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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTIONS 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ________ TO ________
COMMISSION FILE NUMBER - 1-13069
CHOICEPOINT INC.
(Exact Name of Registrant as Specified in Its Charter)
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GEORGIA 58-2309650
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1000 ALDERMAN DRIVE 30005
ALPHARETTA, GEORGIA (Zip Code)
(Address of Principal Executive Offices)
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(770) 752-6000
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
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NAME OF EACH EXCHANGE ON WHICH
TITLE OF EACH CLASS REGISTERED
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Common Stock, par value $.10 per share New York Stock Exchange
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Securities registered pursuant to Section 12(g) of the Act: None
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Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K [ ]
Aggregate market value of the voting stock held by non-affiliates of the
Registrant: $1,140,135,545 as of March 6, 2000
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date. 29,528,082 shares of
Common Stock, par value $.10 per share, outstanding as of March 6, 2000.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement relating to the 2000 Annual Meeting of
Shareholders are incorporated herein by reference in Part III, Items 10 (as
related to Directors), 11, 12 and 13.
Portions of the Annual Report to Shareholders for the year ended December
31, 1999 are incorporated herein by reference in Parts II and IV.
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TABLE OF CONTENTS
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PAGE
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PART I...................................................... 1
Item 1. Business......................................... 1
Item 2. Properties....................................... 6
Item 3. Legal Proceedings................................ 6
Item 4. Submission of Matters to a Vote of Security
Holders.......................................... 6
Part II..................................................... 8
Item 5. Market for the Registrant's Common Equity and
Related Stockholder Matters...................... 8
Item 6. Selected Financial Data.......................... 8
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.............. 8
Item 7A. Quantitative and Qualitative Disclosures About
Market Risk...................................... 8
Item 8. Financial Statements and Supplementary Data...... 9
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.............. 9
Part III.................................................... 9
Item 10. Directors and Executive Officers of the
Registrant....................................... 9
Item 11. Executive Compensation........................... 9
Item 12. Security Ownership of Certain Beneficial Owners
and Management................................... 9
Item 13. Certain Relationships and Related
Transactions..................................... 9
Part IV..................................................... 9
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K.............................. 9
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THIS FORM 10-K AND OTHER STATEMENTS ISSUED OR MADE FROM TIME TO TIME BY
CHOICEPOINT INC. OR ITS MANAGEMENT CONTAIN STATEMENTS WHICH MAY CONSTITUTE
"FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF THE SECURITIES ACT OF 1933,
AS AMENDED, AND THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED BY THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995, 15 U.S.C.A. SECTIONS 77Z-2 AND 78U-5
(SUPP. 1996.). THOSE STATEMENTS AND INFORMATION ARE BASED ON MANAGEMENT'S
BELIEFS, PLANS, EXPECTATIONS AND ASSUMPTIONS AND ON INFORMATION CURRENTLY
AVAILABLE TO CHOICEPOINT. THE WORDS "MAY," "SHOULD," "EXPECT," "ANTICIPATE,"
"INTEND," "PLAN," "CONTINUE," "BELIEVE," "SEEK," "ESTIMATE," AND SIMILAR
EXPRESSIONS USED IN THIS REPORT THAT DO NOT RELATE TO HISTORICAL FACTS ARE
INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS.
THE FORWARD-LOOKING STATEMENTS IN THIS REPORT ARE NOT GUARANTEES OF FUTURE
PERFORMANCE AND INVOLVE CERTAIN RISKS, UNCERTAINTIES AND ASSUMPTIONS. SUCH
RISKS, UNCERTAINTIES AND ASSUMPTIONS INCLUDE THE FOLLOWING: (I) THE LEVELS OF
DEMAND FOR CHOICEPOINT'S EXISTING SERVICES; (II) CHOICEPOINT'S ABILITY TO
DEVELOP NEW SERVICES AND TO ADAPT EXISTING SERVICES TO NEW USES; (III)
CHOICEPOINT'S ABILITY TO MAINTAIN ACCEPTABLE MARGINS AND ITS ABILITY TO CONTROL
ITS COSTS; (IV) THE IMPACT OF FEDERAL, STATE AND LOCAL REGULATORY REQUIREMENTS
ON CHOICEPOINT'S BUSINESS, SPECIFICALLY THE PUBLIC RECORDS MARKET AND PRIVACY
MATTERS AFFECTING CHOICEPOINT; (V) THE IMPACT OF CONSOLIDATION OR OTHER BUSINESS
DEVELOPMENTS IN THE INSURANCE INDUSTRY, WHICH ACCOUNTS FOR APPROXIMATELY 62% OF
CHOICEPOINT'S REVENUE; AND (VI) THE UNCERTAINTY OF ECONOMIC CONDI-
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TIONS IN GENERAL. MANY OF SUCH FACTORS ARE BEYOND CHOICEPOINT'S ABILITY TO
CONTROL OR PREDICT. AS A RESULT, CHOICEPOINT'S FUTURE ACTIONS, FINANCIAL
CONDITION, RESULTS OF OPERATIONS AND THE MARKET PRICE OF CHOICEPOINT'S COMMON
STOCK COULD DIFFER MATERIALLY FROM THOSE EXPRESSED IN ANY FORWARD-LOOKING
STATEMENTS MADE BY CHOICEPOINT. DO NOT PUT UNDUE RELIANCE ON FORWARD-LOOKING
STATEMENTS. CHOICEPOINT DOES NOT INTEND TO PUBLICLY UPDATE ANY FORWARD-LOOKING
STATEMENTS THAT MAY BE MADE FROM TIME TO TIME BY, OR ON BEHALF OF, CHOICEPOINT,
WHETHER AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE.
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PART I
ITEM 1. BUSINESS
GENERAL
ChoicePoint Inc., a Georgia corporation ("ChoicePoint" or the "Company"),
is a leading provider of decision-making intelligence to businesses, government
agencies and individuals. ChoicePoint became an independent public company in
August 1997 through the combination of the businesses that had comprised the
Insurance Services Group of Equifax Inc. ("Equifax") within a separate company
and the subsequent spinoff (the "Spinoff") of the Company's outstanding stock by
Equifax as a stock dividend to the shareholders of Equifax. References to
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.
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. At its formation, the Company
was organized into three service groups: Property & Casualty Insurance Services;
Life & Health Insurance Services; and Business & Government Services. Following
a series of divestitures since the Spinoff, primarily in the life and health
insurance areas, the Company combined all of its insurance related operations
into one service group, and since January 1, 1999, has operated its business
through two primary service groups: Insurance Services and Business & Government
Services.
ChoicePoint provides most major domestic insurance companies with
underwriting and claims information services to assist those companies in
assessing the insurability and associated policy pricing of individuals and
property. The Company furnishes access to motor vehicle reports, maintains a
database of claims histories, provides automated claims verification information
services to both the property and casualty and the life and health insurance
markets, and provides database marketing services, including pre-screened and
direct marketing lists. ChoicePoint also offers pre-employment background
investigations, pre-employment and regulatory compliance drug testing services,
shareholder locator searches, credential verification service, and due diligence
and public record information searches to other corporate and government
organizations, as well as to the aforementioned insurance markets. The Company
also provides modeling services, customized policy rating and issuance software,
property inspections and audits to the commercial insurance market, and
laboratory testing services and related technology solutions to the life
insurance market.
ChoicePoint's strategic goal is to be a leading provider of enhanced
information services to a broad range of industries. The Company is continuing
to expand its data 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. The Company intends to accomplish its goals by
expanding its presence in business and government markets, pursuing acquisitions
and strategic alliances, developing and enhancing key technological capabilities
and maintaining solid financial performance.
STRATEGIC ACQUISITIONS AND ALLIANCES
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 the assets of Programming
Resources Company ("PRC"), headquartered in Hartford, Connecticut, which
develops custom policy 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. In November 1994,
ChoicePoint acquired Osborn Group Inc., formerly known as Osborn Laboratories,
Inc. ("Osborn Group"), a blood, urine and saliva testing business that provides
insurance companies with applicant-specific information. Osborn Group, 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. Osborn Group 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.
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In 1996, ChoicePoint acquired Professional Test Administrators, Inc.
("PTA"), headquartered in Chicago, Illinois, to accelerate the Company's entry
into the drug testing market. The PTA acquisition gave ChoicePoint the ability
to administer all components of substance abuse programs, including results
analysis. By offering drug testing services, ChoicePoint is able to enhance the
value of its employment services by creating a total hiring solution for
customers.
In August 1996, ChoicePoint acquired 70% of the outstanding capital stock
of CDB Infotek, currently marketed under the name ChoicePoint ("ChoicePoint
PRO"), an automated public records company with more than 1,600 online public
record databases, including criminal, bankruptcy, judgment and lien databases.
Through the exercise of an option, the Company acquired the remaining
outstanding shares of ChoicePoint PRO, which is now a wholly owned subsidiary of
ChoicePoint. Headquartered in Santa Ana, California, ChoicePoint PRO serves
corporations and the legal, insurance and investigative markets.
In addition, in furtherance of the Company's focus on building its
strategic records capabilities to serve the government, healthcare and insurance
markets, in October 1997 ChoicePoint acquired the assets of Medical Information
Network, LLC ("MediNet"). MediNet is an online physician verification service
that provides background information on physicians, including disciplinary data,
education, board certifications, and criminal and civil convictions from sources
such as the American Medical Association, U.S. Drug Enforcement Agency, U.S.
Food and Drug Administration and state medical boards, to assist in fraud
mitigation.
To add to its drug testing medical review officer offerings, in 1997
ChoicePoint acquired the assets of Drug Free, Inc., a drug testing information
services company. In April 1998, ChoicePoint acquired the assets of Attest
National Drug Testing, Inc., a drug testing information services company, and
Application Profiles, Inc., a full service background investigation company. In
October 1998, the Company acquired Informus Corporation ("Informus") in order to
leverage their Internet technology and expand its automated offerings in the
pre-employment screening market. The Informus acquisition allows the Company to
provide complete range of web-based solutions by integrating its pre-employment
background and drug testing services over the Internet to its corporate
customers, and the acquisition provides further growth opportunities for the
Company in the small to mid-sized company market. Also in November 1998, the
Company acquired Tyler-McLennon, Inc., a provider of employment background
screening services and record searches.
In September 1998, ChoicePoint entered into a strategic alliance with
Intertech Information Management, Inc. ("Intertech"), a leading provider of
document management and imaging services. The minority equity investment in
Intertech allows the Company to license document management software that
enables ChoicePoint to transform data from paper to electronic format, thereby
enhancing efficiencies.
In October 1998, the Company acquired ChoicePoint Direct Inc., formerly
known as Customer Development Corporation ("CP Direct"). CP Direct is a
full-service, fully integrated database marketing company providing customized
marketing programs primarily for clients in the insurance, consumer finance,
publishing and banking industries.
In November 1998, the Company acquired EquiSearch Services, Inc.
("EquiSearch"). The EquiSearch acquisition allowed the Company to expand its
value-added applications of Company data and to offer consumer-benefit services.
EquiSearch's primary function is to contract with companies or stock transfer
agents to locate lost stockholders of Fortune 1000 and other public
corporations.
In December 1998, in order to increase the Company's presence in the
personal automobile insurance market, ChoicePoint acquired DATEQ Information
Network, Inc. ("DATEQ"), a provider of underwriting services to that market. The
DATEQ acquisition allowed the Company to bring enhanced risk assessment products
and services to its core insurance customer base.
