursuant to Section
2.3 hereof, or (ii) Taxes for which Controlled could be liable pursuant to
Section 2.2 hereof (any proposed adjustment described in subsection 6.1(c)(i)
and (ii) referred to as a "Controlled Indemnity Issue"). Controlled shall
notify Equifax promptly of any communication with the IRS or other Taxing
Authority relating in whole or in part to (iii) Taxes described in subsection
2.2(c) hereof (whether or not the amount of such Taxes exceeds the Basket
Amount), (iv) any Restructuring Taxes (whether or not it is alleged that a
member of the Equifax Group is at fault or is partially at fault), or (v) any
Taxes for which Equifax could be liable pursuant to subsections 2.1(a) and
2.1(b) (each item described in subsection 6.1(c)(iii) through (v) referred to
as an "Equifax Issue").
(d) Controlled shall have 30 days after receipt of such
notice from Equifax within which to object to the proposed adjustment relating
to a Controlled Indemnity Issue (that is not an Equifax Issue). If Controlled
does not notify Equifax within such 30 day period that it objects to the
proposed adjustment, then Equifax shall have exclusive control over all stages
of the Tax Controversy, including full authority to determine whether and in
what manner to contest or compromise the issue, unless and until Controlled so
notifies Equifax.
(e) If Controlled notifies Equifax that it objects to the
proposed adjustment relating to a Controlled Indemnity Issue (that is not an
Equifax Issue), then Equifax shall not thereafter consent to the adjustment or
compromise of such Controlled Indemnity Issue without the consent of
Controlled, but shall cooperate with Controlled to resolve the Controlled
Indemnity Issue on a basis acceptable to Controlled. Prior to the issuance of a
notice of proposed adjustment or similar stage in the proceedings, however,
Equifax shall be responsible for the conduct of the audit, including matters
pertaining to such Controlled Indemnity Issue. Equifax shall notify Controlled
in advance of any conferences, meetings, and proceedings pertaining to the
audit and, at its own expense, Controlled shall have the right to attend all
such proceedings with any Taxing Authority, the subject matter of which is or
includes such Controlled Indemnity Issue.
(f) Upon the issuance of a notice of proposed adjustment or
similar stage in the proceedings, Controlled shall assume the conduct of all
further proceedings, with counsel selected by it, at Controlled's sole expense,
insofar as the proceedings relate to a Controlled Indemnity Issue (that is not
an Equifax Issue), and thereafter Controlled
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<PAGE> 12
and Equifax shall jointly be responsible for the conduct of proceedings to
contest such Controlled Indemnity Issue.
(g) In the event that Equifax receives a notice of deficiency
from the IRS, or a similar notice from any other Taxing Authority, and such
notice relates exclusively to one or more Controlled Indemnity Issues (none of
which are Equifax Issues) and does not relate to an Equifax Issue then:
(i) Upon receiving a written request from Controlled, given
no later than a date reasonably necessary to permit preparation and timely
filing of a petition in the United States Tax Court for redetermination of the
deficiency, or a court of similar jurisdiction with respect to Taxes imposed by
any other Taxing Authority, Equifax shall timely file such petition (at
Controlled's sole expense); or
(ii) If (1) Controlled does not request Equifax to file a
petition for redetermination of the deficiency pursuant to subsection 6.1(g)(i)
hereof, (2) Controlled requests that Equifax file a claim for refund, and (3)
Controlled provides Equifax with sufficient funds to pay the deficiency
relating to the Controlled Indemnity Issue, then Equifax (at Controlled's sole
expense) shall file a claim for refund thereof and, if the claim is denied,
bring an action in a court of competent jurisdiction seeking such refund.
(iii) In the event that a judgment of the United States Tax
Court or other court of competent jurisdiction results in an adverse
determination with respect to the Controlled Indemnity Issue, then Controlled
shall have the right to cause Equifax to appeal from such adverse determination
at Controlled's sole expense.
(iv) Controlled and its representatives, at Controlled's
sole expense, shall be entitled to participate in (1) all conferences,
meetings, or proceedings with any Taxing Authority, the subject matter of which
is a Controlled Indemnity Issue (that is not an Equifax Issue), and (2) all
appearances before any court, the subject matter of which is a Controlled
Indemnity Issue (that is not an Equifax Issue).
(h) The right to participate referred to in subsection 6.1(g)(iv)
hereof shall include the submission and content of documentation, memoranda of
fact and law and briefs, the conduct of oral arguments or presentations, the
selection of witnesses, and the negotiation of stipulations of fact with
respect to a Controlled Indemnity Issue (that is not an Equifax Issue).
(i) If the proposed adjustment relating to a Controlled Indemnity
Issue is also an Equifax Issue (or if the proposed adjustment relates solely to
an Equifax Issue that is not a Controlled Indemnity Issue), then Equifax shall
be fully responsible for the conduct of the Tax Controversy, including matters
pertaining to any Controlled Indemnity Issue, but Equifax shall use reasonable
efforts to involve Controlled in the conduct of the Tax Controversy insofar as
it relates to any Controlled Indemnity Issue. Equifax shall
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<PAGE> 13
notify Controlled in advance of any such proceedings and, at its own expense,
Controlled shall attend all conferences, meetings, or proceedings with any
Taxing Authority, the subject matter of which is or includes any Controlled
Indemnity Issue. Controlled shall use all reasonable efforts to assist Equifax
in resisting any deficiency assertions by any Taxing Authority relating to any
such Controlled Indemnity Issue.
6.2 Cooperation. Equifax and Controlled agree to afford full
cooperation to one another and to their respective representatives, if any, in
any Tax Controversy involving:
(a) any Tax Return filed or required to be filed by or for any member
of the Equifax Group or the Controlled Group for any pre-
Distribution period, or
(b) any item or issue affecting Equifax or Controlled's potential
liability hereunder.
Such cooperation shall include, but not by way of limitation:
(i) preparing responses to information requests by any Taxing
Authority;
(ii) making available books, records and other
documentation (including, but not by way of limitation,
working papers and schedules) relevant to such proceeding,
and systems support for documentation furnished in electronic
form;
(iii) making directors, officers or employees available to appear
in person for interview or for testimony;
(iv) making employees available on a mutually convenient basis to
provide additional information and explanation of materials
provided hereunder;
(v) executing powers of attorney, tax information authorizations
and any other necessary or appropriate authorizations;
(vi) executing agreements with the Taxing Authority or other
documents reasonably necessary or appropriate for the
settlement or pursuit of the contest of such issue; and
(vii) doing whatever is reasonable in the circumstances to assist
the other Party in proving that an acquisition does not
constitute a 50% Acquisition.
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6.3 Record Retention. The Parties, on behalf of themselves and the
members of their respective Affiliated Groups, agree to retain all books,
records, returns, schedules, documents and all material papers or relevant
items of information for periods prior to the Date of Distribution for the
later of (i) seven (7) years or (ii) the full period of the applicable statute
of limitations, including any extensions thereof. If, under legislation enacted
after the date of this Agreement, the statute of limitations with respect to a
transaction does not begin to run until the IRS or other Taxing Authority is
notified of the transaction, then the statute of limitations for purposes of
subsection 6.3(ii) shall also not begin to run until such notification is
given.
ARTICLE VII
PAYMENTS
7.1 Payments in General. Any amount required to be paid by one Party
to the other pursuant to this Agreement (other than the payments described in
Sections 2.4 and 2.5 and subsections 2.2(c) and 6.1(g)(ii)) shall be paid in
immediately available funds within thirty (30) days after written demand
therefor from the other Party given after a Final Determination of the amount
thereof.
7.2 Interest on Late Payments. Any amount payable under this Agreement
by one Party to another Party shall, if not paid within ten (10) business days
after the due date specified in this Agreement, bear interest from such due
date until the date paid at the applicable Federal short term rate as defined
in Section 6621 of the Code in effect on the due date.
7.3 Notice. Equifax and Controlled shall give each other prompt
notice of any payment that may be due under this Agreement.
7.4 Tax Items. Except to the extent already provided for in this
Agreement, the amount of any indemnification payment required hereunder shall
take into account the Tax Benefit, if any, allowable to the indemnified Party
resulting from the event giving rise to such indemnification payment and
additional Taxes, if any, incurred by the indemnified Party resulting from such
indemnification and any additional indemnification payment required by this
section. The Parties will cooperate with each other to determine the amounts
described in this section. This Section 7.4 shall not apply to subsection
2.2(c).
ARTICLE VIII
ADMINISTRATIVE PROVISIONS
8.1 Interest. Except as expressly provided herein, no obligation to
pay or right to collect interest or other amounts shall arise by virtue of this
Agreement.
8.2 Agency. It is understood and acknowledged that in accordance with
Treas. Reg. Section 1.1502-77, Equifax, as the common parent, is the agent for
the members of the affiliated group of which Equifax is the common parent
(including all members of the
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<PAGE> 15
group with respect to taxable years beginning before the Date of Distribution)
with respect to all matters referred to therein.
8.3 Expenses. Each party to this Agreement hereby agrees to be
responsible for all of the Expenses which it may incur in carrying out its
duties hereunder.
ARTICLE IX
DISPUTE RESOLUTION
Either Party may give the other written notice of any controversy or
claim between the Parties arising out of or relating to this Agreement, or the
breach hereof ("Claim") not resolved in the normal course of business. Within
10 days after delivery of the notice of a Claim, the receiving Party shall
submit to the other a written response. The notice and response shall include a
statement of such Party's position and a summary of arguments supporting that
position and the name and title of the executive who will represent that Party
and of any other person who will accompany such executive in resolving the
Claim. Within twenty (20) days after delivery of the first notice, the
executives of both Parties shall meet at a mutually acceptable time and place,
and thereafter as often as they reasonably deem necessary, and shall negotiate
in good faith to attempt to resolve the Claim. All reasonable requests for
information made by one Party to the other will be honored.
Claims not resolved through negotiation between executives within
sixty (60) days after the delivery of the first notice described above shall be
submitted, upon application of either Party, for resolution by binding
arbitration in accordance with the Commercial Arbitration Rules of the American
Arbitration Association (the "Rules"). Arbitration shall be by a single
arbitrator experienced in the matters that are at issue with respect to the
Claim, which arbitrator shall be selected by the Parties in accordance with the
Rules. The arbitration shall be conducted in Atlanta, Georgia (or at any other
place agreed upon by the Parties and the arbitrator). The decision of the
arbitrator shall be final and binding as to all matters at issue with respect
to the Claim; provided, however, if necessary such decision may be enforced by
either Party in any court of law having jurisdiction over the Parties or the
subject matter of the Claim. Unless the arbitrator shall assess the costs and
expenses of the arbitration proceeding and of the Parties differently, each
Party shall pay its costs and expenses incurred in connection with the
arbitration proceeding, and the costs and expenses of the arbitrator shall be
shared equally by the Parties.
All Claims shall be resolved only in accordance with the provisions of
this Article IX; provided, however, that nothing contained herein shall
preclude either Party from seeking or obtaining (i) injunctive relief to
prevent an actual or threatened breach of any of the provisions of this
Agreement, or (ii) equitable or other judicial relief to enforce the provisions
of this Article IX hereof or to preserve the status quo pending resolution of
Claims hereunder.
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ARTICLE X
MISCELLANEOUS
10.1 Enforceability. In case any one or more of the provisions
contained in this Agreement should be invalid, illegal or unenforceable, the
enforceability of the remaining provisions contained herein shall not in any
way be affected or impaired thereby.
10.2 Modification of Agreement. No modification, amendment or waiver
of any provision of this Agreement shall be effective unless the same shall be
in writing, and signed by each of the Parties hereto, and then such
modification, amendment or waiver shall be effective only in the specific
instance and for the purpose for which given.
10.3 Successors and Assigns. Except to the extent provided by
operation of law or as provided herein, neither this Agreement nor any rights
hereunder shall be assignable or transferable by either Party hereto, without
the prior written consent of the other Party hereto. Each Party hereby
guarantees the performance of all actions, covenants, agreements and
obligations provided under this Agreement of each of its subsidiaries. Each
Party shall, upon the written request of the other Party, cause any of its
subsidiaries to formally execute this Agreement. This Agreement shall be
binding upon, and shall inure to the benefit of, the successors and assigns of
each Party. If one or more persons acquires all or substantially all of the
assets of Equifax or Controlled, Equifax and Controlled each agree that, as a
condition to the closing of such acquisition, such person or persons must agree
to indemnify the nonacquired Party for any Restructuring Taxes incurred by that
Party as a result of such acquisition.
10.4 Term. This Agreement shall commence on the date of execution
indicated above and shall continue in effect until otherwise agreed to in
writing by the Parties or their successors and assigns.
10.5 Rights Confined to Parties. Nothing expressed or implied herein
is intended or shall be constructed to confer upon or to give to any person,
firm or corporation (other than the Parties hereto, members of their Affiliated
Groups, and their successors and assigns) any right, remedy or claim under or
by reason of this Agreement or of any term, covenant or condition hereof. All
terms, covenants, conditions, promises and agreements contained herein shall be
for the sole and exclusive benefit of the Parties hereto, the members of their
Affiliated Groups, and their successors and assigns.
10.6 Notices. All demands, notices and communications under this
Agreement shall be in writing and shall be deemed to have been duly given if
personally delivered or sent by certified or registered United States Mail,
postage prepaid, to:
(a) in the case of Equifax:
Equifax Inc.
1600 Peachtree Street, N.W.
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<PAGE> 17
Atlanta, Georgia 30309
Attn:
--------------------------------
(b) in the case of Controlled:
-------------------------------------
1000 Alderman Drive
Alpharetta, Georgia 30202
Attn:
--------------------------------
10.7 Effect of Headings. The paragraph headings herein are for
convenience only and shall not affect the construction hereof.
10.8 Governing Law. The provisions of this Agreement, and all rights
and obligations of the Parties hereunder shall be governed by the laws of the
State of Georgia.
10.9 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall, when so executed, be considered an original
and all of which, taken together, shall be considered one document.
10.10 Prior Tax Sharing Agreements. This Agreement shall supersede
any and all tax sharing and indemnification (or similar) agreements between any
of the members of the Equifax Group, on the one hand, and any of the members
of the Controlled Group, on the other hand.
EQUIFAX INC.
By:
---------------------------------
Title:
------------------------------
CHOICEPOINT INC.
By:
---------------------------------
Title:
------------------------------
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<PAGE> 1
EXHIBIT 10.09
AGREEMENT
THIS AGREEMENT, made this 24th day of July, 1996 by and between EQUIFAX
INC, a Georgia corporation (the "Corporation") and DAN ROCCO, a resident of
Georgia (the "Employee"), to be effective January 1, 1996:
WITNESSETH:
WHEREAS, the Employee is employed as an officer of Equifax Services,
Inc., a wholly owned subsidiary of the Corporation; and
WHEREAS, the Corporation recognizes the valuable contributions of the
Employee to the success of the Corporation and Equifax Services, Inc.: and,
WHEREAS, as an incentive for the Employee to continue such employment,
the Corporation wishes to provide for certain deferred compensation payment to
the Employee:
NOW THEREFORE, in consideration of the premises and the mutual
agreements and covenants contained herein, the parties hereby agree as follows:
1. Additional Benefit. The parties acknowledge the existence of
that certain Compensation Agreement executed by them in March of 1993 (the "1993
Compensation Agreement"), and agree that the benefits described in this
Agreement are in addition to, and not in substitution for the benefits
described in paragraph 1 of the 1993 Compensation Agreement, but that this
Agreement supersedes and amends the remainder of said agreement in its entirety.
2. Amount of Deferred Benefit. In addition to any benefits
otherwise payable to Employee by the Corporation, Employee shall be entitled to
a benefit under this Agreement in an amount such that the total benefit payable
to him pursuant to the benefit formula contained in the Equifax Inc. U.S.
Retirement Income Plan, including any benefit actually paid from said Plan,
shall be calculated by ignoring the limitations contained in sections 415 and
401(a)(17) of the Internal Revenue Code of 1986, as amended, and any other
limitations on benefits payable from tax-qualified retirement plans in effect at
the time when benefits are payable hereunder; in addition, his Plan Earnings for
purposes of said calculation shall include the amount of his annual paid or
deferred bonus which does not exceed 50 percent of his annual base salary
(including any tax-deferred amounts elected by him to be contributed under
section 401(k) and/or 125 of said Code). The additional benefit provided for
hereunder shall be paid in the
<PAGE> 2
same form and beginning at the same time as his benefit under the Equifax Inc.
U.S. Retirement Income Plan (which amount will be reduced for early payment, if
applicable, in the manner described under said Plan).
3. Payment of Deferred Benefits. Payment of deferred benefits
under this Agreement and the 1993 Compensation Agreement (referred to
collectively hereafter as the "Agreements") shall commence at the same time
that payments of Employee's accrued benefit commence under the Retirement Plan.
(i) In the event of Employee's death prior to the
commencement of payments hereunder, the only benefit payable
under the Agreements shall be a death benefit payable to
Employee's surviving spouse, if any, and calculated in the
manner set forth in the Retirement Plan. Such benefit shall be
paid in the manner determined under the Retirement Plan, except
that if the present value of such benefit does not exceed
$20,000, the Company may in its discretion pay such benefit to
the Employee's surviving spouse in the form of a single
lump sum payment.
(ii) In the event payments hereunder commence prior
to the Employee's death, such payments hereunder shall be made
in any form available under the Retirement Plan, provided that
Employee shall have made a written election with respect to the
form of payment at least twelve months prior to the commencement
of payments hereunder. In the event that Employee has made more
than one such election, the most recent election filed with the
Senior Vice President for Finance and Administration of the then
employing entity, but no less than 12 months prior to the date
payments are to commence, shall control. If Employee fails to
make such an election, payments hereunder shall be made in the
form of a joint and 50% survivor annuity with monthly payments
for the Employee's life with payments continued after the
Employee's death, at the rate of 50% of the amount paid to the
Employee, to the beneficiary designated by the Employee until
such beneficiary's death. if the Employee should die after the
commencement of payments but before all payments have been made
hereunder, payments under the Agreements will be discontinued
unless the form of benefit under which payments are being made
provides for the continuation of payments to a beneficiary after
the Employee's death.
4. Condition on Payment. The additional benefits provided for in
this Agreement (but this provision shall not apply to the benefit accrued
pursuant to paragraph 1 of the 1993 Compensation Agreement) shall not be
payable to Employee unless he remains in the employment of the Corporation or
the employing entity continuously until the third anniversary of this
Agreement, or, if earlier, (a) Employee's
2
<PAGE> 3
death, (b) termination of Employees' employment by the employing entity (as
defined below) under circumstances which entitle him (or would entitle him,
were he subject to the terms of said plan) to severance benefits under the
Equifax Inc. Severance Pay Plan for Salaried Employees, or (c) Employee's
termination of his employment because of the employing entity's failure to pay
Employee compensation of at least $225,000 as provided in paragraph 9 below.
An "employing entity" shall be the Employee's employer which is either Equifax
Inc., Equifax Services, Inc., or an employer at least 50% of which is owned
directly or indirectly by either of said companies.
5. Assignment of Agreement. This Agreement may not be assigned by
either party without the other's consent; provided, however, that the
Corporation may assign this Agreement to any corporation at least 50% of which
is owned or controlled by the Corporation, in which event the Corporation will
remain responsible for (i) the entire benefit payable under the 1993
Compensation Agreement and (ii) the prorata portion of any additional benefits
provided hereunder (based on (a) the number of months elapsed from the date of
this Agreement until said assignment divided by (b) 36 months). Notwithstanding
the preceding sentence, however, should Employee consent in writing,
Corporation's liability for all such payments shall be extinguished by such as
assignment.
6. Nonalienability. The right of the Employee or any other person
to the payment of deferred compensation or other benefits under the Agreements
shall not be assigned transferred, pledged or encumbered.
7. Status of Obligations. The Corporation shall at all times
retain title to, and beneficial ownership of, any assets earmarked by the
Corporation to pay the deferred compensation provided hereunder, and neither
the Employee nor his designated beneficiary shall have any property interest
whatsoever in any specific assets of the Corporation. The Corporation's
obligations hereunder are not secured in any manner whatsoever and constitute a
mere promise to pay such amounts. As to said promise, the Employee will have
the status of an unsecured creditor of the Corporation, with no rights or
priority over any other unsecured creditor of the Corporation.
8. No Trust Fund. Notwithstanding the references to the
Retirement Plan in the Agreements, the amount of the pension supplement
provided hereunder shall be paid from the general assets of the Corporation and
shall not be paid from the Retirement Plan trust. Nothing contained in the
Agreements and no action taken pursuant to the provisions of the Agreements
shall create or be construed to create a trust of any kind, or a fiduciary
relationship between the Corporation and the Employee or any other person. To
the extent any person acquires a right to receive payments from the Corporation
under this agreement upon the death of the Employee, such right shall be no
greater than the right of any unsecured general creditor of the Corporation.
3
<PAGE> 4
9. Other Compensation and Benefits. Commencing January 1, 1996,
and continuing during his employment with the Corporation or Equifax Services,
Inc., the Employee shall be entitled to annual base compensation of $200,000,
consisting of base salary which shall be paid biweekly, and total annual
compensation of not less than $225,000. Any annual management incentive
compensation shall be paid at the same time the Corporation pays such incentive
compensation for such year to other management employees. Notwithstanding the
foregoing, the Corporation may in its sole discretion increase the Employee's
total annual compensation if it determines Employee's duties and
responsibilities have significantly increased. Employee shall participate in
the Corporations' long-term incentive award programs (including performance
share plans, stock option plans and similar plans) as is determined appropriate
by the Corporation in its sole discretion from time to time, and Employee shall
participate in the Company's other employee benefit plans, programs and
arrangements in accordance with the provisions of such plans, programs and
arrangements as they exist from time to time.
10. Severance Benefits. In the event the Employee's employment
with the Corporation or the employing entity is terminated under circumstances
which entitle him to severance benefits under the Equifax Inc. Severance Pay
Plan for Salaried Employees (the "Severance Plan"), or in the event that
Employee's employment continues until the third anniversary of the date of this
Agreement, or in the event that Employee terminates his employment because the
employing entity has failed to pay Employee compensation of at least $225,000
as provided for in paragraph 9 above, the Employee shall be paid a total
severance benefit of $150,000 under this Agreement and the Severance Plan, in
addition to all other benefits described herein and in paragraph 1 of the 1993
Compensation Agreement. Such benefit shall be paid in the manner benefits are
payable under the Severance Plan. Employee shall not be entitled to any
severance benefit in the event of his voluntary termination of employment or
other circumstances under which he is not entitled to benefits under the
Severance Plan, prior to said third anniversary.
11. No Right to Continued Employment. Employee acknowledges that
his employment with the Corporation is "at will" and may be terminated by the
Corporation at any time. Nothing contained herein shall be construed as
conferring upon the Employee the right to continue to serve the Corporation as
an employee or in any other capacity.
12. Administration. The Equifax Inc. Pension and Thrift Pan
Investment and Administrative Committee shall have authority to interpret,
construe, and administer this Agreement and the Committee's interpretations and
construction thereof, and actions thereunder, shall be binding and conclusive
for all purposes.
4
<PAGE> 5
13. Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the Corporation, its successors, and assigns and
the Employee and his heirs, executors, administrators, and legal
representatives, to the degree permitted pursuant to paragraph 5 above.
14. Governing Law. This Agreement shall be construed in accordance
with and governed by the law of the State of Georgia.
15. Entire Agreement. This Agreement constitutes the entire
agreement between the Corporation and Employee with respect to Employee's
compensation other than the benefit described in paragraph 1 of the 1993
Compensation Agreement. This Agreement may not be amended or modified except
by a writing executed by the parties.
IN WITNESS WHEREOF, the Corporation has caused this Agreeemnt to be
executed by its duly authorized officers and the Employee has hereunto set his
hand and seal as of the date first above written.
CORPORATION
[CORPORATE SEAL] EQUIFAX INC.
By: /s/ Derek V. Smith
------------------------------
Title: Executive Vice President
ATTEST
By: /s/ J. Michael de Janes
-----------------------
Title: VP and Group Counsel
--------------------
EMPLOYER
/s/ Dan Rocco (SEAL)
---------------------
Dan Rocco
5
<PAGE> 1
EXHIBIT 10.10
================================================================================
REVOLVING CREDIT AGREEMENT
dated as of July __, 1997
among
CHOICEPOINT INC.,
THE LENDERS LISTED HEREIN,
and
WACHOVIA BANK, N.A.
as Administrative Agent,
and
SUNTRUST BANK, ATLANTA
as Documentation Agent
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I. DEFINITIONS; CONSTRUCTION......................................
Section 1.01. Definitions.............................................................
Section 1.02. Accounting Terms and Determination......................................
Section 1.03. Other Definitional Terms................................................
Section 1.04. Exhibits and Schedules..................................................
ARTICLE II. SYNDICATED LOANS, BID RATE LOANS
AND SWING LINE LOANS...........................................
Section 2.01. Description of Revolving Credit Facilities; Use of Proceeds.............
Section 2.02. Syndicated Loans........................................................
Section 2.03. Syndicated Notes; Repayment of Principal................................
Section 2.04. Voluntary Reduction of Syndicated Loan Commitments......................
Section 2.05. Bid Rate Loans..........................................................
Section 2.06. Swing Line Loans........................................................
Section 2.07. Increase of Syndicated Loan Commitments.................................
Section 2.08. Funding Notices.........................................................
ARTICLE III. GENERAL LOAN TERMS.............................................
Section 3.01. Disbursement of Funds...................................................
Section 3.02. Interest ...............................................................
Section 3.03. Interest Periods........................................................
Section 3.04. Fees ...............................................................
Section 3.05. Voluntary Prepayments of Borrowings.....................................
Section 3.06. Payments, etc...........................................................
Section 3.07. Interest Rate Not Ascertainable, etc....................................
Section 3.08. Illegality..............................................................
Section 3.09. Increased Costs.........................................................
Section 3.10. Lending Offices.........................................................
Section 3.11. Funding Losses..........................................................
Section 3.12. Assumptions Concerning Funding of Eurodollar Advances...................
Section 3.13. Apportionment of Payments...............................................
Section 3.14. Sharing of Payments, Etc................................................
Section 3.15. Benefits to Guarantors..................................................
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C>
ARTICLE IV. CONDITIONS TO BORROWINGS.......................................
Section 4.01. Conditions Precedent to Initial Loans...................................
Section 4.02. Conditions to All Loans.................................................
ARTICLE V. REPRESENTATIONS AND WARRANTIES.................................
Section 5.01. Corporate Existence; Compliance with Law................................
Section 5.02. Corporate Power; Authorization..........................................
Section 5.03. Enforceable Obligations.................................................
Section 5.04. No Contractual or Legal Bar.............................................
Section 5.05. No Material Litigation or Investigations................................
Section 5.06. Investment Company Act, Etc.............................................
Section 5.07. Margin Regulations......................................................
Section 5.08. Compliance with Environmental Laws......................................
Section 5.09. Insurance...............................................................
Section 5.10. No Default..............................................................
Section 5.11. No Burdensome Restrictions..............................................
Section 5.12. Taxes ..................................................................
Section 5.13. Subsidiaries............................................................
Section 5.14. Financial Statements....................................................
Section 5.15. ERISA ..................................................................
Section 5.16. Possession of Franchises, Licenses, Etc.................................
Section 5.17. Patents, Trademarks, Licenses, Etc......................................
Section 5.18. Ownership of Property...................................................
Section 5.19. Financial Condition.....................................................
Section 5.20. Labor Matters...........................................................
Section 5.21. Payment or Dividend Restrictions........................................
Section 5.22. Outstanding Indebtedness ...............................................
Section 5.23. Disclosure..............................................................
ARTICLE VI. AFFIRMATIVE COVENANTS..........................................
Section 6.01. Corporate Existence, Etc................................................
Section 6.02. Compliance with Laws, Etc...............................................
Section 6.03. Payment of Taxes and Claims, Etc........................................
Section 6.04. Keeping of Books........................................................
Section 6.05. Visitation, Inspection, Etc.............................................
Section 6.06. Insurance; Maintenance of Properties....................................
Section 6.07. Reporting Covenants.....................................................
Section 6.08. Financial Covenants.....................................................
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C> <C>
Section 6.09. Additional Credit Parties...............................................
Section 6.10. Intellectual Property...................................................
ARTICLE VII. NEGATIVE COVENANTS.............................................
Section 7.01. Liens ...............................................................
Section 7.02. Guarantees..............................................................
Section 7.03. Mergers, Consolidations.................................................
Section 7.04. Asset Sales.............................................................
Section 7.05. Debt of Subsidiaries ...................................................
Section 7.06. Investments, Loans, Etc.................................................
Section 7.07. Sale and Leaseback Transactions.........................................
Section 7.08. Transactions with Affiliates............................................
Section 7.09. ERISA ...............................................................
Section 7.10. Additional Negative Pledges.............................................
Section 7.11. Changes in Business.....................................................
Section 7.12. Limitation on Payment Restrictions Affecting Consolidated
Companies...............................................................
Section 7.13. Actions Under Certain Documents.........................................
Section 7.14. Change in Fiscal Year...................................................
ARTICLE VIII. EVENTS OF DEFAULT..............................................
Section 8.01. Payments................................................................
Section 8.02. Covenants Without Notice................................................
Section 8.03. Other Covenants.........................................................
Section 8.04. Representations.........................................................
Section 8.05. Non-Payments of Other Indebtedness......................................
Section 8.06. Defaults Under Other Agreements.........................................
Section 8.07. Bankruptcy..............................................................
Section 8.08. Money Judgment..........................................................
Section 8.09. Change in Control of Borrower...........................................
Section 8.10. Default Under Other Credit Documents....................................
Section 8.11. Attachments.............................................................
ARTICLE IX. THE AGENTS.....................................................
Section 9.01. Appointment of Administrative Agent.....................................
Section 9.02. Appointment of Documentation Agent......................................
Section 9.03. Nature of Duties of Agents..............................................
</TABLE>
iii
<PAGE> 5
<TABLE>
<S> <C> <C>
Section 9.04. Lack of Reliance on the Agents..........................................
Section 9.05. Certain Rights of the Agents............................................
Section 9.06. Reliance by the Agents..................................................
Section 9.07. Indemnification of the Agents...........................................
Section 9.08. The Agents in their Individual Capacities...............................
Section 9.09. Holders of Notes........................................................
Section 9.10. Successor Agents........................................................
ARTICLE X. MISCELLANEOUS..................................................
Section 10.01. Notices ...............................................................
Section 10.02. Amendments, Etc.........................................................
Section 10.03. No Waiver; Remedies Cumulative..........................................
Section 10.04. Payment of Expenses, Etc................................................
Section 10.05. Right of Setoff.........................................................
Section 10.06. Benefit of Agreement....................................................
Section 10.07. Governing Law; Submission to Jurisdiction; Waiver of Jury Trial.........
Section 10.08. Independent Nature of Lenders' Rights...................................
Section 10.09. Counterparts............................................................
Section 10.10. Effectiveness; Survival.................................................
Section 10.11. Severability............................................................
Section 10.12. Independence of Covenants...............................................
Section 10.13. Headings Descriptive; Entire Agreement..................................
</TABLE>
iv
<PAGE> 6
SCHEDULES
SCHEDULE 5.13 Organization and Ownership of Subsidiaries
SCHEDULE 5.22 Outstanding Indebtedness
SCHEDULE 7.01 Existing Liens
EXHIBITS
EXHIBIT A - Form of Syndicated Note
EXHIBIT B - Form of Bid Facility Note
EXHIBIT C - Form of Swing Line Note
EXHIBIT D - Bid Request
EXHIBIT E - Bid Request Invite
EXHIBIT F - Bid Rate Bid
EXHIBIT G - Bid Rate Accept/Reject Letter
EXHIBIT H - Form of Guaranty Agreement
EXHIBIT I - Form of Contribution Agreement
EXHIBIT J - Form of Closing Certificate
EXHIBIT K - Form of Opinion
EXHIBIT L - Form of Assignment and Acceptance Agreement
EXHIBIT M - Form of Compliance Certificate
EXHIBIT N - Information Sheet
v
<PAGE> 7
REVOLVING CREDIT AGREEMENT
THIS REVOLVING CREDIT AGREEMENT made and entered into as of
July __, 1997, by and among CHOICEPOINT INC., a Georgia corporation
("Borrower"), WACHOVIA BANK, N.A., a national banking association ("Wachovia"),
SUNTRUST BANK, ATLANTA, a Georgia banking corporation ("SunTrust"), the other
banks and lending institutions listed on the signature pages hereof, and any
assignees of Wachovia, SunTrust, or such other banks and lending institutions
which become "Lenders" as provided herein (Wachovia, SunTrust, and such other
banks, lending institutions and assignees are referred to collectively herein as
the "Lenders"), WACHOVIA BANK, N.A., in its capacity as Administrative Agent for
the Lenders and each successor Administrative Agent for such Lenders as may be
appointed from time to time pursuant to Article IX hereof (the "Administrative
Agent"), and SUNTRUST BANK, ATLANTA, in its capacity as Documentation Agent for
the Lenders and each successor Documentation Agent for such Lenders as may be
appointed from time to time pursuant to Article IX hereof (the "Documentation
Agent");
W I T N E S S E T H:
WHEREAS, Borrower has requested that the Lenders extend to
Borrower a $250,000,000 revolving credit facility, and the Lenders are willing
to extend such revolving credit facility, on the terms and subject to the
conditions contained herein.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants herein contained, Borrower, the Lenders, the Administrative
Agent and the Documentation Agent agree as follows:
ARTICLE I.