Also in December 1998, the Company sold its life and health insurance field
underwriting services and insurance claim investigation services to PMSI
Services, Inc. This transaction, when combined with the December 1997 sale of
the paramedical examination business to Pediatric Services of America, Inc.,
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completes ChoicePoint's strategy of exiting the labor-intensive life and health
and investigative field businesses.
In May 1999, the Company purchased the assets of Washington Document
Service, Inc., a leading nationwide court document research and retrieval
company serving the legal market, which complements the Company's existing
public record service. In July 1999, the Company acquired Data Tracks
Technology, Inc., a public record information company based in Sarasota,
Florida. This acquisition strengthens the Company's online public record data in
the Florida market and brings a strong web-based solution that is leveragable
into certain markets and customers. In November 1999, the Company acquired the
stock of DataMart, Inc. which provides software database services for
ChoicePoint companies.
In January 2000 the Company completed the previously-announced sale of its
operations in the United Kingdom to Experian Limited, including the CUE UK
database, a proprietary database containing home and motor insurance claims
information.
Also in January 2000, the Company purchased Statewide Data Services, Inc.
("SDS"), the insurance industry's largest provider of prospecting leads and
related services to property and casualty agents. Management believes that this
acquisition, combined with the Company's underwriting information and direct
marketing services, will provide the insurance industry with a complete and
integrated suite of direct marketing products and services.
Effective February 1, 2000, the Company acquired National Safety Alliance,
Incorporated ("NSA"), one of the largest independent drug testing administration
companies in the United States, to strengthen the Company's position as a
leading single-source provider of pre-employment solutions. NSA contracts with
customers as a third-party administrator of drug tests used for determining
employment eligibility.
On February 14, 2000, the Company announced a proposed merger with DBT
Online, Inc., a public record services provider, ("DBT") which the Company
believes will significantly complement its public records business. DBT
primarily provides mid-sized companies with online public records information
whereas ChoicePoint's current customers primarily represent Fortune 1000
corporations which the Company provides with a broad range of information
services. The Company will acquire all of the outstanding capital stock of DBT
in a pooling-of-interest transaction. The transaction remains subject to
regulatory and shareholder approval.
PRODUCTS AND CUSTOMERS
As indicated above, following a series of divestitures since the Spinoff,
primarily in the life and health insurance areas, the Company has combined all
of its insurance related operations into one service group, and, since January
1, 1999, has operated through two primary service groups: Insurance Services and
Business & Government Services. ChoicePoint's offices are primarily located
throughout the United States. The Company's business is not seasonal. The
following table reflects the revenue generated by each of ChoicePoint's two
service groups, and from the divested and discontinued product lines, from 1997
through 1999 and the percentage contribution by each group to ChoicePoint's
revenue for each such year.
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HISTORICAL REVENUE BY SERVICE GROUP
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1999 1998 1997
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AMOUNT % AMOUNT % AMOUNT %
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(DOLLARS IN THOUSANDS)
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Insurance Services.......................... $264,834 62% $246,463 70% $214,386 73%
Business & Government Services.............. 164,958 38 103,488 30 80,193 27
-------- --- -------- --- -------- ---
Subtotal.................................... 429,792 100% 349,951 100% 294,579 100%
Divested & Discontinued Product Lines....... 351 56,524 122,742
-------- -------- --------
Total............................. $430,143 $406,475 $417,321
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Insurance Services. ChoicePoint provides underwriting information to
property and casualty insurance companies in the United States. Personal lines
property and casualty insurance services include automated direct marketing,
underwriting and claims information, such as motor vehicle reports, the
Company's Comprehensive Loss Underwriting Exchange ("C.L.U.E.(R)") database
services, vehicle registration services, credit reports, modeling services,
ChoicePointLink(TM), (insurance agent software), and driver's license
information. C.L.U.E. is a proprietary database comprised of claims information
contributed by major insurance underwriters (and accessed by those same
underwriters), which enables them to assess underwriting risks and pending
claims in the auto and home insurance markets. ChoicePoint's proprietary
ChoicePoint Rules(TM) systems automate 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. This service group offers information delivery services to its clients
using mainframe, personal computer and Internet web-based communications.
In addition to personal lines underwriting 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.
ChoicePoint also provides laboratory information services and related technology
offerings to major life and health insurance companies in the United States.
Business & 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,
shareholder locator services and database marketing services to Fortune 1000
corporations, asset-based lenders, legal and professional service providers,
health care service providers and local, state and federal 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; and (ii) comprehensive drug
screening program management and administration and due diligence and creditial
verification services to legal and professional services.
The Company also provides enhanced information services to government
agencies, such as (i) uncovering ownership of hidden assets, locating
individuals and providing leads for criminal and civil investigations, (ii)
providing parent locator services, which locate for the public sector
individuals who are in violation of court mandates and (iii) screening of
certain Medicare and Medicaid providers and provider applicants to assist in
identifying and reducing health care fraud. In connection with its business and
government services, the Company provides automated and on-demand 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 1000 companies and certain local, state and
federal government agencies. The Company has more
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than 10,000 customers, none of which represented more than 10% of the Company's
total revenue in 1999.
Both of ChoicePoint's current service groups have the capability to receive
orders for and deliver products and services through electronic communications.
The Company supplies software to customers that wish to access the Company using
private networks.
COMPETITION
The Company operates in a number of geographic and product and service
markets, which are highly competitive. In the insurance services market,
ChoicePoint's competitors include Trans Union Corporation, American Insurance
Services Group, a unit of Insurance Services Office, Inc., Insurance Information
Exchange, L.L.C., a subsidiary of AMS Services, Inc. and LabOne, Inc. with
respect to insurance laboratory services. In the business and government
services market, ChoicePoint's competitors in the automated public records
market currently include DBT Online, Inc., the Lexis-Nexis service of Reed
Elsevier PLC, Online Professional Electronic Network LLC, Dallas Computer
Services, Inc. and InfoUSA Inc. while its competitors in the pre-employment
screening and drug testing services market include various security companies
and clinical laboratories, including Pinkertons Inc., Avert, Inc. and Laboratory
Corporation of America Holdings. Its competitors in database marketing services
offerings include Acxiom Corporation and Harte-Hanks Communications, Inc. With
respect to its offerings of consumer benefit services such as those provided by
EquiSearch, the Company competes with Keane Tracers, Inc. and Shareholder
Communications Corporation. In each of its markets, the Company competes on the
basis of responsiveness to customer needs, price 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 has no reason to anticipate the termination of any
significant relationships with data suppliers. However, if material changes in
state or federal laws regulating or prohibiting the distribution of public
records were to occur, the Company's financial condition and results of
operations could be materially affected. In the event that such a termination
occurred, the Company believes that it could acquire the data from other
sources, however, such termination could have a material 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.
EMPLOYEES
As of December 31, 1999, ChoicePoint employed approximately 3,600 persons,
none of whom were unionized. Substantially all of the Company's workforce is
employed in the United States. As of December 31, 1999, ChoicePoint employed
approximately 350 individuals in Olathe, Kansas in its Osborn Group facilities,
approximately 240 individuals in Hartford, Connecticut in its PRC facilities,
approximately 170 individuals in Santa Ana, California at its ChoicePoint PRO
location, approximately 390 individuals in Peoria, Illinois in its CP Direct
location, about 80 employees at its CP Commercial Specialists office in Overland
Park, Kansas, approximately 250 individuals in St. Petersburg, Florida at its
Application Profiles office, approximately 29 employees in White Plains, New
York at its EquiSearch offices, and approximately 20 individuals at the
Sarasota, Florida location. Subsequent to year-end the Company added
approximately 160 employees in Pensacola, Florida at the SDS office and
approximately 60 NSA employees in Nashville, Tennessee. Approximately 600
individuals are employed in the Atlanta area in the Company's headquarters and
two
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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 trade names that ChoicePoint
believes are important to its business. Except for the ChoicePoint trademark and
logo, however, the Company is not dependent upon any single trademark or trade
name or group of trademarks or trade names. The current duration for federal
registrations range from seven to fifteen years, but each registration may be
renewed an unlimited number of times. Other trademarks and trade names used in
the Company's business are registered and maintained in the U.S. and the United
Kingdom. C.L.U.E. is a registered trademark of ChoicePoint.
ITEM 2. PROPERTIES
ChoicePoint's principal executive offices are located in 206,000 square
feet of office space in Alpharetta, Georgia, a suburb of Atlanta. ChoicePoint
maintains approximately 65 other offices in the United States. These offices,
all of which are leased, contain a total of approximately 423,300 square feet of
space. Through Osborn Group, ChoicePoint owns two laboratory facilities in
Olathe, Kansas with approximately 76,000 square feet of space. Through CP
Direct, ChoicePoint owns four buildings in Peoria, Illinois representing
approximately 182,000 square feet of space. The Company ordinarily leases office
space of the general commercial type for conducting its business.
ITEM 3. 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 outcome of any
pending or threatened litigation will have a material adverse effect on the
financial condition 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 materially adverse to the Company
could be reached.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders by the Company
during the quarter ended December 31, 1999.
EXECUTIVE OFFICERS OF REGISTRANT
Set forth below is certain biographical information with respect to each
executive officer of the Company, as of March 10, 2000:
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NAME AND POSITION AGE EXECUTIVE OFFICER SINCE
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Derek V. Smith, Chairman, President and Chief Executive 45 1997
Officer...................................................
Douglas C. Curling, Chief Operating Officer and Treasurer... 45 1997
Dan H. Rocco, Executive Vice President...................... 60 1997
David T. Lee, Executive Vice President...................... 40 1997
J. Michael de Janes, General Counsel and Secretary.......... 42 1997
Michael S. Wood, Chief Financial Officer.................... 45 2000
</TABLE>
Derek V. Smith, 45, has served as President, Chief Executive Officer and a
Director of the Company since May 1997 and as Chairman of the Board since May
1999. Mr. Smith served as Executive Vice President of Equifax and Group
Executive of the Insurance Services Group of Equifax from 1993 until the
Spinoff. From 1991 to 1993, he served as Senior Vice President and Chief
Financial Officer of Equifax. He also serves as a director of Metris Companies
Inc.
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Douglas C. Curling, 45, has served as Chief Operating Officer and Treasurer
since May 1999. He served as Executive Vice President, Chief Financial Officer
and Treasurer of ChoicePoint from the Spinoff until May 1999. He served as
Senior Vice President -- Finance and Administration of the Insurance Services
Group of Equifax from 1993 until the Spinoff.
Dan H. Rocco, 60, has served as Executive Vice President of ChoicePoint
since the Spinoff. He served as Senior Vice President -- Operations of the
Insurance Services Group of Equifax from 1993 until the Spinoff. Mr. Rocco
served as President and General Manager of the Automated Services Division of
the Insurance Services Group of Equifax from 1991 to 1993.
David T. Lee, 40, has served as Executive Vice President since May 1999 and
prior to that served as Senior Vice President of ChoicePoint from the Spinoff
until May 1999. He served as Vice President -- Property & Casualty Marketing and
Sales of the Insurance Services Group of Equifax from 1991 until the Spinoff.
J. Michael de Janes, 42, has served as General Counsel of ChoicePoint since
the Spinoff, and has been Secretary of the Company since April 1998. He served
as Vice President and Counsel of the Insurance Services Group of Equifax from
1993 until the Spinoff.
Michael S. Wood, 45, has served as Chief Financial Officer since February
2000. From 1997 until January 2000 he served as Chief Financial Officer of Lane
Bryant, Inc., a division of The Limited, Inc. and from 1995 to 1997 he served as
Vice President -- Finance of Lane Bryant, Inc.