DEFINITIONS; CONSTRUCTION
SECTION 1.01. DEFINITIONS. In addition to the other terms
defined herein, the following terms used herein shall have the meanings herein
specified (to be equally applicable to both the singular and plural forms of the
terms defined):
"Administrative Agent" shall mean Wachovia Bank, N.A., a
national banking association, and any successor Administrative Agent appointed
pursuant to Section 9.10.
"Advance" shall mean any principal amount advanced and
remaining outstanding at any time under (i) the Syndicated Loans, which Advances
shall be made or outstanding as Base Rate Advances or Eurodollar Advances, as
the case may be, (ii) the Bid Rate
<PAGE> 8
Loans, which Advances shall be made or outstanding as Bid Rate Advances, and
(iii) the Swing Line Loans, which Advances shall be made or outstanding as Swing
Rate Advances.
"Affiliate" of any Person means any other Person directly or
indirectly controlling, controlled by, or under common control with, such
Person, whether through the ownership of voting securities, by contract or
otherwise. For purposes of this definition, "control" (including with
correlative meanings, the terms "controlling", "controlled by", and "under
common control with") as applied to any Person, means the possession, directly
or indi rectly, of the power to direct or cause the direction of the management
and policies of that Person.
"Agents" shall mean, collectively, the Administrative Agent
and the Documentation Agent.
"Agreement" shall mean this Revolving Credit Agreement, as
amended, modified, restated, or supplemented from time to time.
"Applicable Commitment Percentage" shall mean the percentage
designated on the chart set forth below based on Borrower's ratio of Funded Debt
to Consolidated EBITDA, measured quarterly, effective in the second fiscal
quarter immediately following the date of delivery of the Compliance Certificate
to the Administrative Agent:
<TABLE>
<CAPTION>
FUNDED DEBT TO
CONSOLIDATED APPLICABLE
EBITDA RATIO COMMITMENT PERCENTAGE
- ------------ ---------------------
<S> <C>
Greater than 3.0:1.0 .20%
Less than or Equal to 3.0:1.0
and Greater than 2.5:1.0 .15%
Less than or Equal to 2.50:1.0
and Greater than 2.0:1.0 .125%
Less than or Equal to 2.0:1.0
but Greater than 1.5:1.0 .11%
Less than or Equal to 1.5:1.0
but Greater than 1.0:1.0 .10%
Less than or Equal to 1.0:1.0 .09%
</TABLE>
2
<PAGE> 9
For purposes of the foregoing, (i) the Applicable Commitment Percentage on the
Closing Date is 0.11% and shall remain 0.11% through and including December 31,
1997 (By way of example, as of the first day of the fourth fiscal quarter of
Borrower, the Applicable Commitment Percentage shall be calculated based upon
the ratio of Funded Debt to Consolidated EBITDA of Borrower reported in the
Compliance Certificate delivered by the Borrower for the first fiscal quarter of
such fiscal year of Borrower.); and (ii) if the Borrower fails to provide the
Compliance Certificate and related financial statements required by Section 6.07
within the applicable time period set forth therein, the Applicable Commitment
Percentage shall be adjusted to .20% on the first day of the following fiscal
quarter until such Compliance Certificate and related financial statements are
delivered.
"Applicable Margin" shall mean the percentage designated on
the chart set forth below based on Borrower's ratio of Funded Debt to
Consolidated EBITDA, measured quarterly, effective in the second fiscal quarter
immediately following the date of delivery of the Compliance Certificate to the
Administrative Agent:
<TABLE>
<CAPTION>
FUNDED DEBT TO
CONSOLIDATED APPLICABLE
EBITDA RATIO MARGIN
- ------------ ------
<S> <C>
Greater than 3.0:1.0 0.45%
Less than or Equal to 3.0:1.0
and Greater than 2.5:1.0 0.375%
Less than or Equal to 2.5:1.0
and Greater than 2.0:1.0 0.275%
Less than or Equal to 2.0:1.0
and Greater than 1.5:1.00 0.24%
Less than or Equal to 1.5:1.0
but Greater than 1.0:1.0 0.20%
Less than or Equal to 1.0:1.0 0.16%
</TABLE>
For purposes of the foregoing, (i) the Applicable Margin on the Closing Date is
0.24% and shall remain 0.24% through and including December 31, 1997 (By way of
example, as of the first day of the fourth fiscal quarter of Borrower, the
Applicable Margin shall be calculated based upon the ratio of Funded Debt to
Consolidated EBITDA of Borrower reported in the Compliance Certificate delivered
by the Borrower for the first fiscal quarter of such fiscal year of Borrower.);
and (ii) if the Borrower fails to provide the Compliance Certificate and related
financial
3
<PAGE> 10
statements required by Section 6.07 within the applicable time period set forth
therein, the Applicable Margin shall be adjusted to .45% on the first day of the
following fiscal quarter until such Compliance Certificate and related financial
statements are delivered.
"Arrangement Fee" shall mean the arrangement fee previously
agreed in writing by Borrower and the Documentation Agent.
"Asset Sale" shall mean any sale or other disposition (or a
series of related sales or other dispositions), including without limitation,
loss, damage, destruction or taking to the extent not covered by insurance, by
any Consolidated Company to any Person other than a Consolidated Company, of any
property or asset (including Capital Stock but excluding the issuance and sale
by Borrower of its own Capital Stock), other than sales or other dispositions
made in the ordinary course of business of any Consolidated Company.
"Assignment and Acceptance" shall mean an assignment and
acceptance entered into by a Lender and an Eligible Assignee in accordance with
the terms of this Agreement and substantially in the form of Exhibit L.
"Bankruptcy Code" shall mean The Bankruptcy Code of 1978, as
amended and in effect from time to time (11 U.S.C. ss. 101 et seq.).
"Base Rate" shall mean the higher of (with any change in the
Base Rate to be effective as of the date of change of either of the following
rates):
(a) the rate which the Administrative Agent so
denominates and sets from time to time to be its prime lending rate, as
in effect from time to time, and
(b) the Federal Funds Rate, as in effect from time to
time, plus one-half of one percent (0.50%) per annum.
The Administrative Agent's prime lending rate is a reference rate and does not
necessarily represent the lowest or best rate charged to customers; the
Administrative Agent may make commercial loans or other loans at rates of
interest at, above or below the Administrative Agent's prime lending rate.
"Base Rate Advance" shall mean an Advance made or outstanding
as (i) a Syndicated Loan bearing interest based on the Base Rate or (ii) an
Advance bearing interest at the rate agreed upon between Borrower and the
Lenders pursuant to Section 3.07, Section 3.08 or Section 3.09.
"Bid Accept/Reject Letter" shall mean a notification made by
Borrower pursuant to Section 2.07 substantially in the form of Exhibit G.
4
<PAGE> 11
"Bid Facility Note" shall mean a promissory note of Borrower
payable to the order of any Lender, in substantially the form of Exhibit B
hereto, evidencing the maximum aggregate principal indebtedness of Borrower to
such Lender with respect to outstanding Bid Rate Advances made by such Lender
pursuant to this Agreement, either as originally executed or as it may be from
time to time supplemented, modified, amended, renewed or extended.
"Bid Rate" shall mean, as to any Bid Rate Bid made by a
Syndicated Lender pursuant to Section 2.07, the fixed rate of interest per annum
offered by the Lender making the Bid Rate Bid for the relevant Interest Period.
"Bid Rate Advance" shall mean an Advance made by a Syndicated
Lender to Borrower pursuant to the bidding procedure described in Section 2.07.
"Bid Rate Bid" shall mean an offer by a Lender to make a Bid
Rate Loan pursuant to Section 2.07.
"Bid Rate Facility" shall mean the credit facility being made
available by the Syndicated Lenders to Borrower as described in Section 2.07.
"Bid Rate Loan" shall mean a Borrowing made up of Advances by
all of those Lenders whose Bid Rate Bids have been accepted by Borrower pursuant
to the same Bid Request under the bidding procedure described in Section 2.07
for the same Interest Period and interest rate (with the understanding that two
Bid Rate Loans may be made pursuant to a single Bid Request).
"Bid Request" shall mean a request made by Borrower pursuant
to Section 2.07 substantially in the form of Exhibit D.
"Borrower" shall mean ChoicePoint Inc., a Georgia corporation,
and its successors.
"Borrowing" shall mean the incurrence by Borrower under any
Facility of Advances of one Type concurrently having the same Interest Period or
the continuation or conversion of an existing Borrowing or Borrowings in whole
or in part.
"Business Day" shall mean any day which is neither a Saturday
or Sunday nor a legal holiday on which banks are required or authorized to close
in Atlanta, Georgia.
"Capital Stock" shall mean, with respect to any Person, all
capital stock of such Person, whether voting or nonvoting, including common
stock and preferred stock of such Person.
5
<PAGE> 12
"CDB/Infotek" shall mean CDB/Infotek, a California
corporation.
"Change in Control Provision" shall mean any term or provision
contained in any indenture, debenture, note, or other agreement or document
evidencing or governing Indebtedness of Borrower evidencing debt or a commitment
to extend loans in excess of $5,000,000 which requires, or permits the holder(s)
of such Indebtedness of Borrower to require that such Indebtedness of Borrower
be redeemed, repurchased, defeased, prepaid or repaid, either in whole or in
part, or the maturity of such Indebtedness of Borrower to be accelerated in any
respect, as a result of a change in ownership of the Capital Stock of Borrower
or voting rights with respect thereto.
"Closing Date" shall mean the date on or before July __, 1997
on which the initial Loans are made or deemed to have been made hereunder and
the conditions set forth in Section 4.01 are satisfied or waived in accordance
with Section 10.02.
"Commitment" shall mean (i) for any Syndicated Lender at any
time, its Syndicated Loan Commitment, and (ii) for the Swing Line Lender at any
time, its Swing Line Commitment, in each case as the context may require.
"Compliance Certificate" shall have the meaning set forth in
Section 6.07(c).
"Consolidated Companies" shall mean, collectively, Borrower
and all of its Subsidiaries.
"Consolidated EBIT" shall mean, for any fiscal period of
Borrower, an amount equal to (A) the sum for such fiscal period of Consolidated
Net Income (Loss) and, to the extent deducted in determining such Consolidated
Net Income (Loss), provisions for (i) taxes based on income and (ii)
Consolidated Interest Expense, minus (B) any items of gain (or plus any items of
loss) which were included in determining such Consolidated Net Income (Loss) and
were (x) not realized in the ordinary course of business (whether or not
classified as "ordinary" by GAAP), (y) the result of any sale of assets, or (z)
resulting from minority investments, together in the case of (x), (y) or (z),
any related provision for taxes included in Consolidated Net Income (Loss) with
respect thereto, plus (C) non-recurring non-cash charges, including without
limitation, accruals related to any acquisition and earnouts incurred in
connection with any acquisition to the extent not paid in cash.
"Consolidated EBITDA" shall mean, for any four fiscal-quarter
period of Borrower, an amount equal to the sum of (A) Consolidated EBIT plus (B)
depreciation and amortization expense to the extent deducted in determining
Consolidated Net Income (Loss), plus (C) without duplication, the sum of the
following items to the extent not included in Consolidated EBITDA for such
period:
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(1) the net income (or net loss) for such four fiscal-quarter
period of any Person which became a Subsidiary during such period (a
"New Subsidiary");
(2) the net income (or net loss) derived during such four
fiscal-quarter period from any assets acquired by any Consolidated
Company during such period ("New Assets");
(3) the sum of (x) taxes based on income, (y) Consolidated
Interest Expense and (z) depreciation and amortization expense, in each
case to the extent deducted in determining net income of any New
Subsidiary or derived from any New Assets during such four
fiscal-quarter period, minus any items of gain (or plus any items of
loss) which were included in determining such net income and were (aa)
not realized in the ordinary course of business (whether or not
classified as "ordinary" by GAAP), (bb) the result of any sale of
assets, or (cc) resulting from minority investments, together in the
case of (aa), (bb) or (cc), any related provision for taxes included in
such net income with respect thereto; and
(4) non-recurring non-cash charges of any New Subsidiary or
derived from any New Assets during such four fiscal-quarter period,
including without limitation, accruals related to any acquisition and
earnouts incurred in connection with any acquisition to the extent not
paid in cash.
"Consolidated EBITR" shall mean, for any fiscal period of
Borrower, an amount equal to the sum of Consolidated EBIT plus Consolidated
Rental Expense for such period.
"Consolidated Fixed Charges" shall mean, for any fiscal period
of Borrower, the sum of (A) Consolidated Interest Expense, plus (B) Consolidated
Rental Expense, plus (C) dividends and distributions on Capital Stock paid in
cash during such fiscal period by Borrower or any other Consolidated Company,
but excluding the one-time dividend paid by Borrower to Equifax as of the
Spin-Off Date and any repurchases of Capital Stock of Borrower made on a non-pro
rata basis.
"Consolidated Interest Expense" shall mean, for any fiscal
period of Borrower, total interest expense of the Consolidated Companies
(including without limitation, interest expense attributable to capitalized
leases in accordance with GAAP, all commissions, discounts and other fees and
charges owed with respect to bankers acceptance financing, and total interest
expense (whether shown as interest expense or as loss and expenses on sale of
receivables) under a receivables purchase facility) determined on a consolidated
basis in accordance with GAAP.
"Consolidated Net Income (Loss)" shall mean, for any fiscal
period of Borrower, the net income (or loss) of the Consolidated Companies for
such period (taken as a single
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<PAGE> 14
accounting period), but excluding therefrom (to the extent otherwise included
therein) the income of any Consolidated Company to the extent that the
declaration or payment of dividends or similar distributions by such
Consolidated Company of that income is not at the time permitted by operation of
the terms of its charter or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation; provided that the foregoing exclusion
shall not apply to CDB/Infotek so long as there is at least $1 of outstanding
intercompany debt owed by CDB/Infotek to another Consolidated Company.
"Consolidated Net Worth" shall mean, as of any date of
determination, shareholders' equity of Borrower, determined on a consolidated
basis in conformity with GAAP.
"Consolidated Rental Expense" shall mean, for any fiscal
period of Borrower, the operating lease expense of the Consolidated Companies
determined in accordance with GAAP for leases with an initial term greater than
one year, as disclosed in the notes to Borrower's consolidated financial
statements of the Consolidated Companies, determined on a consolidated basis in
accordance with GAAP.
"Contractual Obligation" of any Person shall mean any
provision of any security issued by such Person or of any agreement, instrument
or undertaking under which such Person is obligated or by which it or any of the
property owned by it is bound.
"Credit Documents" shall mean, collectively, this Agreement,
the Notes, the Guaranty Agreements, and all other documents, instruments,
certificates and opinions executed and delivered in connection with the
foregoing.
"Credit Parties" shall mean, collectively, each of Borrower,
the Guarantors, and every other Person who from time to time executes a
supplement to the Guaranty Agreements with respect to all or any portion of the
Obligations.
"Default" shall mean any condition or event which, with notice
or lapse of time or both, would constitute an Event of Default.
"Documentation Agent" shall mean SunTrust Bank, Atlanta, a
Georgia banking corporation, and any successor Documentation Agent appointed
pursuant to Section 9.10 hereof.
"Dollar" and "U.S. Dollar" and the sign "$" shall mean lawful
money of the United States of America.
"Environmental Laws" shall mean all federal, state, local and
foreign statutes and codes or regulations, rules or ordinances issued,
promulgated, or approved thereunder, now or hereafter in effect (including,
without limitation, those with respect to asbestos or asbestos containing
material or exposure to asbestos or asbestos containing material), relating to
pollution or protection of the environment and relating to public health and
safety, relating to (i) emissions,
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<PAGE> 15
discharges, releases or threatened releases of pollutants, contaminants,
chemicals or industrial toxic or hazardous constituents, substances or wastes,
including without limitation, any Hazardous Substance, petroleum including crude
oil or any fraction thereof, any petroleum product or other waste, chemicals or
substances regulated by any Environmental Law into the environment (including
without limitation, ambient air, surface water, ground water, land surface or
subsurface strata), or (ii) the manufacture, processing, distribution, use,
generation, treatment, storage, disposal, transport or handling of any Hazardous
Substance, petroleum including crude oil or any fraction thereof, any petroleum
product or other waste, chemicals or substances regulated by any Environmental
Law, and (iii) underground storage tanks and related piping, and emissions,
discharges and releases or threatened releases therefrom, such Environmental
Laws to include, without limitation (i) the Clean Air Act (42 U.S.C. ss. 7401 et
seq.), (ii) the Clean Water Act (33 U.S.C. ss. 1251 et seq.), (iii) the Resource
Conservation and Recovery Act (42 U.S.C. ss. 6901 et seq.), (iv) the Toxic
Substances Control Act (15 U.S.C. ss. 2601 et seq.), (v) the Comprehensive
Environmental Response Compensation and Liability Act, as amended by the
Superfund Amendments and Reauthorization Act (42 U.S.C. ss. 9601 et seq.), and
(vi) all applicable national and local laws or regulations with respect to
environmental control (including applicable laws of the Federal Republic of
Germany or any applicable international agreements).
"Equifax" shall mean Equifax Inc., a Georgia corporation.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended and in effect from time to time.
"ERISA Affiliate" shall mean, with respect to any Person, each
trade or business (whether or not incorporated) which is a member of a group of
which that Person is a member and which is under common control within the
meaning of the regulations promulgated under Section 414 of the Tax Code.
"Eurodollar Advance" shall mean an Advance made or outstanding
as a Syndicated Loan bearing interest based on LIBOR.
"Eurodollar Business Day" shall mean a Business Day on which
trading is carried on by and between banks in deposits of Dollars in the London
interbank market.
"Eurodollar Reserve Percentage" shall mean, for any Bank which
is a member bank of the Federal Reserve System, on any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the reserve requirement for such Bank in respect of "Eurocurrency
liabilities" (or in respect of any other category of liabilities which includes
deposits by reference to which the interest rate on Eurodollar Advances is
determined or any category of extensions of credit or other assets which
includes loans by a non-United States office of any Bank to the United States
residents).
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"Event of Default" shall have the meaning provided in Article
VIII.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended from time to time, and any successor statute thereto.
"Executive Officer" shall mean, with respect to any Person,
Chief Executive Officer, President, Chief Financial Officer, the Chief Legal
Officer, the Treasurer, any Assistant Treasurer and any Person holding
comparable offices or duties.
"Facility" or "Facilities" shall mean the credit facilities
made available to the Borrower pursuant to the Syndicated Loan Commitments, the
Swing Line Commitment, and the Bid Rate Facility, as the context may indicate.
"Facility Fee" shall have the meaning assigned to such term in
Section 3.04.
"Federal Funds Rate" shall mean for any period, a fluctuating
interest rate per annum equal for each day during such period to the weighted
average of the rates on overnight Federal funds transactions with member banks
of the Federal Reserve System arranged by Federal funds brokers, as published
for such day (or, if such day is not a Business Day, for the next preceding
Business Day) by the Federal Reserve Bank of Atlanta, or, if such rate is not so
published for any day which is a Business Day, the average of the quotations for
such day on such transactions received by the Administrative Agent from three
Federal funds brokers of recognized standing selected by the Administrative
Agent.
"Fixed Charge Coverage Ratio" shall mean, as of the last day
of any fiscal quarter of Borrower, the ratio of (A) Consolidated EBITR to (B)
Consolidated Fixed Charges, in each case calculated with respect to the
immediately preceding four fiscal quarters ending on such date.
"Foreign Plan" shall mean any pension, profit sharing,
deferred compensation, or other employee benefit plan, program or arrangement
maintained by any Foreign Subsidiary which, under applicable local law, is
required to be funded through a trust or other funding vehicle, but shall not
include any benefit provided by a foreign government or its agencies.
"Foreign Subsidiary" shall mean each Consolidated Company that
is organized under the laws of a jurisdiction other than the United States of
America or any State thereof.
"Funded Debt" shall mean all Indebtedness for money borrowed,
Indebtedness evidenced or secured by purchase money Liens, capitalized leases,
outstandings under asset securitization vehicles, conditional sales contracts
and similar title retention debt instruments, including any current maturities
of the foregoing, which by its terms matures more than one year from the date of
any calculation thereof or which is renewable or extendable at the option of the
obligor to a date beyond one year from such date. The calculation of Funded Debt
shall include
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<PAGE> 17
(i) all Funded Debt of the Consolidated Companies, plus (ii) all Funded Debt of
other Persons to the extent guaranteed by a Consolidated Company, to the extent
supported by a letter of credit issued for the account of a Consolidated
Company, or as to which and to the extent which a Consolidated Company or its
assets otherwise have become liable for payment thereof, plus (iii) the
redemption amount with respect to the stock of the Borrower required to be
redeemed during the next succeeding twelve months at the option of the holder or
its Subsidiaries. Notwithstanding the foregoing, "Funded Debt" shall exclude the
Lease Documents and all operating lease obligations.
"GAAP" shall mean generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession, which are applicable to the circumstances as of the
date of determination.
"Guarantors" shall mean, collectively, _______________________
and all other Material Subsidiaries formed, acquired or existing after the
Closing Date, but excluding (i) all Foreign Subsidiaries and (ii) CDB/Infotek so
long as it is not directly or indirectly wholly owned by other Consolidated
Companies. [TO BE PROVIDED BY CHOICEPOINT]
"Guaranty" shall mean any contractual obligation, contingent
or otherwise, of a Person with respect to any Indebtedness or other obligation
or liability of another Person, including without limitation, any such
Indebtedness, obligation or liability directly or indirectly guaranteed,
endorsed, co-made or discounted or sold with recourse by that Person, or in
respect of which that Person is otherwise directly or indirectly liable,
including contractual obligations (contingent or otherwise) arising through any
agreement to purchase, repurchase, or otherwise acquire such Indebtedness,
obligation or liability or any security therefor, or any agreement to provide
funds for the payment or discharge thereof (whether in the form of loans,
advances, stock purchases, capital contributions or otherwise), or to maintain
solvency, assets, level of income, or other financial condition, or to make any
payment other than for value received. The amount of any Guaranty shall be
deemed to be an amount equal to the stated or determinable amount of the primary
obligation in respect of which guaranty is made or, if not so stated or
determinable, the maximum reasonably anticipated liability in respect thereof
(assuming such Person is required to perform thereunder) as determined by such
Person in good faith.
"Guaranty Agreements" shall mean, collectively, (i) the
Guaranty Agreement, dated as of even date herewith, executed by each of the
Guarantors in favor of the Lenders and the Agents, substantially in the form of
Exhibit H, as the same may be amended, restated or supplemented from time to
time and (ii) the Contribution Agreement, dated as of even date herewith,
executed by each of the Guarantors and the Borrower in favor of the Lenders and
the
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<PAGE> 18
Agents, substantially in the form of Exhibit I, as the same may be amended,
restated or supple mented from time to time.
"Hazardous Substances" shall have the meaning assigned to that
term in the Comprehensive Environmental Response Compensation and Liability Act
of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986.
"Indebtedness" of any Person shall mean, without duplication
(i) all obligations of such Person which in accordance with GAAP would be shown
on the balance sheet of such Person as a liability (including, without
limitation, obligations for borrowed money and for the deferred purchase price
of property or services, and obligations evidenced by bonds, debentures, notes
or other similar instruments); (ii) all rental obligations under leases required
to be capitalized under GAAP; (iii) all Guaranties of such Person (including
contingent reimbursement obligations under undrawn letters of credit); (iv)
Indebtedness of others secured by any Lien upon property owned by such Person,
whether or not assumed; and (v) obligations or other liabilities under currency
contracts, interest rate hedging contracts, or similar agreements or
combinations thereof to the extent required to be disclosed in such Person's
financial statements in accordance with GAAP.
"Information Sheet" shall mean the Information Sheet attached
hereto as Exhibit N.
"Interest Period" shall mean (i) as to any Eurodollar
Advances, the interest period selected by Borrower pursuant to Section 3.03(a),
(ii) as to any Bid Rate Advances, the interest period requested by Borrower and
agreed to by the participating Lenders pursuant to Section 3.03(b), and (iii) as
to any Swing Rate Advances, the interest period requested by Borrower and agreed
to by the Swing Line Lender pursuant to Section 2.08(c).
"Investment" shall mean, when used with respect to any Person,
any direct or indirect advance, loan or other extension of credit (other than
the creation of receivables in the ordinary course of business) or capital
contribution by such Person (by means of transfers of property to others or
payments for property or services for the account or use of others, or
otherwise) to any Person, or any direct or indirect purchase or other
acquisition by such Person of, or of a beneficial interest in, Capital Stock,
partnership interests, bonds, notes, debentures or other securities issued by
any other Person. Each Investment shall be valued as of the date made; provided
that any Investment or portion of an Investment consisting of Debt shall be
valued at the outstanding principal balance thereof as of the date of
determination.
"Lease Documents" shall mean, collectively, (i) that certain
Lease Agreement, dated as of ____________, by and between Borrower as lessee and
SunTrust Banks, Inc., as lessor, pursuant to which the Borrower has leased its
office building, (ii) that certain Master Agreement, dated as of __________, by
and among Borrower as lessee, SunTrust Banks, Inc., as
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lessor and SunTrust Bank, Atlanta, as Agent, and (iii) all other documents,
instruments and agreements executed in connection therewith.
"Lender" or "Lenders" shall mean SunTrust, Wachovia the other
banks and lending institutions listed on the signature pages hereof, and each
assignee thereof, if any, pursuant to Section 10.06(c).
"Lending Office" shall mean for each Lender the office such
Lender may designate in writing from time to time to Borrower and the
Administrative Agent with respect to each Type of Loan.
"LIBOR" shall mean, for any Interest Period, with respect to
Eurodollar Advances under the Syndicated Loan Commitments, the offered rate for
deposits in Dollars, for a period comparable to the Interest Period and in an
amount comparable to the Administrative Agent's portion of such Advances,
appearing on Telerate Page 3750 as of 11:00 AM (London, England time) on the day
that is two Eurodollar Business Days prior to the first day of the Interest
Period. If two or more of such rates appear on such Telerate Page, the rate
shall be the arithmetic mean of such rates. If the foregoing rate is unavailable
from Telerate for any reason, then such rate shall be determined by the
Administrative Agent from the Reuters Screen LIBO Page or, if such rate is also
unavailable on such service, then on any other interest rate reporting service
of recognized standing designated in writing by the Administrative Agent to
Borrower and the other Lenders; in any such case rounded, if necessary, to the
next higher 1/100 of 1.0%, if the rate is not such a multiple.
"Lien" shall mean any mortgage, pledge, security interest,
lien, charge, hypothecation, assignment, deposit arrangement, title retention,
preferential property right, trust or other arrangement having the practical
effect of the foregoing and shall include the interest of a vendor or lessor
under any conditional sale agreement, capitalized lease or other title retention
agreement.
"Loans" shall mean, collectively, the Syndicated Loans, the
Bid Rate Loans and the Swing Line Loans.
"Margin Regulations" shall mean Regulation G, Regulation T,
Regulation U and Regulation X of the Board of Governors of the Federal Reserve
System, as the same may be in effect from time to time.
"Margin Stock" shall have the meaning set forth in the Margin
Regulations.
"Materially Adverse Effect" shall mean any materially adverse
change in (i) the business, assets, liabilities, financial condition or results
of operations of the Consolidated Companies, taken as a whole, (ii) the ability
of Borrower to perform its obligations under this
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Agreement, or (iii) the ability of the other Credit Parties (taken as a whole)
to perform their respective obligations under the Credit Documents.
"Material Subsidiary" shall mean each Subsidiary of Borrower,
now existing or hereafter established or acquired, that at any time prior to the
Maturity Date (i) has or acquires assets which constitute fifteen percent (15%)
or more of the Total Assets or (ii) accounts for or produces fifteen percent
(15%) or more of Consolidated EBITDA during the most recently completed fiscal
year of Borrower.
"Maturity Date" shall mean the earlier of (i) July __, 2002,
and (ii) the date on which all amounts outstanding under this Agreement have
been declared or have automatically be come due and payable pursuant to the
provisions of Article VIII.
"Multiemployer Plan" shall have the meaning set forth in
Section 4001(a)(3) of ERISA.
"Notes" shall mean, collectively, the Syndicated Notes, the
Bid Facility Notes and the Swing Line Note.
"Notice of Borrowing" shall have the meaning provided in
Section 2.06(a).
"Notice of Continuation/Conversion" shall have the meaning
provided in Section 2.08(b).
"Obligations" shall mean all amounts owing to either Agent or
any Lender pursuant to the terms of this Agreement or any other Credit Document,
including without limitation, all Loans (including all principal and interest
payments due thereunder), fees, expenses, indemnification and reimbursement
payments, indebtedness, liabilities, and obligations of the Credit Parties,
direct or indirect, absolute or contingent, liquidated or unliquidated, now
existing or hereafter arising, together with all renewals, extensions,
modifications or refinancings thereof.
"Payment Office" shall mean the office specified as the
"Payment Office" for the Administrative Agent on the signature page of the
Administrative Agent, or such other location as to which the Administrative
Agent shall have given written notice to Borrower and the Lenders.
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or
any successor thereto.
"Permitted Liens" shall mean those Liens expressly permitted
by Section 7.01.
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"Person" shall mean any individual, limited liability company,
partnership, firm, corporation, association, joint venture, trust or other
entity, or any government or political subdivision or agency, department or
instrumentality thereof.
"Plan" shall mean any "employee benefit plan" (as defined in
Section 3(3) of ERISA), including, but not limited to, any defined benefit
pension plan, profit sharing plan, money purchase pension plan, savings or
thrift plan, stock bonus plan, employee stock ownership plan, Multiemployer
Plan, or any plan, fund, program, arrangement or practice providing for medical
(including post-retirement medical), hospitalization, accident, sickness,
disability, or life insurance benefits, but shall exclude any Foreign Plan.
"Pro Rata Share" shall mean, with respect to each of the
Syndicated Loan Commitments of each Syndicated Lender and each Syndicated Loan
to be made by and each payment (including, without limitation, any payment of
principal, interest or fees) to be made to each such Lender, the percentage
designated as such Lender's Pro Rata Share of such Commitments, such Loans or
such payments, as applicable, set forth under the name of such Lender on the
respective signature page for such Lender, as such percentage may change based
upon amendments, assignments or reductions made pursuant to this Agreement.
"Regulation D" shall mean Regulation D of the Board of
Governors of the Federal Reserve System, as the same may be in effect from time
to time.
"Required Lenders" shall mean at any time prior to the
termination of the Syndicated Loan Commitments, Lenders holding at least 60% of
the then aggregate amount of the Syndicated Loan Commitments, or, following the
termination of the Syndicated Loan Commitments hereunder, Lenders holding at
least 60% of the sum of the aggregate outstanding Syndicated Loans.
"Requirement of Law" for any person shall mean the articles or
certificate of incorporation and by-laws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation, or
determination of an arbitrator or a court or other governmental authority, in
each case applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.
"Reuters Screen" shall mean, when used in connection with any
designated page and LIBOR, the display page so designated on the Reuters Monitor
Money Rates Service (or such other page as may replace that page on that service
for the purpose of displaying rates comparable to LIBOR).
"Solvent" shall mean, as to Borrower or any Guarantor at any
time, that (i) each of the fair value and the present fair saleable value of
such Person's assets (including any rights of subrogation or contribution to
which such Person is entitled, under any of the Loan
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<PAGE> 22
Documents or otherwise) is greater than such Person's debts and other
liabilities (including contingent, unma tured and unliquidated debts and
liabilities) and the maximum estimated amount required to pay such debts and
liabilities as such debts and liabilities mature or otherwise become payable;
(ii) such Person is able and expects to be able to pay its debts and other
liabilities (including, without limitation, contingent, unmatured and
unliquidated debts and liabilities) as they mature; and (iii) such Person does
not have unreasonably small capital to carry on its business as conducted and as
proposed to be conducted.
"SpinOff" shall mean the spinoff of stock of the Borrower by
Equifax to shareholders of Equifax.
"SpinOff Date" shall mean the date on which the SpinOff is
consummated.
"Subsidiary" shall mean, with respect to any Person, any
corporation or other entity (including, without limitation, partnerships, joint
ventures, and associations) regardless of its jurisdiction of organization or
formation, at least a majority of the total combined voting power of all classes
of voting stock or other ownership interests of which shall, at the time as of
which any determination is being made, be owned by such Person, either directly
or indirectly through one or more other Subsidiaries.
"Swing Line Advance" shall mean a Borrowing pursuant to
Section 2.08 consisting of a Swing Line Loan made by the Swing Line Lender to
Borrower on the same date and interest rate basis.
"Swing Line Borrowing" shall mean a Borrowing consisting or to
consist of a Swing Line Advance.
"Swing Line Borrowing Notice" shall mean the notice given by
Borrower to the Administrative Agent requesting a Swing Line Advance as provided
in Section 2.08(c).
"Swing Line Commitment" shall mean the commitment of the Swing
Line Lender to make Swing Line Loans in an aggregate principal amount at any
time outstanding not to exceed $10,000,000.
"Swing Line Facility" shall mean the credit facility described
in Section 2.08.
"Swing Line Lender" shall mean Wachovia or any successor
Lender extending to Borrower the Swing Line Commitment hereunder.
"Swing Line Loans" shall mean, collectively, the loans made to
Borrower by the Swing Line Lender pursuant to Section 2.08.
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"Swing Line Note" shall mean the promissory note evidencing
the Swing Line Loans substantially in the form of Exhibit C and duly completed
in accordance with the terms hereof.
"Swing Rate" shall mean the rate of interest specified by the
Swing Line Lender to Borrower as being applicable to a Swing Line Loan requested
by Borrower pursuant to Section 2.08(c).
"Swing Rate Advance" shall mean an Advance made or outstanding
as a Swing Line Loan bearing interest based on the Swing Rate as provided in
Section 3.02.
"Swing Rate Quote" shall mean an offer by the Swing Line
Lender to make a Swing Line Loan to Borrower at the Swing Rate specified therein
for the interest period to be applicable to the Swing Line Loan as specified
therein, pursuant to Section 2.08(c).
"Syndicated Advance" shall mean a Borrowing pursuant to
Section 2.02 consisting of the aggregate amount of Syndicated Loans made by the
Syndicated Lenders to Borrower at the same time, on the same interest rate basis
and, if made as a Eurodollar Advance, for the same Interest Period.
"Syndicated Borrowing" shall mean a Borrowing consisting or to
consist of a Syndicated Advance.
"Syndicated Facility" shall mean the credit facility made
available by the Syndicated Lenders to Borrower as described in Section 2.02(a).
"Syndicated Lenders" shall mean, collectively, the Lenders
extending the Syndicated Loan Commitments to Borrower pursuant to Section
2.02(a).
"Syndicated Loan Commitments" shall mean, at any time for any
Syndicated Lender, the amount of such commitment set forth opposite such
Syndicated Lender's name on the signature pages of this Agreement, as the same
may be increased or decreased from time to time as a result of any reduction
thereof pursuant to Section 2.04, any assignment thereof pursuant to Section
10.06, or any amendment thereof pursuant to Section 10.02.
"Syndicated Loans" shall mean, collectively, the loans made to
Borrower by the Syndicated Lenders pursuant to Section 2.02.
"Syndicated Notes" shall mean, collectively, the promissory
notes evidencing the Syndicated Loans in the form attached hereto as Exhibit A
duly completed in accordance with the terms hereof, either as originally
executed or as hereafter amended, modified or substituted.
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"Tax Code" shall mean the Internal Revenue Code of 1986, as
amended and in effect from time to time.
"Taxes" shall mean any present or future taxes, levies,
imposts, duties, fees, assessments, deductions, withholdings or other charges of
whatever nature, including without limitation, income, receipts, excise,
property, sales, transfer, license, payroll, withholding, social security and
franchise taxes now or hereafter imposed or levied by the United States, or any
state, local or foreign government or by any department, agency or other
political subdivision or taxing authority thereof or therein and all interest,
penalties, additions to tax and similar liabilities with respect thereto.
"Telerate" shall mean, when used in connection with any
designated page and LIBOR, the display page so designated on the Dow Jones
Telerate Service (or such other page as may replace that page on that service
for the purpose of displaying rates comparable to LIBOR).
"Total Assets" shall mean the total assets of the Consolidated
Companies, determined in accordance with GAAP.
"Type" of Borrowing shall mean a Borrowing consisting of Base
Rate Advances, Eurodollar Advances, Bid Rate Advances and Swing Rate Advances.
SECTION 1.02. ACCOUNTING TERMS AND DETERMINATION. Unless
otherwise defined or specified herein, all accounting terms shall be construed
herein, all accounting determinations hereunder shall be made, all financial
statements required to be delivered hereunder shall be prepared, and all
financial records shall be maintained in accordance with, GAAP, except that
financial records of Foreign Subsidiaries may be maintained in accordance with
generally accepted accounting principles in effect from time to time in the
jurisdiction of organization of such Foreign Subsidiary; provided, however, that
compliance with the financial covenants and calculations set forth in Section
6.08, Article VII and elsewhere herein, and in the definitions used in such
covenants and calculations, shall be calculated, made and applied in accordance
with GAAP and such generally accepted accounting principles in such foreign
jurisdictions, as the case may be, as in effect on the date of this Agreement
applied on a basis consistent with the preparation of the financial statements
referred to in Section 5.14 unless and until Borrower and the Required Lenders
enter into an agreement with respect thereto in accordance with Section 10.13.
SECTION 1.03. OTHER DEFINITIONAL TERMS. The words "hereof",
"herein" and "hereunder" and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provision of
this Agreement, and Article, Section, Schedule, Exhibit and like references are
to this Agreement unless otherwise specified. Any of the terms defined in
Section 1.01 may, unless the context otherwise requires, be used in the singular
or the plural depending on the reference.
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SECTION 1.04. EXHIBITS AND SCHEDULES. All Exhibits and
Schedules attached hereto are by reference made a part hereof.
ARTICLE II.
SYNDICATED LOANS, BID RATE LOANS AND SWING LINE LOANS
SECTION 2.01. DESCRIPTION OF REVOLVING CREDIT FACILITIES; USE
OF PROCEEDS.
(a) Subject to and upon the terms and conditions herein set
forth, (i) the Syndicated Lenders hereby establish in favor of Borrower a
revolving credit facility pursuant to which such Syndicated Lenders agree to
make Syndicated Loans to Borrower in accordance with Section 2.02, (ii) each
Syndicated Lender may, in its sole discretion, submit bids to make Bid Rate
Loans to Borrower in accordance with Section 2.07 and (iii) the Swing Line
Lender hereby establishes in favor of Borrower a swing line credit facility
pursuant to which the Swing Line Lender agrees to make Swing Line Loans to
Borrower in accordance with Section 2.08 provided, however, that (i) in no event
may the aggregate principal amount of all outstanding Loans exceed at any time
the total Syndicated Loan Commitments from time to time in effect and (ii) in no
event shall the outstanding principal amount of the Syndicated Loans of each
Syndicated Lender exceed each Syndicated Lender's Pro Rata Share of the
Syndicated Loan Commitments.
(b) The proceeds of the Syndicated Loans, the Bid Rate Loans
and the Swing Line Loans shall be used as working capital and for other general
corporate purposes of Borrower and its Consolidated Subsidiaries, including
without limitation, acquisitions of the assets of, or the Capital Stock of, any
other Person.
(c) At no time shall the number of outstanding Borrowings
comprised of Eurodollar Advances and Bid Rate Advances exceed eight.
SECTION 2.02. SYNDICATED LOANS.
(a) Subject to and upon the terms and conditions herein set
forth (including the limitation set forth in Section 2.01), each Syndicated
Lender severally agrees to make to Borrower, from time to time on and after the
Closing Date, but prior to the Maturity Date, Syndicated Loans in an aggregate
principal amount outstanding at any time not to exceed an amount equal to such
Syndicated Lender's Syndicated Loan Commitment. Borrower shall be entitled to
repay and reborrow Syndicated Loans in accordance with the provisions, and
subject to the limitations, set forth herein (including the limitation set forth
in Section 2.01).
(b) Each Syndicated Loan shall, at the option of Borrower, be
made or continued as, or converted into, part of one or more Borrowings that
shall consist entirely of Base
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Rate Advances or Eurodollar Advances. The aggregate principal amount of each
Borrowing of Syndicated Loans shall be not less than $5,000,000 or a greater
integral multiple of $500,000, provided that each Borrowing of Syndicated Loans
comprised of Base Rate Advances shall be not less than $1,000,000 or a greater
integral multiple of $100,000.
SECTION 2.03. SYNDICATED NOTES; REPAYMENT OF PRINCIPAL.
(a) Borrower's obligations to pay the principal of, and
interest on, the Syndicated Loans to each Syndicated Lender shall be evidenced
by the records of the Administrative Agent and such Lender and by the Syndicated
Note payable to such Lender (or the assignor of such Lender) completed in
conformity with this Agreement.
(b) All outstanding principal amounts under the Syndicated
Loan Commitments shall be due and payable in full on the Maturity Date.
SECTION 2.04. VOLUNTARY REDUCTION OF SYNDICATED LOAN
COMMITMENTS. Upon at least three (3) Business Days' prior written notice
(promptly confirmed in writing) to the Administrative Agent, Borrower shall have
the right, without premium or penalty, to terminate the unutilized Syndicated
Loan Commitments, in part or in whole, provided that (i) any such termination
shall apply to proportionately and permanently reduce the Syndicated Loan
Commitments of each of the Syndicated Lenders, and (ii) any partial termination
pursuant to this Section 2.03 shall be in an amount of at least $5,000,000 and
integral multiples of $1,000,000. Any portion of the Syndicated Loan Commitments
terminated pursuant to this Section 2.04 may not be reinstated.
SECTION 2.05. INCREASE OF SYNDICATED LOAN COMMITMENTS.
(a) Borrower may, at any time by written notice to the
Syndicated Lenders, request that the Syndicated Loan Commitments be increased up
to an amount not to exceed $300,000,000 in the aggregate (the "Requested
Commitment Amount") on a pro rata basis based on the Pro Rata Shares of the
Syndicated Lenders. No Syndicated Lender (or any successor thereto) shall have
any obligation to increase its Syndicated Loan Commitment or its other
obligations under this Agreement and the other Credit Documents, and any
decision by a Syndicated Lender to increase its Syndicated Loan Commitment shall
be made in its sole discretion independently from any other Syndicated Lender or
the Agents. Within fifteen (15) Business Days from each Syndicated Lender's
receipt of such request from the Borrower, each Syndicated Lender shall notify
the Documentation Agent in writing of whether or not it will agree to increase
its Syndicated Loan Commitment and by what amount it will agree to increase its
Syndicated Loan Commitment, up to its Pro Rata Share of the Requested Commitment
Amount.
(b) In the event that the aggregate amount to which the
Syndicated Lenders are willing to increase their Syndicated Loan Commitments is
less than the Requested
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Commitment Amount based on the written notices delivered by the Syndicated
Lenders to the Documentation Agent, the Documentation Agent shall first offer to
the Syndicated Lenders who have agreed to increase their Syndicated Loan
Commitments the opportunity to further increase their Syndicated Loan
Commitments up to an amount equal to the Requested Commitment Amount. Such
Syndicated Lenders shall promptly respond in writing to the Documentation Agent
of whether or not it will agree to further increase its Syndicated Loan
Commitment and by what amount it will agree to further increase its Syndicated
Loan Commitment. Within five (5) Business Days after receipt of all responses
from such Syndicated Lenders, the Documentation Agent shall inform the Borrower
and all Syndicated Lenders in writing of the amount by which each Syndicated
Lender will increase its Syndicated Loan Commitment.
(c) In the event that the aggregate amount to which the
Syndicated Lenders are willing to increase their Syndicated Loan Commitments is
less than the Requested Commitment Amount based on the notice from the
Documentation Agent to the Borrower and all Syndicated Lenders, the Borrower
shall have the right, within sixty days (60) after receipt of such notice from
the Documentation Agent, to obtain commitments from new banks or financial
institutions in an aggregate amount such that the existing Syndicated Loan
Commitments, plus the aggregate principal amount by which the Syndicated Lenders
are willing to increase their Syndicated Loan Commitments, plus the aggregate
principal amount of the new commitments by the new banks or financial
institutions does not exceed the Requested Commitment Amount; provided, however,
that (1) the new banks or financial institutions must be acceptable to the
Agents in their sole discretion, which acceptance will not be unreasonably
withheld or delayed, and (2) the new banks or financial institutions must become
parties to this Agreement pursuant to a joinder agreement in form and substance
satisfactory to the Agents and the Required Lenders, pursuant to which (x) they
shall be granted all of the rights that existing Lenders have under this
Agreement and the other Credit Documents and (y) they shall assume the same
liabilities and obligations that the existing Lenders have under this Agreement.
SECTION 2.06. SYNDICATED LOAN FUNDING NOTICES.
(a) Whenever Borrower desires to obtain a Syndicated Loan with
respect to the Syndicated Loan Commitments (other than one resulting from a
conversion or continuation pursuant to Section 2.06(b)), it shall give the
Administrative Agent prior written notice (or telephonic notice promptly
confirmed in writing) of such Borrowing (a "Notice of Borrowing"), such Notice
of Borrowing to be given prior to 11:00 AM (Atlanta, Georgia time) at its
Payment Office (x) three Eurodollar Business Days prior to the requested date of
such Borrowing in the case of Eurodollar Advances, and (y) on the date of such
Borrowing (which shall be a Business Day) in the case of a Borrowing consisting
of Base
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Rate Advances. Notices received after 11:00 AM shall be deemed received on the
next Business Day. Each Notice of Borrowing shall be irrevocable and shall
specify the aggregate principal amount of the Borrowing, the date of Borrowing
(which shall be a Business Day), and whether the Borrowing is to consist of Base
Rate Advances or Eurodollar Advances and (in the case of Eurodollar Advances)
the interest period to be applicable thereto.
(b) Whenever Borrower desires to convert all or a portion of
an outstanding Borrowing under the Syndicated Loan Commitments, consisting of
Base Rate Advances into one or more Borrowings consisting of Eurodollar
Advances, or to continue outstanding a Borrowing consisting of Eurodollar
Advances for a new Interest Period, it shall give the Administrative Agent at
least three Eurodollar Business Days' prior written notice (or telephonic notice
promptly confirmed in writing) of each such Borrowing to be converted into or
continued as Eurodollar Advances. Such notice (a "Notice of
Conversion/Continuation") shall be given prior to 11:00 AM (Atlanta, Georgia
time) on the date specified at the Payment Office of the Administrative Agent.
Each such Notice of Conversion/Continuation shall be irrevocable and shall
specify the aggregate principal amount of the Advances to be converted or
continued, the date of such conversion or continuation, whether the Advances are
being converted into or continued as Eurodollar Advances and the Interest Period
applicable thereto. If, upon the expiration of any Interest Period in respect of
any Borrowing, Borrower shall have failed to deliver the Notice of
Conversion/Continuation, Borrower shall be deemed to have elected to convert or
continue such Borrowing to a Borrowing consisting of Base Rate Advances. So long
as any Default or Event of Default shall have occurred and be continuing, no
Borrowing may be converted into or continued as (upon expiration of the current
Interest Period) Eurodollar Advances unless the Administrative Agent and each of
the Syndicated Lenders shall have otherwise consented in writing. No conversion
of any Borrowing of Eurodollar Advances shall be permitted except on the last
day of the Interest Period in respect thereof.
(c) Without in any way limiting Borrower's obligation to
confirm in writing any telephonic notice, the Administrative Agent may act
without liability upon the basis of telephonic notice believed by the
Administrative Agent in good faith to be from Borrower prior to receipt of
written confirmation. In each such case, Borrower hereby waives the right to
dispute the Administrative Agent's records of the terms of such telephonic
notice, absent manifest error.
(d) The Administrative Agent shall promptly give each
Syndicated Lender notice by telephone (confirmed in writing) or by telex,
telecopy or facsimile transmission of the matters covered by the notices given
to the Administrative Agent pursuant to this Section 2.06 with respect to the
Syndicated Loan Commitments.
SECTION 2.07. BID RATE LOANS. Subject to and upon the terms
and conditions herein set forth (including the limitation set forth in Section
2.01), Borrower may request, and each Syndicated Lender, in its sole discretion,
may agree to make, Bid Rate Advances in accordance with the following procedure:
(a) In order to request Bid Rate Bids, Borrower shall telecopy
to the Administrative Agent a duly completed Bid Request in the form of Exhibit
D attached hereto
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(which may request not more than two Bid Rate Bids), to be received by the
Administrative Agent not later than 11:00 A.M. (Atlanta, Georgia time) at least
one Business Day prior to the Business Day of the proposed Bid Rate Loan or
Loans; provided that, such Bid Request shall not be deemed to have been received
by the Administrative Agent in a timely manner unless Borrower shall also have
notified the Administrative Agent by telephone (excluding voice mail
notification) of such Bid Request by the time specified above. A Bid Request
that does not conform substantially to the format of Exhibit D may be rejected
in the Administrative Agent's sole discretion, and the Administrative Agent
shall notify Borrower of such rejection by telecopy not later than 12:00 Noon
(Atlanta, Georgia time) on the date of receipt. Such request shall in each case
refer to this Agreement and specify (i) the date of such Borrowing or Borrowings
(which shall be a Business Day) and (ii) the aggregate principal amount thereof
which shall be in a minimum principal amount of $5,000,000 and in an integral
multiple of $500,000, and (iii) the Interest Period with respect thereto.
Promptly after its receipt of a Bid Request that is not rejected as aforesaid,
the Administrative Agent shall invite by telecopy (substantially in the form set
forth in Exhibit E attached hereto) the Syndicated Lenders to bid, on the terms
and conditions of this Agreement, to make Bid Rate Advances pursuant to the Bid
Request.
(b) Each Syndicated Lender may, in its sole discretion, make
one or more Bid Rate Bids (but not more than two) to Borrower responsive to a
Bid Request. Each Bid Rate Bid by a Syndicated Lender must be received by the
Administrative Agent via telecopy, substan tially in the form of Exhibit F
attached hereto, not later than 12:00 Noon (Atlanta, Georgia time) one Business
Day prior to the Business Day of the proposed Bid Rate Loan. Multiple bids (not
to exceed two per Syndicated Lender) will be accepted by the Administrative
Agent. Bid Rate Bids that do not conform substantially to the format of Exhibit
F may be rejected by the Administrative Agent acting in consultation with
Borrower, and the Administrative Agent shall notify the Syndicated Lender making
such nonconforming bid of such rejection as soon as practicable. Each Bid Rate
Bid shall refer to this Agreement and specify (i) the principal amount (which
shall be in a minimum principal amount of $5,000,000 and in an integral multiple
of $500,000 and which may equal the entire principal amount of the Bid Rate Loan
requested by Borrower) of the Bid Rate Advance or Advances that the Syndicated
Lender is willing to make to Borrower, (ii) the Bid Rate or Rates at which the
Syndicated Lender is prepared to make the Bid Rate Advance or Advances, and
(iii) the Interest Period and the last day thereof. If any Syndicated Lender
shall elect not to make a Bid Rate Bid, such Syndicated Lender shall so notify
the Administrative Agent via telecopy by the time specified above for submitting
a Bid Rate Bid; provided, however, that failure by any Syndicated Lender to give
such notice shall not cause such Syndicated Lender to be obligated to make any
Bid Rate Advance as part of such Bid Rate Loan. A Bid Rate Bid submit ted by a
Syndicated Lender pursuant to this paragraph (b) shall be irrevocable (absent
manifest error).
(c) The Administrative Agent shall promptly notify Borrower by
telecopy of all the Bid Rate Bids made, the Bid Rate and the principal amount of
each Bid Rate Advance in respect of which a Bid Rate Bid was made and the
identity of the Syndicated Lender that made
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each bid. The Administrative Agent shall send a copy of all Bid Rate Bids to
Borrower for its records as soon as practicable after completion of the bidding
process set forth in this Section 2.07.
(d) Borrower may, in its sole and absolute discretion, subject
only to the provisions of this paragraph (d), accept or reject any Bid Rate Bid
referred to in paragraph (c) above. Borrower shall notify the Administrative
Agent by telephone, confirmed by telecopy in the form of a Reject Letter,
whether and to what extent it has decided to accept or reject any of or all the
bids referred to in paragraph (c) above not later than 1:00 P.M. (Atlanta,
Georgia time) on the Business Day of the proposed Bid Rate Loan; provided,
however, that (i) the failure by Borrower to give such notice shall be deemed to
be a rejection of all the bids referred to in paragraph (c) above, (ii) Borrower
shall not accept a bid made at a particular Bid Rate if Borrower has decided to
reject a bid made at a lower Bid Rate, and if two or more Syndicated Lenders
have bid the same Bid Rate, the Borrower shall accept all bids made at such Bid
Rate, subject to allocation on a pro rata basis, if necessary, pursuant to
clause (iv) below, (iii) the aggregate amount of the Bid Rate Bids accepted by
Borrower shall not exceed the principal amount specified in the Bid Request,
(iv) if Borrower shall accept a bid or bids made at a particular Bid Rate but
the amount of such bid or bids shall cause the total amount of bids to be
accepted by Borrower to exceed the amount specified in the Bid Request, then
Borrower shall accept a portion of such bid or bids in an amount equal to the
amount specified in the Bid Request less the amount of all other Bid Rate Bids
accepted with respect to such Bid Request, which acceptance, in the case of
multiple bids at the same Bid Rate, shall be made pro rata in accordance with
the amount of each such bid at such Bid Rate, and (v) except pursuant to clause
(iv) above, no bid shall be accepted for a Bid Rate Loan unless such Bid Rate
Loan is in a minimum principal amount of $5,000,000 and an integral multiple of
$500,000; provided further, however, that if a Bid Loan must be in an amount
less than $5,000,000 because of the provisions of clause (iv) above, such Bid
Loan may be for a minimum of $500,000 or any integral multiple thereof, and in
calculating the pro rata allocation of acceptances of portions of multiple bids
at a particular Bid Rate pursuant to clause (iv) the amounts shall be rounded to
integral multiples of $500,000 in a manner which shall be in the discretion of
Borrower. A notice given by Borrower pursuant to this paragraph (d) shall be
irrevocable.
(e) The Administrative Agent shall promptly notify each
bidding Syndicated Lender whether or not its Bid Rate Bid has been accepted (and
if so, in what amount and at what Bid Rate) and shall notify each Syndicated
Lender as to the amount, Interest Period and Bid Rate of each Bid Rate Bid
accepted by Borrower by telecopy sent by the Administrative Agent, and each
successful bidder will thereupon become bound, subject to the other applicable
conditions hereof, to make the Bid Rate Loan in respect of which its bid has
been accepted.
(f) Borrower shall not submit a Bid Request more than twice in
any seven day period.
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(g) If the Administrative Agent shall elect to submit a Bid
Rate Bid in its capacity as a Syndicated Lender, it shall submit such bid
directly to Borrower one half of an hour earlier than the earliest time at which
the other Syndicated Lenders are required to submit their bids to the
Administrative Agent pursuant to paragraph (b) above.
(h) The Bid Rate Advances of each Syndicated Lender shall be
evidenced by its Bid Facility Note and shall be due and payable in full on the
Maturity Date unless sooner accelerated pursuant to Article VIII hereof.
SECTION 2.08. SWING LINE LOANS.
(a) Subject to and upon the terms and conditions herein set
forth (including the limitation set forth in Section 2.01), the Swing Line
Lender agrees to make to Borrower, from time to time prior to the Maturity Date,
Swing Line Loans in an aggregate principal amount outstanding at any time not to
exceed the Swing Line Commitment then in effect. Borrower shall be entitled to
repay and reborrow Swing Line Loans in accordance with the provisions, and
subject to the limitations, set forth herein (including the limitation set forth
in Section 2.01).
(b) Each Swing Line Loan shall be made as a Swing Rate
Advance.
(c) Whenever Borrower desires to make a Swing Line Borrowing,
it shall give the Swing Line Lender (with a copy to the Administrative Agent,
unless the Administrative Agent is also the Swing Line Lender) prior written
notice (or telephonic notice promptly confirmed in writing) of such Swing Line
Borrowing (each a "Swing Line Borrowing Notice") prior to 11:00 a.m. (Atlanta,
Georgia time) on the date of such Swing Line Borrowing. Each Swing Line
Borrowing Notice shall specify the aggregate principal amount of the Swing Line
Borrowing, the date of such Swing Line Borrowing (which shall be a Business Day)
and the interest period to be applicable thereto. Prior to 12:00 noon (Atlanta,
Georgia time) on such date, the Swing Line Lender shall furnish Borrower (with a
copy to the Administrative Agent, unless the Administrative Agent is also the
Swing Line Lender) with a quotation of the interest rate being offered with
respect to such Swing Line Borrowing (the "Swing Rate Quote") by telephone
(promptly confirmed in writing) or by facsimile transmission. Borrower shall
immediately inform the Swing Line Lender (with a copy to the Administrative
Agent, unless the Administrative Agent is also the Swing Line Lender) of its
decision as to whether to accept the Swing Rate Quote and to confirm the Swing
Line Borrowing (which may be done by telephone, promptly confirmed in writing,
and which decision shall be irrevocable).
(d) Borrower's obligations to pay the principal of, and
interest on, the Swing Line Loans shall be evidenced by the records of the
Administrative Agent and the Swing Line Lender and by the Swing Line Note
payable to the Swing Line Lender (or the assignor of such Swing Line Lender)
completed in conformity with this Agreement.
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(e) The outstanding principal amount under each Swing Line
Loan shall be due and payable in full on the Maturity Date.
(f) At any time on the request of the Swing Line Lender, each
Syndicated Lender other than the Swing Line Lender shall purchase a
participating interest in all outstanding Swing Line Loans in an amount equal to
its Pro Rata Share (based upon on its respective Syndicated Loan Commitment) of
such Swing Line Loans, and the Swing Line Lender shall furnish each Syndicated
Lender with a certificate evidencing such participating interest. Such purchase
shall be made on the third Business Day after such request is made; provided,
however, that unless an Event of Default has occurred and is continuing on the
date such request is made, the purchase of a participating interest in any Swing
Line Loan outstanding as a Swing Rate Advance shall not be required to be made
until the expiration of the current interest period in effect for such Swing
Line Loan. On the date of such required purchase, each Syndicated Lender will
immediately transfer to the Swing Line Lender, in immediately available funds,
the amount of its participation. Whenever, at any time after the Swing Line
Lender has received from any such Syndicated Lender the funds for its
participating interest in a Swing Line Loan, the Administrative Agent receives
any payment on account thereof, the Administrative Agent will distribute to such
Syndicated Lender its participating interest in such amount (appropriately
adjusted, in the case of interest payments, to reflect the period of time during
which such Syndicated Lender's participating interest was outstanding and
funded); provided, however, that if such payment received by the Administrative
Agent is required to be returned, such Syndicated Lender will return to the
Administrative Agent any portion thereof previously distributed by the
Administrative Agent to it. Each Syndicated Lender's obligation to purchase such
participating interests shall be absolute and unconditional and shall not be
affected by any circumstance, including without limitation (i) any setoff,
counterclaim, recoupment, defense or other right that such Syndicated Lender or
any other Person may have against the Swing Line Lender requesting such purchase
or any other Person for any reason whatsoever, (ii) the occurrence or
continuation of a Default or an Event of Default or the termination of any of
the Commitments, (iii) any adverse change in the condition (financial or
otherwise) of Borrower, any of its Consolidated Subsidiaries, or any other
Person, (iv) any breach of this Agreement by Borrower, any other Borrower, or
any other Lender, or (v) any other circumstance, happening or event whatsoever,
whether or not similar to any of the foregoing; provided, however, that no such
obligation shall exist (A) to the extent that the aggregate Swing Line Loans
were advanced in excess of the Swing Line Commitment then in effect, or in
excess of the limitation set forth in Section 2.01, or (B) with respect to any
Swing Line Loan where the Swing Line Lender actually advanced to Borrower net
proceeds from the Swing Line Loan (and therefore was not refunding a previous
Swing Line Loan) at a time when (x) the Swing Line Lender had actual knowledge
that an Event of Default had occurred and then existed, and (y) the Required
Lenders had not agreed to waive such Event of Default for purposes of funding
such Swing Line Loan.
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ARTICLE III.
GENERAL LOAN TERMS
SECTION 3.01. DISBURSEMENT OF FUNDS.
(a) No later than 12:00 Noon (Atlanta, Georgia time) on the
date of each Syndicated Loan pursuant to the Syndicated Loan Commitments (other
than one resulting from a conversion or continuation pursuant to Section
2.06(b)), each Lender will make available its Pro Rata Share of such Syndicated
Loan in immediately available funds at the Payment Office of the Administrative
Agent. The Administrative Agent will make available to Borrower the aggregate of
the amounts (if any) so made available by the Syndicated Lenders to the
Administrative Agent no later than 2:00 P.M. (Atlanta, Georgia time) by
crediting such amounts to Borrower's demand deposit account maintained with the
Administrative Agent or at Borrower's option, effecting a wire transfer of such
amounts to an account specified by Borrower, by the close of business on such
Business Day. In the event that the Syndicated Lenders do not make such amounts
available to the Administrative Agent by the time prescribed above, but such
amount is received later that day, such amount may be credited to Borrower in
the manner described in the preceding sentence on the next Business Day (with
interest on such amount to begin accruing hereunder on such next Business Day).
(b) No later than 12:00 Noon (Atlanta, Georgia time) on the
date of each Bid Rate Loan, the Syndicated Lenders participating in such Bid
Rate Loan will make available the amount of its Bid Rate Advance in immediately
available funds at the Payment Office of the Administrative Agent on the date of
such Bid Rate Loan. The Administrative Agent will make available to Borrower the
aggregate of the amounts (if any) so made available by the Syndicated Lenders to
the Administrative Agent no later than 2:00 P.M. (Atlanta, Georgia time) by
crediting such amounts to Borrower's demand deposit account maintained with the
Administrative Agent or at Borrower's option, effecting a wire transfer of such
amounts to an account specified by Borrower, by the close of business on such
Business Day. In the event that the Syndicated Lenders do not make such amounts
available to the Administrative Agent by the time prescribed above, but such
amount is received later that day, such amount may be credited to Borrower in
the manner described in the preceding sentence on the next Business Day (with
interest on such amount to begin accruing hereunder on such next Business Day).
(c) No later than 2:00 p.m. (Atlanta, Georgia time) on the
date of each Swing Line Loan, the Swing Line Lender will make available the
principal amount of the Swing Line Loan available to Borrower by crediting such
amount to Borrower's demand deposit account maintained with the Swing Line
Lender.
(d) Unless the Administrative Agent shall have been notified
by any Syndicated Lender prior to the date of a Syndicated Loan Borrowing or a
Bid Rate Borrowing that such Lender does not intend to make available to the
Administrative Agent such Lender's portion of such Borrowing to be made on such
date, the Administrative Agent may assume that
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such Lender has made such amount available to the Administrative Agent on such
date and the Administrative Agent may make available to Borrower a corresponding
amount. If such corresponding amount is not in fact made available to the
Administrative Agent by such Lender on the date of such Borrowing, the
Administrative Agent shall be entitled to recover such corresponding amount on
demand from such Lender together with interest at the Federal Funds Rate. If
such Lender does not pay such corresponding amount forthwith upon the
Administrative Agent's demand therefor, the Administrative Agent shall promptly
notify Borrower, and Borrower shall immediately pay such corresponding amount to
the Administrative Agent together with interest at the rate specified for such
Borrowing. Nothing in this subsection shall be deemed to relieve any Syndicated
Lender from its obligation to fund its Syndicated Loan Commitment or Bid Rate
Loans hereunder or to prejudice any rights which Borrower may have against any
Syndicated Lender as a result of any default by such Lender hereunder.
(e) All Syndicated Loans under the Syndicated Loan Commitments
shall be loaned by the Lenders on the basis of their Pro Rata Share of the
Syndicated Loan Commitments. All Bid Rate Loans shall be loaned by the
Syndicated Lenders participating therein in accordance with their respective pro
rata shares thereof as determined in accordance with Section 2.07 with respect
to each Bid Rate Loan. All Swing Line Loans shall be loaned by the Swing Line
Lender in accordance with Section 2.08. No Lender shall be responsible for any
default by any other Lender in its obligations hereunder, and each Lender shall
be obligated to make the Loans provided to be made by it hereunder, regardless
of the failure of any other Lender to fund its Commitments or Bid Rate Loans
hereunder.
SECTION 3.02. INTEREST.
(a) Borrower agrees to pay interest in respect of all unpaid
principal amounts of Syndicated Loans from the respective dates such principal
amounts were advanced to maturity (whether by acceleration, notice of prepayment
or otherwise) at rates per annum equal to the applicable rates indicated below:
(i) For Base Rate Advances--The Base Rate in
effect from time to time;
(ii) For Eurodollar Advances--The relevant LIBOR
plus the Applicable Margin; or
(b) Borrower agrees to pay interest in respect of all unpaid
principal amounts of the Bid Rate Loans made to Borrower from the respective
dates such principal amounts were advanced to maturity (whether by acceleration,
notice of prepayment or otherwise) at the Bid Rate established for such Loan
pursuant to Section 2.07;
(c) Borrower agrees to pay interest in respect of all unpaid
principal amounts of the Swing Line Loans made to Borrower from the respective
dates such principal
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amounts were advanced to maturity (whether by acceleration, notice of prepayment
or otherwise) at the Swing Rate established for such Loan pursuant to Section
2.08;
(d) Overdue principal and, to the extent not prohibited by
applicable law, overdue interest, in respect of the Loans, and all other overdue
amounts owing hereunder, shall bear interest from each date that such amounts
are overdue:
(i) in the case of overdue principal and
interest with respect to all Loans outstanding as Eurodollar Advances
and Bid Rate Advances, at the rate otherwise applicable for the
then-current Interest Period plus an additional two percent (2.0%) per
annum; thereafter at the rate in effect for Base Rate Advances plus an
additional two percent (2.0%) per annum; and
(ii) in the case of overdue principal and
interest with respect to all other Loans outstanding as Base Rate
Advances and Swing Rate Advances, and all other Obligations hereunder
(other than Loans), at a rate equal to the applicable Base Rate plus an
additional two percent (2.0%) per annum;
(e) Interest on each Loan shall accrue from and including the
date of such Loan to but excluding the date of any repayment thereof; provided
that, if a Loan is repaid on the same day made, one day's interest shall be paid
on such Loan. Interest on all Base Rate Advances and Swing Rate Advances shall
be payable quarterly in arrears on the last calendar day of each calendar
quarter in each year. Interest on all outstanding Eurodollar Advances and Bid
Rate Advances shall be payable on the last day of each Interest Period
applicable thereto, and, in the case of Interest Periods in excess of three
months (in the case of Eurodollar Advances), on each day which occurs every 3
months, as the case may be, after the initial date of such Interest Period.