There are no family relationships among the officers of the Company, nor
are there any arrangements or understandings between any of the officers and any
other persons pursuant to which they were selected as officers. The Board of
Directors may elect an officer or officers at any meeting of the Board of
Directors. Each officer is elected to serve until his successor has been elected
and has duly qualified. Elections of officers generally occur each year at the
Board of Directors meeting held in conjunction with the Company's Annual Meeting
of Shareholders.
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The Company's common stock is listed and traded on the New York Stock
Exchange under the symbol "CPS." Information regarding the high and low sales
prices and the number of holders of the common stock is set forth under the
captions "Market Information" and "Quarterly Activity" on page 39 of the 1999
Annual Report to Shareholders (the "Annual Report"), a copy of which page is
included in Exhibit 13 to this Form 10-K and is incorporated herein by
reference.
The Company does not pay cash dividends and does not anticipate paying any
cash dividends in the foreseeable future. The Company currently intends to
retain future earnings to finance its 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 Board of Directors deems relevant.
ITEM 6. SELECTED FINANCIAL DATA
The information included under the caption "Financial Highlights" on the
inside front cover page of the Annual Report, a copy of which page is included
in Exhibit 13 to this Form 10-K, is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The information included under the caption "Management's Discussion and
Analysis" on pages 18 through 21 of the Annual Report, a copy of which pages are
included in Exhibit 13 to this Form 10-K and is incorporated herein by
reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to market risk from changes in interest rates. The
information below summarizes the Company's market risk associated with its debt
obligations as of December 31, 1999. The information below should be read in
conjunction with Note 6 of the "Notes to Consolidated Financial Statements" on
pages 30 through 31 of the Annual Report, copies of which pages are included in
Exhibit 13 to this Form 10-K and are incorporated herein by reference.
In August 1997, the Company entered into a $250 million unsecured floating
rate revolving credit facility (the "Credit Facility") with a group of banks. As
of December 31, 1999, $184 million was outstanding under the Credit Facility.
The Company has also entered into six interest rate swap agreements (the "Swap
Agreements") to reduce the impact of changes in interest rates on its floating
rate obligation. The Swap Agreements have a combined notional amount of $175
million at December 31, 1999 and mature at various dates from 2000 to 2007. The
Swap Agreements involve the exchange of variable rate for fixed rate payments
and effectively change the Company's interest rate exposure to a weighted
average fixed rate of 5.43% plus a credit spread.
In December 1999, the Company entered into a $100 million unsecured
revolving credit facility with a group of banks (the "1999 Facility"). The 1999
Facility has a termination date of one year, at which time the Company has the
option to convert the outstanding balance to a one-year term obligation. The
Company may select from several pricing options for borrowings under the 1999
Facility, including the lender's base rate, LIBOR plus the applicable margin, or
the lender's cost of funds plus the application margin.
Based on the Company's overall interest rate exposure at December 31, 1999,
a near-term change in interest rates would not materially affect the
consolidated financial position, results or operations or cash flows of the
Company.
8
<PAGE> 12
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information included under the captions "Consolidated Statements of
Income," "Consolidated Balance Sheets," "Consolidated Statements of
Shareholders' Equity," "Consolidated Statements of Cash Flows" and "Notes to
Consolidated Financial Statements" on pages 23 through 37 of the Annual Report,
copies of which pages are included in Exhibit 13 to this Form 10-K and are
incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
The Company has neither changed its independent accountants nor had any
disagreements on accounting and financial disclosures with such accountants.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this Item with respect to Directors and
Executive Officers of the Company is included in the sections entitled "Election
of ChoicePoint Directors," and "Section 16(a) Beneficial Ownership Reporting
Compliance" of the Proxy Statement for the 2000 Annual Meeting of Shareholders
and is incorporated herein by reference. Information regarding the Company's
executive officers is set forth in Part I of this report.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item is included in the sections entitled
"ChoicePoint Executive Compensation," "Management Compensation and Benefits
Committee Report on Executive Compensation," "Election of ChoicePoint
Directors," "Employment Agreements and Change-in-Control Agreements,"
"Compensation Committee Interlocks and Insider Participation," and "ChoicePoint
Stock Performance Graph" of the Proxy Statement for the 2000 Annual Meeting of
Shareholders and is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item is included in the sections entitled
"ChoicePoint Security Ownership of Certain Beneficial Owners and Management" of
the Proxy Statement for the 2000 Annual Meeting of Shareholders and is
incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this Item is included in the section entitled
"Certain Relationships and Related Transactions" of the Proxy Statement for the
2000 Annual Meeting of Shareholders and is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Index to exhibits, financial statements and schedules.
(1) Financial Statements
Consolidated Balance Sheets for the Years Ended December 31, 1999 and
1998 are incorporated by reference from the Annual Report, and are included
in Exhibit 13 hereto.
Consolidated Statements of Income for the Years Ended December 31,
1999, 1998 and 1997 are incorporated by reference from the Annual Report,
and are included in Exhibit 13 hereto.
9
<PAGE> 13
Consolidated Statements of Shareholders' Equity for the Years Ended
December 31, 1999, 1998 and 1997 are incorporated by reference from the
Annual Report, and are included in Exhibit 13 hereto.
Consolidated Statements of Cash Flows for the Years Ended December 31,
1999, 1998 and 1997 are incorporated by reference from the Annual Report,
and are included in Exhibit 13 hereto.
Notes to Consolidated Financial Statements are incorporated by
reference from the Annual Report, and are included in Exhibit 13 hereto.
Report of Arthur Andersen LLP on the foregoing financial statements is
incorporated by reference from the Annual Report, and is included in
Exhibit 13 hereto.
(2) Financial Statement Schedules
All schedules have been omitted because they are not applicable or the
required information is included in the consolidated financial statements
or notes thereto.
(3) Exhibits required by Item 601 of Regulation S-K:
The following exhibits are included in this Form 10-K:
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S> <C>
2.1 -- Purchase Agreement, by and among ChoicePoint Inc.,
ChoicePoint Acquisition Company and DBT Online, Inc.
(incorporated by reference to Exhibit 2.1 of the Company's
Current Report on Form 8-K, filed February 15, 2000).
3.1 -- Bylaws of the Company, as amended (incorporated by reference
to Exhibit 3.2 of the Company's Quarterly Report on Form
10-Q for the quarter ended September 30, 1999).
3.2 -- Articles of Incorporation of the Company, as amended
(incorporated by reference to Exhibit 3.1 of the Company's
Registration Statement on Form S-1, as amended, File No.
333-30297).
4.1 -- Amendment No. 2 to the Rights Agreement between ChoicePoint
Inc. and SunTrust Bank, Atlanta dated February 14, 2000
(incorporated by reference to Exhibit 4.1 of the Company's
Current Report on Form 8-K, filed February 15, 2000).
4.2 -- Amendment No. 1 to the Rights Agreement, dated as of June
21, 1999, between ChoicePoint Inc. and SunTrust Bank,
Atlanta (incorporated by reference to Exhibit 4.2 of the
Company's Current Report on Form 8-A, filed August 17,
1999).
4.3 -- Rights Agreement, dated as of October 29, 1997, by and
between ChoicePoint Inc. and SunTrust Bank, Atlanta
(incorporated by reference to Exhibit 4.2 of the Company's
Form 8-A, filed November 5, 1997).
4.4 -- Form of Common Stock certificate (incorporated by reference
to Exhibit 4.1 of the Company's Registration Statement on
Form S-1, as amended, File No. 333-30297).
10.1 -- Form of Employment Agreement between the Company and each of
Derek V. Smith, Douglas C. Curling, David T. Lee and J.
Michael de Janes (incorporated by reference to Exhibit 10 of
the Company's Annual Report on Form 10-K for the year ended
December 31, 1997).
10.2 -- ChoicePoint Inc. 1997 Omnibus Stock Incentive Plan
(incorporated by reference to Exhibit 10.1 of the Company's
Quarterly Report on Form 10-Q, for the quarter ended June
30, 1997).
10.3 -- Employee Benefits Agreement, dated as of July 31, 1997,
between Equifax Inc. and ChoicePoint Inc. (incorporated by
reference to Exhibit 10.4 of the Company's Quarterly Report
on Form 10-Q, for the quarter ended June 30, 1997).
</TABLE>
10
<PAGE> 14
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S> <C>
10.4 -- Tax Sharing and Indemnification Agreement, dated as of July
31, 1997, by and between Equifax Inc. and ChoicePoint Inc.
(incorporated by reference to Exhibit 10.7 of the Company's
Quarterly Report on Form 10-Q, for the quarter ended June
30, 1997).
10.5 -- Revolving Credit Agreement, dated as of August 5, 1997,
among ChoicePoint Inc., the Lenders Listed Therein and
Wachovia Bank, N.A. as Administrative Agent, and SunTrust
Bank, Atlanta, as Documentation Agent (incorporated by
reference to Exhibit 10.10 of the Company's Quarterly Report
on Form 10-Q, for the quarter ended June 30, 1997).
10.6 -- Master Agreement, dated as of July 31, 1997, among
ChoicePoint Inc., SunTrust Banks, Inc. and SunTrust Bank,
Atlanta, as Agent (incorporated by reference to Exhibit
10.11(a) of the Company's Quarterly Report on Form 10-Q, for
the quarter ended June 30, 1997).
10.7 -- Lease agreement, dated as of July 31, 1997, between
ChoicePoint Inc. and SunTrust Banks, Inc. (incorporated by
reference to Exhibit 10.11(b) of the Company's Quarterly
Report on Form 10-Q, for the quarter ended June 30, 1997).
10.8 -- Georgia Lease Supplement, dated as of July 31, 1997, between
ChoicePoint Inc. and SunTrust Banks, Inc. (incorporated by
reference to Exhibit 10.11(c) of the Company's Quarterly
Report on Form 10-Q, for the quarter ended June 30, 1997).
10.9 -- Operative Guaranty, dated as of July 31, 1997, by
ChoicePoint Inc. as Guarantor. (incorporated by reference to
Exhibit 10.11(d) of the Company's Quarterly Report on Form
10-Q, for the quarter ended June 30, 1997).
10.10 -- Construction Agency Agreement, dated as of July 31, 1997,
between SunTrust Banks, Inc. and ChoicePoint Inc.
(incorporated by reference to Exhibit 10.11(e) of the
Company's Quarterly Report on Form 10-Q, for the quarter
ended June 30, 1997).
10.11 -- Sublease Agreement, dated as of July 31, 1997, between
Equifax Inc. and Equifax Services Inc. (for certain property
and building located at 1525 Windward Concourse, Alpharetta,
Georgia [J.V. White Technology Center]). (incorporated by
reference to Exhibit 10.13 of the Company's Quarterly Report
on Form 10-Q, for the quarter ended June 30, 1997).
10.12 -- ChoicePoint Inc. 401(k) Profit Sharing Plan (incorporated by
reference to Exhibit 10.2 of the Company's Registration
Statement on Form S-1, as amended, File No. 333-30297).
10.13 -- Agreement, dated July 24, 1996, by and between Equifax Inc.
and Dan Rocco, to be effective January 1, 1996 (relating to
the compensation of Mr. Rocco) (incorporated by reference to
Exhibit 10.9 of the Company's Registration Statement on Form
S-1, as amended, File No. 333-30297).
10.14 -- Revolving Credit Agreement dated as of December 29, 1999
among ChoicePoint Inc., the Lenders listed therein, Wachovia
Bank, N.A. as Administrative Agent, SunTrust Bank, Atlanta,
as Documentation Agent, and First Union National Bank, as
Managing Agent.