Interest on all Loans shall be payable on any conversion of any Advances
comprising such Loans into Advances of another Type, prepayment (on the amount
prepaid), at maturity (whether by acceleration, notice of prepayment or
otherwise) and, after maturity, on demand; and
(f) The Administrative Agent, upon determining LIBOR for any
Interest Period, shall promptly notify by telephone (confirmed in writing) or in
writing Borrower and the other Syndicated Lenders. Any such determination shall,
absent manifest error, be final, conclusive and binding for all purposes.
SECTION 3.03. INTEREST PERIODS.
(a) In connection with the making or continuation of, or
conversion into, each Borrowing of Eurodollar Advances, Borrower shall select an
Interest Period to be applicable to such Eurodollar Advances, which Interest
Period shall be either a 1, 2, 3 or 6 month period.
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(b) In connection with the making of each Bid Rate Loan,
Borrower shall request an Interest Period to be applicable thereto, which
Interest Period shall be for a minimum of seven (7) days and a maximum of one
hundred eighty (180) days, which request may be accepted or rejected by the
Lenders as provided in Section 2.07 hereof.
(c) Notwithstanding paragraphs (a) or (b) above:
(i) The initial Interest Period for any
Borrowing of Eurodollar Advances shall commence on the date of such
Borrowing (including the date of any conversion from a Borrowing
consisting of Base Rate Advances) and each Interest Period occurring
thereafter in respect of a continuation of such Borrowing shall
commence on the day on which the immediately preceding Interest Period
expires;
(ii) If any Interest Period would otherwise
expire on a day which is not a Business Day, such Interest Period shall
expire on the next succeeding Business Day, provided that if any
Interest Period in respect of Eurodollar Advances would otherwise
expire on a day that is not a Business Day but is a day of the month
after which no further Business Day occurs in such month, such Interest
Period shall expire on the next preceding Business Day;
(iii) Any Interest Period in respect of Eurodollar
Advances which begins on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period shall, subject to part (iv) below, expire on the last Business
Day of such calendar month; and
(iv) No Interest Period with respect to the Loans
shall extend beyond the Maturity Date.
SECTION 3.04. FEES.
(a) Borrower shall pay to the Administrative Agent, for the
account of and distribution of the respective Pro Rata Share to each Lender
(subject to the last sentence hereof), a facility fee (the "Facility Fee") for
the period commencing on the Closing Date to and including the Maturity Date,
computed at a rate equal to the Applicable Commitment Percentage per annum
multiplied by the aggregate principal amount of the Syndicated Loan Commitments
of the Lenders, such fee being payable quarterly in arrears on the date which is
five days following the last day of each fiscal quarter of Borrower and on the
Maturity Date.
(b) On the Closing Date and on each anniversary of the Closing
Date prior to the Maturity Date, Borrower shall pay to the Administrative Agent
and the Documentation Agent such fees for their respective services in the
respective amounts as previously agreed in writing by Borrower with the
Administrative Agent and the Documentation Agent, respectively.
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SECTION 3.05. VOLUNTARY PREPAYMENTS OF BORROWINGS.
(a) Borrower may, at its option, prepay Borrowings at any time
in whole, or from time to time in part, in amounts aggregating $1,000,000 or any
greater integral multiple of $100,000, by paying the principal amount to be
prepaid together with interest accrued and unpaid thereon to the date of
prepayment, together with, in the case of Eurodollar Advances and Bid Rate
Advances, all compensation payments pursuant to Section 3.11 if such prepayment
is made on a date other than the last day of the Interest Period applicable
thereto. Each such optional prepayment shall be applied in accordance with
Section 3.05(c) below.
(b) Borrower shall give written notice (or telephonic notice
confirmed in writing) to the Administrative Agent of any intended prepayment of
the Loans not less than two Business Days prior to any prepayment of Borrowings.
Such notice, once given, shall be irrevocable. Upon receipt of such notice of
prepayment, the Administrative Agent shall promptly notify each Lender of the
contents of such notice and of such Lender's share of such prepayment (provided
that notices of prepayments of Bid Rate Loans shall only be given to the Lenders
participating therein).
(c) Borrower, when providing notice of prepayment pursuant to
Section 3.05(b), may designate the Types of Advances and the specific Borrowing
or Borrowings which are to be prepaid provided that each prepayment made
pursuant to a single Borrowing shall be applied pro rata among the Advances
comprising such Borrowing. In the absence of a designation by Borrower, the
Administrative Agent shall, subject to the foregoing, make such designation in
its sole discretion. All voluntary prepayments shall be applied to the payment
of interest on the Borrowings prepaid before application to principal.
SECTION 3.06. PAYMENTS, ETC.
(a) Except as otherwise specifically provided herein, all
payments under this Agreement and the other Credit Documents, other than the
payments specified in clause (ii) below, shall be made without defense, set-off
or counterclaim to the Administrative Agent not later than 12:00 Noon (Atlanta,
Georgia time ) on the date when due and shall be made in Dollars in immediately
available funds at its Payment Office.
(b) (i) All such payments shall be made free and clear of
and without deduction or withholding for any Taxes in respect of this Agreement,
the Notes or other Credit Documents, or any payments of principal, interest,
fees or other amounts payable hereunder or thereunder (but excluding, except as
provided in paragraph (iii) hereof, any Taxes imposed on the overall net income
of the Lenders pursuant to the laws of the jurisdiction in which the principal
executive office or appropriate Lending Office of such Lender is located). If
any Taxes are so levied or imposed, Borrower agrees (A) to pay the full amount
of such Taxes, and such additional amounts as may be necessary so that every net
payment of all amounts due hereunder and under
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the Notes and other Credit Documents, after withholding or deduction for or on
account of any such Taxes (including additional sums payable under this Section
3.06), will not be less than the full amount provided for herein had no such
deduction or withholding been required, (B) to make such withholding or
deduction and (C) to pay the full amount deducted to the relevant authority in
accordance with applicable law. Borrower will furnish to the Administrative
Agent and each Lender, within 30 days after the date the payment of any Taxes is
due pursuant to applicable law, certified copies of tax receipts evidencing such
payment by Borrower. Borrower will indemnify and hold harmless the
Administrative Agent and each Lender and reimburse the Administrative Agent and
each Lender upon written request for the amount of any Taxes so levied or
imposed and paid by the Administrative Agent or Lender and any liability
(including penalties, interest and expenses) arising therefrom or with respect
thereto, whether or not such Taxes were correctly or illegally asserted. A
certificate as to the amount of such payment by such Lender or the
Administrative Agent, absent manifest error, shall be final, conclusive and
binding for all purposes.
(ii) Each Lender that is organized under the laws of
any jurisdiction other than the United States of America or any State thereof
(including the District of Columbia) agrees to furnish to Borrower and the
Administrative Agent, on the Closing Date and otherwise prior to the time it
becomes a Lender hereunder, two copies of either U.S. Internal Revenue Service
Form 4224 or U.S. Internal Revenue Service Form 1001 or any successor forms
thereto (wherein such Lender claims entitlement to complete exemption from or
reduced rate of U.S. Federal withholding tax on interest paid by Borrower
hereunder) and to provide to Borrower and the Administrative Agent a new Form
4224 or Form 1001 or any successor forms thereto if any previously delivered
form is found to be incomplete or incorrect in any material respect or upon the
obsolescence of any previously delivered form.
(iii) Borrower shall also reimburse the
Administrative Agent and each Lender, upon written request, for any Taxes
imposed (including, without limitation, Taxes imposed on the overall net income
of the Administrative Agent or Lender or its applicable Lending Office pursuant
to the laws of the jurisdiction in which the principal executive office or the
applicable Lending Office of the Administrative Agent or Lender is located) as
the Administrative Agent or Lender shall determine are payable by the
Administrative Agent or Lender in respect of amounts paid by or on behalf of
Borrower to or on behalf of the Administrative Agent or Lender pursuant to
paragraph (i) hereof.
(c) Subject to Section 3.03(ii), whenever any payment to be
made hereunder or under any Note shall be stated to be due on a day which is not
a Business Day, the due date thereof shall be extended to the next succeeding
Business Day and, with respect to payments of principal, interest thereon shall
be payable at the applicable rate during such extension.
(d) All computations of interest and fees shall be made on the
basis of a year of 360 days for the actual number of days (including the first
day but excluding the last day)
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occurring in the period for which such interest or fees are payable (to the
extent computed on the basis of days elapsed), except that interest on Base Rate
Advances shall be computed on the basis of a year of 365/366 days for the actual
number of days. Interest on Base Rate Advances shall be calculated based on the
Base Rate from and including the date of such Loan to but excluding the date of
the repayment or conversion thereof. Interest on Swing Rate Advances shall be
calculated based on the Swing Rate from and including the date of such Loan to
but excluding the date of the repayment or conversion thereof. Interest on
Eurodollar Advances and Bid Rate Advances shall be calculated as to each
Interest Period from and including the first day thereof to but excluding the
last day thereof. Each determination by the Administrative Agent of an interest
rate or fee hereunder shall be made in good faith and, except for manifest
error, shall be final, conclusive and binding for all purposes.
(e) Payment by Borrower to the Administrative Agent in
accordance with the terms of this Agreement shall, as to Borrower, constitute
payment to the Lenders under this Agreement.
SECTION 3.07. INTEREST RATE NOT ASCERTAINABLE, ETC. In the
event that the Administrative Agent shall have determined (which determination
shall be made in good faith and, absent manifest error, shall be final,
conclusive and binding upon all parties) that on any date for determining LIBOR
for any Interest Period, by reason of any changes arising after the date of this
Agreement affecting the London interbank market, or the Administrative Agent's
position in such market, adequate and fair means do not exist for ascertaining
the applicable interest rate on the basis provided for in the definition of
LIBOR then, and in any such event, the Administrative Agent shall forthwith give
notice (by telephone confirmed in writing) to Borrower and to the Lenders, of
such determination and a summary of the basis for such determination. Until the
Administrative Agent notifies Borrower that the circumstances giving rise to the
suspension described herein no longer exist, the obligations of the Lenders to
make or permit portions of the Loans to remain outstanding past the last day of
the then current Interest Periods as Eurodollar Advances shall be suspended, and
such affected Advances shall bear interest at the Base Rate (or at such other
rate of interest per annum as Borrower and each of the Administrative Agent and
the Lenders shall have agreed to in writing).
SECTION 3.08. ILLEGALITY.
(a) In the event that any Lender shall have determined (which
determination shall be made in good faith and, absent manifest error, shall be
final, conclusive and binding upon all parties) at any time that the making or
continuance of any Eurodollar Advance has become unlawful by compliance by such
Lender in good faith with any applicable law, governmental rule, regulation,
guideline or order (whether or not having the force of law and whether or not
failure to comply therewith would be unlawful), then, in any such event, the
Lender shall give prompt notice (by telephone confirmed in writing) to Borrower
and to the
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Administrative Agent of such determination and a summary of the basis for such
determination (which notice the Administrative Agent shall promptly transmit to
the other Lenders).
(b) Upon the giving of the notice to Borrower referred to in
subsection (a) above, (i) Borrower's right to request and such Lender's
obligation to make Eurodollar Advances shall be immediately suspended, and such
Lender shall make an Advance as part of the requested Borrowing of Eurodollar
Advances, bearing interest at the Base Rate (or at such other rate of interest
per annum as Borrower and each of the Administrative Agent and the Lenders shall
have agreed to in writing), which Base Rate Advance shall, for all other
purposes, be considered part of such Borrowing, and (ii) if the affected
Eurodollar Advance or Advances are then outstanding, Borrower shall immediately,
or if permitted by applicable law, no later than the date permitted thereby,
upon at least one Business Day's written notice to the Administrative Agent and
the affected Lender, convert each such Advance into an Advance or Advances of a
different Type with an Interest Period ending on the date on which the Interest
Period applicable to the affected Eurodollar Advances expires, provided that if
more than one Lender is affected at any time, then all affected Lenders must be
treated the same pursuant to this Section 3.08(b).
SECTION 3.09. INCREASED COSTS.
(a) (i) If, by reason of (x) after the date hereof, the
introduction of or any change (including, without limitation, any change by way
of imposition or increase of reserve requirements) in or in the interpretation
of any law or regulation, or (y) the compliance with any guideline or request
from any central bank or other governmental authority or quasi-governmental
authority exercising control over banks or financial institutions generally
(whether or not having the force of law):
(1) any Lender (or its applicable Lending Office)
shall be subject to any tax, duty or other charge with respect to its
Eurodollar Advances, or its obligation to make Eurodollar Advances, or
the basis of taxation of payments to any Lender of the principal of or
interest on its Eurodollar Advances or its obligation to make
Eurodollar Advances shall have changed (except for changes in the tax
on the overall net income of such Lender or its applicable Lending
Office imposed by the jurisdiction in which such Lender's principal
executive office or applicable Lending Office is located); or
(2) any reserve (including, without limitation, any
imposed by the Board of Governors of the Federal Reserve System),
special deposit or similar requirement against assets of, deposits with
or for the account of, or credit extended by, any Lender's applicable
Lending Office shall be imposed or deemed applicable or any other
condition affecting its Eurodollar Advances, or its obligation to make
Eurodollar Advances shall be imposed on any Lender or its applicable
Lending Office or the London interbank market;
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and as a result thereof there shall be any increase in the cost to such Lender
of agreeing to make or making, funding or maintaining Eurodollar Advances, or
there shall be a reduction in the amount received or receivable by such Lender
or its applicable Lending Office, or
(ii) in the event that any Lender shall have determined that any law,
treaty, governmental (or quasi-governmental) rule, regulation, guideline or
order regarding capital adequacy not currently in effect or fully applicable as
of the Closing Date, or any change therein or in the interpretation or
application thereof after the Closing Date, or compliance by such Lender with
any request or directive regarding capital adequacy not currently in effect or
fully applicable as of the Closing Date (whether or not having the force of law
and whether or not failure to comply therewith would be unlawful) from a central
bank or governmental authority or body having jurisdiction, does or shall have
the effect of reducing the rate of return on such Lender's capital as a
consequence of its obligations hereunder to a level below that which such Lender
could have achieved but for such law, treaty, rule, regulation, guideline or
order, or such change or compliance (taking into consideration such Lender's
policies with respect to capital adequacy) by an amount deemed by such Lender to
be material;
then, in the case of (i) or (ii) above, upon written notice from and demand by
such Lender on Borrower (with a copy of such notice and demand to the
Administrative Agent), Borrower shall pay to the Administrative Agent for the
account of such Lender within five Business Days after the date of such notice
and demand, additional amounts sufficient to indemnify such Lender against such
increased cost or reduced yield. A certificate as to the amount of such
increased cost or reduced yield submitted to Borrower and the Administrative
Agent by such Lender in good faith and accompanied by a statement prepared by
such Lender describing in reasonable detail the basis for and calculation of
such increased cost, shall, except for manifest error, be final, conclusive and
binding for all purposes.
In addition, if at any time a Euro-Dollar Reserve Percentage
greater than 0% is imposed on any Bank, the Borrower shall pay to such Bank
additional interest on the unpaid principal amount of the Eurodollar Advances of
such Bank until such principal amount is paid in full at an interest rate per
annum equal at all times to the quotient obtained (rounded upwards, if
necessary, to the next higher 1/100th of 1%) by dividing (i) the applicable
LIBOR for such Eurodollar Advance for such Interest Period by (ii) 1.00 minus
the Euro-Dollar Reserve Percentage, payable on each date on which interest is
payable on such Eurodollar Advance. Such additional interest, if any, shall be
determined by such Lender and notified to the Borrower through the
Administrative Agent.
(b) If any Lender shall advise the Administrative Agent that
at any time, because of the circumstances described in clauses (x) or (y) in
Section 3.09(a) or any other circumstances beyond such Lender's reasonable
control arising after the date of this Agreement affecting such Lender or the
London interbank market or such Lender's position in such markets,
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LIBOR as determined by the Administrative Agent, will not adequately and fairly
reflect the cost to such Lender of funding its Eurodollar Advances, then, and in
any such event:
(i) the Administrative Agent shall forthwith
give notice (by telephone confirmed in writing) to Borrower and to the
other Lenders of such advice;
(ii) Borrower's right to request and such
Lender's obligation to make or permit portions of the Loans to remain
outstanding past the last day of the then current Interest Periods as
Eurodollar Advances shall be immediately suspended; and
(iii) such Lender shall make an Advance as part of
the requested Borrowing of Eurodollar Advances, as the case may be,
bearing interest at the Base Rate (or at such other rate of interest
per annum as Borrower and each of the Administrative Agent and the
Lenders shall have agreed to in writing), which Base Rate Advance
shall, for all other purposes, be considered part of such Borrowing.
(c) Each Lender or Administrative Agent shall make written
demand on Borrower for indemnification or compensation pursuant to this Section
3.09 no later than 60 days after the event giving rise to the claim for
indemnification or compensation occurs. In the event that any Lender or
Administrative Agent fails to give Borrower notice within the time limitations
prescribed in the foregoing sentence, Borrower shall not have any obligation to
pay such claim for compensation or indemnification.
SECTION 3.10. LENDING OFFICES.
(a) Each Lender agrees that, if requested by Borrower, it will
use reasonable efforts (subject to overall policy considerations of such Lender)
to designate an alternate Lending Office with respect to any of its Eurodollar
Advances affected by the matters or circumstances described in Sections 3.06(b),
3.07, 3.08 or 3.09 to reduce the liability of Borrower or avoid the results
provided thereunder, so long as such designation is not materially
disadvantageous to such Lender as determined by such Lender, which determination
if made in good faith, shall be conclusive and binding on all parties hereto.
Nothing in this Section 3.10 shall affect or postpone any of the obligations of
Borrower or any right of any Lender provided hereunder.
(b) If any Lender that is organized under the laws of any
jurisdiction other than the United States of America or any State thereof
(including the District of Columbia) issues a public announcement with respect
to the closing of its lending offices in the United States such that any
withholdings or deductions and additional payments with respect to Taxes may be
required to be made by Borrower thereafter pursuant to Section 3.06(b), such
Lender shall use reasonable efforts to furnish Borrower notice thereof as soon
as practicable thereafter; provided, however, that no delay or failure to
furnish such notice shall in any event release or discharge
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Borrower from its obligations to such Lender pursuant to Section 3.06(b) or
otherwise result in any liability of such Lender.
SECTION 3.11. FUNDING LOSSES. Borrower shall compensate each
Lender, upon its written request to Borrower (which request shall set forth the
basis for requesting such amounts in reasonable detail and which request shall
be made in good faith and, absent manifest error, shall be final, conclusive and
binding upon all of the parties hereto), for all losses, expenses and
liabilities (including, without limitation, any interest paid by such Lender to
lenders of funds borrowed by it to make or carry its Eurodollar Advances or Bid
Rate Advances), in either case to the extent not recoverable by such Lender in
connection with a re-employment of such funds and including loss of anticipated
profits, which the Lender may sustain: (i) if for any reason (other than a
default by such Lender) a borrowing of, or conversion to or continuation of,
Eurodollar Advances or Bid Rate Advances to Borrower does not occur on the date
specified therefor in a Notice of Borrowing, Bid Request or Notice of
Conversion/Continuation, (whether or not withdrawn), (ii) if any repayment
(including mandatory prepayments and any conversions pursuant to Section
3.08(b)) of any Eurodollar Advances or Bid Rate Advances by Borrower occurs on a
date which is not the last day of an Interest Period applicable thereto, or
(iii) if, for any reason, Borrower defaults in its obligation to repay its
Eurodollar Advances when required by the terms of this Agreement. In no
circumstance will Borrower be responsible for losses (other than adminstrative
costs) where interest rates have increased as of the date of determination of
funding losses hereunder.
SECTION 3.12. ASSUMPTIONS CONCERNING FUNDING OF EURODOLLAR
ADVANCES. Calculation of all amounts payable to a Lender under this Article III
shall be made as though that Lender had actually funded its relevant Eurodollar
Advances through the purchase of deposits in the relevant market bearing
interest at the rate applicable to such Eurodollar Advances in an amount equal
to the amount of the Eurodollar Advances and having a maturity comparable to the
relevant Interest Period and through the transfer of such Eurodollar Advances
from an offshore office of that Lender to a domestic office of that Lender in
the United States of America; provided however, that each Lender may fund each
of its Eurodollar Advances in any manner it sees fit and the foregoing
assumption shall be used only for calculation of amounts payable under this
Article III.
SECTION 3.13. APPORTIONMENT OF PAYMENTS. Aggregate principal
and interest payments in respect of Loans and payments in respect of the
Facility Fee shall be apportioned among all outstanding Commitments and Loans to
which such payments relate, proportionately to the Lenders' respective pro rata
portions of such Commitments and outstanding Loans. The Administrative Agent
shall promptly distribute to each Lender at its Payment Office set forth beside
its name on the appropriate signature page hereof or such other address as any
Lender may request its share of all such payments received by the Administrative
Agent.
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SECTION 3.14. SHARING OF PAYMENTS, ETC. If any Lender shall
obtain any payment or reduction (including, without limitation, any amounts
received as adequate protection of a deposit treated as cash collateral under
the Bankruptcy Code) of the Obligations (whether voluntary, involuntary, through
the exercise of any right of set-off, or otherwise) in excess of its pro rata
portion of payments or reductions on account of such obligations obtained by all
the Lenders (other than, prior to the termination of the Commitments, payments
of principal, interest and fees with respect to the Bid Rate Loans which are
payable solely to the Lenders participating therein), such Lender shall
forthwith (i) notify each of the other Lenders and Administrative Agent of such
receipt, and (ii) purchase from the other Lenders such participations in the
affected obligations as shall be necessary to cause such purchasing Lender to
share the excess payment or reduction, net of costs incurred in connection
therewith, ratably with each of them, provided that if all or any portion of
such excess payment or reduction is thereafter recovered from such purchasing
Lender or additional costs are incurred, the purchase shall be rescinded and the
purchase price restored to the extent of such recovery or such additional costs,
but without interest unless the Lender obligated to return such funds is
required to pay interest on such funds. Borrower agrees that any Lender so
purchasing a participation from another Lender pursuant to this Section 3.14
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 Borrower in the amount of such
participation.
SECTION 3.15. BENEFITS TO GUARANTORS. In consideration of the
execution and delivery by the Guarantors of the Guaranty Agreements, Borrower
agrees, subject to the terms hereof, to make extensions of credit hereunder
available to the Guarantors.
ARTICLE IV.
CONDITIONS TO BORROWINGS
The obligations of each Lender to make Advances to Borrower
hereunder is subject to the satisfaction of the following conditions:
SECTION 4.01. CONDITIONS PRECEDENT TO INITIAL LOANS. On the
Closing Date, all obligations of Borrower hereunder incurred prior to such date
(including, without limitation, Borrower's obligations to pay the Arrangement
Fee and all agency fees due and payable to the Agents on the Closing Date as
previously agreed with Borrower), shall have been paid in full, and the
Documentation Agent shall have received the following, in form and substance
reasonably satisfactory in all respects to the Lenders and (except for the
Notes) in sufficient number for each Lender:
(a) the duly executed counterparts of this Agreement;
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(b) the duly executed Syndicated Notes, the duly executed Bid
Facility Notes and the duly executed Swing Line Note;
(c) the duly executed Guaranty Agreements;
(d) a duly executed certificate of Borrower, in substantially
the form of Exhibit J attached hereto and appropriately completed, certifying
that (i) the representations and warranties set forth in Article 5 hereof are
true and correct on and as of such date with the same effect as though made on
and as of such date, (ii) Borrower and the Guarantors are in compliance with all
the terms and provisions set forth in this Agreement and the other Credit
Documents on their respective parts to be observed or performed, (iii) on the
Closing Date, and after giving effect to the consummation of the SpinOff, no
Default or Event of Default, will have occurred or be continuing and (iv) as of
the Closing Date, there has been no materially adverse change in the financial
condition of the Borrower and its Subsidiaries as reflected in the pro forma
financial statements delivered to the Agents prior to the Closing Date;
(e) a duly executed solvency certificate of Borrower and the
Guarantors, in form and substance satisfactory to the Lenders;
(f) certificates of the Secretary or Assistant Secretary of
each of the Credit Parties attaching and certifying copies of the resolutions of
the boards of directors of the Credit Parties, authorizing as applicable the
execution, delivery and performance of the Credit Documents;
(g) certificates of the Secretary or an Assistant Secretary of
each of the Credit Parties certifying (i) the name, title and true signature of
each officer of such entities executing the Credit Documents, and (ii) the
bylaws or comparable governing documents of such entities;
(h) certified copies of the certificate or articles of
incorporation of each Credit Party certified by the Secretary of State or the
Secretary or Assistant Secretary of such Credit Party, together with
certificates of good standing or existence, as may be available from the
Secretary of State of the jurisdiction of incorporation or organization of such
Credit Party;
(i) copies of all documents and instruments, including all
consents, authorizations and filings, required or advisable under any
Requirement of Law or by any material Contractual Obligation of the Credit
Parties, in connection with the execution, delivery, performance, validity and
enforceability of the Credit Documents and the other documents to be executed
and delivered hereunder, and such consents, authorizations, filings and orders
shall be in full force and effect and all applicable waiting periods shall have
expired;
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(j) a certificate of the chief executive officer of the
Borrower (x) certifying that (1) all conditions to the consummation of the
SpinOff, including without limitation the obtaining of a ruling from the
Internal Revenue Service that the SpinOff may be completed without causing the
recognition of Federal income tax to Equifax, the Borrower or the shareholders
of the Borrower, have been satisfied or waived with the prior written consent of
the Lenders, other than the funding of the initial Loans under this Agreement,
and (2) immediately following the funding of the initial Loans, the SpinOff will
be completed, substantially as projected and on substantially the terms set
forth in the Form S1 filed with the Securities and Exchange Commission, and (y)
attaching true and correct copies of all documents, agreements and other
instruments executed and delivered in connection with the SpinOff;
(k) certificates of insurance issued on behalf of insurers of
Borrower and the Guarantors, describing in reasonable detail the types and
amounts of insurance (property and liability) maintained by Borrower and the
Guarantors;
(l) the favorable opinion of Jones, Day, Reavis & Pogue,
counsel to the Credit Parties, substantially in the form of Exhibit K-1
addressed to the Agents and each of the Lenders and the favorable opinion of
in-house general counsel to the Credit Parties, substantially in the form of
Exhibit K-2 addressed to the Agents and each of the Lenders;
(m) all corporate proceedings and all other legal matters in
connection with the authorization, legality, validity and enforceability of the
Credit Documents shall be reasonably satisfactory in form and substance to the
Required Lenders.
SECTION 4.02. CONDITIONS TO ALL LOANS. At the time of the
making of all Loans (before as well as after giving effect to such Loans and to
the proposed use of the proceeds thereof), the following conditions shall have
been satisfied or shall exist:
(a) there shall exist no Default or Event of Default;
(b) all representations and warranties by Borrower contained
herein shall be true and correct in all material respects with the same effect
as though such representations and warranties had been made on and as of the
date of such Loans; and
(c) the Loans to be made and the use of proceeds thereof shall
not contravene, violate or conflict with, or involve the Administrative Agent or
any Lender in a violation of, the Margin Regulations or any other material law,
rule, injunction, or regulation, or determination of any court of law or other
governmental authority applicable to Borrower.
Each request for a new Borrowing and the acceptance by
Borrower of the proceeds thereof (but not the continuation or conversion of an
existing Borrowing) shall constitute a representation and warranty by Borrower,
as of the date of the Loans comprising
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such Borrowing, that the applicable conditions specified in Sections 4.01 and
4.02 have been satisfied or waived in writing.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES
Borrower (as to itself and all other Consolidated Companies)
represents and warrants as follows:
SECTION 5.01. CORPORATE EXISTENCE; COMPLIANCE WITH LAW. Each
of the Credit Parties is a corporation duly organized, validly existing, and in
good standing under the laws of the jurisdiction of its incorporation. Each of
the Credit Parties (i) has the corporate power and authority and the legal right
to own and operate its property and to conduct its business, (ii) is duly
qualified as a foreign corporation and in good standing under the laws of each
jurisdiction where its ownership of property or the conduct of its business
requires such qualification, and (iii) is in compliance with all Requirements of
Law, except where the failure to duly qualify or to comply with applicable
Requirements of Law would not have a Materially Adverse Effect.
SECTION 5.02. CORPORATE POWER; AUTHORIZATION. Each of the
Credit Parties has the corporate power and authority to make, deliver and
perform the Credit Documents to which it is a party and has taken all necessary
corporate action to authorize the execution, delivery and performance of such
Credit Documents. No consent or authorization of, or filing with, any Person
(including, without limitation, any governmental authority), is required in
connection with the execution, delivery or performance by any Credit Party, or
the validity or enforceability against any Credit Party, of the Credit
Documents, other than such consents, authorizations or filings which have been
made or obtained.
SECTION 5.03. ENFORCEABLE OBLIGATIONS. This Agreement and each
other Credit Document has been duly authorized, executed and delivered by the
respective Credit Parties, and this Agreement and each other Credit Document
constitute legal, valid and binding obligations of the Credit Parties,
respectively, enforceable against the Credit Parties in accordance with their re
spective terms, except as may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity.
SECTION 5.04. NO CONTRACTUAL OR LEGAL BAR. The execution,
delivery and performance by the Borrower and each Guarantor of the Credit
Documents to which it is a party (a) will not contravene any material provision
of any Requirement of Law, (b) will not conflict with or be inconsistent with or
result in any breach of, or constitute a default under, any Contractual
Obligations of any Consolidated Company that would result in liability to any
Credit
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Party of $500,000 or more in the aggregate or otherwise result in a Materially
Adverse Effect, (c) will not violate any provision of the certificate of
incorporation (or equivalent thereof) or bylaws (or equivalent thereof) of the
Borrower or any Guarantor, (d) will not require the consent, approval or
authorization of any governmental or non-governmental authority or Person and
(e) will not result in the creation of any Lien upon the assets or properties of
the Borrower and its Subsidiaries, other than those Liens permitted under
Section 7.01.
SECTION 5.05. NO MATERIAL LITIGATION OR INVESTIGATIONS. No
litigation, investigations or proceedings of or before any courts, tribunals,
arbitrators or governmental authorities are pending or, to the knowledge of
Borrower, threatened by or against any of the Consolidated Companies, or against
any of their respective properties or rights, existing or future (a) with
respect to any Credit Document or any of the transactions contemplated hereby or
thereby, or (b) which, if adversely determined, would reasonably be expected to
have a Materially Adverse Effect.
SECTION 5.06. INVESTMENT COMPANY ACT, ETC. None of the
Consolidated Companies is an "investment company" or a company "controlled" by
an "investment company" (as each of the quoted terms is defined or used in the
Investment Company Act of 1940, as amended). None of the Consolidated Companies
is subject to regulation under the Public Utility Holding Company Act of 1935,
the Federal Power Act, or any foreign, federal or local statute or regulation
limiting its ability to incur indebtedness for money borrowed, guarantee such
indebtedness, or pledge its assets to secure such indebtedness, as contemplated
hereby or by any other Credit Document.
SECTION 5.07. MARGIN REGULATIONS. No part of the proceeds of
any of the Loans will be used for any purpose which violates, or which would be
inconsistent or not in compliance with, the provisions of the applicable Margin
Regulations.
SECTION 5.08. COMPLIANCE WITH ENVIRONMENTAL LAWS.
(a) The Consolidated Companies have received no notices of
claims or potential liability under, and are in compliance with, all applicable
Environmental Laws, where such claims and liabilities under, and failures to
comply with, such statutes, regulations, rules, ordinances, laws or licenses,
would reasonably be expected to result in penalties, fines, claims or other
liabilities to the Consolidated Companies having a Materially Adverse Effect.
(b) None of the Consolidated Companies has received any notice
of violation, or notice of any action, either judicial or administrative, from
any governmental authority (whether United States or foreign) relating to the
actual or alleged violation of any Environmental Law, including, without
limitation, any notice of any actual or alleged spill, leak, or other release of
any Hazardous Substance, waste or hazardous waste by any Consolidated Company or
its employees or agents, or as to the existence of any contamination on any
properties owned by any Consolidated Company, where any such violation, spill,
leak, release or
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contamination would reasonably be expected to result in penalties, fines, claims
or other liabilities to the Consolidated Companies having a Materially Adverse
Effect.
(c) The Consolidated Companies have obtained all necessary
governmental permits, licenses and approvals which are material to the
operations conducted on their respective properties, including without
limitation, all required material permits, licenses and approvals for (i) the
emission of air pollutants or contaminants, (ii) the treatment or pretreatment
and discharge of waste water or storm water, (iii) the treatment, storage,
disposal or generation of hazardous wastes, (iv) the withdrawal and usage of
ground water or surface water, and (v) the disposal of solid wastes.
SECTION 5.09. INSURANCE. The Credit Parties currently maintain
insurance with respect to their respective properties and businesses, with
financially sound and reputable insurers, having coverages against losses or
damages of the kinds customarily insured against by reputable companies in the
same or similar businesses, such insurance being the types, and in amounts no
less than those amounts which are, customary for such companies under similar
circumstances; provided, however, that the Company may self insure in amounts
satisfactory to management, subject to the provisions of Section 6.06(a). The
Consolidated Companies have paid all material amounts of insurance premiums now
due and owing with respect to such insurance policies and coverages, and such
policies and coverages are in full force and effect.
SECTION 5.10. NO DEFAULT. None of the Consolidated Companies
is in default under or with respect to any material Contractual Obligation in
any respect.
SECTION 5.11. NO BURDENSOME RESTRICTIONS. None of the
Consolidated Companies is a party to or bound by any Contractual Obligation or
Requirement of Law which has had or would reasonably be expected to have a
Materially Adverse Effect.
SECTION 5.12. TAXES. Each of the Consolidated Companies has
filed or caused to be filed all declarations, reports and tax returns which are
required to have been filed, and has paid all taxes, custom duties, levies,
charges and similar contributions ("taxes" in this Section 5.12) shown to be due
and payable on said returns or on any assessments made against it or its
properties, and all other taxes, fees or other charges imposed on it or any of
its properties by any governmental authority (other than those the amount or
validity of which is currently being contested in good faith by appropriate
proceedings and with respect to which reserves in conformity with GAAP have been
provided in its books or where the aggregate sum of taxes unpaid is less than
$500,000); and no tax liens have been filed and, to the knowledge of Borrower,
no claims are being asserted with respect to any such taxes, fees or other
charges.
SECTION 5.13. SUBSIDIARIES. Schedule 5.13 accurately describes
as of the Closing Date (1) the complete name of each Subsidiary of the Borrower,
(2) the jurisdiction of incorporation or organization of each Subsidiary of the
Borrower, (3) the ownership of all issued
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and outstanding Capital Stock of each Subsidiary of the Borrower and (4) whether
such Subsidiary is a Material Subsidiary. Except as disclosed on Schedule 5.13,
Borrower has no Subsidiaries and neither Borrower nor any Subsidiary is a joint
venture partner or general partner in any partnership. Each of the Subsidiaries
that is not a Guarantor is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation, is duly
qualified to transact business in every jurisdiction where the failure to so
qualify would have a Materially Adverse Effect, and has all corporate powers and
all governmental licenses, authorizations, consents and approvals required to
carry on its business as now as now conducted in each case where the failure to
have the same would have a Materially Adverse Effect.
SECTION 5.14. FINANCIAL STATEMENTS. The unaudited pro forma
balance sheet of the Consolidated Companies as of March 31, 1997 (after giving
effect to the SpinOff), setting forth the pro forma financial position of the
Consolidated Companies, a copy of which has been delivered to the Lenders,
fairly presents, on a pro forma basis, in conformity with generally accepted
accounting principles, the financial position of the Consolidated Companies as
of such date and time. The Consolidated Companies do not have any material
contingent obligations, contingent liabilities or other obligations which are
not reflected in the balance sheet referenced above (the "Pro Forma Financial
Statements"). Since March 31, 1997, there have been no changes with respect to
the Consolidated Companies which has had or would reasonably be expected to have
a Materially Adverse Effect.
SECTION 5.15. ERISA.
(a)(1) Identification of Plans. (A) None of the Consolidated
Companies nor any of their respective ERISA Affiliates maintains or contributes
to, or has during the past two years maintained or contributed to, any Plan that
is subject to Title IV of ERISA other than the Equifax Inc. U.S. Retirement
Income Plan, and (B) none of the Consolidated Companies maintains or contributes
to any Foreign Plan other than the Equifax Europe (U.K.) Ltd. Pension Plan;
(2) Compliance. Each Plan and each Foreign Plan maintained by
the Consolidated Companies have at all times been maintained, by their terms and
in operation, in compliance with all applicable laws, and the Consolidated
Companies are subject to no tax or penalty with respect to any Plan maintained
or contributed to by such Consolidated Company or any ERISA Affiliate thereof,
including without limitation, any tax or penalty under Title I or Title IV of
ERISA or under Chapter 43 of the Tax Code, or any tax or penalty resulting from
a loss of deduction under Sections 404, or 419 of the Tax Code, where the
failure to comply with such laws, and such taxes and penalties, together with
all other liabilities referred to in this Section 5.15 (taken as a whole), would
in the aggregate have a Materially Adverse Effect;
(3) Liabilities. The Consolidated Companies are subject to no
liabilities (including withdrawal liabilities) with respect to any Plans or
Foreign Plans maintained or contributed to by such Consolidated Companies or any
of their ERISA Affiliates, including
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without limitation, any liabilities arising from Titles I or IV of ERISA, other
than obligations to fund benefits under an ongoing such Plan and to pay current
contributions, expenses and premiums with respect to such Plans or Foreign
Plans, where such liabilities, together with all other liabilities referred to
in this Section 5.15 (taken as a whole), would in the aggregate have a
Materially Adverse Effect;
(4) Funding. The Consolidated Companies and, with respect to
any Plan which is subject to Title IV of ERISA, each of their respective ERISA
Affiliates, have made full and timely payment of all amounts (A) required to be
contributed by any of them under the terms of each Plan and applicable law, and
(b) required to be paid as expenses by any of them (including PBGC or other
premiums) of each Plan, where the failure to pay such amounts (when taken as a
whole, including any penalties attributable to such amounts) would have a
Materially Adverse Effect. No Plan maintained by a Consolidated Company subject
to Title IV of ERISA has an "amount of unfunded benefit liabilities" (as defined
in Section 4001(a)(18) of ERISA, determined as if such Plan terminated on any
date on which this representation and warranty is deemed made, in any amount
which, together with all other liabilities referred to in this Section 5.15
(taken as a whole), would have a Materially Adverse Effect if such amount were
then due and payable. The Consolidated Companies are subject to no liabilities
with respect to post-retirement medical benefits other than those accrued on
Borrower's financial statements.
(b) With respect to any Foreign Plan, reasonable reserves have
been established in accordance with prudent business practice or where required
by ordinary accounting practices in the jurisdiction where the Foreign
Subsidiary maintains its principal place of business or in which the Foreign
Plan is maintained. The aggregate unfunded liabilities, after giving effect to
any reserves for such liabilities, with respect to such Foreign Plans, together
with all other liabilities referred to in this Section 5.15 (taken as a whole),
would not have a Materially Adverse Effect.
SECTION 5.16. POSSESSION OF FRANCHISES, LICENSES, ETC. Each
of the Consolidated Companies possesses all franchises, certificates, licenses,
permits and other authorizations from governmental political subdivisions or
regulatory authorities, that are necessary in any material respect for the
ownership, maintenance and operation of its properties and assets, and none of
the Consolidated Companies is in violation of any thereof in any material
respect.
SECTION 5.17. PATENTS, TRADEMARKS, LICENSES, ETC. (i) The
Consolidated Companies have obtained and hold in full force and effect all
patents, trademarks, service marks, trade names, copyrights, licenses and other
such rights, free from burdensome restrictions, which are necessary for the
operation of their respective businesses as presently conducted and where the
result of a failure to obtain and hold such patents, trademarks, service marks,
trade names, copyrights, licenses and other such rights would have a Materially
Adverse Effect, and (ii) to the best of Borrower's knowledge, no product,
process, method, service or other item presently sold
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by or employed by any Consolidated Company in connection with such business
infringes any patents, trademark, service mark, trade name, copyright, license
or other right owned by any other person and there is not presently pending, or
to the knowledge of Borrower, threatened, any claim or litigation against or
affecting any Consolidated Company contesting such Person's right to sell or use
any such product, process, method, substance or other item where the result of
such failure to obtain and hold such benefits or such infringement would have a
Materially Adverse Effect.
SECTION 5.18. OWNERSHIP OF PROPERTY. Each Consolidated Company
has good and marketable fee simple title to or a valid leasehold interest in all
of its real property and good title to, or a valid leasehold interest in, all of
its other material assets, as such properties are reflected in the most recent
financial statements (including the Pro Forma Financial Statements) delivered by
Borrower to the Administrative Agent, other than properties disposed of in the
ordinary course of business since such date or as otherwise permitted by the
terms of this Agreement, subject to no Lien or title defect of any kind, except
Liens permitted under Section 7.01. The Consolidated Companies enjoy peaceful
and undisturbed possession under all of their respective leases.
SECTION 5.19. FINANCIAL CONDITION. On the Closing Date and
after giving effect to the transactions contemplated by this Agreement, the
Guaranty Agreements and the other Credit Documents, including without
limitation, the use of the proceeds of the Loans as provided in Section 2.01(b),
each of the Credit Parties is Solvent.
SECTION 5.20. LABOR MATTERS. The Consolidated Companies have
experienced no strikes, labor disputes, slow downs or work stoppages due to
labor disagreements which have had, or would reasonably be expected to have, a
Materially Adverse Effect, and, to the best knowledge of Borrower, there are no
such strikes, disputes, slow downs or work stoppages threatened against any
Consolidated Company which if they occurred, would reasonably be expected to
have a Materially Adverse Effect. The hours worked and payment made to employees
of the Consolidated Companies have not been in violation in any material respect
of the Fair Labor Standards Act (in the case of Consolidated Companies that are
not Foreign Subsidiaries) or any other applicable law dealing with such matters.
All payments due from the Consolidated Companies, or for which any claim may be
made against the Consolidated Companies, on account of wages and employee health
and welfare insurance and other benefits have been paid or accrued as
liabilities on the books of the Consolidated Companies in all jurisdictions
where the failure to pay or accrue such liabilities would reasonably be expected
to have a Materially Adverse Effect.
SECTION 5.21. PAYMENT OR DIVIDEND RESTRICTIONS. None of the
Consolidated Companies is party to or subject to any agreement or understanding
restricting or limiting the payment of any dividends or other distributions by
any such Consolidated Company, other than CDB/Infotek.
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SECTION 5.22. OUTSTANDING INDEBTEDNESS. Schedule 5.22 lists
all outstanding Indebtedness of the Consolidated Companies as of the Closing
Date. There exists no default under the provisions of any instrument evidencing
or securing Indebtedness of the Borrower or any of its Subsidiaries or of any
agreement otherwise relating thereto which has had or would reasonably be
expected to have a Material Adverse Effect.
SECTION 5.23. DISCLOSURE. No representation or warranty
contained in this Agreement (including the Schedules attached hereto) or in any
other document furnished from time to time pursuant to the terms of this
Agreement, contains or will contain any untrue statement of a material fact or
omits or will omit to state any material fact necessary to make the statements
herein or therein not misleading in any material respect as of the date made or
deemed to be made. There is no fact known to Borrower which is having, or is
reasonably expected to have, a Materially Adverse Effect.
ARTICLE VI.
AFFIRMATIVE COVENANTS
So long as any Commitment remains in effect hereunder or any
Note shall remain unpaid, Borrower will (unless waived in writing by the
Required Lenders):
SECTION 6.01. CORPORATE EXISTENCE, ETC. Preserve and maintain,
and cause each of its Subsidiaries to preserve and maintain, its corporate
existence (except for mergers, divestitures and consolidations permitted
pursuant to Section 7.03), and except where the failure to be so qualified would
reasonably be expected to have a Materially Adverse Effect, its qualification to
do business as a foreign corporation in all jurisdictions where it conducts
business or other activities making such qualification necessary.
SECTION 6.02. COMPLIANCE WITH LAWS, ETC. Comply, and cause
each of its Subsidiaries to comply with, all Requirements of Law (including,
without limitation, the Environmental Laws, ERISA and employee benefit laws) and
Contractual Obligations applicable to or binding on any of them where the
failure to comply with such Requirements of Law and Contractual Obligations
would reasonably be expected to have a Materially Adverse Effect.
SECTION 6.03. PAYMENT OF TAXES AND CLAIMS, ETC. Pay, and cause
each of its Subsidiaries to pay, (i) all taxes, assessments and governmental
charges imposed upon it or upon its property, and (ii) all claims (including,
without limitation, claims for labor, materials, supplies or services) which
might, if unpaid, become a Lien upon its property, unless, in each case, the
validity or amount thereof is being contested in good faith by appropriate
proceedings and adequate reserves are maintained with respect thereto or the
aggregate sum of taxes unpaid is less than $500,000.
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SECTION 6.04. KEEPING OF BOOKS. Keep, and cause each of its
Subsidiaries to keep, proper books of record and account, containing complete
and accurate entries of all their respective financial and business
transactions.
SECTION 6.05. VISITATION, INSPECTION, ETC. (a) Prior to the
occurrence of a Default, permit, and cause each of its Subsidiaries to permit,
any representative of any Lender at such Lender's expense after reasonable
notice during regular business hours (which date of visit shall be mutually
agreed upon but shall not be later than 2 weeks after the date requested by such
Lender) to visit and inspect, in the company of any of the Executive Officers or
their designees and their independent public accountants, any of their
respective properties, and to examine and make abstracts from any of their
respective books and records and to discuss with any of the Executive Officers
the respective affairs, finances and accounts of the Borrower and its
Subsidiaries. Prior to the occurrence of a Default, each Lender shall be
entitled to no more than two (2) such visits and inspections per year.
(b) After the occurrence of a Default, permit, and cause each
of its Subsidiaries to permit, any representative of any Lender at the
Borrower's expense to visit and inspect, in the company of any of the Executive
Officers or their designees and their independent public accountants, any of
their respective properties, and to examine and make abstracts from any of their
respective books and records and to discuss with any of the Executive Officers
the respective affairs, finances and accounts of the Borrower and its
Subsidiaries.
(c) To cooperate and assist, and to cause each of its
Subsidiaries to cooperate and assist, in such visits and inspections set forth
in paragraphs (a) and (b) above in this Section, in each case at such reasonable
times and as often as may reasonably be desired; provided, however, that (i) in
no event shall any Lender have access to information prohibited by law, and (ii)
in the event any Lender desires to inspect confidential matters (which matters
shall in no event include financial information and data of the Borrower or its
Subsidiaries or other information the Lenders may require in order to determine
compliance this Agreement) under this Section, such Lender shall executed a
confidentiality agreement relating to such matters, which agreement shall
contain reasonable terms acceptable to such Lender and its counsel.
SECTION 6.06. INSURANCE; MAINTENANCE OF PROPERTIES.
(a) Maintain or cause to be maintained with financially sound
and reputable insurers, insurance with respect to its properties and business,
and the properties and business of its Subsidiaries, against loss or damage of
the kinds customarily insured against by reputable companies in the same or
similar businesses, such insurance to be of such types and in such amounts as
are customary for such companies under similar circumstances; provided, however,
that the Credit Parties may self-insure in amounts satisfactory to management.
Upon the request of the Administrative Agent, Borrower shall file with the
Administrative Agent a detailed list of such insurance then in effect stating
the names of the insurance companies, the limits of liability of insurance, the
date of expiration thereof, the Property and risks covered
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thereby and the insured with respect thereto, and, within 60 days after notice
in writing from the Administrative Agent, obtain such additional insurance as
the Required Lenders may reasonably request as a result of a material change in
the circumstances or conditions affecting Borrower's business specifically or
its type of business generally, provided that such additional insurance is
available at a commercially reasonable cost.
(b) Cause, and cause each of the Consolidated Companies to
cause, all properties used or useful in the conduct of its business to be
maintained and kept in good condition, repair and working order and supplied
with all necessary equipment and will cause to be made all necessary repairs,
renewals, replacements, settlements and improvements thereof, all as in the
judgment of Borrower may be necessary so that the business carried on in
connection therewith may be properly and advantageously conducted at all times;
provided, however, that nothing in this Section 6.06 shall prevent Borrower from
discontinuing the operation or maintenance of any such properties if such
discontinuance is, in the judgment of Borrower, desirable in the conduct of its
business or the business of any Consolidated Company.
(c) Maintain in full force and effect all material patents,
trademarks, service marks, trade names, copyrights, licenses and other such
rights, free from burdensome restrictions, which are necessary for the operation
of the businesses of the Consolidated Companies as presently conducted, where
the result of failure to obtain and hold such benefits would have a Materially
Adverse Effect.
SECTION 6.07. REPORTING COVENANTS. Furnish to each Lender:
(a) Annual Financial Statements. As soon as available and in
any event within 105 days after the end of each fiscal year of
Borrower, balance sheets of the Consolidated Companies as at the end of
such year, presented on a consolidated basis, and the related
statements of income, and cash flows of the Consolidated Companies for
such fiscal year, presented on a consolidated basis, setting forth in
each case in comparative form the figures for the previous fiscal year,
all in reasonable detail and accompanied by a report thereon of the
independent public accountants of comparable recognized national
standing, which such report shall be unqualified as to going concern
and scope of audit and shall state that such financial statements
present fairly in all material respects the financial condition as at
the end of such fiscal year on a consolidated basis, and the results of
operations and statements of cash flows of the Consolidated Companies
for such fiscal year in accordance with GAAP and that the examination
by such accountants in connection with such consolidated financial
statements has been made in accordance with generally accepted auditing
standards;
(b) Quarterly Financial Statements. As soon as available and
in any event within 60 days after the end of each fiscal quarter of
Borrower (other than the fourth fiscal quarter), balance sheets of the
Consolidated Companies as at the end of such
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quarter presented on a consolidated basis and the related statements of
income, shareholders' equity, and cash flows of the Consolidated
Companies for such fiscal quarter and for the portion of Borrower's
fiscal year ended at the end of such quarter, presented on a
consolidated basis setting forth in each case in comparative form the
figures for the corresponding quarter and the corresponding portion of
Borrower's previous fiscal year, all in reasonable detail and
accompanied by a certification by the chief financial officer of
Borrower that such financial statements fairly present in all material
respects the financial condition of the Consolidated Companies as at
the end of such fiscal quarter on a consolidated basis, and the results
of operations and statements of cash flows of the Consolidated
Companies for such fiscal quarter and such portion of Borrower's fiscal
year, in accordance with GAAP consistently applied (subject to normal
year-end audit adjustments and the absence of certain footnotes);
(c) No Default/Compliance Certificate. Together with the
financial statements required pursuant to subsections (a) and (b)
above, a certificate (with supporting details) of the chief financial
officer of Borrower substantially in the form of Exhibit M attached
hereto (the "Compliance Certificate") (i) to the effect that, based
upon a review of the activities of the Consolidated Companies and such
financial statements during the period covered thereby, there exists no
Event of Default and no Default under this Agreement, or if there
exists an Event of Default or a Default hereunder, specifying the
nature thereof and the proposed response thereto, and (ii)
demonstrating in reasonable detail compliance as at the end of such
fiscal year or such fiscal quarter with Sections 6.08, 7.01, 7.04 and
7.05;
(d) Auditor's Statement. Together with the financial
statements required pursuant to subsection (a) above, a statement of
the accountants who prepared the report referred to therein, to the
effect that, nothing has come to their attention which would cause them
to believe that a Default or Event of Default existed as of the date of
such financial statements, or if there existed a Default or Event of
Default, specifying the nature thereof;
(e) Notice of Default. Promptly, and no later than five (5)
Business Days after any Executive Officer of Borrower has notice or
knowledge of the occurrence of an Event of Default or a Default, a
certificate of the chief financial officer of Borrower specifying the
nature thereof and the proposed response thereto;
(f) Litigation and Investigations. Promptly, and no later than
ten (10) Business Days after any Executive Officer of Borrower has
notice or knowledge thereof, notice of the institution of or any
material adverse development in any material action, suit or proceeding
or any governmental investigation or any arbitration, before any court
or arbitrator or any governmental or administrative body, agency or
official, against any Consolidated Company, or any material property of
any thereof, or the threat of any such action, suit, proceeding,
investigation or arbitration;
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(g) Environmental Notices. Promptly, and no later than ten
(10) Business Days after any Executive Officer of Borrower has notice
or knowledge thereof, notice of any actual or alleged violation, or
notice of any action, claim or request for information, either judicial
or administrative, from any governmental authority relating to any
actual or alleged claim, notice of potential responsibility under or
violation of any Environmental Law, or any actual or alleged spill,
leak, disposal or other release of any waste, petroleum product, or
hazardous waste or Hazardous Substance by any Consolidated Company
which could result in a Materially Adverse Effect;
(h) ERISA. (A)(i) Promptly, and no later than ten (10)
Business Days after any Executive Officer of Borrower has notice or
knowledge thereof, with respect to any Plan maintained or contributed
to by any Consolidated Company or any ERISA Affiliate thereof, or any
trust established thereunder, notice of a "reportable event" described
in Section 4043 of ERISA and the regulations issued from time to time
thereunder (other than a "reportable event" not subject to the
provisions for 30-day notice to the PBGC under such regulations); or
(B) any other event which could subject any Consolidated Company to any
tax, penalty or liability under Title I or Title IV of ERISA or Chapter
43 of the Tax Code, or any tax or penalty resulting from a loss of
deduction under Sections 404 or 419 of the Tax Code, or any tax,
penalty or liability under any Requirement of Law applicable to any
Foreign Plan, where any such taxes, penalties or liabilities could
result in a Material Adverse Effect;
(ii) Promptly after such notice must be provided
to the PBGC, or to a Plan participant, beneficiary or alternative
payee, any notice required under Section 101(d), 302(f)(4), 303, 307,
4041(b)(1)(A) or 4041(c)(1)(A) of ERISA or under Section 401(a)(29) or
412 of the Tax Code with respect to any Plan maintained or contributed
to by any Consolidated Company or any ERISA Affiliate thereof;
(iii) Promptly after receipt, any notice received
by any Consolidated Company or any ERISA Affiliate thereof concerning
the intent of the PBGC or any other governmental authority to terminate
a Plan maintained or contributed to by such Company or ERISA Affiliate
thereof which is subject to Title IV of ERISA, to impose any liability
on such Company or ERISA Affiliate under Title IV of ERISA or Chapter
43 of the Tax Code;
(iv) Upon the request of the Administrative
Agent, promptly upon the filing thereof with the Internal Revenue
Service ("IRS") or the Department of Labor ("DOL"), a copy of IRS Form
5500 or annual report for each Plan maintained or contributed to by any
Consolidated Company or ERISA Affiliate thereof which is subject to
Title IV of ERISA;
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(v) Upon the request of the Administrative
Agent, but no more frequently than twice each calendar year, (A) true
and complete copies of any and all documents, government reports and
IRS determination or opinion letters or rulings for any Plan maintained
or contributed to by any Consolidated Company from the IRS, PBGC or
DOL, filed within the preceding 12 months, (B) any reports filed with
the IRS, PBGC or DOL with respect to a Plan maintained or contributed
to by the Consolidated Companies or any ERISA Affiliate thereof filed
within the preceding 12 months, or (C) a current statement of
withdrawal liability for each Multiemployer Plan contributed to by any
Consolidated Company or any ERISA Affiliate thereof;
(B) Promptly, and no later than give (5) Business
Days after any Executive Officer has notice of knowledge thereof,
notice that (i) any material contributions to any Foreign Plan have not
been made by the required due date for such contribution and such
default cannot immediately be remedied, (ii) any Foreign Plan is not
funded to the extent required by the law of the jurisdiction whose law
governs such Foreign Plan based on the actuarial assumptions reasonably
used at any time, or (iii)] a material change is anticipated to any
Foreign Plan that may have a Materially Adverse Effect.
(i) Liens. Promptly, and no later than five (5) Business Days
after any Executive Officer of Borrower has notice or knowledge
thereof, notice of the filing of any federal statutory Lien, tax or
other state or local government Lien or any other Lien affecting their
respective properties, other than those Liens expressly permitted by
Section 7.01;
(j) Public Filings, Etc. Promptly upon the filing thereof or
otherwise becoming available, copies of all financial statements,
annual, quarterly and special reports, proxy statements and notices
sent or made available generally by Borrower to its public security
holders, of all regular and periodic reports and all registration
statements and prospectuses, if any, filed by any of them with any
securities exchange, and of all press releases and other statements
made available generally to the public containing material developments
in the business or financial condition of Borrower and the other
Consolidated Companies;
(k) New Material Subsidiaries. Within 30 days after the
formation, acquisition or existence of any new Material Subsidiary, or
any other event resulting in the creation of a new Material Subsidiary,
or the domestication of any Foreign Subsidiary, notice of the formation
or acquisition of such Subsidiary or such occurrence, including a
description of the assets of such entity, the activities in which it
will be engaged, and such other information as the Administrative Agent
may request;
(l) Default under Other Debt. Immediately upon its receipt
thereof, copies of any notice received by the Borrower or any other
Consolidated Company from the
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holder(s) of Indebtedness of the Consolidated Companies (or from any
trustee, agent, attorney, or other party acting on behalf of such
holder(s)) in an amount which, in the aggregate, exceeds $5,000,000,
where such notice states or claims the existence or occurrence of any
default or event of default with respect to such Indebtedness under the
terms of any indenture, loan or credit agreement, debenture, note, or
other document evidencing or governing such Indebtedness; and
(m) Other Information. With reasonable promptness, any other
information as the Administrative Agent on behalf of any Lender may
reasonably request from time to time.
SECTION 6.08. FINANCIAL COVENANTS.
(a) Fixed Charge Coverage Ratio. (i) Maintain as of the last
day of each fiscal quarter of 1997 and 1998, a Fixed Charge Coverage Ratio,
calculated for the fiscal quarter then ended and the immediately preceding three
fiscal quarters, equal to or greater than 2.0:1.0, and (ii) maintain as of the
last day of each fiscal quarter of 1999 and thereafter, a Fixed Charge Coverage
Ratio, calculated for the fiscal quarter then ended and the immediately
preceding three fiscal quarters, equal to or greater than 2.5:1.0.
(b) Funded Debt to Consolidated EBITDA. Maintain as of the
last day of each fiscal quarter, a maximum ratio of Funded Debt to Consolidated
EBITDA, calculated for the fiscal quarter then ended and the immediately
preceding three fiscal quarters, of less than or equal to 3.5:1.0.
SECTION 6.09. ADDITIONAL CREDIT PARTIES. If at any time a U.S.
Subsidiary that is not a Credit Party becomes a Material Subsidiary, Borrower
shall cause such subsidiary to execute and deliver to the Documentation Agent a
supplement to each of the Guaranty Agreements in the forms attached thereto,
together with related documents with respect to such new Subsidiary of the kind
described in Section 4.01 (e), (f), (g), (h), (i) and (p), all in form and
substance satisfactory to the Documentation Agent and the Required Lenders.
SECTION 6.10. INTELLECTUAL PROPERTY. Preserve and maintain,
and cause each of its Subsidiaries to preserve and maintain, its rights,
franchises, and licenses, and its patents and copyrights (for the scheduled
duration thereof), trademarks, trade names, and service marks, necessary or
desirable in the normal conduct of its business, except where the failure to
maintain such rights, franchises, and licenses, patents, copyrights trademarks,
trade names, and service marks would reasonably be expected to have a Materially
Adverse Effect.
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ARTICLE VII.
NEGATIVE COVENANTS
So long as any Commitment remains in effect hereunder or any
Note shall remain unpaid shall remain outstanding, Borrower will not and will
not permit any Subsidiary to (unless waived in writing by the Required Lenders):
SECTION 7.01. LIENS. Create, incur, assume or suffer to exist
any Lien on any of its property now owned or hereafter acquired to secure any
Indebtedness other than:
(a) Liens existing on the Closing Date and disclosed on
Schedule 7.01;
(b) Liens on any property securing Indebtedness incurred or
assumed for the purpose of financing all or any part of the acquisition
cost of such property and any refi nancing thereof, provided that such
Lien does not extend to any other property and further provided that
the amount of Indebtedness secured by such Liens does not exceed
$10,000,000 in aggregate principal amount at any one time outstanding;
(c) Liens for taxes not yet due and payable, and Liens for
taxes which are being contested in good faith by appropriate
proceedings and with respect to which adequate reserves are being
maintained;
(d) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other Liens imposed by law
created in the ordinary course of business for amounts not yet due or
which are being contested in good faith by appropriate proceedings and
with respect to which adequate reserves are being maintained;
(e) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment
insurance and other types of social security, or to secure the
performance of tenders, statutory obligations, surety and appeal bonds,
bids, leases, government contracts, performance and return-of-money
bonds and other similar obligations (exclusive of obligations for the
payment of borrowed money);
(f) zoning, easements and restrictions on the use of real
property which do not materially impair the use of such property;
(g) Liens arising under ERISA;
(h) rights in property reserved or vested in any governmental
authority which do not materially impair the use of such property;
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(i) Liens on assets of newly acquired Subsidiaries which were
in existence at the time of acquisition and not created in
contemplation thereof;
(j) Liens granted under the Lease Documents;
(k) Liens (other than those permitted by paragraphs (a)
through (j) of this Section 7.01) securing Indebtedness in an aggregate
principal amount outstanding at any time not to exceed fifteen percent
(15%) of the Consolidated Net Worth of the Consolidated Companies as of
the last day of the immediately preceding fiscal quarter of the
Borrower.
SECTION 7.02. GUARANTIES. Create, incur, assume, guarantee,
suffer to exist or otherwise become liable on or with respect to, directly or
indirectly, any Guaranties other than:
(a) endorsements of instruments for deposit or collection in
the ordinary course of business;
(b) guarantees of Indebtedness owned by any Consolidated
Company to another Consolidated Company;
(c) Guaranties of Indebtedness to the extent such Indebtedness
is permitted under Section 6.08(b).
SECTION 7.03. MERGERS, CONSOLIDATIONS. Merge or consolidate
with any other Person, except that the foregoing restrictions shall not be
applicable to:
(a) mergers or consolidations of (x) any Subsidiary with any
other Subsidiary which is a Guarantor or (y) any Subsidiary with
Borrower; or
(b) mergers or consolidations in which any Person engaged in
businesses in which Borrower is engaged as of the Closing Date or
substantially related thereto merges or consolidates with Borrower or
any of its Subsidiaries where the surviving corporation is Borrower or
such Subsidiary;
provided that before and after giving effect to any such merger or
consolidations and any Funded Debt incurred by the Borrower or such Subsidiary
in connection with such merger or consolidation, (x) Borrower is and will be in
compliance with Section 6.08 hereof and if the consideration paid by Borrower or
such Subsidiary in connection with such merger or consolidation is greater than
$75,000,000, Borrower has delivered pro forma financial covenants calculations
demonstrating such compliance, in such detail and using such form of
presentation of historical and forecasted financial information as may be
satisfactory to the Agents (based on the projected Fixed Charges or Funded Debt,
as the case may be, for the immediately succeeding
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four fiscal quarters (including Fixed Charges incurred as a result of the
incurrence of any such Funded Debt) and the historical Consolidated EBIT
(including the Consolidated EBIT of such Person)); (y) no other Default or Event
of Default exists hereunder; and (z) if the surviving Person is a Material
Subsidiary, it promptly complies with Section 6.09 hereof, if applicable;
SECTION 7.04. ASSET SALES. Sell, lease or otherwise dispose of
its accounts, property, stock of its Subsidiaries or other assets; provided,
however, that the foregoing restrictions on Asset Sales shall not be applicable
to:
(a) sales, leases, transfers or dispositions of assets of any
Consolidated Company to the Borrower or any Guarantor;
(b) sales of inventory in the ordinary course of business and
unneeded, worn out or obsolete equipment;
(c) sales of accounts receivable (or of undivided ownership
interests therein) pursuant to the asset securitization facilities;
(d) Asset Sales comprised of assets of any Consolidated
Company where, on the date of execution of a binding obligation to make
such Asset Sale, the assets which are the subject of the proposed Asset
Sale, together with all other such Asset Sales of the Consolidated
Companies during the current fiscal year of Borrower, did not generate
ten percent (10%) or more of Consolidated EBITDA for the immediately
preceding fiscal year of Borrower;
provided that notwithstanding the foregoing, no transaction pursuant to clauses
(c) or (d) above shall be permitted if any Default or Event of Default exists at
the time of such transaction or would exist as a result of such transaction.