10.15 -- First Amendment to the Master Agreement, dated as of
September 30, 1998, among ChoicePoint, Inc., as Lessee,
SunTrust Banks, Inc., as Lessor, and SunTrust Bank, Atlanta,
as Agent.
10.16 -- Second Amendment to the Master Agreement, dated as of
December 30, 1999, among ChoicePoint Inc., as Lessee,
SunTrust Banks, Inc., as Lessor, and SunTrust Bank, Atlanta,
as Agent.
10.17 -- First Amendment to the Georgia Lease Supplement, dated
September 30, 1998, between ChoicePoint Inc. and SunTrust
Banks, Inc.
10.18 -- Second Amendment to the Georgia Lease Supplement, dated
December 30, 1999, between ChoicePoint Inc. and SunTrust
Banks, Inc.
13 -- The inside front cover and pages 18-37 and 39 of the
Company's 1999 Annual Report To Shareholders.
</TABLE>
11
<PAGE> 15
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S> <C>
21 -- Subsidiaries of the Company.
23 -- Consent of Arthur Andersen LLP, Independent Public
Accountants.
27 -- Financial Data Schedule (for SEC use only).
</TABLE>
Copies of the Company's Form 10-K that are furnished pursuant to the
written request of the Company's shareholders do not include the exhibits listed
above. Any shareholder desiring copies of one or more of such exhibits should
write to the Company's Director, Investor Relations, specifying the exhibit or
exhibits requested.
(b) Reports on Form 8-K
A report on Form 8-K, filed on February 15, 2000, announced the execution
of a definitive agreement for the Company to acquire all of the outstanding
stock of DBT Online, Inc. in a merger transaction. The transaction remains
subject to regulatory and shareholder approval.
12
<PAGE> 16
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Alpharetta, State of Georgia, on March 9, 2000.
CHOICEPOINT INC.
By: /s/ DEREK V. SMITH
------------------------------------
Derek V. Smith
Chairman, President and Chief
Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ DEREK V. SMITH Chairman, President, and Chief March 9, 2000
- ----------------------------------------------------- Executive Officer Vice
Derek V. Smith President
and Director
/s/ DAVID E. TRINE Vice President -- Corporate March 9, 2000
- ----------------------------------------------------- Controller (Principal
David E. Trine Accounting Officer)
/s/ C. B. ROGERS, JR. Director March 8, 2000
- -----------------------------------------------------
C. B. Rogers, Jr.
/s/ RON D. BARBARO Director March 9, 2000
- -----------------------------------------------------
Ron D. Barbaro
/s/ JAMES M. DENNY Director March 9, 2000
- -----------------------------------------------------
James M. Denny
/s/ TINSLEY H. IRVIN Director March 9, 2000
- -----------------------------------------------------
Tinsley H. Irvin
/s/ NED C. LAUTENBACH Director March 10, 2000
- -----------------------------------------------------
Ned C. Lautenbach
/s/ JULIA B. NORTH Director March 9, 2000
- -----------------------------------------------------
Julia B. North
/s/ CHARLES I. STORY Director March 8, 2000
- -----------------------------------------------------
Charles I. Story
/s/ ALAN J. TAETLE Director March 9, 2000
- -----------------------------------------------------
Alan J. Taetle
</TABLE>
13
<PAGE> 1
EXHIBIT 10.14
==================================================================
REVOLVING CREDIT AGREEMENT
dated as of December 29, 1999
among
CHOICEPOINT INC.,
THE LENDERS LISTED HEREIN,
and
WACHOVIA BANK, N.A.
as Administrative Agent,
SUNTRUST BANK, ATLANTA,
as Documentation Agent,
and
FIRST UNION NATIONAL BANK,
as Managing Agent
==================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I. DEFINITIONS; CONSTRUCTION.............................................................................1
Section 1.01. Definitions........................................................................................1
Section 1.02. Accounting Terms and Determination................................................................16
Section 1.03. Other Definitional Terms..........................................................................16
Section 1.04. Exhibits and Schedules............................................................................16
ARTICLE II. SYNDICATED LOANS....................................................................................17
Section 2.01. Description of Revolving Credit Facilities; Use of Proceeds.......................................17
Section 2.02. Syndicated Loans..................................................................................17
Section 2.03. Syndicated Notes; Repayment of Principal..........................................................17
Section 2.04. Voluntary Reduction of Syndicated Loan Commitments................................................18
Section 2.05. Syndicated Loan Funding Notices...................................................................18
ARTICLE III. GENERAL LOAN TERMS.................................................................................20
Section 3.01. Disbursement of Funds.............................................................................20
Section 3.02. Interest..........................................................................................21
Section 3.03. Interest Periods..................................................................................22
Section 3.04. Fees..............................................................................................23
Section 3.05. Voluntary and Mandatory Prepayments of Borrowings.................................................23
Section 3.06. Payments, etc.....................................................................................24
Section 3.07. Interest Rate Not Ascertainable, etc..............................................................26
Section 3.08. Illegality........................................................................................26
Section 3.09. Increased Costs...................................................................................27
Section 3.10. Lending Offices...................................................................................29
Section 3.11. Funding Losses....................................................................................30
Section 3.12. Assumptions Concerning Funding of Eurodollar Advances.............................................30
Section 3.13. Apportionment of Payments.........................................................................30
Section 3.14. Sharing of Payments, Etc..........................................................................30
Section 3.15. Benefits to Guarantors............................................................................31
ARTICLE IV. CONDITIONS TO BORROWINGS............................................................................31
Section 4.01. Conditions Precedent to Initial Loans.............................................................31
Section 4.02. Conditions to All Loans...........................................................................33
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
ARTICLE V. REPRESENTATIONS AND WARRANTIES.......................................................................33
Section 5.01. Corporate Existence; Compliance with Law..........................................................33
Section 5.02. Corporate Power; Authorization....................................................................34
Section 5.03. Enforceable Obligations...........................................................................34
Section 5.04. No Contractual or Legal Bar.......................................................................34
Section 5.05. No Material Litigation or Investigations..........................................................34
Section 5.06. Investment Company Act, Etc.......................................................................34
Section 5.07. Margin Regulations................................................................................35
Section 5.08. Compliance With Environmental Laws................................................................35
Section 5.09. Insurance.........................................................................................35
Section 5.10. No Default........................................................................................36
Section 5.11. No Burdensome Restrictions........................................................................36
Section 5.12. Taxes.............................................................................................36
Section 5.13. Subsidiaries......................................................................................36
Section 5.14. Financial Statements..............................................................................36
Section 5.15. ERISA.............................................................................................37
Section 5.16. Possession of Franchises, Licenses, Etc...........................................................38
Section 5.17. Patents, Trademarks, Licenses, Etc................................................................38
Section 5.18. Ownership of Property.............................................................................38
Section 5.19. Financial Condition...............................................................................38
Section 5.20. Labor Matters.....................................................................................39
Section 5.21. Payment or Dividend Restrictions..................................................................39
Section 5.22. Outstanding Indebtedness..........................................................................39
Section 5.23. Disclosure........................................................................................39
Section 5.24. Year 2000 Issues..................................................................................39
ARTICLE VI. AFFIRMATIVE COVENANTS...............................................................................40
Section 6.01. Corporate Existence, Etc..........................................................................40
Section 6.02. Compliance with Laws, Etc.........................................................................40
Section 6.03. Payment of Taxes and Claims, Etc..................................................................40
Section 6.04. Keeping of Books..................................................................................40
Section 6.05. Visitation, Inspection, Etc.......................................................................40
Section 6.06. Insurance; Maintenance of Properties..............................................................41
Section 6.07. Reporting Covenants...............................................................................42
Section 6.08. Financial Covenants...............................................................................46
Section 6.09. Additional Credit Parties.........................................................................46
Section 6.10. Intellectual Property.............................................................................46
Section 6.11. Notice of Year 2000 Problem.......................................................................46
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
ARTICLE VII. NEGATIVE COVENANTS.................................................................................47
Section 7.01. Liens.............................................................................................47
Section 7.02. Guaranties........................................................................................48
Section 7.03. Mergers, Consolidations...........................................................................48
Section 7.04. Asset Sales.......................................................................................49
Section 7.05 Investments, Loans, Etc...........................................................................49
Section 7.06 Sale and Leaseback Transactions...................................................................51
Section 7.07. Transactions with Affiliates......................................................................51
Section 7.08. ERISA.............................................................................................51
Section 7.09. Additional Negative Pledges.......................................................................52
Section 7.10. Changes in Business...............................................................................52
Section 7.11. Limitation on Payment Restrictions Affecting Consolidated Companies...............................53
Section 7.12. Actions Under Certain Documents...................................................................53
Section 7.13. Changes in Fiscal Year............................................................................53
Section 7.14. Amendments and Modifications to Existing Credit Agreement.........................................53
ARTICLE VIII. EVENTS OF DEFAULT.................................................................................53
Section 8.01. Payments..........................................................................................53
Section 8.02. Covenants Without Notice..........................................................................53
Section 8.03. Other Covenants...................................................................................54
Section 8.04. Representations...................................................................................54
Section 8.05. Non-Payments of Other Indebtedness................................................................54
Section 8.06. Defaults Under Other Agreements...................................................................54
Section 8.07. Bankruptcy........................................................................................54
Section 8.08. Money Judgment....................................................................................55
Section 8.09. Change in Control of Borrower.....................................................................55
Section 8.10. Default Under Other Credit Documents..............................................................55
Section 8.11. Attachments.......................................................................................56
ARTICLE IX. THE ADMINISTRATIVE AGENT, THE DOCUMENTATION AGENT AND THE MANAGING AGENT............................56
Section 9.01. Appointment of Administrative Agent...............................................................56
Section 9.02. Appointment of Documentation Agent................................................................57
Section 9.03. Appointment of Managing Agent.....................................................................57
Section 9.04. Nature of Duties of Agents........................................................................57
Section 9.05. Lack of Reliance on the Agents....................................................................57
Section 9.06. Certain Rights of the Agents......................................................................58
Section 9.07. Reliance by the Agents............................................................................58
Section 9.08. Indemnification of the Agents.....................................................................58
Section 9.09. The Agents in their Individual Capacities.........................................................59
</TABLE>
iii
<PAGE> 5
<TABLE>
<S> <C>
Section 9.10. Holders of Notes..................................................................................59
Section 9.11. Successor Agents..................................................................................59
ARTICLE X. MISCELLANEOUS........................................................................................60
Section 10.01. Notices..........................................................................................60
Section 10.02. Amendments, Etc..................................................................................60
Section 10.03. No Waiver; Remedies Cumulative...................................................................61
Section 10.04. Payment of Expenses, Etc.........................................................................61
Section 10.05. Right of Setoff..................................................................................62
Section 10.06. Benefit of Agreement.............................................................................63
Section 10.07. Governing Law; Submission to Jurisdiction; Waiver of Jury Trial..................................65
Section 10.08. Independent Nature of Lenders' Rights............................................................66
Section 10.09. Counterparts.....................................................................................66
Section 10.10. Effectiveness; Survival..........................................................................66
Section 10.11. Severability.....................................................................................66
Section 10.12. Independence of Covenants........................................................................66
Section 10.13. Headings Descriptive; Entire Agreement...........................................................67
</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 Guaranty Agreement
EXHIBIT C - Form of Contribution Agreement
EXHIBIT D - Form of Closing Certificate
EXHIBIT E - Form of Opinion
EXHIBIT F - Form of Assignment and Acceptance Agreement
EXHIBIT G - Form of Compliance Certificate
v
<PAGE> 7
REVOLVING CREDIT AGREEMENT
THIS REVOLVING CREDIT AGREEMENT made and entered into as of
December 29, 1999, 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"), and First
Union National Bank, a national banking association ("First Union"), and any
assignees of Wachovia, SunTrust, or First Union (Wachovia, SunTrust, and First
Union 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"), 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"), and FIRST UNION
NATIONAL BANK, in its capacity as Managing Agent for the Lenders and each
successor Managing Agent for such Lenders as may be appointed from time to time
pursuant to Article IX hereof (the "Managing Agent");
W I T N E S S E T H:
WHEREAS, Borrower has requested that the Lenders extend to
Borrower a $100,000,000 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, the Documentation Agent and the Managing 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 9.11.