SECTION 7.05 INVESTMENTS, LOANS, ETC. Make, permit or hold any
Investments other than:
(a) Investments in the stock of Subsidiaries of Borrower
existing as of the Closing Date or existing as Subsidiaries of Borrower
immediately prior to the making of such Investment, and Investments in
the form of loans and advances by the Borrower to any Guarantor;
(b) Investments in the stock or other assets of any other
Person that is engaged in a business permitted by Section 7.10 hereof;
provided, that after giving effect to such Investment and any Funded
Debt incurred by the Borrower or such Subsidiary in connection with
making such Investment, (x) Borrower is and will be in compliance with
Section 6.08 hereof and if the Investment is greater than $75,000,000,
the Borrower has delivered pro forma financial covenants calculations
demonstrating such compliance, in
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such detail and using such form of presentation of historical and
forecasted financial infor mation as may be satisfactory to the Agents;
(y) no other Default or Event of Default exists hereunder (based on the
projected Fixed Charges or Funded Debt, as the case may be, for the
immediately succeeding four fiscal quarters (including Fixed Charges
incurred a result of the incurrence of any such Funded Debt) and the
historical Consolidated EBIT (including the Consolidated EBIT of such
Person)); and (z) as a result of such Investment, such Person becomes a
Subsidiary of Borrower, and promptly complies with Section 6.09 if it
becomes a Material Subsidiary of Borrower;
(c) marketable direct obligations of the United States or any
agency thereof, or obligations guaranteed by the United States or any
agency thereof, in each case supported by the full faith and credit of
the United States and maturing within one year from the date of
creation thereof;
(d) Investments received in settlement of Indebtedness created
in the ordinary course of business, and the endorsement of negotiable
instruments in the ordinary course of business;
(e) commercial paper issued by corporations, each of which has
a consolidated net worth of not less than $500,000,000, and conducts a
substantial portion of its business in the United States of America,
maturing no more than 365 days from the date of acquisition thereof and
having as at any date of determination a rating of P-1, P-2 or P-3 from
Standard & Poor's or a rating of A-1, A-2 or A-3 from Moody's;
(f) money market or similar depository accounts, certificates
of deposit or bankers acceptances, in each case redeemable upon demand
or maturing within one year from the date of acquisition thereof,
issued by commercial banks incorporated under the laws of the United
States of America or any state thereof or the District of Columbia,
provided (x) each such bank has at any date of determination combined
capital and surplus of not less than $1,000,000,000 and a rating of its
long-term debt of at least A by Standard & Poor's or at least A by
Moody's or a long-term deposit rating of at least A issued by Standard
& Poor's or at least A issued by Moody's, (y) the aggregate amount of
all such certificates of deposit issued by such bank are fully insured
at all times by the Federal Deposit Insurance Company;
(g) Loans and advances to officers and employees of the
Consolidated Companies made in the ordinary course of business;
(h) Investments in joint ventures in an aggregate amount
during any fiscal year of Borrower not to exceed an amount equal to ten
percent (10%) of Borrower's Consolidated Net Worth as of the end of the
immediately preceding fiscal year of Borrower; and
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(i) Investments (other than those permitted by paragraphs (a)
through (h) above) in an aggregate amount during any fiscal year of
Borrower not to exceed an amount equal to five (5%) percent of
Borrower's Consolidated Net Worth as of the end of the immediately
preceding fiscal year of Borrower.
SECTION 7.07 SALE AND LEASEBACK TRANSACTIONS. Sell or transfer
any property, real or personal, whether now owned or hereafter acquired, and
thereafter rent or lease such property or other property which any Consolidated
Company intends to use for substantially the same purpose or purposes as the
property being sold or transferred.
SECTION 7.08. TRANSACTIONS WITH AFFILIATES. Enter into any
transaction or series of related transactions, whether or not in the ordinary
course of business, with any Affiliate of any Consolidated Company (but
excluding any Affiliate which is also a Subsidiary that is directly or
indirectly wholly owned by the Credit Parties), other than on terms and
conditions substantially as favorable to such Consolidated Company as would be
obtained by such Consolidated Company at the time in a comparable arm's-length
transaction with a Person other than an Affiliate; and
SECTION 7.09. ERISA. (a) Take or fail to take any action with
respect to any Plan maintained or contributed to by any Consolidated Company or,
with respect to its ERISA Affiliates, any Plans which are subject to Title IV of
ERISA or to continuation health care re quirements for group health plans under
Section 4980B of the Tax Code, including without limitation (i) establishing any
such Plan, (ii) amending any such Plan (except where required to comply with
applicable law), (iii) terminating or withdrawing from any such Plan, or (iv)
incurring an amount of unfunded benefit liabilities, as defined in Section
4001(a)(18) of ERISA, or any withdrawal liability under Title IV of ERISA with
respect to any such Plan, or any unfunded liabilities under any Foreign Plan,
without first obtaining the written approval of the Required Lenders, where such
actions or failures could result in a Material Adverse Effect; or
(b) Permit a Plan or Foreign Plan maintained or contributed to by a
Consolidated Company or a Plan subject to Title IV of ERISA of any of its ERISA
Affiliates:
(i) to fail to be funded in accordance with the minimum
funding standard required by applicable law, the terms of such Plan or
Foreign Plan, Section 412 of the Tax Code or Section 302 of ERISA for
any plan year or a waiver of such standard is sought or granted with
respect to such Plan or Foreign Plan under applicable law, the terms of
such Plan or Foreign Plan or Section 412 of the Tax Code or Section 303
of ERISA; or
(ii) to be terminated or the subject of termination
proceedings under applicable law or the terms of such Plan or Foreign
Plan; or
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(iii) to require a Consolidated Company to provide security
under applicable law, the terms of such Plan or Foreign Plan, Section
401 or 412 of the Tax Code or Section 306 or 307 of ERISA; or
(iv) to result for any reason, in a liability (including
without limitation, withdrawal liability) to a Consolidated Company
under applicable law, the terms of such Plan or Foreign Plan, or Title
IV of ERISA;
if the result from any such failure, waiver, termination or other event a
liability to the PBGC (or any similar Person with respect to any Foreign Plan),
a Plan or any other Person that would have a Materially Adverse Effect.
SECTION 7.10. ADDITIONAL NEGATIVE PLEDGES. Create or otherwise
cause or suffer to exist or become effective, directly or indirectly, any
prohibition or restriction on the creation or existence of any Lien upon any
asset of any Consolidated Company, other than the prohibitions and restrictions
contained in this Agreement.
SECTION 7.11. CHANGES IN BUSINESS. Enter into any business
which is substantially different from that presently conducted by the
Consolidated Companies taken as a whole immediately prior to the SpinOff from
Equifax, which includes providing risk management and fraud prevention
information and related technology solutions to the property and casualty
insurance industry, life and health insurance industry and other industries,
(including, without limitation, (1) providing automated and traditional
underwriting and claim information services to assist U.S. insurance companies
in assessing the insurability of individuals and property and the validity of
insurance claims, (2) providing background investigations, (3) performing
paramedical exams, (4) furnishing access to motor vehicles reports, (5)
maintaining a database of claims histories, (5) providing claim verification and
investigative services to both the property and casualty and the life and health
insurance markets, (6) providing pre-employment background investigations,
pre-employment and regulatory compliance drug testing services and public record
information to other corporate and government organizations), unless such
business is a strategic extension of the business of the Consolidated Companies
immediately prior to the SpinOff.
SECTION 7.12. LIMITATION ON PAYMENT RESTRICTIONS AFFECTING
CONSOLIDATED COMPANIES. Create or otherwise cause or suffer to exist or become
effective, any consensual encumbrance or restriction on the ability of any
Consolidated Company to (i) pay dividends or make any other distributions to
Borrower or any other Subsidiary on such Consolidated Company's stock, provided
that this provision shall not affect CBD/Infotek's payment of dividends or
distributions on its stock to Borrower, or (ii) pay any indebtedness owed to
Borrower or any other Consolidated Company, or (iii) transfer any of its
property or assets to Borrower or any other Consolidated Company, except any
consensual encumbrance or restriction existing under the Credit Documents.
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SECTION 7.13. ACTIONS UNDER CERTAIN DOCUMENTS. Without the
prior written consent of the Agents and the Required Lenders, modify, amend or
supplement the Lease Documents to (i) increase the principal amount of the
indebtedness thereunder or the lease payments required thereunder, (ii) increase
the interest rate thereunder, (iii) modify any requirement of prepayment or
repayment thereunder which would shorten the final maturity or average life of
the indebtedness or lease obligations outstanding thereunder or make the
requirement of prepayment more onerous, or (iv) make any more onerous any other
provision thereof.
SECTION 7.14. CHANGES IN FISCAL YEAR. Change the calculation
of the fiscal year of the Borrower.
ARTICLE VIII.
EVENTS OF DEFAULT
Upon the occurrence and during the continuance of any of the
following specified events (each an "Event of Default"):
SECTION 8.01. PAYMENTS. Borrower shall fail to make promptly
when due (including, without limitation, by mandatory prepayment) any principal
payment with respect to the Loans, or Borrower shall fail to make within five
(5) Business Days after the due date thereof any payment of interest, fee or
other amount payable hereunder or any of the Obligations;
SECTION 8.02. COVENANTS WITHOUT NOTICE. Borrower shall fail to
observe or perform any covenant or agreement (i) contained in Section 7.09 and,
if capable of being remedied, such failure shall remain unremedied for fifteen
(15) days after the earlier of (A) an Executive Officer's obtaining knowledge
thereof, (ii) contained in Section 7.05 and, if capable of being remedied, such
failure shall remain unremedied for ten (10) days after the earlier of (A) an
Executive Officer's obtaining knowledge thereof, or (B) written notice thereof
shall have been given to Borrower by any Agent or any Lender, or (iii) contained
in Sections 2.01(b), 6.01, 6.05, 6.07(e), 6.08, or 7.03.
SECTION 8.03. OTHER COVENANTS. Borrower shall fail to observe
or perform any covenant or agreement contained in this Agreement, other than
those referred to in Sections 8.01 and 8.02, and, if capable of being remedied,
such failure shall remain unremedied for thirty (30) days after the earlier of
(i) an Executive Officer of Borrower's obtaining knowledge thereof, or (ii)
written notice thereof shall have been given to Borrower by any Agent or any
Lender;
SECTION 8.04. REPRESENTATIONS. Any representation or warranty
made or deemed to be made by Borrower or any other Credit Party or by any of its
officers under this Agreement or any other Credit Document (including the
Schedules attached thereto), or any
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certificate or other document submitted to the Agents or the Lenders by any such
Person pursuant to the terms of this Agreement or any other Credit Document,
shall be incorrect in any material respect when made or deemed to be made or
submitted;
SECTION 8.05. NON-PAYMENTS OF OTHER INDEBTEDNESS. Any
Consolidated Company shall fail to make when due (whether at stated maturity, by
acceleration, on demand or otherwise, and after giving effect to any applicable
grace period) any payment of principal of or interest on any Indebtedness (other
than the Obligations) exceeding $5,000,000 in the aggregate;
SECTION 8.06. DEFAULTS UNDER OTHER AGREEMENTS. Any
Consolidated Company shall fail to observe or perform within any applicable
grace period any covenants or agreements contained in any agreements or
instruments relating to any of its Indebtedness exceeding $5,000,000 in the
aggregate, or any other event shall occur if the effect of such failure or other
event is to accelerate, or to permit the holder of such Indebtedness or any
other Person to accelerate, the maturity of such Indebtedness; or any such
Indebtedness shall be required to be prepaid (other than by a regularly
scheduled required prepayment) in whole or in part prior to its stated maturity;
SECTION 8.07. BANKRUPTCY. Borrower or any other Consolidated
Company shall commence a voluntary case concerning itself under the Bankruptcy
Code or applicable foreign bankruptcy laws; or an involuntary case for
bankruptcy is commenced against any Consolidated Company and the petition is not
controverted within 10 days, or is not dismissed within 60 days, after
commencement of the case; or a custodian (as defined in the Bankruptcy Code) or
similar official under applicable foreign bankruptcy laws is appointed for, or
takes charge of, all or any substantial part of the property of any Consolidated
Company; or any Consolidated Company commences proceedings of its own bankruptcy
or to be granted a suspension of payments or any other proceeding under any
reorganization, arrangement, adjustment of debt, relief of debtors, dissolution,
insolvency or liquidation or similar law of any jurisdiction, whether now or
hereafter in effect, relating to any Consolidated Company or there is commenced
against any Consolidated Company any such proceeding which remains undismissed
for a period of 60 days; or any Consolidated Company is adjudicated insolvent or
bankrupt; or any order of relief or other order approving any such case or
proceeding is entered; or any Consolidated Company suffers any appointment of
any custodian or the like for it or any substantial part of its property to
continue undischarged or unstayed for a period of 60 days; or any Consolidated
Company makes a general assignment for the benefit of creditors; or any
Consolidated Company shall fail to pay, or shall state that it is unable to pay,
or shall be unable to pay, its debts generally as they become due; or any
Consolidated Company shall call a meeting of its creditors with a view to
arranging a composition or adjustment of its debts; or any Consolidated Company
shall by any act or failure to act indicate its consent to, approval of or
acquiescence in any of the foregoing; or any corporate action is taken by any
Consolidated Company for the purpose of effecting any of the foregoing;
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SECTION 8.08. MONEY JUDGMENT. A judgment or order for the
payment of money in excess of $5,000,000 not covered by insurance or otherwise
having a Materially Adverse Effect shall be rendered against Borrower or any
other Consolidated Company and such judgment or order shall continue unsatisfied
and in effect for a period of 60 days during which execution shall not be
effectively stayed or deferred (whether by action of a court, by agreement or
otherwise);
SECTION 8.09. CHANGE IN CONTROL OF BORROWER. (i) Any "person"
or "group" (within the meaning of Sections 13(d) and 14(d)(2) of the Exchange
Act) other than employees of the Borrower (either directly or through a
retirement or employee benefit plan), shall become the "beneficial owner(s)" (as
defined in said Rule 13d-3) of more than twenty-five percent (25%) of the shares
of the outstanding common stock of Borrower entitled to vote for members of
Borrower's board of directors, or (ii) any event or condition shall occur or
exist which, pursuant to the terms of any Change in Control Provision, requires
or permits the holder(s) of Indebtedness of any Consolidated Company to require
that such Indebtedness be redeemed, repurchased, defeased, prepaid or repaid, in
whole or in part, or the maturity of such Indebtedness to be accelerated in any
respect.
SECTION 8.10. DEFAULT UNDER OTHER CREDIT DOCUMENTS. There
shall exist or occur any "Event of Default" as provided under the terms of any
other Credit Document, or any Credit Document ceases to be in full force and
effect or the validity or enforceability thereof is disaffirmed by or on behalf
of Borrower or any other Credit Party, or at any time it is or becomes unlawful
for Borrower or any other Credit Party to perform or comply with its obligations
under any Credit Document, or the obligations of Borrower or any other Credit
Party under any Credit Document are not or cease to be legal, valid and binding
on Borrower or any such Credit Party; or
SECTION 8.11. ATTACHMENTS. An attachment or similar action
shall be made on or taken against any of the assets of any Consolidated Company
with an aggregate value (based upon the greater of the book value of such assets
as established in accordance with GAAP or the fair market value of such assets
as determined in good faith by such Consolidated Company) exceeding $5,000,000
in aggregate and is not removed, suspended or enjoined within 60 days of the
same being made or any suspension or injunction being lifted;
then, and in any such event, and at any time thereafter if any Event of Default
shall then be continuing, the Administrative Agent may, with the consent of the
Required Lenders, and upon the written (including telecopied) or telex request
of the Required Lenders, shall, by written notice to Borrower, take any or all
of the following actions, without prejudice to the rights of either Agent, any
Lender or the holder of any Note to enforce its claims against Borrower or any
other Credit Party: (i) declare all Commitments terminated, whereupon the pro
rata Commitments of each Lender shall terminate immediately and any commitment
fee shall forthwith become due and payable without any other notice of any kind;
and (ii) declare the principal of and any accrued interest on the Loans, and all
other Obligations owing hereunder, to
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be, whereupon the same shall become, forthwith due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by Borrower; provided, that, if an Event of Default specified in
Section 8.07 shall occur, the result which would occur upon the giving of
written notice by the Administrative Agent to any Credit Party, as specified in
clauses (i) and (ii) above, shall occur automatically without the giving of any
such notice; and (iii) exercise any rights or remedies under the Security
Documents.
ARTICLE IX.
THE ADMINISTRATIVE AGENT AND THE DOCUMENTATION AGENT
SECTION 9.01. APPOINTMENT OF ADMINISTRATIVE AGENT. Each Lender
hereby designates Wachovia as Administrative Agent to administer all matters
concerning the Loans and to act as herein specified. Each Lender hereby
irrevocably authorizes, and each holder of any Note by the acceptance of a Note
shall be deemed irrevocably to authorize, the Administrative Agent to take such
actions on its behalf under the provisions of this Agreement, the other Credit
Documents, and all other instruments and agreements referred to herein or
therein, and to exercise such powers and to perform such duties hereunder and
thereunder as are specifically delegated to or required of the Administrative
Agent by the terms hereof and thereof and such other powers as are reasonably
incidental thereto. The Administrative Agent may perform any of its duties
hereunder by or through its agents or employees.
SECTION 9.02. APPOINTMENT OF DOCUMENTATION AGENT. Each Lender
hereby designates SunTrust as Documentation Agent and acknowledges that it shall
have no duties under this Agreement or any other Credit Document whatsoever
except as explicitly set forth herein. Each Lender hereby irrevocably
authorizes, and each holder of any Note by the ac ceptance of a Note shall be
deemed irrevocably to authorize, the Documentation Agent to take such actions on
its behalf under the provisions of this Agreement, the other Credit Documents,
and all other instruments and agreements referred to herein or therein, and to
exercise such powers and to perform such duties hereunder and thereunder as are
specifically delegated to or required of the Documentation Agent by the terms
hereof and thereof and such other powers as are reasonably incidental thereto.
The Documentation Agent may perform any of its duties hereunder by or through
its agents or employees.
SECTION 9.03. NATURE OF DUTIES OF AGENTS. The Agents shall
have no duties or responsibilities except those expressly set forth in this
Agreement and the other Credit Documents. Neither the Agents nor any of their
respective officers, directors, employees or agents shall be liable for any
action taken or omitted by it as such hereunder or in connection herewith,
unless caused by its or their gross negligence or willful misconduct. The duties
of the Agents shall be ministerial and administrative in nature; the Agents
shall not have by reason of this Agreement a fiduciary relationship in respect
of any Lender; and nothing in this Agreement,
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express or implied, is intended to or shall be so construed as to impose upon
any Agent any obligations in respect of this Agreement or the other Credit
Documents except as expressly set forth herein.
SECTION 9.04. LACK OF RELIANCE ON THE AGENTS.
(a) Independently and without reliance upon either Agent, each
Lender, to the extent it deems appropriate, has made and shall continue to make
(i) its own independent investigation of the financial condition and affairs of
the Credit Parties in connection with the taking or not taking of any action in
connection herewith, and (ii) its own appraisal of the creditworthiness of the
Credit Parties, and, except as expressly provided in this Agreement, neither
Agent shall have any duty or responsibility, either initially or on a continuing
basis, to provide any Lender with any credit or other information with respect
thereto, whether coming into its possession before the making of the Loans or at
any time or times thereafter.
(b) Neither Agent shall be responsible to any Lender for any
recitals, statements, information, representations or warranties herein or in
any document, certificate or other writing delivered in connection herewith or
for the execution, effectiveness, genuineness, validity, enforceability,
collectibility, priority or sufficiency of this Agreement, the Notes, the
Guaranty Agreements or any other documents contemplated hereby or thereby, or
the financial condition of the Credit Parties, or be required to make any
inquiry concerning either the performance or observance of any of the terms,
provisions or conditions of this Agreement, the Notes, the Guaranty Agreements
or the other documents contemplated hereby or thereby, or the financial
condition of the Credit Parties, or the existence or possible existence of any
Default or Event of Default.
SECTION 9.05. CERTAIN RIGHTS OF THE AGENTS. If either Agent
shall request instructions from the Required Lenders with respect to any action
or actions (including the failure to act) in connection with this Agreement,
such Agent shall be entitled to refrain from such act or taking such act, unless
and until such Agent shall have received instructions from the Required Lenders;
and such Agent shall not incur liability in any Person by reason of so
refraining. Without limiting the foregoing, no Lender shall have any right of
action whatsoever against either Agent as a result of such Agent's acting or
refraining from acting hereunder in accordance with the instructions of the
Required Lenders.
SECTION 9.06. RELIANCE BY THE AGENTS. The Agents shall be
entitled to rely, and shall be fully protected in relying, upon any note,
writing, resolution, notice, statement, certificate, telex, teletype or
telecopier message, cable gram, radiogram, order or other documentary,
teletransmission or telephone message believed by it to be genuine and correct
and to have been signed, sent or made by the proper Person. The Agents may
consult with legal counsel (including counsel for any Credit Party), independent
public accountants and other experts selected by it and shall not be liable for
any action taken or omitted to be taken by it in good faith in accordance with
the advice of such counsel, accountants or experts.
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SECTION 9.07. INDEMNIFICATION OF THE AGENTS. To the extent
either Agent is not reimbursed and indemnified by the Credit Parties, each
Lender will reimburse and indemnify such Agent, ratably according to the
respective amounts of the Loans outstanding under all Facilities (or if no
amounts are outstanding, ratably in accordance with the aggregate Commitments),
in either case, for and against any and all liabilities, taxes, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses
(including counsel fees and disbursements) or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by or asserted against such
Agent in performing its duties hereunder, in any way relating to or arising out
of this Agreement or the other Credit Documents; provided that no Lender shall
be liable to either Agent for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from such Agent's gross negligence or willful
misconduct.
SECTION 9.08. THE AGENTS IN THEIR INDIVIDUAL CAPACITIES. With
respect to its obligation to lend under this Agreement, the Loans made by it and
the Notes issued to it, each Agent shall have the same rights and powers
hereunder as any other Lender or holder of a Note and may exercise the same as
though it were not performing the duties specified herein; and the terms
"Lenders", "Required Lenders", "holders of Notes", or any similar terms shall,
unless the context clearly otherwise indicates, include each Agent in its
individual capacity. Each Agent may accept deposits from, lend money to, and
generally engage in any kind of banking, trust, financial advisory or other
business with the Consolidated Companies or any affiliate of the Consolidated
Companies as if it were not performing the duties specified herein, and may
accept fees and other consideration from the Consolidated Companies for services
in connection with this Agreement and otherwise without having to account for
the same to the Lenders.
SECTION 9.09. HOLDERS OF NOTES. The Agents may deem and treat
the payee of any Note as the owner thereof for all purposes hereof unless and
until a written notice of the assignment or transfer thereof shall have been
filed with the Administrative Agent. Any request, authority or consent of any
Person who, at the time of making such request or giving such authority or
consent, is the holder of any Note shall be conclusive and binding on any
subsequent holder, transferee or assignee of such Note or of any Note or Notes
issued in exchange therefor.
SECTION 9.10. SUCCESSOR AGENTS.
(a) Each Agent may resign at any time by giving written notice
thereof to the Lenders and Borrower and may be removed at any time with or
without cause by the Required Lenders; provided, however, neither Agent may
resign or be removed until a successor Administrative Agent or Documentation
Agent, as the case may be, has been appointed and shall have accepted such
appointment. Upon any such resignation or removal, the Required Lenders shall
have the right to appoint a successor Administrative Agent or Documentation
Agent, as the case may be, with the consent of the Borrower so long as no
Default or Event of Default has occurred and is continuing, which consent shall
not be unreasonably withheld or delayed. If no
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successor Administrative Agent or Documentation Agent, as the case may be shall
have been so appointed by the Required Lenders with the consent of the Borrower,
and shall have accepted such appointment, within 30 days after the retiring
Agent's giving of notice of resignation or the Required Lenders' removal of the
retiring Agent, then the retiring Agent may, on behalf of the Lenders, appoint a
successor Administrative Agent or Documentation Agent, as the case may be, which
shall be a bank which maintains an office in the United States, or a commercial
bank organized under the laws of the United States of America or any State
thereof, or any Affiliate of such bank, having a combined capital and surplus of
at least $100,000,000.
(b) Upon the acceptance of any appointment as the
Administrative Agent or the Documentation Agent, as the case may be, hereunder
by a successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations under
this Agreement. After any retiring Agent's resignation or removal hereunder as
Administrative Agent or Documentation Agent, as the case may be, the provisions
of this Article IX shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was an Agent under this Agreement.
ARTICLE X.
MISCELLANEOUS
SECTION 10.01. NOTICES. All notices, requests and other
communications to any party hereunder shall be in writing (including bank wire,
telex, telecopy or similar teletransmission or writing) and shall be given to
such party at its address or applicable teletransmission number set forth on the
signature pages hereof, or such other address or applicable teletransmission
number as such party may hereafter specify by notice to the Agents and Borrower.
Each such notice, request or other communication shall be effective (i) if given
by telex, when such telex is transmitted to the telex number specified in this
Section and the appropriate answerback is received, (ii) if given by mail, 72
hours after such communication is deposited in the mails with first class
postage prepaid, addressed as aforesaid, (iii) if given by telecopy, when such
telecopy is transmitted to the telecopy number specified in this Section and the
appropriate confirmation is received, or (iv) if given by any other means
(including, without limitation, by air courier), when delivered or received at
the address specified in this Section; provided that notices to the Agents shall
not be effective until received.
SECTION 10.02. AMENDMENTS, ETC. No amendment or waiver of any
provision of this Agreement or the other Credit Documents, nor consent to any
departure by any Credit Party therefrom, shall in any event be effective unless
the same shall be in writing and signed by Borrower and the Required Lenders,
and then such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given; provided that no amendment, waiver
or consent shall, unless in writing and signed by Borrower and all the Lenders
do any of
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the following: (i) waive any of the conditions specified in Section 4.01 or
4.02, (ii) increase the Commitments or other contractual obligations to Borrower
under this Agreement, (iii) reduce the principal of, or interest on, the Notes
or any fees hereunder, (iv) postpone any date fixed for the payment in respect
of principal of, or interest on, the Notes or any fees hereunder, (v) change the
percentage of the Syndicated Loan Commitments or of the aggregate unpaid
principal amount of the Notes, or the number or identity of Lenders which shall
be required for the Lenders or any of them to take any action hereunder, (vi)
agree to release any Guarantor from its obligations under any Guaranty
Agreement, (vii) modify the definition of "Required Lenders," or (viii) modify
this Section 10.02. Notwithstanding the foregoing, no amendment, waiver or
consent shall, unless in writing and signed by Borrower and the Agents in
addition to the Lenders required hereinabove to take such action, affect the
rights or duties of the Agents under this Agreement or under any other Credit
Document.
SECTION 10.03. NO WAIVER; REMEDIES CUMULATIVE. No failure or
delay on the part of the Agents, any Lender or any holder of a Note in
exercising any right or remedy hereunder or under any other Credit Document, and
no course of dealing between any Credit Party and the Agents, any Lender or the
holder of any Note shall operate as a waiver thereof, nor shall any single or
partial exercise of any right or remedy hereunder or under any other Credit
Document preclude any other or further exercise thereof or the exercise of any
other right or remedy hereunder or thereunder. The rights and remedies herein
expressly provided are cumulative and not exclusive of any rights or remedies
which the Agents, any Lender or the holder of any Note would otherwise have. No
notice to or demand on any Credit Party not re quired hereunder or under any
other Credit Document in any case shall entitle any Credit Party to any other or
further notice or demand in similar or other circumstances or constitute a
waiver of the rights of the Agents, the Lenders or the holder of any Note to any
other or further action in any circumstances without notice or demand.
SECTION 10.04. PAYMENT OF EXPENSES, ETC. Borrower shall:
(i) whether or not the transactions hereby
contemplated are consummated, pay all reasonable, out-of-pocket costs
and expenses of both Agents in the administration (both before and
after the execution hereof and including reasonable expenses actually
incurred relating to advice of counsel as to the rights and duties of
the Agents and the Lenders with respect thereto) of, and in connection
with the preparation, execution and delivery of, preservation of rights
under, enforcement of, and, after a Default or Event of Default,
refinancing, renegotiation or restructuring of, this Agreement and the
other Credit Documents and the documents and instruments referred to
therein, and any amendment, waiver or consent relating thereto
(including, without limitation, the reasonable fees actually incurred
and disbursements of counsel for the Agents), and in the case of
enforcement of this Agreement or any Credit Document after an Event of
Default, all such reasonable, out-of-pocket costs and expenses
(including, without limitation, the
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reasonable fees actually incurred and disbursements of counsel), for
both Agents and the Lenders;
(ii) subject, in the case of certain Taxes, to
the applicable provisions of Section 3.06(b), pay and hold each of the
Agents and the Lenders harmless from and against any and all present
and future stamp, documentary, and other similar Taxes with respect to
this Agreement, the Notes and any other Credit Documents, any
collateral described therein, or any payments due thereunder, and save
each of the Lenders harmless from and against any and all liabilities
with respect to or resulting from any delay or omission to pay such
Taxes; and
(iii) indemnify the Agents and each Lender, and
their respective officers, directors, employees, representatives and
agents from, and hold each of them harmless against, any and all costs,
losses, liabilities, claims, damages or expenses incurred by any of
them (whether or not any of them is designated a party thereto) (an
"Indemnitee") arising out of or by reason of any investigation,
litigation or other proceeding related to any actual or proposed use of
the proceeds of any of the Loans or any Credit Party's entering into
and performing of the Agreement, the Notes, or the other Credit
Documents, including, without limitation, the reasonable fees actually
incurred and disbursements of counsel (including foreign counsel)
incurred in connection with any such investigation, litigation or other
proceeding; provided, however, Borrower shall not be obligated to
indemnify any Indemnitee for any of the foregoing arising out of such
Indemnitee's gross negligence or willful misconduct;
(iv) without limiting the indemnities set forth
above, indemnify each Indemnitee for any and all expenses and costs
(including without limitation, remedial, removal, response, abatement,
cleanup, investigative, closure and monitoring costs), losses, claims
(including claims for contribution or indemnity and including the cost
of investigating or defending any claim and whether or not such claim
is ultimately defeated, and whether such claim arose before, during or
after any Credit Party's ownership, operation, possession or control of
its business, property or facilities or before, on or after the date
hereof, and including also any amounts paid incidental to any
compromise or settlement by the Indemnitee or Indemnitees to the
holders of any such claim), lawsuits, liabilities, obligations,
actions, judgments, suits, disbursements, encumbrances, liens, damages
(including without limitation damages for contamination or destruction
of natural resources), penalties and fines of any kind or nature
whatsoever (including without limitation in all cases the reasonable
fees actually incurred, other charges and disbursements of counsel in
connection therewith) incurred, suffered or sustained by that
Indemnitee based upon, arising under or relating to Environmental Laws
based on, arising out of or relating to in whole or in part, the
existence or exercise of any rights or remedies by any Indemnitee under
this Agreement, any other Credit Document or any related documents.
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If and to the extent that the obligations of Borrower under this Section 10.04
are unenforceable for any reason, Borrower hereby agrees to make the maximum
contribution to the payment and satisfaction of such obligations which is
permissible under applicable law.
SECTION 10.05. RIGHT OF SETOFF. In addition to and not in
limitation of all rights of offset that any Lender or other holder of a Note may
have under applicable law, each Lender or other holder of a Note shall, upon the
occurrence of any Event of Default and whether or not such Lender or such holder
has made any demand or any Credit Party's obligations are matured, have the
right to appropriate and apply to the payment of any Credit Party's obligations
hereunder and under the other Credit Documents, all deposits of any Credit Party
(general or special, time or demand, provisional or final) then or thereafter
held by and other indebtedness or property then or thereafter owing by such
Lender or other holder to any Credit Party, whether or not related to this
Agreement or any transaction hereunder.
SECTION 10.06. BENEFIT OF AGREEMENT.
(a) This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the respective successors and assigns of the
parties hereto, provided that Borrower may not assign or transfer any of its
interest hereunder without the prior written consent of all Lenders.
(b) Any Lender may make, carry or transfer Loans at, to or for
the account of, any of its branch offices or the office of an Affiliate of such
Lender.
(c) Each Lender may assign all or a portion of its interests,
rights and obligations under this Agreement (including all or a portion of any
of its Commitments and the Loans at the time owing to it and the Notes held by
it) to any other Lender or any financial institution; provided, however, that
(i) the Agents and Borrower must give their prior written consent to such
assignment (which consent shall not be unreasonably withheld or delayed) unless
such assignment is to an Affiliate of the assigning Lender or, in the case of
Borrower, unless an Event of Default has occurred and is continuing, (ii) the
amount of the Commitments or Loans of the assigning Lender subject to each
assignment (determined as of the date the assignment and acceptance with respect
to such assignment is delivered to the Administrative Agent) shall not be less
than $10,000,000 and in intervals of $5,000,000, (iii) the parties to each such
assignment shall execute and deliver to the Administrative Agent an Assignment
and Acceptance, together with a Note or Notes subject to such assignment and,
unless such assignment is to an Affiliate of such Lender, a processing and
recordation fee of $3,000, (iv) no Lender may make more than two (2) assignments
to any Person which is not then a Lender or affiliate thereof (unless a Default
or Event of Default has occurred and is continuing) and (v) if the assignee
Lender is not a United States citizen or resident (or the assignee Lender is
filing as a foreign corporation, partnership, estate or trust), the assignee
Lender delivers the Internal Revenue Service Form 1001 or 4224, as appropriate,
or any successor form prescribed by the Internal Revenue Service, to the
Borrower
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and the Administrative Agent, as required by Section 3.06(b)(ii) of this
Agreement. Borrower shall not be responsible for such processing and recordation
fee or any costs or expenses incurred by any Lender or the Administrative Agent
in connection with such assignment. From and after the effective date specified
in each Assignment and Acceptance, which effective date shall be at least five
(5) Business Days after the execution thereof, the assignee thereunder shall be
a party hereto and to the extent of the interest assigned by such Assignment and
Acceptance, have the rights and obligations of a Lender under this Agreement.