"Advance" shall mean any principal amount advanced and
remaining outstanding at any time under the Loans, which Advances shall be made
or outstanding as Base Rate Advances or Eurodollar Advances, as the case may be.
<PAGE> 8
"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 indirectly, of the power to direct or cause the direction of the management
and policies of that Person.
"Agents" shall mean, collectively, the Administrative Agent,
the Documentation Agent and the Managing Agent.
"Agreement" shall mean this Revolving Credit Agreement, as
amended, modified, restated, or supplemented from time to time.
"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 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 1.25%
Less than or Equal to 3.0:1.0
and Greater than 2.5:1.0 1.15%
Less than or Equal to 2.5:1.0
and Greater than 2.0:1.0 1.05%
Less than or Equal to 2.0:1.0 1.00%
</TABLE>
The Applicable Margin shall become effective only upon the Borrower's election
to exercise the Term Out Option pursuant to Section 2.03(b) hereof. For purposes
of the foregoing, (i) the Applicable Margin for any fiscal quarter shall be
calculated based upon the ratio of Funded Debt to Consolidated EBITDA of
Borrower reported in the most recent Compliance Certificate delivered by the
Borrower to the Lenders; 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 Margin shall
be adjusted to 1.25% on the
2
<PAGE> 9
first day of the following fiscal quarter until such Compliance Certificate and
related financial statements are delivered.
"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 F.
"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 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.
"Borrower" shall mean ChoicePoint Inc., a Georgia corporation,
and its successors.
"Borrowing" shall mean the incurrence by Borrower under the
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.
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"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.
"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 December 29,
1999 on which the conditions set forth in Section 4.01 are satisfied or waived
in accordance with Section 10.02.
"Commitment" shall mean, for any Lender at any time, its
Syndicated Loan Commitment.
"Commitment Date" shall mean January 3, 2000 on which date the
Commitment of each Lender hereunder becomes effective and the initial Loans are
made or deemed to be made hereunder. No Borrowing shall be made prior to the
Commitment Date.
"Commitment Termination Date" shall mean the earlier of (i)
December 29, 2000, and (ii) the date on which all amounts outstanding under this
Agreement have been declared or have automatically become due and payable
pursuant to the provisions of Article VIII. Upon the Commitment Termination
Date, the Commitment of any Lender hereunder shall no longer be effective and
the Lenders shall have no further obligation to make Advances to the Borrower.
"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
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<PAGE> 11
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:
(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)
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<PAGE> 12
dividends and distributions on Capital Stock paid in cash during such fiscal
period by Borrower or any other Consolidated Company, but excluding any
repurchases of Capital Stock of Borrower.
"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 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.
"Contribution Agreements" shall mean, collectively, 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 Agents,
substantially in the form of Exhibit C, as the same may be amended, restated or
supplemented from time to time.
"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.
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"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 9.11 hereof.
"Dollar" and "U.S. Dollar" and the sign "$" shall mean lawful
money of the United States of America.
"Eligible Assignee" shall mean any of the following (i) a
commercial bank organized under the laws of the United States, or any State
thereof, and having total assets in excess of $100,000,000; (ii) a savings and
loan association or savings bank organized under the laws of the United States,
or any State thereof, and having total assets in excess of $100,000,000; (iii) a
commercial bank organized under the laws of any other country having total
assets in excess of $100,000,000, provided that such bank is acting through a
branch or agency located in the United States; (iv) a finance company, insurance
company or other financial institution, lender or fund (whether a corporation,
partnership or other entity) which is engaged in making, purchasing or otherwise
investing in commercial loans in the ordinary course of its business, and having
total assets in excess of at least $100,000,000; (v) any Lender or any Affiliate
of any Lender; or (vi) any other Person consented to by the Borrower and the
Administrative Agent, such consent not unreasonably to be withheld.
"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, 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.
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<PAGE> 14
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).
"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 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).
"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.
"Existing Credit Agreement" shall mean that certain Credit
Agreement dated as of August 5, 1997 by and among Borrower, Wachovia Bank, N.A.,
as administrative agent, SunTrust Bank, Atlanta, as documentation agent, and the
Lenders listed therein, as amended, restated, supplemented or otherwise modified
from time to time.
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"Existing Lenders" shall mean all lenders from time to time
party to the Existing Credit Agreement.
"Facility" or "Facilities" shall mean the credit facilities
made available to the Borrower pursuant to the Syndicated Loan Commitments.
"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 (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.
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<PAGE> 16
"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, ChoicePoint Services
Inc., a Georgia corporation, Osborn Group Inc., a Delaware corporation,
ChoicePoint Capital Corporation, a Delaware corporation, 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.
"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 B, 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 Agents, substantially in the form of Exhibit C, as the same may be amended,
restated or supplemented 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
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<PAGE> 17
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.
"Interest Period" shall mean, as to any Eurodollar Advances,
the interest period selected by Borrower pursuant to Section 3.03(a).
"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 July 31, 1997, 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 July 31,
1997, by and among Borrower as lessee, SunTrust Banks, Inc., as 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, First
Union, 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, 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
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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.
"Managing Agent" shall mean First Union National Bank, a
national banking association, and any successor Managing Agent appointed
pursuant to Section 9.11 hereof.
"Margin Regulations" shall mean 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 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
Commitment Termination Date or, if Borrower elects to exercise the Term Out
Option, 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) December 29,
2001, and (ii) the date on which all amounts outstanding under this Agreement
have been declared or have automatically become 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.
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"Notice of Borrowing" shall have the meaning provided in
Section 2.05(a).
"Notice of Continuation/Conversion" shall have the meaning
provided in Section 2.08(b).
"Obligations" shall mean all amounts owing to any 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.
"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 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.
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"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 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 Credit Documents or otherwise)
is greater than such Person's debts and other liabilities (including contingent,
unmatured 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.
"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.
"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.
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"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
Lender, the amount of such commitment set forth opposite such 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
or Section 3.05(f), 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 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.
"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).
"Term Out Option" shall have the meaning assigned to such term
in Section 2.03(b) hereof.
"Total Assets" shall mean the total assets of the Consolidated
Companies, determined in accordance with GAAP.
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"Type" of Borrowing shall mean a Borrowing consisting of Base
Rate Advances or Eurodollar Advances.
"Unused Commitment" shall mean, at any date, with respect to
each lender, an amount equal to its Syndicated Loan Commitment less the
outstanding principal amount of its Syndicated Loans then outstanding.
"Unused Fee" shall have the meaning assigned to such term in
Section 3.04(a).
"Upfront Fee" shall have the meaning assigned to such term in
Section 3.04(b).
"Year 2000 Compliant" shall have the meaning assigned to such
term in Section 5.24.
"Year 2000 Plan" shall have the meaning assigned to such term
in Section 5.24.
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.
SECTION 1.04. EXHIBITS AND SCHEDULES. All Exhibits and
Schedules attached hereto are by reference made a part hereof.
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ARTICLE II.
SYNDICATED LOANS
SECTION 2.01. DESCRIPTION OF REVOLVING CREDIT FACILITIES; USE
OF PROCEEDS.
(a) Subject to and upon the terms and conditions herein
set forth, the Lenders hereby establish in favor of Borrower a revolving credit
facility pursuant to which such Lenders agree to make Syndicated Loans to
Borrower in accordance with Section 2.02, provided, however, that (i) in no
event may the aggregate principal amount of all outstanding Syndicated 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 Lender exceed each Lender's Pro Rata Share of the
Syndicated Loan Commitments.
(b) The proceeds of the Syndicated Loans shall be used as
working capital and for other general corporate purposes of Borrower and its
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 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 Lender
severally agrees to make to Borrower, from time to time on and after the
Commitment Date, but prior to the Commitment Termination Date, Syndicated Loans
in an aggregate principal amount outstanding at any time not to exceed an amount
equal to such 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 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 Lender shall be evidenced by the
records of the Administrative Agent
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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 Commitment
Termination Date; provided, however, that on the Commitment Termination Date, so
long as no Default or Event of Default has occurred and is continuing, Borrower
shall have the right to defer payment of the balance of outstanding principal
amounts under the Syndicated Loan Commitments for a term of one (1) year (the
"Term Out Option"); provided that Borrower notifies the Administrative Agent of
its intent to exercise this Term Out Option at least thirty (30) days prior to
the Commitment Termination Date. Upon the Commitment Termination Date and at
anytime thereafter, no additional Borrowings shall be made and Borrower shall
not be entitled to reborrow any amounts paid with respect to the Loans extended
under this Agreement. The entire outstanding principal amount of the Loans,
together with all accrued and unpaid interest thereon and any other amounts
owing under this Agreement, shall be due and payable in full on the Maturity
Date. Except as otherwise provided in this Section 2.03(b), all continuation or
conversion of Advances made during the one (1) year term of deferment permitted
in connection with the Term Out Option shall be subject to the provisions and
limitations of this Article II.
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 Lenders, and (ii) any partial termination pursuant to
this Section 2.04 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. 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 2.05(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 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
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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 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
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 2.05 with respect to the
Syndicated Loan Commitments.
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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
2.05(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 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 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).
(d) Unless the Administrative Agent shall have been
notified by any Lender prior to the date of a 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 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 Lender from
its obligation to fund its Syndicated Loan Commitment hereunder or to prejudice
any rights which Borrower may have against any 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. 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 hereunder.
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SECTION 3.02. INTEREST.
(a) Until such time as the Borrower elects to exercise
the Term Out Option, 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 eighty-five one hundredths of one percent (0.85%); or
(b) In the event that Borrower elects to exercise the
Term Out Option, Borrower agrees to pay interest in respect of all unpaid
principal amounts of Syndicated Loans from the respective dates such principal
amounts were converted under the Term Out Option 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;
(c) 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,
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 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;
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(d) 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 shall be payable
quarterly in arrears on the last calendar day of each calendar quarter in each
year. Interest on all outstanding Eurodollar 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), conversion pursuant to the Term Out Option,
at maturity (whether by acceleration, notice of prepayment or otherwise) and,
after maturity, on demand; and
(e) 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 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.
(b) Notwithstanding paragraphs (a) 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
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(iv) No Interest Period with respect to the Loans
shall extend beyond the Commitment Termination Date; provided, however
that in the event Borrower elects to exercise the Term Out Option, such
Interest Periods may extend beyond the Commitment Termination Date but
shall not 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), an unused Fee (the "Unused Fee") for the
period commencing on the Commitment Date to and including the Commitment
Termination Date, computed at a rate equal to fifteen hundredths of one percent
(0.15%) per annum multiplied by the average daily amount of such Lender's Unused
Commitment. 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
Commitment Termination Date.
(b) On the Closing Date, 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
non-refundable and fully earned upfront fee (the "Upfront Fee") equal in amount
to one tenth of one percent (0.10%) of the Syndicated Loan Commitments of the
Lenders.
(c) On the Closing Date Borrower shall pay to the
Administrative Agent such fees for services as previously agreed in writing by
Borrower with the Administrative Agent.
SECTION 3.05. VOLUNTARY AND MANDATORY 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, 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.