Within five (5) Business Days after receipt of the notice and the Assignment and
Acceptance, Borrower, at its own expense, shall execute and deliver to the
Administrative Agent, in exchange for the surrendered Note or Notes, a new Note
or Notes to the order of such assignee in a principal amount equal to the
applicable Commitments assumed by it pursuant to such Assignment and Acceptance
and new Note or Notes to the assigning Lender in the amount of its retained
Commitment or Commitments. Such new Note or Notes shall be in an aggregate
principal amount equal to the aggregate principal amount of such surrendered
Note or Notes, shall be dated the date of the surrendered Note or Notes which
they replace, and shall otherwise be in substantially the form attached hereto.
(d) Each Lender may, without the consent of Borrower or the
Agents, sell participations to one or more banks or other entities in all or a
portion of its rights and obligations under this Agreement (including all or a
portion of its Commitments and the Loans owing to it and the Notes held by it),
provided, however, that (i) no Lender may sell a participa tion in its aggregate
Commitments (after giving effect to any permitted assignment hereof) in an
amount in excess of fifty percent (50%) of such aggregate Commitments, except
that sales of participations to an Affiliate of such Lender shall not be
included in such calculation and no such maximum amount shall be applicable to
any such participation sold at any time there exists an Event of Default
hereunder, (ii) such Lender's obligations under this Agreement shall remain
unchanged, (iii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations, and (iv) the
participating bank or other entity shall not be entitled to the benefit (except
through its selling Lender) of the cost protection provisions contained in
Article III of this Agreement, and (v) Borrower, the Agents and other Lenders
shall continue to deal solely and directly with each Lender in connection with
such Lender's rights and obligations under this Agreement and the other Credit
Documents, and such Lender shall retain the sole right to enforce the
obligations of Borrower relating to the Loans and to approve any amendment,
modification or waiver of any provisions of this Agreement. Any Lender selling a
participation hereunder shall provide prompt written notice to Borrower of the
name of such participant.
(f) Any Lender may at any time assign or pledge all or any
portion of its rights in this Agreement and the Notes issued to it to a Federal
Reserve Bank.
(g) If (i) any Taxes referred to in Section 3.06(b) have been
levied or imposed so as to require withholdings or deductions by Borrower and
payment by Borrower of additional amounts to any Lender as a result thereof, or
(ii) any Lender shall make demand for payment of increased costs or reduced rate
of return pursuant to Section 3.09 or any Lender
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determines that LIBOR is unascertainable or illegal pursuant to Section 3.07 or
Section 3.08, or any Lender makes a claim for increased costs pursuant to
Section 3.08, then and in such event, upon request from Borrower delivered to
such Lender and the Administrative Agent, such Lender shall assign, in
accordance with the provisions of Section 10.06(c), all of its rights and
obligations under this Agreement and the other Credit Documents to another
Lender or another financial institution selected by Borrower and acceptable to
the Agents, which acceptance will not be unreasonably withheld or delayed, in
consideration for the payment by such assignee to the Lender of the principal
of, and interest on, the outstanding Loans accrued to the date of such
assignment, and the assumption of such Lender's Commitment hereunder, together
with any and all other amounts owing to such Lender under any provisions of this
Agreement or the other Credit Documents accrued to the date of such assignment;
provided, however, Lenders subject to this Section 10.06 shall be treated in a
substantially identical manner.
SECTION 10.07. GOVERNING LAW; SUBMISSION TO JURISDICTION;
WAIVER OF JURY TRIAL.
(a) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER AND UNDER THE NOTES SHALL BE CONSTRUED IN ACCORDANCE WITH AND
BE GOVERNED BY THE LAW (WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES
THEREOF) OF THE STATE OF GEORGIA.
(B) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT, THE NOTES OR ANY OTHER CREDIT DOCUMENT MAY BE BROUGHT IN THE SUPERIOR
COURT OF FULTON COUNTY, GEORGIA, OR ANY OTHER COURT OF THE STATE OF GEORGIA OR
OF THE UNITED STATES OF AMERICA FOR THE NORTHERN DISTRICT OF GEORGIA, AND, BY
EXECUTION AND DELIVERY OF THIS AGREEMENT, BORROWER HEREBY ACCEPTS FOR ITSELF AND
IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF
THE AFORESAID COURTS. THE PARTIES HERETO HEREBY IRREVOCABLY WAIVE TRIAL BY JURY,
AND BORROWER HEREBY IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING, WITHOUT
LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF
FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY
SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS.
(C) BORROWER HEREBY IRREVOCABLY DESIGNATES [CSC/PRENTICE HALL,
INC.,] AS ITS DESIGNEE, APPOINTEE AND LOCAL AGENT TO RECEIVE, FOR AND ON BEHALF
OF BORROWER, SERVICE OF PROCESS IN SUCH RESPECTIVE JURISDICTIONS IN ANY LEGAL
ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR THE NOTES OR ANY DOCUMENT
RELATED THERETO. IT IS UNDERSTOOD THAT A COPY OF SUCH
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PROCESS SERVED ON SUCH LOCAL AGENT WILL BE PROMPTLY FORWARDED BY SUCH LOCAL
AGENT AND BY THE SERVER OF SUCH PROCESS BY MAIL TO BORROWER AT ITS ADDRESS SET
FORTH OPPOSITE ITS SIGNATURE BELOW, BUT THE FAILURE OF BORROWER TO RECEIVE SUCH
COPY SHALL NOT AFFECT IN ANY WAY THE SERVICE OF SUCH PROCESS. BORROWER FURTHER
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED
COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY
REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO BORROWER AT ITS SAID ADDRESS,
SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING.
(d) Nothing herein shall affect the right of any Lender, any
holder of a Note or any Credit Party to serve process in any other manner
permitted by law or to commence legal proceedings or otherwise proceed against
Borrower in any other jurisdiction.
SECTION 10.08. INDEPENDENT NATURE OF LENDERS' RIGHTS. The
amounts payable at any time hereunder to each Lender shall be a separate and
independent debt, and each Lender shall be entitled to protect and enforce its
rights pursuant to this Agreement and its Notes, and it shall not be necessary
for any other Lender to be joined as an additional party in any proceeding for
such purpose.
SECTION 10.09. COUNTERPARTS. This Agreement may be executed in
any number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall together constitute one and the same instrument.
SECTION 10.10. EFFECTIVENESS; SURVIVAL.
(a) This Agreement shall become effective on the date (the
"Effective Date") on which all of the parties hereto shall have signed a copy
hereof (whether the same or different copies) and shall have delivered the same
to the Documentation Agent pursuant to Section 10.01 or, in the case of the
Lenders, shall have given to the Documentation Agent written or telex notice
(actually received) that the same has been signed and mailed to them.
(b) The obligations of Borrower under Sections 3.06(b), 3.09,
3.11, 3.12 and 10.04 hereof shall survive the payment in full of the Notes and
all other Obligations after the Maturity Date. All representations and
warranties made herein, in the certificates, reports, notices, and other
documents delivered pursuant to this Agreement shall survive the execution and
delivery of this Agreement, the other Credit Documents, and such other
agreements and documents, the making of the Loans hereunder, and the execution
and delivery of the Notes.
SECTION 10.11. SEVERABILITY. In case any provision in or
obligation under this Agreement or the other Credit Documents shall be invalid,
illegal or unenforceable, in whole or
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in part, in any jurisdiction, the validity, legality and enforceability of the
remaining provisions or obligations, or of such provision or obligation in any
other jurisdiction, shall not in any way be affected or impaired thereby.
SECTION 10.12. INDEPENDENCE OF COVENANTS. All covenants
hereunder shall be given independent effect so that if a particular action or
condition is not permitted by any of such covenants, the fact that it would be
permitted by an exception to, or be otherwise within the limitation of, another
covenant, shall not avoid the occurrence of a Default or an Event of Default if
such action is taken or condition exists.
SECTION 10.13. HEADINGS DESCRIPTIVE; ENTIRE AGREEMENT. The
headings of the several sections and subsections of this Agreement are inserted
for convenience only and shall not in any way affect the meaning or construction
of any provision of this Agreement. This Agreement, the other Credit Documents,
and the agreements and documents required to be delivered pursuant to the terms
of this Agreement constitute the entire agreement among the parties hereto and
thereto regarding the subject matters hereof and thereof and supersede all prior
agreements, representations and understandings related to such subject matters.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and to be delivered in Atlanta, Georgia, by their
duly authorized officers as of the day and year first above written.
Address for Notices: CHOICEPOINT INC.
- -------------------
1000 Alderman Drive By:
Alpharetta, Georgia 30005 --------------------------------
Name:
Title:
Attn: ____________
Attest:
Telephone: ----------------------------
Telecopy: Name:
Title:
[CORPORATE SEAL]
74
<PAGE> 81
Address for Notices: WACHOVIA BANK, N.A.,
- ------------------- AS ADMINISTRATIVE AGENT
191 Peachtree St., N.E. By:
Atlanta, GA 30303 --------------------------------
Name:
Title:
Attn: Mr. Brad Marcus
Telephone No.: (404) 332-6483
Telecopy No.: (404) 332-5016
Payment Office:
191 Peachtree St., N.E.
Atlanta, Georgia 30303
75
<PAGE> 82
Address for Notices: SUNTRUST BANK, ATLANTA,
- ------------------- AS DOCUMENTATION AGENT
25 Park Place, N.E., 23rd Floor
Atlanta, Georgia 30303 By:
Attn: Mr. J. Christopher Deisley --------------------------------
Name:
Title:
Telephone No.: (404) 588-8684
Telecopy No.: (404) 588-8833 By:
--------------------------------
Name:
---------------------------
Title:
--------------------------
Payment Office:
25 Park Place, N.E., 23rd Floor
Atlanta, Georgia 30303
76
<PAGE> 83
Address for Notices: WACHOVIA BANK, N.A.
- -------------------
191 Peachtree St., N.E.
Atlanta, Georgia 30303 By:
Attention: Mr. Brad Marcus --------------------------------
Name:
Title:
Telephone No.: (404) 332-64383
Telecopy No. (404) 332-5016
Lending Office and Payment Office:
191 Peachtree St., N.E.
Atlanta, Georgia 30303
SYNDICATED LOAN COMMITMENT: $60,000,000
PRO RATA SHARE OF
SYNDICATED LOAN COMMITMENTS: 24%
77
<PAGE> 84
Address for Notices: SUNTRUST BANK, ATLANTA
- -------------------
25 Park Place, N.E., 23rd Floor
Atlanta, Georgia 30303 By:
Attention: Mr. J. Christopher Deisley --------------------------------
Name:
Title:
Telephone No.: (404) 588-8684
Telecopy No.: (404) 588-8833
By:
--------------------------------
Name:
---------------------------
Title:
--------------------------
Lending Office and Payment Office:
25 Park Place, N.E.
Atlanta, Georgia 30303
SYNDICATED LOAN COMMITMENT: $60,000,000
PRO RATA SHARE OF
SYNDICATED LOAN COMMITMENTS: 24%
78
<PAGE> 85
Address for Notices: FIRST UNION NATIONAL BANK OF
- ------------------- GEORGIA
999 Peachtree St.
Atlanta, Georgia 30309 By:
Attention: Mr. Jonathan Hook --------------------------------
Name:
Title:
Telephone No.: (404) 225-4055
Telecopy No.: (404) 225-4255
Lending Office and Payment Office:
999 Peachtree St.
Atlanta, Georgia 30309
SYNDICATED LOAN COMMITMENT: $40,000,000
PRO RATA SHARE OF
SYNDICATED LOAN COMMITMENTS: 16%
79
<PAGE> 86
Address for Notices: BANK OF AMERICA NT & SA
- -------------------
1230 Peachtree St., Suite 3800
Atlanta, Georgia 30309 By:
Attention: Mr. William Tucker --------------------------------
Name:
Title:
Telephone No.: (404) 249-6927
Telecopy No.: (404) 249-6906
Lending Office and Payment Office:
1230 Peachtree St., Suite 3800
Atlanta, Georgia 30309
SYNDICATED LOAN COMMITMENT: $35,000,000
PRO RATA SHARE OF
SYNDICATED LOAN COMMITMENTS: 14%
80
<PAGE> 87
Address for Notices: CIBC, INC.
- -------------------
2727 Paces Ferry Road, Suite 1200
Atlanta, Georgia 30339 By:
Attention: ________________ --------------------------------
Name:
Title:
Telephone No.: ___________________
Telecopy No.: ___________________
Lending Office and Payment Office:
__________________________
__________________________
SYNDICATED LOAN COMMITMENT: $30,000,000
PRO RATA SHARE OF
SYNDICATED LOAN COMMITMENTS: 12%
81
<PAGE> 88
Address for Notices: FIRST CHICAGO/NBD
- -------------------
One First National Plaza - MC 0324
Chicago, Illinois 60670-0324 By:
Attention: ________________ --------------------------------
Name:
Title:
Telephone No.: ___________________
Telecopy No.: ____________________
Lending Office and Payment Office:
_______________________
_______________________
SYNDICATED LOAN COMMITMENT: $25,000,000
PRO RATA SHARE OF
SYNDICATED LOAN COMMITMENTS: 10%
82
<PAGE> 1
EXHIBIT 10.12
SUBLEASE AGREEMENT
THIS SUBLEASE AGREEMENT (this "Sublease") is made as of the 31st day of
July, 1997 between EQUIFAX INC., a Georgia corporation ("Sublandlord"), and
EQUIFAX SERVICES INC., a Georgia corporation ("Subtenant").
R E C I T A L S
1600 Peachtree, L.L.C. (the "Prime Landlord"), as lessor, and
Sublandlord, as lessee, entered into that certain Headquarters Facility Lease
(as the same may be amended, renewed or extended from time to time, the "Prime
Lease"), dated as of March 11, 1994, for the lease by Sublandlord of that
certain property and building known as 1600 Peachtree Street, NW, according to
the current system of numbering, located in Atlanta, Georgia, as more
particularly described in the Prime Lease (the "Property"). The building located
on the Property is herein referred to as the "Building."
Sublandlord and Subtenant desire to enter into this Sublease, pursuant
to the terms of which Subtenant will lease from Sublandlord and Sublandlord will
lease to Subtenant a portion of the Building and related facilities on the
Property.
A G R E E M E N T
NOW THEREFORE, for and in consideration of Ten and No/100 Dollars
($10.00) and the mutual covenants and obligations set forth in this Sublease,
Sublandlord and Subtenant do hereby agree as follows:
1. Subleased Premises. Sublandlord does hereby lease to Subtenant, and
Subtenant leases and rents from Sublandlord that portion of the first floor of
the Building consisting of approximately 12,000 rentable square feet as shown
outlined and cross-hatched on the floor plan attached hereto as Exhibit A and
incorporated herein by this reference (the "Subleased Premises"). The Subleased
Premises are being leased by Sublandlord to Subtenant "as is" and Subtenant
accepts the Subleased Premises in such condition. Sublandlord shall not be
obligated to construct any demising walls or make any improvements whatsoever
with regard to the Subleased Premises. Subtenant shall make no alterations
within the Subleased Premises without the prior written consent of Sublandlord.
2. Parking; Use of Common Areas and Facilities.
(a) Use of General Parking and Reserved Parking. Subtenant may use
the parking facilities on the Property on a first-come, first-served basis, so
long as Subtenant's use is in compliance with building code requirements.
Certain parking spaces on the Property are marked "Reserved" and shall not be
available for use by Subtenant,
<PAGE> 2
except that Subtenant's individual employees may qualify for use of such
reserved parking spaces under the same procedures and years of service
requirements as are applicable to Equifax, receiving credit for years of service
with Equifax immediately prior to the date of this Sublease.
(b) Use of Related Facilities and Services. Subtenant is granted a
license to use, on a non-exclusive basis, the common areas used as such by
Sublandlord, conference rooms, training rooms, cafeteria facilities and mailroom
facilities in the Building, as more specifically described in Exhibit B attached
hereto and incorporated herein by this reference. Conference rooms and training
rooms shall be scheduled on an availability basis in accordance with
Sublandlord's reservation procedures. Subtenant shall pay its pro rata share of
overhead allocable to such areas as Additional Rent as set forth below.
Subtenant's mail may be delivered to the Sublandlord's mail room and shall be
delivered to one location within the Subleased Premises (i.e., Sublandlord shall
have no responsibility for delivering Subtenant's mail directly to individual
addressees).
3. Term. The term of this Sublease ("Sublease Term") shall be for five
(5) years, commencing at 5:00 p.m. on the 31st day of July, 1997 and expiring at
12:00 midnight on July 30, 2002, unless the Prime Lease or this Sublease is
sooner terminated in accordance with the terms and conditions set forth therein
or herein. Subtenant has no options to renew or extend the Sublease Term.
4. Rent. Subtenant shall pay to Sublandlord a base rent ("Base Rent")
of One Hundred Thousand Eight Hundred Seven and no/100 Dollars per annum
($100,807.00). The Base Rent shall be payable by Subtenant to Sublandlord in
advance in twelve equal monthly installments of Eight Thousand Four Hundred and
60/100 Dollars ($8,400.60) each, which are due and payable on or before the
first day of each calendar month during the Sublease Term with appropriate
prorations for partial months.
5. Additional Rent.
(a) Subtenant agrees to reimburse Sublandlord throughout the
Sublease Term, as "Additional Rent" hereunder, for Subtenant's Share (as defined
below) of the annual Operating Expenses (as defined below). Subtenant shall pay
to Sublandlord, monthly within ten (10) days of delivery of an invoice therefor,
the Additional Rent hereunder accrued through the immediately preceding calendar
month. For any partial period to which an Operating Expense is allocable but
this Sublease is not in effect (by way of illustration only, annual insurance
premiums for coverage expiring after termination of the Sublease Term),
Subtenant's Share for such period shall be subject to a pro rata adjustment
based upon the number of days prior to the expiration of the Sublease Term. If
any payments are estimated or adjusted after payment, then at the end of any
calendar year if Subtenant has paid to Sublandlord an amount in excess of
Subtenant's Share of Operating Expenses for such calendar year, Sublandlord
shall reimburse to Subtenant any such excess amount (or shall apply any such
excess amount to any amount then owing to
-2-
<PAGE> 3
Sublandlord hereunder, and if none, to the next due installment or installments
of Additional Rent due hereunder, at the option of Sublandlord, or if Subtenant
has paid to Sublandlord less than Subtenant's Share of Operating Expenses for
such calendar year, Subtenant shall pay to Sublandlord any such deficiency
within ten (10) days after Subtenant receives an invoice therefor.
(b) The term "Subtenant's Share" shall mean the percentage
determined by dividing the rentable square footage of the Subleased Premises by
the rentable square footage of the Building. Sublandlord and Subtenant hereby
agree that Subtenant's Share is 3.25% (calculated upon the Building square
footage of 369,329 and the Subleased Premises square footage of 12,000). If
Subtenant does not occupy the Subleased Premises during the entire full calendar
year in which the Sublease Term commences or ends, Subtenant's Share of
Operating Expenses excess for the applicable calendar year shall be
appropriately prorated for the partial year, based on the number of days
Subtenant has occupied the Subleased Premises during that year.
(c) "Operating Expenses" shall be all those expenses of operating,
servicing, managing, maintaining and repairing the Property, Building, all
parking areas and related common areas in a manner deemed by Sublandlord
reasonable and appropriate and in a manner consistent with first-class office
buildings in metropolitan Atlanta, Georgia. All Operating Expenses shall be as
actually incurred by Sublandlord. Subtenant may have reasonable access to
Sublandlord's records in order to audit or otherwise verify Subtenant's Share of
such expenses. Operating Expenses shall include, without limitation, the
following:
(1) All taxes and assessments, whether general or special,
applicable to the Property and the Building, which shall include real and
personal property ad valorem taxes, and any and all reasonable costs and
expenses incurred by Sublandlord in seeking a reduction of any such taxes
and assessments. However, Subtenant shall not be obligated for taxes on
the net income to Sublandlord for the sublease hereunder, unless there is
imposed in the future a tax on rental income on the Building in lieu of
the real property ad valorem taxes, in which event such tax shall be
deemed an Operating Expense of the Building;
(2) Insurance premiums and deductible amounts, including,
without limitation, for commercial general liability, "all risks"
property, rent loss and other coverages carried by Sublandlord on the
Building and Property as required by the Prime Lease;
(3) Overhead allocated to operation, repair and maintenance
of the parking areas, common areas, conference rooms, training rooms,
cafeteria facilities (including any subsidization of meal costs) and
mailroom facilities, in accordance with Exhibit B hereto, as allocated by
Sublandlord's cost management system;
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<PAGE> 4
(4) All expenses borne by Sublandlord with respect to the
Building or the Property pursuant to the Prime Lease;
(5) All utilities, including, without limitation, water,
electricity, power, heating, lighting, ventilation, sanitary sewer and air
conditioning of the Building, but not including those utility charges
actually paid directly by Subtenant, if any;
(6) Landscaping and janitorial and maintenance expenses,
including janitorial services and janitorial supplies and other materials
used in the operation and maintenance of the Building, and the cost of
maintenance and service agreements on equipment, window cleaning, grounds
maintenance, pest control, security, trash and snow removal, and other
similar services or agreements;
(7) The costs, including interest, amortized over its useful
life, of any capital improvement made to the Building by or on behalf of
Sublandlord after the date of this Sublease which is required under any
governmental law or regulation (or any judicial interpretation thereof)
that was not applicable to the Building as of the date of this Sublease,
and of the acquisition and installation of any device or equipment
designed to improve the operating efficiency of any system within the
Building;
(8) All services, supplies, repairs, replacements or other
expenses directly and reasonably associated with servicing, maintaining,
managing and operating the Building, including, but not limited to the
lobby, vehicular and pedestrian traffic areas and other common use areas;
(9) Wages and salaries of Sublandlord's employees (not above
the level of building manager) engaged in the maintenance, operation,
repair and services of the Property, including taxes, insurance and
customary fringe benefits;
(10) Legal and accounting costs;
(11) Costs to maintain and repair the Building and Property;
(12) Security costs unless the cost of that service contract
is already included in Operating Expenses as described above.
(d) Operating Expenses shall not include the cost of long distance
telephone service or any telephone related expense in excess of basic service
(unless Sublandlord obtains such services for all telephones in the Building and
pays for the same).
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<PAGE> 5
(e) For the utility costs included in Operating Expenses, the
electricity provided to the Subleased Premises shall be on a level suitable for
normal office use, including usual and normal small office machines and similar
equipment using 110 volt current, and lighting of the Subleased Premises to
building standard light levels produced by building standard lighting fixtures
(Subtenant being obligated to pay for replacement of all light bulbs including
fluorescent tubes). Seasonal air conditioning and heating shall be on Monday
through Friday inclusive, with holidays observed by Sublandlord and legal
holidays excepted, from 8:00 A.M. to 5:00 P.M. Sublandlord reserves the right to
prohibit installation within the Subleased Premises of equipment using
electricity in amounts greater than the amounts provided, including, but not
limited to, non-standard lighting, electric heaters, air conditioners, data
processing and duplicating equipment, stoves, microwaves, refrigerators and
vending machines. Sublandlord shall not be liable for any damages directly or
indirectly resulting from the installation, use, or interruption of use of
utilities or the furnishing of services referred to in this paragraph where such
interruption results from circumstances beyond Sublandlord's reasonable control
or from interruptions made necessary by repairs and maintenance being undertaken
by Sublandlord.
6. Use and Maintenance. Subtenant's use of the Subleased Premises shall
be strictly in accordance with the use provisions of the Prime Lease.
Subtenant's maintenance obligations with respect to the Subleased Premises shall
be the same as Sublandlord's maintenance obligations with respect to the
Property and the Building pursuant to the terms of the Prime Lease, except that
Sublandlord and not Subtenant shall be responsible for maintenance of the
exterior and structural portions of the Subleased Premises.
7. Relationship to Prime Lease. This Sublease and all of Subtenant's
rights hereunder are expressly subject to and subordinate to all of the terms of
the Prime Lease. Subtenant hereby acknowledges that it has received a copy of
the Prime Lease and has read all of the terms and conditions thereof.
Sublandlord shall provide to Subtenant copies of all modifications or amendments
to the Prime Lease which in any manner affect Subtenant's obligations hereunder.
Subtenant hereby agrees to and does assume all obligations of Sublandlord, as
Lessee under the Prime Lease, with respect to the Subleased Premises. All of the
terms and conditions of the Prime Lease are hereby incorporated into this
Sublease by reference as if fully set forth herein, except for Article 18 and
all provisions relating to the "Vacant Land", as therein defined, and except
that "LESSOR" shall be read as "Sublandlord" and "LESSEE" shall be read as
"Subtenant"; provided, however, that Subtenant hereby acknowledges that
Subtenant shall look solely to Sublandlord for the performance of all the Prime
Landlord's obligations under the Prime Lease and that Sublandlord shall not be
obligated with respect to such obligations unless the same are fulfilled by the
Prime Landlord under the Prime Lease.
8. Default. Any act or omission by Subtenant that would constitute a
default under the Prime Lease shall be deemed a default by Subtenant under this
Sublease. In addition, any failure by Subtenant to pay Base Rent when due (and
the continuance of
-5-
<PAGE> 6
such failure for five (5) days following notice from Sublandlord to Subtenant)
or any failure by Subtenant to perform any other obligations required under this
Sublease (and the continuance of such failure for five (5) days following notice
from Sublandlord to Subtenant) shall be deemed a default hereunder. Any such
default by Subtenant shall entitle Sublandlord to exercise any and all remedies
available to Prime Landlord under the Prime Lease or any other remedies
available at law or in equity under the laws of the State of Georgia.
9. Quiet Enjoyment. Provided Subtenant has performed its obligations
hereunder, Subtenant shall have the quiet enjoyment of the Subleased Premises
without interference by Sublandlord. Sublandlord shall use its reasonable
business judgment in determining when and whether to enforce Prime Landlord's
obligations under the Prime Lease, but if Sublandlord chooses not to pursue an
action to enforce any of Prime Landlord's obligations, Subtenant shall have no
right to any recourse or action or claim against Prime Landlord, Subtenant's
only rights with respect to the Subleased Premises being against the Sublandlord
in accordance with the terms hereof.
10. Insurance and Indemnities. Subtenant hereby agrees to indemnify and
hold Prime Landlord harmless, with regard to Subtenant's leasing and use of
Subleased Premises, to the same extent that the "Lessee" under the Prime Lease
is required to indemnify and hold Prime Landlord harmless with respect to the
Property. Subtenant shall not be required to carry casualty insurance with
respect to the Subleased Premises, which coverage shall be maintained by
Sublandlord as provided in Section 12.01(ii) of the Prime Lease. Subtenant shall
maintain commercial general liability insurance coverage with respect to its
operations at the Subleased Premises, in compliance with the provisions of
Section 12 of the Prime Lease, which shall name Prime Landlord and Sublandlord
as additional insureds as their interests may appear. Subtenant hereby agrees to
obtain and provide evidence satisfactory to Sublandlord, on or before the date
of this Sublease, that Subtenant is carrying such insurance in the same amounts
and otherwise in compliance with the Prime Lease as required to be carried by
Sublandlord with regard to the Property. Subtenant shall also maintain adequate
coverage on all of Subtenant's personal property.
11. Casualty and Condemnation. All provisions of the Prime Lease with
respect to casualty loss and condemnation or conveyance in lieu thereof shall
apply with respect to the Subleased Property. Subtenant further acknowledges and
agrees that if the Subleased Premises are affected in a condemnation or
conveyance in lieu thereof, Subtenant shall not be entitled to any of Prime
Landlord's or Sublandlord's award.
12. Subleasing and Assignment. Subtenant shall not and shall have no
right to voluntarily, involuntarily or by operation of law, assign, transfer,
hypothecate or otherwise encumber this Sublease, or any interest herein, and
shall not sublet nor permit the use by others of the Subleased Premises or any
part thereof without first obtaining in each instance Sublandlord's prior
written consent, which consent Sublandlord shall be entitled to withhold in its
sole discretion. Any such assignment, sublease, transfer or
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<PAGE> 7
hypothecation without Sublandlord's prior written consent shall be null and void
and shall constitute an immediate event of default under this Sublease. No
acceptance by Sublandlord of any rent or any other sum of money from any
assignee, sublessee or other category of transferee shall release Subtenant from
any of its obligations hereunder or be deemed to constitute Sublandlord's
consent to any assignment, sublease, transfer or hypothecation.
13. No Estate in Land. No estate in land is created hereby, and
Subtenant shall have only a usufruct in the Subleased Premises, not subject to
encumbrance, mortgage, transfer, assignment or other conveyance.
14. Early Termination by Either Party. Sublandlord has the right to
terminate this Sublease prior to expiration of the Sublease Term upon not less
than six (6) months prior written notice to Subtenant. After the first
anniversary date hereof, Subtenant has the right to terminate this Sublease
prior to expiration of the Sublease Term upon not less than six (6) months prior
written notice to Subtenant. Such termination shall be effective at midnight on
the day which is the later to occur of the date specified in such notice, or the
date which is six (6) months from the date such notice is delivered.
15. Holding Over. If Subtenant remains in possession of the Subleased
Premises after expiration of the Sublease Term or earlier termination date
designated pursuant to paragraph 14 above, with Sublandlord's acquiescence and
without any distinct agreement of the parties, then Subtenant by virtue of this
paragraph shall become a tenant from month-to-month at a monthly base rent,
payable in advance, in an amount equal to twice the amount of Base Rent payable
for the last month of the Sublease Term and otherwise subject to all of the
conditions and covenants of this Sublease as though this Sublease had originally
been a month-to-month tenancy. In no event shall there be a renewal of this
Sublease by operation of law, and any such month-to-month tenancy may be
terminated by either Sublandlord or Subtenant by giving thirty (30) days written
notice to the other. Specifically notwithstanding the foregoing, if Subtenant
shall remain in possession of the Subleased Premises as a holdover tenant
without the acquiescence of Sublandlord or otherwise in violation of the terms
and provisions of this Sublease, in addition to any other rights and remedies
available to Sublandlord, Sublandlord shall have the immediate right to reenter
and take possession of the Subleased Premises.
16. Surrender of Subleased Premises. At the expiration or earlier
termination of this Sublease, Subtenant shall surrender the Subleased Premises
(and all keys to the Subleased Premises) to Sublandlord in the condition
required by the Prime Lease. Any property of Subtenant left upon the Subleased
Premises at the termination of this Sublease shall be deemed abandoned by
Subtenant, and Sublandlord may thereafter use or dispose of such property as
Sublandlord sees fit without obligation to Subtenant. Subtenant shall reimburse
Sublandlord on demand for Sublandlord's costs and expenses in removing and
disposing of such property, and Subtenant shall further indemnify and hold
Sublandlord
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<PAGE> 8
free and harmless from any liability, claim or expense suffered or incurred by
Sublandlord in connection with the removal or disposal of such property.
17. Subordination. Subject to the terms of Section 19.06 of the Prime
Lease, this Sublease and all rights of Subtenant hereunder are and shall be
inferior to any mortgage, deed to secure debt, deed of trust or other instrument
in the nature thereof which may now or hereafter affect Sublandlord's interest
in the Subleased Premises or Building, and to any modifications, renewals,
consolidations, extensions or replacements of any such security instrument. This
paragraph shall be self-operative, and no further instrument of subordination
shall be necessary for the holder of any such security instrument. Subtenant
shall, however, execute, acknowledge and deliver to Sublandlord or the holder of
any such security instrument, upon demand and without expense, any and all
instruments that may be requested by Sublandlord for the purpose of
subordinating this Sublease and the rights of Subtenant hereunder to the rights
and interests of the holder of such security instrument and for any and all
purposes reasonably related thereto, including without limitation evidence that
Subtenant shall attorn to and recognize any successor to Sublandlord under this
Sublease.
18. Estoppel Certificates. Subtenant shall at any time and from time to
time, upon not less than ten (10) days' prior written notice from Sublandlord,
execute, acknowledge and deliver to Sublandlord, or Sublandlord's designee, a
statement in writing (a) certifying that this Sublease is unmodified and in full
force and effect (or, if modified, stating the nature of such modification), (b)
stating that Subtenant has accepted occupancy of the Subleased Premises, (c)
specifying the dates to which rent, and other amounts due hereunder have been
paid, and (d) certifying that there are no existing defaults on the part of
Sublandlord or Subtenant hereunder and that Subtenant has no defenses or offsets
against the enforcement of this Sublease or specifying such defaults, defenses
or offsets if any are claimed.
19. Exculpation. Sublandlord's obligations and liability to Subtenant
with respect to this Sublease shall be limited solely to Sublandlord's interest
in the Subleased Premises, and neither Sublandlord, nor any of the
representatives, partners, officers, directors or shareholders of Sublandlord,
shall have any personal liability whatsoever with respect to this Sublease or
Sublandlord's obligations hereunder.