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(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.
(d) Immediately upon receipt by Borrower or any Guarantor
of proceeds of any Asset Sale (including condemnation proceeds, but excluding
proceeds of Asset Sales permitted by Section 7.04 and any such sales or
dispositions which occur in Borrower's or any Guarantor's ordinary course of
business), Borrower shall prepay the Loans in an amount equal to all such
proceeds, net of commissions and other reasonable and customary transaction
costs, fees and expenses properly attributable to such transaction and payable
by Borrower in connection therewith (in each case, paid to non-Affiliates). Any
such prepayment shall be applied in accordance with Section 3.05(f) below.
(e) If Borrower or Guarantor issues equity or any debt
securities, then no later than the Business Day following the date of receipt of
the proceeds thereof, Borrower shall prepay the Loans in an amount equal to all
such proceeds, net of underwriting discounts and commissions and other
reasonable costs paid to non-Affiliates in connection therewith. Any such
prepayment shall be applied in accordance with Section 3.05(f) below.
(f) Any prepayments made by Borrower pursuant to Sections
3.05(d) or (e) above shall be applied as follows: first, to the reimbursable
expenses of the Agents then due and payable pursuant to any of the Credit
Documents; second, to all other fees and reimbursable expenses of the Lenders
then due and payable pursuant to any of the Credit Documents, pro rata to the
Lenders based on their respective Pro Rata Shares; third, to interest then due
and payable on Loans made to Borrower, pro rata to the Lenders based on their
respective Pro Rata Shares of the outstanding Loans; fourth, to the principal
balance of the Loans, until the same shall have been paid in full, pro rata to
the Lenders based on their respective Pro Rata Shares of the Syndicated Loan
Commitments. The Syndicated Loan Commitments shall be permanently reduced by the
amount of any prepayments made pursuant to clause fourth above.
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.
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(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 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.
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(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) 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 Eurodollar 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
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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 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
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Advances shall be imposed on any Lender or its applicable Lending
Office or the London interbank market;
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 Eurodollar 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 Eurodollar 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
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affecting such Lender or the London interbank market or such Lender's position
in such markets, 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
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discharge 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), 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 to
Borrower does not occur on the date specified therefor in a Notice of Borrowing
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 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 administrative 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 Unused
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.
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
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(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, 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 any 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
Administrative 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;
(b) the duly executed Syndicated Notes;
(c) the duly executed Guaranty Agreements;
(d) a duly executed certificate of Borrower, in
substantially the form of Exhibit D attached hereto and appropriately completed,
certifying that (i) the representations and
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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, 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 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;
(j) 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;
(k) the favorable opinion of Jones, Day, Reavis & Pogue,
counsel to the Credit Parties, substantially in the form of Exhibit E-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 E-2 addressed to the Agents and each of the Lenders;
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(l) 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 (excepting therefrom any made as of a prior date) 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 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.
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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
respective 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 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
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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 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.
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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 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 balance
sheet of the Consolidated Companies as of September 30, 1999, setting forth the
financial position of the Consolidated Companies, a copy of which has been
delivered to the Lenders, fairly presents, 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 "September 1999
Financial Statements"). Since September 30, 1999, 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.
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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 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
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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 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 September 1999 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.
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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.
SECTION 5.22. OUTSTANDING INDEBTEDNESS. Schedule 5.22 lists
all outstanding Indebtedness of the Consolidated Companies as of September 30,
1999, and since September 30, 1999, no additional material Indebtedness has been
incurred by the Consolidated Companies. 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.
SECTION 5.24. YEAR 2000 ISSUES. Prior to the Closing Date,
Borrower and each Consolidated Company have (i) reviewed the areas, sites and
systems within their businesses and operations which could be materially and
adversely affected by failure to become "Year 2000 Compliant" (that is, that
computer applications, imbedded microchips and other systems used by Borrower,
any Consolidated Company, or any material vendor of Borrower or a Consolidated
Company, will be able to properly recognize and perform date-sensitive functions
involving certain dates prior to and any date after December 31, 1999) and (ii)
developed, implemented and fully tested a detailed plan (the "Year 2000 Plan")
to assure that the Borrower and each
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Consolidated Company are Year 2000 Compliant in all respects (except where the
failure to be so does not or would not reasonably be expected to have a Material
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.
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
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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 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
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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 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);
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(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 G 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;
(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. (i) Promptly, and no later than ten (10)
Business Days after any Executive Officer of Borrower has notice or
knowledge thereof, (A) with respect to
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any Plan maintained 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, 304,
307, 4041(a)(2), 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 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 by any Consolidated
Company or ERISA Affiliate thereof which is subject to Title IV of
ERISA;
(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, received 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
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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 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;
(m) Complete Lien Search Results. As soon as available
and in any event within 30 days after the Closing Date, copies of all
UCC, judgment and tax lien search results for all of the Borrower's and
the Guarantors' locations in the United States other than field offices
at which is located tangible personal property (having an aggregate
value not in excess of $6,000,000);
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(n) Update of Schedule 7.01. As soon as available and in
any event within 30 days after the Closing Date, a revised Schedule
7.01 listing all Liens existing on the Closing Date, which shall not be
materially different from Schedule 7.01 provided by the Borrower on the
Closing Date and which shall automatically be deemed to amend Schedule
7.01 to this Credit Agreement;
(o) 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, 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 Administrative 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), and (i), all in form and substance
satisfactory to the Administrative 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.
SECTION 6.11. NOTICE OF YEAR 2000 PROBLEM. Borrower will
promptly notify the Administrative Agent in writing immediately upon determining
that any computer application or system which is material to the operations of
the Borrower or any Consolidated Company or any material vendor or supplier of
Borrower or a Consolidated Company is not Year 2000 Complaint, if and to the
extent that such condition has had, or could reasonably be expected to have, a
Material 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 or any Loan 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 (A) securing an
aggregate not in excess of $5,400,000 and disclosed on Schedule 7.01,
(B) securing obligations of CDB/Infotek owning to the Borrower or (C)
securing an amount not to exceed $250,000 in the aggregate;
(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 refinance 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;
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(h) rights in property reserved or vested in any governmental
authority which do not materially impair the use of such property;
(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 granted in favor of the Borrower or any Guarantor
securing intercompany indebtedness owed by another Consolidated
Company;
(l) Liens (other than those permitted by paragraphs (b)
through (k) 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; and
(m) Liens arising under or in connection with this Agreement.
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 owed 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;
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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 with copies provided to each Lender (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 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 Consolidated Company;
(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
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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 such detail and using such form of
presentation of historical and forecasted financial information 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;
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(g) Loans and advances to officers and employees of the
Consolidated Companies made in the ordinary course of business,
including without limitation, loans to executives for the purchase of
stock of the Borrower pursuant to a program established by the Board of
Directors or a committee thereof from time to time in an amount not to
exceed $15,000,000;
(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
(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 7.06 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 7.07. 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.
SECTION 7.08. 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 requirements 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 by a Consolidated
Company or a Plan subject to Title IV of ERISA of any of its ERISA Affiliates:
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(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
(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 7.09. 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 and the prohibitions and restrictions contained in
the Existing Credit Agreement.
SECTION 7.10. CHANGES IN BUSINESS. Enter into any business
which is substantially different from that presently conducted by the
Consolidated Companies taken as a whole, 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) furnishing access to motor vehicles
reports, (3) maintaining a database of claims histories, (4) providing
pre-employment background investigations, pre-employment and regulatory
compliance drug testing services and public record information to other
corporate and government organizations, (5) providing direct marketing services
to corporations, and (6) providing people and shareholder locator services to
corporations).
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SECTION 7.11. LIMITATION ON PAYMENT RESTRICTIONS AFFECTING
CONSOLIDATED COMPANIES. Except for any applicable consensual encumbrances or
restrictions under the Existing Credit Agreement, 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.
SECTION 7.12. 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 7.13. CHANGES IN FISCAL YEAR. Change the calculation
of the fiscal year of the Borrower.
SECTION 7.14. AMENDMENTS AND MODIFICATIONS TO EXISTING CREDIT
AGREEMENT. Amend or otherwise modify the Existing Credit Agreement unless, to
the extent relevant hereto, this Agreement is concurrently amended or modified
with substantially the same terms and provisions.
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 7.08 and,
if capable of being
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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 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.
(a) 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;
(b) Any Event of Default (as defined therein) under the
Existing Credit Agreement has occurred and is continuing;
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
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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;
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
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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 any 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 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 Credit Documents.
ARTICLE IX.
THE ADMINISTRATIVE AGENT, THE DOCUMENTATION AGENT AND THE MANAGING 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.
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SECTION 9.02. APPOINTMENT OF DOCUMENTATION AGENT. Each Lender
hereby designates SunTrust Bank, Atlanta 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 acceptance 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. APPOINTMENT OF MANAGING AGENT. Each Lender
hereby designates First Union National Bank as Managing 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 acceptance of a Note shall be
deemed irrevocably to authorize, the Managing 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 Managing Agent by the terms hereof
and thereof and such other powers as are reasonably incidental thereto. The
Managing Agent may perform any of its duties hereunder by or through its agents
or employees.
SECTION 9.04. 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, 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 9.05. LACK OF RELIANCE ON THE AGENTS.
(a) Independently and without reliance upon any 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, no Agent shall have any duty or responsibility, either initially
or on a continuing basis, to provide
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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) No 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 9.06. CERTAIN RIGHTS OF THE AGENTS. If any 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 any Agent as a result of such Agent's acting or refraining
from acting hereunder in accordance with the instructions of the Required
Lenders.
SECTION 9.07. 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.
SECTION 9.08. INDEMNIFICATION OF THE AGENTS. To the extent any
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 the 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 any Agent for any
portion of such liabilities, obligations, losses,
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damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from such Agent's gross negligence or willful misconduct.
SECTION 9.09. 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 9.10. 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 9.11. 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, no Agent may resign
or be removed until a successor Administrative Agent, Documentation Agent or
Managing 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, Documentation
Agent or Managing 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 successor
Administrative Agent, Documentation Agent, or Managing 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, Documentation Agent, or
Managing 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.
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(b) Upon the acceptance of any appointment as the
Administrative Agent, the Documentation Agent, or the Managing 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, Documentation Agent,
or Managing 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 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
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<PAGE> 67
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 required 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 all 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 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
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(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.
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
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<PAGE> 69
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 integrals 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), (v) the
assignee Lender must be an Eligible Assignee, and (vi) 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 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
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<PAGE> 70
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) such Lender's obligations under this Agreement shall
remain unchanged, (ii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations, (iii) 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 (iv) 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. No Lender shall be entitled to create in favor
of any Participant, in the participation agreement pursuant to which such
Participant's participating interest shall be created or otherwise, any right to
vote on, consent to or approve any matter relating to this Agreement or any
other Credit Document except for those matters specified in clauses (i) through
(viii) of the proviso to Section 10.02.
(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 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.
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<PAGE> 71
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 ITS GENERAL
COUNSEL (PRESENTLY MICHAEL DE JANES), 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 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.
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<PAGE> 72
(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 Administrative Agent pursuant to Section 10.01 or, in the case of
the Lenders, shall have given to the Administrative 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 Commitment Termination Date and, in the
event Borrower elects to exercises its Term Out Option pursuant to Section
2.03(b), 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 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.
66
<PAGE> 73
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.