20. Environmental Matters. All warranties and covenants made by
Sublandlord in Article 16 of the Prime Lease are hereby made by Subtenant on its
own behalf to and for the benefit of Sublandlord with respect to Subtenant's
possession and occupancy of the Subleased Premises, including without limitation
the indemnity set forth in Section 16.04 of the Prime Lease, and Subtenant shall
and hereby does indemnify Sublandlord for any failure of Subtenant, its agents,
employees or invitees to comply with such covenants and warranties.
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<PAGE> 9
21. Indemnification. Unless due solely to the gross negligence or
misconduct of Sublandlord or its agents, neither Sublandlord nor Sublandlord's
agents shall be liable to Subtenant or Subtenant's agents, contractors or
visitors, and Subtenant shall and does hereby indemnify and hold Sublandlord
harmless from and against any and all loss, cost, liability, claim, damage or
expense (including, without limitation, reasonable attorneys' fees, court costs
and costs of investigation) incurred in connection with or arising from (a) any
default by Subtenant in the performance of any of the terms and provisions of
this Sublease on Subtenant's part to be performed; (b) Subtenant's use and
occupancy of the Subleased Premises; or (c) any acts, omissions or-negligence of
Subtenant, its agents, employees and guests in or about the Subleased Premises,
including, without limitation, any breach of security, or loss or
misappropriation of Sublandlord's proprietary or confidential information.
Subtenant, and all those claiming by, through or under Subtenant, shall store
their property in and shall occupy and use the Subleased Premises and all
portions of the Building and related improvements to which they are entitled
hereunder solely at their own risk. Subtenant and all those claiming or entering
the Subleased Premises by, through or under Subtenant hereby release
Sublandlord, to the full extent permitted by law, from all claims of every kind,
including, without limitation, personal injury, property damage, loss or other
damages occurring by theft or mysterious disappearance, or business
interruption, unless caused by or due to the gross negligence or misconduct of
Sublandlord.
22. Notices. Notices by Sublandlord and Subtenant shall be given to each
other in the same manner provided by the Prime Lease:
Sublandlord:
Equifax Inc.
1600 Peachtree Street, NW
Atlanta, Georgia 30309
Attention: Chief Financial Officer
Subtenant:
Equifax Services Inc.
1000 Alderman Drive
Alpharetta, Georgia 30202
Attention: General Counsel
23. Brokers. Each party represents to the other that it has not dealt
with any real estate broker, sales person or finder in connection with this
Sublease. Each party hereby agrees to indemnify and hold the other harmless from
and against any liabilities and claims for commissions and fees due or claimed
to be due by any party claiming to have dealt with the indemnifying party in
connection with this Sublease.
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<PAGE> 10
24. Governing Law; Time of Essence; Miscellaneous. This Sublease shall
be governed by the laws of the State of Georgia. Time shall be of the essence
with regard to the terms and provisions of this Sublease. This Sublease
supersedes all prior discussions and agreements between the parties and
incorporates their entire agreement with respect to the subject matter hereof
and no representations or agreements, oral or otherwise, between the parties not
embodied herein shall be of any force or effect. Any term used in this Sublease
which begins with initial capital letters and is not defined herein shall have
the same meaning attributable to that term in the Prime Lease. No failure of
Sublandlord to exercise any power given Sublandlord hereunder, or to insist upon
strict compliance by Subtenant of any obligation hereunder, and no custom or
practice of the parties at variance with the terms hereof, shall constitute a
waiver of Sublandlord's right to demand exact compliance with the terms hereof.
This Sublease may be executed in one or more counterparts, each of which shall
be deemed an original, and all of which shall constitute one and the same
instrument. All modifications of this Sublease must be in writing and signed by
the party to be bound. Subtenant shall not record this Sublease nor any
memorandum hereof.
(Signatures Begin on Next Page)
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<PAGE> 11
[Signature Page to Sublease Agreement between Equifax Inc. as Sublandlord and
Equifax Services Inc. as Subtenant for premises at 1600 Peachtree Street,
Atlanta, Georgia]
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands and
seals, the day and year first above written.
SUBLANDLORD:
EQUIFAX INC., A GEORGIA CORPORATION
By:
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Name:
-----------------------------------
Title:
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Attest:
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Name:
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Title:
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[CORPORATE SEAL]
(Signatures Continued on Next Page)
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[Signature Page to Sublease Agreement between Equifax Inc. as Sublandlord and
Equifax Services Inc. as Subtenant for premises at 1600 Peachtree Street,
Atlanta, Georgia]
SUBTENANT:
EQUIFAX
SERVICES INC., a Georgia
corporation
By:
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Name:
-----------------------------------
Title:
----------------------------------
Attest:
---------------------------------
Name:
----------------------------------
Title:
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[CORPORATE SEAL]
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<PAGE> 1
EXHIBIT 10.13
SUBLEASE AGREEMENT
THIS SUBLEASE AGREEMENT (this "Sublease") is made this ______ day of
____________, 1997 between EQUIFAX INC., a Georgia corporation ("Sublandlord"),
and EQUIFAX SERVICES INC., a Georgia corporation ("Subtenant").
R E C I T A L S
William J. Wade, not in his individual capacity but solely as the
Individual Owner Trustee of Equifax Business Trust No. 1994-A, a Delaware
business trust (the "Prime Landlord"), as lessor, and Sublandlord, as lessee,
entered into that certain Lease Agreement (as the same may be amended, renewed
or extended from time to time, the "Prime Lease"), dated as of March 18, 1994,
for the lease by Sublandlord of that certain property and building known as 1525
Windward Concourse, according to the current system of numbering, located in
Alpharetta, Fulton County, Georgia, as more particularly described in the Prime
Lease, known generally as the J. V. White Technology Center (the "Property").
The building located on the Property is herein referred to as the "Building."
Sublandlord and Subtenant desire to enter into this Sublease, pursuant to
the terms of which Subtenant will lease from Sublandlord and Sublandlord will
lease to Subtenant a portion of the Building and related facilities on the
Property.
A G R E E M E N T
NOW THEREFORE, for and in consideration of Ten and No/100 Dollars ($10.00)
and the mutual covenants and obligations set forth in this Sublease, Sublandlord
and Subtenant do hereby agree as follows:
1. Subleased Premises. Sublandlord does hereby lease to Subtenant, and
Subtenant leases and rents from Sublandlord that portion of the ____________
floor of the Building consisting of approximately __________________ rentable
square feet as shown outlined and cross-hatched on the floor plan attached
hereto as Exhibit A and incorporated herein by this reference (the "Subleased
Premises"). The Subleased Premises are being leased by Sublandlord to Subtenant
"as is" and Subtenant accepts the Subleased Premises in such condition.
Sublandlord shall not be obligated to construct any demising walls or make any
improvements whatsoever with regard to the Subleased Premises. Subtenant shall
make no alterations within the Subleased Premises without the prior written
consent of Sublandlord.
2. Parking; Use of Common Areas and Facilities.
(a) Use of General Parking and Reserved Parking. Subtenant may use
the parking facilities on the Property on a first-come, first-served basis, so
long as
<PAGE> 2
Subtenant's use is in compliance with building code requirements. Certain
parking spaces on the Property are marked "Reserved" and shall not be available
for use by Subtenant, except that Subtenant's individual employees may qualify
for use of such reserved parking spaces under the same procedures and years of
service requirements as are applicable to Equifax, receiving credit for years of
service with Equifax immediately prior to the date of this Sublease.
(b) Use of Related Facilities and Services. Subtenant is granted a
license to use, on a non-exclusive basis, the common areas used as such by
Sublandlord, conference rooms, training rooms, cafeteria facilities and mailroom
facilities in the Building, as more specifically described in Exhibit B attached
hereto and incorporated herein by this reference. Conference rooms and training
rooms shall be scheduled on an availability basis in accordance with
Sublandlord's reservation procedures. Subtenant shall pay its pro rata share of
overhead allocable to such areas as Additional Rent as set forth below.
Subtenant's mail may be delivered to the Sublandlord's mail room and shall be
delivered to one location within the Subleased Premises (i.e., Sublandlord shall
have no responsibility for delivering Subtenant's mail directly to individual
addressees).
3. Term. The term of this Sublease ("Sublease Term") shall be for five
(5) years, commencing on the _________ day of ______________, 1997 and expiring
at 12:00 midnight on ____________, 2002, unless the Prime Lease or this Sublease
is sooner terminated in accordance with the terms and conditions set forth
therein or herein. Subtenant has no options to renew or extend the Sublease
Term.
4. Rent.
(a) Subtenant shall pay to Sublandlord a base rent ("Base Rent")
in an amount equal to Subtenant's Share (as defined below) of the "Basic Rent"
and all "Supplemental Rent" (as such terms are defined in the Prime Lease) and
all other amounts due from Sublandlord under the Prime Lease (without
duplication of amounts constituting "Operating Expenses", as defined below).
Subtenant acknowledges and agrees that Basic Rent under the Prime Lease is
payable twice yearly (currently every March 1 and every September 1), and
Supplemental Rent and other amounts due from Sublandlord under the Prime Lease
are payable on demand.
(b) The Base Rent shall be payable by Subtenant to Sublandlord [on
a reimbursement basis] [in advance]. Subtenant shall pay to Sublandlord, within
ten (10) days of delivery by Sublandlord of an invoice therefor, the Base Rent
hereunder accrued through the immediately preceding payment date for Base Rent.
If any payments are estimated or adjusted after payment, then at [the end of any
calendar year] if Subtenant has paid to Sublandlord an amount in excess of Base
Rent for such period, Sublandlord shall reimburse to Subtenant any such excess
amount (or shall apply any such excess amount to any amount then owing to
Sublandlord hereunder, and if none, to the next due installment or installments
of Base Rent due hereunder, at the option of Sublandlord), or if
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Subtenant has paid to Sublandlord less than the Base Rent for such period,
Subtenant shall pay to Sublandlord any such deficiency within ten (10) days
after Subtenant receives an invoice therefor.
(c) The term "Subtenant's Share" shall mean the percentage
determined by dividing the rentable square footage of the Subleased Premises by
the rentable square footage of the Building. Sublandlord and Subtenant hereby
agree that Subtenant's Share is _______________ percent (____%) (calculated upon
the Building square footage of ________________ and the Subleased Premises
square footage of ___________(________). For any partial period to which amounts
which constitute a part of Base Rent are allocable but this Sublease is not in
effect, Base Rent for such period shall be subject to a pro rata adjustment
based upon the number of days prior to the commencement or expiration of the
Sublease Term, as the case may be. Further, Base Rent shall be appropriately
prorated for any partial period, based on the number of days Subtenant has
occupied the Subleased Premises during that period, prorated on a daily basis.
5. Additional Rent.
(a) Subtenant agrees to reimburse Sublandlord throughout the
Sublease Term, as "Additional Rent" hereunder, for Subtenant's Share of the
annual Operating Expenses (as defined below). Subtenant shall pay to
Sublandlord, monthly within ten (10) days of delivery of an invoice therefor,
the Additional Rent hereunder accrued through the immediately preceding calendar
month. For any partial period to which an Operating Expense is allocable but
this Sublease is not in effect (by way of illustration only, annual insurance
premiums for coverage expiring after termination of the Sublease Term),
Subtenant's Share for such period shall be subject to a pro rata adjustment
based upon the number of days prior to the expiration of the Sublease Term. If
any payments are estimated or adjusted after payment, then at the end of any
calendar year if Subtenant has paid to Sublandlord an amount in excess of
Subtenant's Share of Operating Expenses for such calendar year, Sublandlord
shall reimburse to Subtenant any such excess amount (or shall apply any such
excess amount to any amount then owing to Sublandlord hereunder, and if none, to
the next due installment or installments of Additional Rent due hereunder, at
the option of Sublandlord, or if Subtenant has paid to Sublandlord less than
Subtenant's Share of Operating Expenses for such calendar year, Subtenant shall
pay to Sublandlord any such deficiency within ten (10) days after Subtenant
receives an invoice therefor.
(b) If Subtenant does not occupy the Subleased Premises during the
entire full calendar year in which the Sublease Term commences or ends,
Subtenant's Share of Operating Expenses excess for the applicable calendar year
shall be appropriately prorated for the partial year, based on the number of
days Subtenant has occupied the Subleased Premises during that year.
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<PAGE> 4
(c) "Operating Expenses" shall be all those expenses of operating,
servicing, managing, maintaining and repairing the Property, Building, all
parking areas and related common areas in a manner deemed by Sublandlord
reasonable and appropriate and in a manner consistent with first-class office
buildings in suburban Atlanta, Georgia. All Operating Expenses shall be as
actually incurred by Sublandlord. Subtenant may have reasonable access to
Sublandlord's records in order to audit or otherwise verify Subtenant's Share of
such expenses. Operating Expenses shall include, without limitation, the
following:
(1) All taxes and assessments, whether general or special,
applicable to the Property and the Building, which shall include
real and personal property ad valorem taxes, and any and all
reasonable costs and expenses incurred by Sublandlord in seeking a
reduction of any such taxes and assessments. However, Subtenant
shall not be obligated for taxes on the net income to Sublandlord
for the sublease hereunder, unless there is imposed in the future a
tax on rental income on the Building in lieu of the real property ad
valorem taxes, in which event such tax shall be deemed an Operating
Expense of the Building;
(2) Insurance premiums and deductible amounts, including,
without limitation, for commercial general liability, "all risks"
property, rent loss and other coverages carried by Sublandlord on
the Building and Property as required by the Prime Lease;
(3) Overhead allocated to operation, repair and maintenance
of the parking areas, common areas, conference rooms, training
rooms, cafeteria facilities (including any subsidization of meal
costs) and mailroom facilities, in accordance with Exhibit B hereto,
as allocated by Sublandlord's cost management system;
(4) All expenses borne by Sublandlord with respect to the
Building or the Property pursuant to the Prime Lease;
(5) All utilities, including, without limitation, water,
electricity, power, heating, lighting, ventilation, sanitary sewer
and air conditioning of the Building, but not including those
utility charges actually paid directly by Subtenant, if any;
(6) Landscaping and janitorial and maintenance expenses,
including janitorial services and janitorial supplies and other
materials used in the operation and maintenance of the Building, and
the cost of maintenance and service agreements on equipment, window
cleaning, grounds maintenance, pest control, security, trash and
snow removal, and other similar services or agreements;
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(7) The costs, including interest, amortized over its useful
life, of any capital improvement made to the Building by or on
behalf of Sublandlord after the date of this Sublease which is
required under any governmental law or regulation (or any judicial
interpretation thereof) that was not applicable to the Building as
of the date of this Sublease, and of the acquisition and
installation of any device or equipment designed to improve the
operating efficiency of any system within the Building;
(8) All services, supplies, repairs, replacements or other
expenses directly and reasonably associated with servicing,
maintaining, managing and operating the Building, including, but not
limited to the lobby, vehicular and pedestrian traffic areas and
other common use areas;
(9) Wages and salaries of Sublandlord's employees (not above
the level of building manager) engaged in the maintenance,
operation, repair and services of the Property, including taxes,
insurance and customary fringe benefits;
(10) Legal and accounting costs;
(11) Costs to maintain and repair the Building and Property;
(12) Security costs unless the cost of that service contract
is already included in Operating Expenses as described above.
(d) Operating Expenses shall not include the cost of long distance
telephone service or any telephone related expense in excess of basic service
(unless Sublandlord obtains such services for all telephones in the Building and
pays for the same).
(e) For the utility costs included in Operating Expenses, the
electricity provided to the Subleased Premises shall be on a level suitable for
normal office use, including usual and normal small office machines and similar
equipment using 110 volt current, and lighting of the Subleased Premises to
building standard light levels produced by building standard lighting fixtures
(Subtenant being obligated to pay for replacement of all light bulbs including
fluorescent tubes). Seasonal air conditioning and heating shall be on Monday
through Friday inclusive, with holidays observed by Sublandlord and legal
holidays excepted, from 8:00 A.M. to 5:00 P.M. Sublandlord reserves the right to
prohibit installation within the Subleased Premises of equipment using
electricity in amounts greater than the amounts provided, including, but not
limited to, non-standard lighting, electric heaters, air conditioners, data
processing and duplicating equipment, stoves, microwaves, refrigerators and
vending machines. Sublandlord shall not be liable for any damages directly or
indirectly resulting from the installation, use, or interruption of use of
utilities or the furnishing of services referred to in this paragraph where such
interruption results from circumstances beyond Sublandlord's reasonable control
or from
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interruptions made necessary by repairs and maintenance being undertaken by
Sublandlord.
6. Use and Maintenance. Subtenant's use of the Subleased Premises shall be
strictly in accordance with the use provisions of the Prime Lease. Subtenant's
maintenance obligations with respect to the Subleased Premises shall be the same
as Sublandlord's maintenance obligations with respect to the Property and the
Building pursuant to the terms of the Prime Lease, except that Sublandlord and
not Subtenant shall be responsible for maintenance of the exterior and
structural portions of the Subleased Premises.
7. Security Protocols, Policies and Procedures. Subtenant acknowledges and
agrees that the Building is a secure facility and that sensitive and privileged
information is stored within the Building. Subtenant agrees that all personnel
of Subtenant and Subtenant's use of the Leased Premises will be subject to all
security protocols, policies and procedures currently in effect or as may be
implemented or established from time to time by Sublandlord with respect to its
own personnel and operations at the Premises, including background checks, daily
identification and clearance procedures, and other building security measures,
as such protocols, policies or procedures may be changed, replaced, or otherwise
modified from time to time.
8. Relationship to Prime Lease. This Sublease and all of Subtenant's
rights hereunder are expressly subject to and subordinate to all of the terms
and conditions of the Prime Lease. Subtenant hereby acknowledges that it has
received a copy of the Prime Lease and all of the instruments incorporated
therein by reference, and has read all of the terms and conditions thereof,
including without limitation the terms and conditions of that certain
Participation Agreement dated as of March 18, 1994 between and among Alphafax
Properties Limited Partnership, Equifax Inc., Equifax Properties, Inc., First
Chicago Leasing Corporation, Equifax Business Trust No. 1994-A, Wilmington Trust
Company, William J. Wade, NationsBank of Georgia, National Association, and
Trust Company Bank. Sublandlord shall provide to Subtenant copies of all
modifications or amendments to the Prime Lease or such other instruments which
in any manner affect Subtenant's obligations hereunder. Subtenant hereby agrees
to and does assume all obligations of Sublandlord, as Lessee under the Prime
Lease, with respect to the Subleased Premises. All of the terms and conditions
of the Prime Lease are hereby incorporated into this Sublease by reference as if
fully set forth herein; provided, however, that Subtenant shall have no rights
whatsoever to exercise rights or privileges of Sublandlord pursuant to Articles
12 (lease renewal), 13 (buyout), 14 (early termination; obsolescence or
uneconomic usefulness termination), 19 (right of first offer) and 21 (rejectable
offers), and except that "Lessor" shall be read as "Sublandlord" and "Lessee"
shall be read as "Subtenant"; and provided, further, however, that Subtenant
hereby acknowledges that Subtenant shall look solely to Sublandlord for the
performance of all the Prime Landlord's obligations under the Prime Lease and
that Sublandlord shall not be obligated with respect to such obligations unless
the same are fulfilled by the Prime Landlord under the Prime Lease.
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9. Default. Any act or omission by Subtenant that would constitute a
default under the Prime Lease shall be deemed a default by Subtenant under this
Sublease. In addition, any failure by Subtenant to pay Base Rent when due (and
the continuance of such failure for five (5) days following notice from
Sublandlord to Subtenant) or any failure by Subtenant to perform any other
obligations required under this Sublease (and the continuance of such failure
for five (5) days following notice from Sublandlord to Subtenant) shall be
deemed a default hereunder. Any such default by Subtenant shall entitle
Sublandlord to exercise any and all remedies available to Prime Landlord under
the Prime Lease or any other remedies available at law or in equity under the
laws of the State of Georgia.
10. Quiet Enjoyment. Provided Subtenant has performed its obligations
hereunder, Subtenant shall have the quiet enjoyment of the Subleased Premises
without interference by Sublandlord. Sublandlord shall use its reasonable
business judgment in determining when and whether to enforce Prime Landlord's
obligations under the Prime Lease, but if Sublandlord chooses not to pursue an
action to enforce any of Prime Landlord's obligations, Subtenant shall have no
right to any recourse or action or claim against Prime Landlord, Subtenant's
only rights with respect to the Subleased Premises being against the Sublandlord
in accordance with the terms hereof.
11. Insurance and Indemnities. Subtenant hereby agrees to indemnify and
hold Prime Landlord (and any other persons or entities specified under the Prime
Lease) harmless, with regard to Subtenant's leasing and use of Subleased
Premises, to the same extent that the "Lessee" under the Prime Lease is required
to indemnify and hold Prime Landlord or any other persons or entities thereunder
harmless with respect to the Property. Subtenant shall not be required to carry
casualty insurance with respect to the Subleased Premises, which coverage shall
be maintained by Sublandlord as provided in Section 10(a) of the Prime Lease.
Subtenant shall maintain commercial general liability and workers' compensation
insurance coverage with respect to its operations at the Subleased Premises, in
compliance with the provisions of Sections 10(a)(i)(B) and 10(a)(i)(B) of the
Prime Lease, which shall name Prime Landlord (and any other persons or entities
specified in the Prime Lease) and Sublandlord as additional insureds as their
interests may appear and shall otherwise be in compliance with Article 10 of the
Prime Lease. Subtenant hereby agrees to obtain and provide evidence satisfactory
to Sublandlord, on or before the date of this Sublease, that Subtenant is
carrying such insurance in the same amounts and otherwise in compliance with the
Prime Lease as required to be carried by Sublandlord with regard to the
Property. Subtenant shall also maintain adequate coverage on all of Subtenant's
personal property.
12. Casualty and Condemnation; Proceeds; Title Defects. All provisions of
the Prime Lease with respect to casualty loss and condemnation or conveyance in
lieu thereof shall apply with respect to the Subleased Property. Subtenant
acknowledges and agrees that if the Subleased Premises are affected in a
condemnation or conveyance in lieu
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thereof, Subtenant shall not be entitled to any of Prime Landlord's or
Sublandlord's award. Subtenant further acknowledges and agrees that if an award
is made under any title policy not issued to Subtenant with respect to a title
defect or failure of title to the Property, Subtenant shall not be entitled to
any award thereunder.
13. Subleasing and Assignment. Subtenant shall not and shall have no right
to voluntarily, involuntarily or by operation of law, assign, transfer,
hypothecate or otherwise encumber this Sublease, or any interest herein, and
shall not sublet nor permit the use by others of the Subleased Premises or any
part thereof without first obtaining in each instance Sublandlord's prior
written consent, which consent Sublandlord shall be entitled to withhold in its
sole discretion. Any such assignment, sublease, transfer or hypothecation
without Sublandlord's prior written consent shall be null and void and shall
constitute an immediate event of default under this Sublease. No acceptance by
Sublandlord of any rent or any other sum of money from any assignee, sublessee
or other category of transferee shall release Subtenant from any of its
obligations hereunder or be deemed to constitute Sublandlord's consent to any
assignment, sublease, transfer or hypothecation.
14. No Estate in Land. No estate in land is created hereby, and Subtenant
shall have only a usufruct in the Subleased Premises, not subject to
encumbrance, mortgage, transfer, assignment or other conveyance.
15. Early Termination by Either Party. Sublandlord has the right to
terminate this Sublease prior to expiration of the Sublease Term upon not less
than six (6) months prior written notice to Subtenant. After the first
anniversary date hereof, Subtenant has the right to terminate this Sublease
prior to expiration of the Sublease Term upon not less than six (6) months prior
written notice to Subtenant. Such termination shall be effective at midnight on
the day which is the later to occur of the date specified in such notice, or the
date which is six (6) months from the date such notice is delivered.
16. Holding Over. If Subtenant remains in possession of the Subleased
Premises after expiration of the Sublease Term or earlier termination date
designated pursuant to paragraph 15 above, with Sublandlord's acquiescence and
without any distinct agreement of the parties, then Subtenant by virtue of this
paragraph shall become a tenant from month-to-month at a monthly base rent,
payable in advance, in an amount equal to twice the amount of Base Rent payable
for the last month of the Sublease Term and otherwise subject to all of the
conditions and covenants of this Sublease as though this Sublease had originally
been a month-to-month tenancy. In no event shall there be a renewal of this
Sublease by operation of law, and any such month-to-month tenancy may be
terminated by either Sublandlord or Subtenant by giving thirty (30) days written
notice to the other. Specifically notwithstanding the foregoing, if Subtenant
shall remain in possession of the Subleased Premises as a holdover tenant
without the acquiescence of Sublandlord or otherwise in violation of the terms
and provisions of this Sublease, in addition to any other
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rights and remedies available to Sublandlord, Sublandlord shall have the
immediate right to reenter and take possession of the Subleased Premises.
17. Surrender of Subleased Premises. At the expiration or earlier
termination of this Sublease, Subtenant shall surrender the Subleased Premises
(and all keys to the Subleased Premises) to Sublandlord in the condition
required by the Prime Lease. Any property of Subtenant left upon the Subleased
Premises at the termination of this Sublease shall be deemed abandoned by
Subtenant, and Sublandlord may thereafter use or dispose of such property as
Sublandlord sees fit without obligation to Subtenant. Subtenant shall reimburse
Sublandlord on demand for Sublandlord's costs and expenses in removing and
disposing of such property, and Subtenant shall further indemnify and hold
Sublandlord free and harmless from any liability, claim or expense suffered or
incurred by Sublandlord in connection with the removal or disposal of such
property.
18. Subordination. Subject to the terms the Prime Lease, this Sublease and
all rights of Subtenant hereunder are and shall be inferior to any mortgage,
deed to secure debt, deed of trust or other instrument in the nature thereof
which may now or hereafter affect Sublandlord's interest in the Subleased
Premises or Building, and to any modifications, renewals, consolidations,
extensions or replacements of any such security instrument. This paragraph shall
be self-operative, and no further instrument of subordination shall be necessary
for the holder of any such security instrument. Subtenant shall, however,
execute, acknowledge and deliver to Sublandlord or the holder of any such
security instrument, upon demand and without expense, any and all instruments
that may be requested by Sublandlord for the purpose of subordinating this
Sublease and the rights of Subtenant hereunder to the rights and interests of
the holder of such security instrument and for any and all purposes reasonably
related thereto, including without limitation evidence that Subtenant shall
attorn to and recognize any successor to Sublandlord under this Sublease.
19. Estoppel Certificates. In addition to the requirements of Section
22(h)(i) of the Prime Lease, Subtenant shall at any time and from time to time,
upon not less than ten (10) days' prior written notice from Sublandlord,
execute, acknowledge and deliver to Sublandlord, or Sublandlord's designee, a
statement in writing (a) certifying that this Sublease is unmodified and in full
force and effect (or, if modified, stating the nature of such modification), (b)
stating that Subtenant has accepted occupancy of the Subleased Premises, (c)
specifying the dates to which rent, and other amounts due hereunder have been
paid, and (d) certifying that there are no existing defaults on the part of
Sublandlord or Subtenant hereunder and that Subtenant has no defenses or offsets
against the enforcement of this Sublease or specifying such defaults, defenses
or offsets if any are claimed.
20. Exculpation. Sublandlord's obligations and liability to Subtenant with
respect to this Sublease shall be limited solely to Sublandlord's interest in
the Subleased Premises, and neither Sublandlord, nor any of the representatives,
partners, officers,
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directors or shareholders of Sublandlord, shall have any personal liability
whatsoever with respect to this Sublease or Sublandlord's obligations hereunder.
21. Environmental Matters. All warranties and covenants made by
Sublandlord in Article 8(i) of the Prime Lease are hereby made by Subtenant on
its own behalf to and for the benefit of Sublandlord with respect to Subtenant's
possession and occupancy of the Subleased Premises, including without limitation
the all agreements to pay costs and liabilities set forth in Sections 8(i)(C)
and 8(i)(E) of the Prime Lease, and Subtenant shall and hereby does indemnify
Sublandlord for any failure of Subtenant, its agents, employees or invitees to
comply with such covenants and warranties.
22. Indemnification. Unless due solely to the gross negligence or
misconduct of Sublandlord or its agents, neither Sublandlord nor Sublandlord's
agents shall be liable to Subtenant or Subtenant's agents, contractors or
visitors, and Subtenant shall and does hereby indemnify and hold Sublandlord
harmless from and against any and all loss, cost, liability, claim, damage or
expense (including, without limitation, reasonable attorneys' fees, court costs
and costs of investigation) incurred in connection with or arising from (a) any
default by Subtenant in the performance of any of the terms and provisions of
this Sublease on Subtenant's part to be performed; (b) Subtenant's use and
occupancy of the Subleased Premises; or (c) any acts, omissions or-negligence of
Subtenant, its agents, employees and guests in or about the Subleased Premises,
including, without limitation, any breach of security, or loss or
misappropriation of Sublandlord's proprietary or confidential information.
Subtenant, and all those claiming by, through or under Subtenant, shall store
their property in and shall occupy and use the Subleased Premises and all
portions of the Building and related improvements to which they are entitled
hereunder solely at their own risk. Subtenant and all those claiming or entering
the Subleased Premises by, through or under Subtenant hereby release
Sublandlord, to the full extent permitted by law, from all claims of every kind,
including, without limitation, personal injury, property damage, loss or other
damages occurring by theft or mysterious disappearance, or business
interruption, unless caused by or due to the gross negligence or misconduct of
Sublandlord.
23. Notices. Notices by Sublandlord and Subtenant shall be given to each
other in the same manner provided by the Prime Lease:
Sublandlord:
Equifax Inc.
1600 Peachtree Street, NW
Atlanta, Georgia 30309
Attention: Chief Financial Officer
Subtenant:
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Equifax Services Inc.
1000 Alderman Drive
Alpharetta, Georgia 30202
Attention: General Counsel
24. Permitted Sublease under Prime Lease. Subtenant acknowledges and
agrees that Sublandlord is entering into this Sublease as a subletting permitted
without Prime Landlord's prior written consent pursuant to the terms of Section
11(a) of the Prime Lease. Accordingly, Subtenant acknowledges and agrees that
Sublandlord may assign all of Sublandlord's right, title and interest in this
Sublease to Prime Landlord and other parties pursuant to the terms of Section
11(a) of the Prime Lease. Subtenant further represents and warrants that
Subtenant is not a "Tax-Exempt Entity" as defined in Section 11(a)(iv) of the
Prime Lease.
25. Brokers. Each party represents to the other that it has not dealt with
any real estate broker, sales person or finder in connection with this Sublease.
Each party hereby agrees to indemnify and hold the other harmless from and
against any liabilities and claims for commissions and fees due or claimed to be
due by any party claiming to have dealt with the indemnifying party in
connection with this Sublease.
26. Governing Law; Time of Essence; Miscellaneous. This Sublease shall be
governed by the laws of the State of Georgia. Time shall be of the essence with
regard to the terms and provisions of this Sublease. This Sublease supersedes
all prior discussions and agreements between the parties and incorporates their
entire agreement with respect to the subject matter hereof and no
representations or agreements, oral or otherwise, between the parties not
embodied herein shall be of any force or effect. Any term used in this Sublease
which begins with initial capital letters and is not defined herein shall have
the same meaning attributable to that term in the Prime Lease. No failure of
Sublandlord to exercise any power given Sublandlord hereunder, or to insist upon
strict compliance by Subtenant of any obligation hereunder, and no custom or
practice of the parties at variance with the terms hereof, shall constitute a
waiver of Sublandlord's right to demand exact compliance with the terms hereof.
This Sublease may be executed in one or more counterparts, each of which shall
be deemed an original, and all of which shall constitute one and the same
instrument. All modifications of this Sublease must be in writing and signed by
the party to be bound. Subtenant shall not record this Sublease nor any
memorandum hereof.
(Signatures Begin on Next Page)
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<PAGE> 12
[Signature Page to Sublease Agreement between Equifax Inc. as Sublandlord and
Equifax Services Inc. as Subtenant for premises at 1525 Windward Concourse,
Alpharetta, Georgia]
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands and
seals, the day and year first above written.
SUBLANDLORD:
EQUIFAX INC., A GEORGIA CORPORATION
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
Attest:
-------------------------
Name:
---------------------------
Title:
--------------------------
[CORPORATE SEAL]
(Signatures Continued on Next Page)
-12-
<PAGE> 13
[Signature Page to Sublease Agreement between Equifax Inc. as Sublandlord and
Equifax Services Inc. as Subtenant for premises at 1525 Windward Concourse,
Alpharetta, Georgia]
SUBLANDLORD:
EQUIFAX INC., A GEORGIA CORPORATION
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
Attest:
-------------------------
Name:
---------------------------
Title:
--------------------------
[CORPORATE SEAL]
-13-
<PAGE> 1
EXHIBIT 23.01
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the inclusion in this
registration statement on Form S-1 of our report on the financial statements of
ChoicePoint Inc. dated April 15, 1997 and our report on the financial
statements of CDB Infotek dated April 24, 1996 and to all references to our
firm included in this registration statement.
/s/ Arthur Andersen LLP
Atlanta, Georgia
July 15, 1997