67
<PAGE> 74
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: Mr. Richard M. Koze
Attest:
Telephone: (770) 752-6010 ----------------------------
Telecopy: (770) 752-6247 Name:
Title:
[CORPORATE SEAL]
[SIGNATURE PAGE TO REVOLVING CREDIT AGREEMENT]
<PAGE> 75
Address for Notices: WACHOVIA BANK, N.A.,
AS ADMINISTRATIVE AGENT
191 Peachtree St., N.E. By:
Atlanta, GA 30303 --------------------------------
Name: Aly Schattner
Title: Assistant Vice President
Attn: Ms. Aly Schattner
Telephone No.: (404) 332-1043
Telecopy No.: (404) 332-5016
Payment Office:
191 Peachtree St., N.E.
Atlanta, Georgia 30303
[SIGNATURE PAGE FOR REVOLVING CREDIT AGREEMENT]
<PAGE> 76
Address for Notices: SUNTRUST BANK, ATLANTA,
AS DOCUMENTATION AGENT
303 Peachtree Street, 4th Floor
MC 1909
Atlanta, Georgia 30308 By:
Attn: Mr. Dan Komitor --------------------------------
Name:
Title:
Telephone No.: (404) 724-3889
Telecopy No.: (404) 588-8833
Payment Office:
303 Peachtree Street
Atlanta, Georgia 30308
[SIGNATURE PAGE FOR REVOLVING CREDIT AGREEMENT]
<PAGE> 77
Address for Notices: FIRST UNION NATIONAL BANK,
AS MANAGING AGENT
999 Peachtree St.
Atlanta, Georgia 30309 By:
Mr. Frank Tart --------------------------------
Name:
Title:
Telephone No.: (404) 225-4258
Telecopy No.: (404) 225-4255
Payment Office:
999 Peachtree St.
Atlanta, Georgia 30309
[SIGNATURE PAGE FOR REVOLVING CREDIT AGREEMENT]
<PAGE> 78
Address for Notices: WACHOVIA BANK, N.A.
191 Peachtree St., N.E.
Atlanta, Georgia 30303 By:
Attention: Ms. Aly Schattner --------------------------------
Name: Aly Schattner
Title: Assistant Vice President
Telephone No.: (404) 332-1043
Telecopy No. (404) 332-5016
Lending Office and Payment Office:
191 Peachtree St., N.E.
Atlanta, Georgia 30303
SYNDICATED LOAN COMMITMENT: $33,333,333.34
PRO RATA SHARE OF
SYNDICATED LOAN COMMITMENTS: 33 1/3%
[SIGNATURE PAGE FOR REVOLVING CREDIT AGREEMENT]
<PAGE> 79
Address for Notices: SUNTRUST BANK, ATLANTA
303 Peachtree Street, 4th Floor
MC 1909 By:
Atlanta, Georgia 30308 -------------------------------
Attention: Mr. Dan Komitor Name:
Title:
Telephone No.: (404) 724-3889
Telecopy No.: (404) 588-8833
Lending Office and Payment Office:
303 Peachtree Street
Atlanta, Georgia 30308
SYNDICATED LOAN COMMITMENT: $33,333,333.33
PRO RATA SHARE OF
SYNDICATED LOAN COMMITMENTS: 33 1/3%
[SIGNATURE PAGE FOR REVOLVING CREDIT AGREEMENT]
<PAGE> 80
Address for Notices: FIRST UNION NATIONAL BANK
999 Peachtree St.
Atlanta, Georgia 30309 By:
Attention: Mr. Frank Tart -------------------------------
Name:
Title:
Telephone No.: (404) 225-4258
Telecopy No.: (404) 225-4255
Lending Office and Payment Office:
999 Peachtree St.
Atlanta, Georgia 30309
SYNDICATED LOAN COMMITMENT: $33,333,333.33
PRO RATA SHARE OF
SYNDICATED LOAN COMMITMENTS: 33 1/3%
[SIGNATURE PAGE FOR REVOLVING CREDIT AGREEMENT]
<PAGE> 1
EXHIBIT 10.15
FIRST AMENDMENT
TO
MASTER AGREEMENT
This First Amendment to Master Agreement (this "Amendment"), dated as
of September 30, 1998, is entered into among CHOICEPOINT INC., a Georgia
corporation, as Lessee and Guarantor; SUNTRUST BANKS, INC., a Georgia
corporation, as Lessor; and SUNTRUST BANK, ATLANTA, a Georgia banking
corporation, as Agent.
W I T N E S S E T H:
WHEREAS, the Lessee, the Lessor and the Agent have entered into that
certain Master Agreement dated as of July 31, 1997, as amended (the "Master
Agreement") (capitalized terms used herein without definition shall have the
meanings ascribed to them in Appendix A to the Master Agreement); and
WHEREAS, the parties hereto desire to enter into this Amendment in
order to amend the Master Agreement with respect to the matters provided for in
this Amendment.
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
terms and conditions herein contained, and for other good and valuable
consideration the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
Section 1. Modifications to Master Agreement. The parties hereto
amend the Master Agreement as follows:
1.1 Section 2.2(c) of the Master Agreement is amended by
increasing the dollar amount in clause (y) thereof from $22,000,000 to
$24,000,000.
1.2 Schedule 2.2 to the Master Agreement is amended by
increasing the amount of the Lessor Commitment set forth therein from
$22,000,000 to $24,000,000 and to read in its entirety in the form attached to
this Amendment.
Section 2. Representations and Warranties. Lessee represents and
warrants to each of the other parties hereto that each of the representations
and warranties of Lessee contained in the Master Agreement and in each other
Operative Document is true and correct in all material respects on the Effective
Date, with the same effect as
<PAGE> 2
though made on and as of the Effective Date and, for purposes of this paragraph,
all references in such representations and warranties to the "Operative
Documents" shall be deemed to include this Amendment.
Section 3. Effectiveness. Subject to the execution and delivery
of this Amendment by all parties hereto, this Amendment shall be deemed
effective on the date set forth in the preamble to this Amendment (the
"Effective Date").
Section 4. GOVERNING LAW. THIS AMENDMENT HAS BEEN DELIVERED IN,
AND SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF GEORGIA APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED
ENTIRELY WITHIN SUCH STATE, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE.
Section 5. References. All references to the words "Master
Agreement" shall hereinafter refer to the Master Agreement as amended by this
Amendment.
Section 6. Counterparts. This Amendment may be executed in any
number of counterparts and by different parties hereto on separate counterparts,
each executed counterpart constituting an original but all together one
agreement.
<PAGE> 3
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment
to Master Agreement to be duly executed by their respective officers thereunto
duly authorized as of the day and year first above written.
CHOICEPOINT INC., as the Lessee
By:
------------------------------------
Name Printed:
--------------------------
Title:
---------------------------------
<PAGE> 4
SUNTRUST BANKS, INC., as Lessor
By:
------------------------------------
Name Printed:
--------------------------
Title:
---------------------------------
<PAGE> 5
SUNTRUST BANK, ATLANTA, as Agent
By:
------------------------------------
Name Printed:
--------------------------
Title:
---------------------------------
By:
------------------------------------
Name Printed:
--------------------------
Title:
---------------------------------
<PAGE> 6
AMENDED SCHEDULE 2.2
PAYMENT INSTRUCTIONS AND
AMOUNT OF EACH FUNDING PARTY'S COMMITMENT
Lessor Commitment Percentage: 100%
Lender Commitment Percentage:
zero
Lessor Commitment: $24,000,000
Lender Commitment: zero
<PAGE> 1
EXHIBIT 10.16
SECOND AMENDMENT
TO
MASTER AGREEMENT
This Second Amendment to Master Agreement (this "Amendment"), dated as
of December 30, 1999, is entered into among CHOICEPOINT INC., a Georgia
corporation, as Lessee and Guarantor; SUNTRUST BANKS, INC., a Georgia
corporation, as Lessor; and SUNTRUST BANK, ATLANTA, a Georgia banking
corporation, as Agent.
W I T N E S S E T H:
WHEREAS, the Lessee, the Lessor and the Agent have entered into that
certain Master Agreement dated as of July 31, 1997, as amended (the "Master
Agreement") (capitalized terms used herein without definition shall have the
meanings ascribed to them in Appendix A to the Master Agreement); and
WHEREAS, the parties hereto desire to enter into this Amendment in
order to amend the Master Agreement with respect to the matters provided for in
this Amendment.
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
terms and conditions herein contained, and for other good and valuable
consideration the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
Section 1. Modifications to Master Agreement. The parties hereto amend
the Master Agreement as follows:
1.1 Section 2.2(c) of the Master Agreement is amended by
increasing the dollar amount in clause (y) thereof from $24,000,000 to
$26,700,000. The additional amount of $2,700,000 shall be available only to
fund the acquisition of the Land described on Schedule 1 to this Amendment (the
"1999 Land") and the Lessee, the Lessor and the Agent agree that the 1999 Land
shall not constitute a Construction Land Interest.
1.2 Schedule 2.2 to the Master Agreement is amended by
increasing the amount of the Lessor Commitment set forth therein from
$24,000,000 to $26,700,000 and to read in its entirety in the form attached to
this Amendment.
<PAGE> 2
1.3 The definition of "Funding Termination Date" contained in
Appendix A to the Master Agreement is amended to read as follows: '"Funding
Termination Date" means December 30, 1999.'
1.4 Appendix A to the Master Agreement is further amended by
inserting therein in the appropriate alphabetical position the following
definition: '"1999 Land" means the Land described in Schedule 1 to the
Amendment dated as of December 30, 1999 to the Master Agreement.'
Section 2. Representations and Warranties. Lessee represents and
warrants to each of the other parties hereto that each of the representations
and warranties of Lessee contained in the Master Agreement and in each other
Operative Document is true and correct in all material respects on the
Effective Date, with the same effect as though made on and as of the Effective
Date and, for purposes of this paragraph, all references in such
representations and warranties to the "Operative Documents" shall be deemed to
include this Amendment (except to the extent such representations and
warranties expressly refer to an earlier date, in which case they shall be true
and correct as of such earlier date).
Section 3. Effectiveness. Subject to the execution and delivery of
this Amendment by all parties hereto, this Amendment shall be deemed effective
on the date set forth in the preamble to this Amendment (the "Effective Date").
Section 4. GOVERNING LAW. THIS AMENDMENT HAS BEEN DELIVERED IN, AND
SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF GEORGIA APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED
ENTIRELY WITHIN SUCH STATE, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE.
Section 5. References. All references to the words "Master Agreement"
shall hereinafter refer to the Master Agreement as amended by this Amendment.
Section 6. Counterparts. This Amendment may be executed in any number
of counterparts and by different parties hereto on separate counterparts, each
executed counterpart constituting an original but all together one agreement.
2
<PAGE> 3
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
Master Agreement to be duly executed by their respective officers thereunto
duly authorized as of the day and year first above written.
CHOICEPOINT INC., as the Lessee
By:
----------------------------
Name Printed:
Title:
S-1
<PAGE> 4
SUNTRUST BANKS, INC., as Lessor
By:
----------------------------
Name Printed:
------------------
Title:
-------------------------
S-2
<PAGE> 5
SUNTRUST BANK, ATLANTA, as Agent
By:
-----------------------------
Name Printed:
-------------------
Title:
--------------------------
By:
-----------------------------
Name Printed:
-------------------
Title:
--------------------------
S-3
<PAGE> 6
AMENDED SCHEDULE 2.2
PAYMENT INSTRUCTIONS AND
AMOUNT OF EACH FUNDING PARTY'S COMMITMENT
Lessor Commitment Percentage: 100%
Lender Commitment Percentage: zero
Lessor Commitment: $26,700,000
Lender Commitment: zero
<PAGE> 1
EXHIBIT 10.17
Prepared by and after recording,
return to:
Rex A. Palmer, Esq.
Mayer, Brown & Platt
190 S. LaSalle Street
Chicago, IL 60603
FIRST AMENDMENT TO
GEORGIA LEASE SUPPLEMENT NO. ONE AND SHORT FORM
THIS GEORGIA LEASE SUPPLEMENT NO. ONE (this "Amendment") dated as of
September __, 1998 between SUNTRUST BANKS, INC., with an address at 25 Park
Place, Atlanta, Georgia 30303, as the lessor (the "Lessor"), and CHOICEPOINT
INC., with an address of 1000 Alderman Drive, Alpharetta, Georgia 30005, a
Georgia corporation, as lessee (the "Lessee").
WHEREAS, Lessor and Lessee entered into a Lease Supplement No. One and
Short Form (the "Original Lease Supplement"), dated as of July 31, 1997 which
was recorded on August 4, 1997 in Deed Book 22914 at Page 15 in the Fulton
County, Georgia Records and which related to the real estate described on
Exhibit A hereto;
WHEREAS, the Lessor and Lessee wish to amend the Lease Supplement in
certain respects;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Section 3.2 of the Lease Supplement and Article XI of the Lease are
amended by increasing the maximum principal amount of the Lessee Liabilities to
Twenty-Four Million Dollars ($24,000,000).
2. Exhibit B to the Lease Supplement shall read as does Exhibit B to
this Amendment.
<PAGE> 2
3. Except as specifically modified hereby, the terms and provisions of
the Lease Supplement are hereby ratified and confirmed and remain in full force
and effect. The terms of the Lease (as amended by the Lease Supplement and this
Amendment) are by this reference incorporated herein and made a part hereof.
4. THIS LEASE SUPPLEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAW OF THE STATE OF GEORGIA.
5. This Amendment may be executed in any number of counterparts and by
each of the parties hereto in separate counterparts, all such counterparts
together constituting but one and the same instrument.
<PAGE> 3
IN WITNESS WHEREOF, each of the parties hereto has caused this
Amendment to be duly executed by an officer thereunto duly authorized as of the
date and year first above written.
Signed, sealed and delivered SUNTRUST BANKS, INC., as the
before me this day of Lessor
, 1998.
By:
--------------------------
Unofficial Witness Name:
------------------------
Title:
-----------------------
Notary Public
[NOTARIAL SEAL]
My Commission Expires:
- -----------------------
<PAGE> 4
Signed, sealed and delivered CHOICEPOINT INC., as the
before me this __ day of Lessee
______________, 1998.
By:
--------------------------
Unofficial Witness Name:
------------------------
Title:
-----------------------
Notary Public
[NOTARIAL SEAL]
My Commission Expires:
- ----------------------
<PAGE> 5
EXHIBIT A
ALL THAT TRACT OF LAND lying and being in Land Lots 1046, 1047, 1108 and 1109 of
the 2nd District, 1st Section, City of Alpharetta, Fulton County, and being more
particularly described as follows:
Beginning at an iron pin set on the intersection of the northerly right-of-way
of Windward Parkway (135' R/W) and the westerly right-of-way of Alderman Drive
(R/W Varies), THENCE along said right-of-way of Windward Parkway, the following
two (2) courses and distances: South 53 degrees 55 minutes 56 seconds West for a
distance of 559.08 feet to a point, and along a curve to the right having a
radius of 3178.45 feet and an arc length of 322.12 feet, being subtended by a
chord of South 56 degrees 50 minutes 08 seconds West for a distance of 321.92
feet to a point, THENCE leaving said right-of-way and running North 33 degrees
41 minutes 39 seconds West for a distance of 101.93 feet to a point, THENCE
North 44 degrees 10 minutes 01 seconds West for a distance of 137.48 feet to a
point, THENCE North 35 degrees 53 minutes 57 seconds West for a distance of
148.57 feet to a point, THENCE North 38 degrees 42 minutes 59 seconds West for a
distance of 83.51 feet to a point, THENCE North 34 degrees 56 minutes 47 seconds
West for a distance of 463.99 feet to a point, THENCE North 26 degrees 26
minutes 34 seconds West for a distance of 218.78 feet to a point set, THENCE
North 14 degrees 29 minutes 25 seconds West for a distance of 114.90 feet to a
point, THENCE North 15 degrees 45 minutes 02 seconds West for a distance of
636.39 feet to a point, THENCE North 21 degrees 22 minutes 20 seconds West for a
distance of 246.03 feet to a point, THENCE North 86 degrees 40 minutes 35
seconds East for a distance of 691.19 feet to an iron pin found on the westerly
right-of-way of Alderman Drive, thence along Alderman Drive the following
courses and distances: Along a curve to the left having a radius of 524.50 feet
and an arc length of 438.64 feet, being subtended by a chord of South 37 degrees
16 minutes 26 seconds East for a distance of 425.97 feet to a point, THENCE
South 61 degrees 13 minutes 57 seconds East for a distance of 186.24 feet to a
point, THENCE along a curve to the right having a radius of 475.00 feet and an
arc length of 93.22 feet, being subtended by a chord of South 55 degrees 36
minutes 58 seconds East for a distance of 93.07 feet to a point, THENCE South 50
degrees 00 minutes 00 seconds East for a distance of 195.25 feet to a point,
THENCE along a curve to the right having a radius of 475.50 feet and an arc
length of 365.79 feet, being subtended by a chord of South 27 degrees 57 minutes
44 seconds East for a distance of 356.83 feet to a point, THENCE South 05
degrees 55 minutes 28 seconds East for a distance of 117.60 feet to a point,
THENCE along a curve to the left having a radius of 524.50 feet and an arc
length of 275.95 feet, being subtended by a chord of South 20 degrees 59 minutes
46 seconds East for a distance of 272.78 feet to a point, THENCE South 36
degrees 04 minutes 04 seconds East for a distance of 104.10 feet to an iron pin
set, THENCE along a curve to the right having a radius of 39.50 feet and an arc
length of 62.05 feet, being subtended by a chord of South 08 degrees 55 minutes
56 seconds West for a distance of 55.85 feet to an iron pin set and the Point of
Beginning.
Together with and subject to covenants, easements, and restrictions of record.
Said property contains 40.8247 acres more or less.
<PAGE> 6
The above-described property is shown on and described according to that certain
ALTA/ACSM Survey prepared by Bailey Engineering Associates, Inc. dated June 26,
1997, last revised July 29, 1997.
LEASE
AGREEMENT
<PAGE> 7
EXHIBIT B
Permitted Exceptions
1. State and County taxes subsequent to the year 1997 and the lien of
additional real property taxes by reason of amended billing of taxes
for prior years, not yet due and payable and City of Alpharetta taxes
subsequent to the year 1996, not yet due and payable.
2. Declaration of Covenants, Conditions and Restrictions for Windward
Business Center Association recorded in Deed Book 8700, page 362,
aforesaid records; with Re-Recording of Declaration of Covenants,
Conditions and Restrictions for Windward Business Center Associates
being recorded in Deed Book 8750, page 82, aforesaid records; as
amended by that certain Amendment Withdrawing Certain Real Property
From the Declaration of Covenants, Conditions and Restrictions for
Windward Business Center Association by Windward Properties, Inc.,
dated October 4, 1984, recorded in Deed Book 9197, page 242, aforesaid
records; as further amended by that certain Amendment Withdrawing
Certain Real Property From the Declaration of Covenants, Conditions and
Restrictions for Windward Business Center Association by Windward
Properties, Inc., dated October 4, 1984, recorded in Deed Book 9373,
page 268, aforesaid records; as further amended by Seventh Amendment to
the Declaration of Covenants, Conditions and Restrictions for Windward
Business Center Association by Windward Properties, Inc., dated
December 1, 1987, recorded in Deed Book 11219, page 319, aforesaid
records. This instrument is listed under "References" on the plat of
survey hereinafter identified.
3. Reservation and Grant of Easements and Agreement by and between
Windward Properties, Inc. and Digital Communications Associates, Inc.,
dated October 25, 1983, recorded in Deed Book 8700, page 411, aforesaid
records, and as shown on the plat of survey hereinafter identified.
4. Right-of-Way Easement from Digital Communications Associates, Inc. to
Sawnee Electric Membership Corporation, dated January 13, 1984,
recorded in Deed Book 8827, page 125, aforesaid records. This easement
is listed under "References" on the plat of survey hereinafter
identified.
5. Plat of survey prepared for Equifax, Inc., SunTrust Banks, Inc.,
SunTrust Bank, Atlanta, as Agent, Choicepoint, Inc. and Chicago Title
Insurance Company, and their respective successors and/or assigns,
prepared by Seaton G. Shepherd, Georgia Registered Land Surveyor No.
2136, Grant Shepherd & Associates Surveying Planning, dated June 27,
1997, last revised July 29, 1997, reveals the following:
a. sixty-five-foot building setback lines along Windward Parkway
and Alderman Drive; fifteen-foot building setback lines along
the northern and western lines of subject property;
<PAGE> 8
b. twenty-foot and thirty-foot storm and sanitary sewer easements
traversing the western, southern and eastern portions of
subject property (being granted pursuant to the instrument
recorded in Deed Book 8700, page 441, aforesaid records);
c. a portion of subject property lies within the 100-year flood
plain limit;
d. creek traversing the southern portion of subject property; and
e. electrical, gas, telephone, water and drainage facilities
located on various portions of subject property and serving
the same.
6. Rights of upper and lower riparian owners in and to the waters of
creeks and branches crossing or adjoining subject property and the
natural flow thereof, free from diminution or pollution.
7. Rights of tenants, as tenants only, under unrecorded commercial leases.
<PAGE> 1
EXHIBIT 10.18
Prepared by and after recording, return to:
Rex A. Palmer, Esq.
Mayer, Brown & Platt
190 S. LaSalle Street
Chicago, IL 60603
- -------------------------------------------------------------------------------
SECOND AMENDMENT TO
GEORGIA LEASE SUPPLEMENT NO. ONE AND SHORT FORM
THIS SECOND AMENDMENT TO GEORGIA LEASE SUPPLEMENT NO. ONE (this
"Amendment") dated as of December 30, 1999 between SUNTRUST BANKS, INC., with
an address at 303 Peachtree Street, Atlanta, Georgia 30308, as the lessor (the
"Lessor"), and CHOICEPOINT INC., with an address of 1000 Alderman Drive,
Alpharetta, Georgia 30005, a Georgia corporation, as lessee (the "Lessee").
WHEREAS, Lessor and Lessee entered into a Lease Supplement No. One and
Short Form as heretofore amended, (the "Original Lease Supplement"), dated as
of July 31, 1997 which was recorded on August 4, 1997 in Deed Book 22914 at
Page 15 in the Fulton County, Georgia Records and which related to the real
estate described on Exhibit A hereto and which has been amended by a First
Amendment dated September 30, 1998, which was recorded on October 1, 1998 in
Deed Book 25269 at Page 279;
WHEREAS, the Lessor and Lessee wish to amend the Lease Supplement in
certain respects;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Section 3.2 of the Lease Supplement and Article XI of the Lease are
amended by increasing the maximum principal amount of the Lessee Liabilities to
Twenty-Six Million Seven Hundred Thousand and No/100 Dollars ($26,700,000.00).
<PAGE> 2
2. Exhibit A to the Lease Supplement is amended to add the property
described on Exhibit B to this Amendment (the "1999 Land").
3. The 1999 Land shall be included within the meaning of the term
"Subject Property" as such term is used in the Original Lease Supplement and in
the other Operative Documents (defined for purposes hereof as in the Original
Lease Supplement). The 1999 Land shall be a Leased Property under the Lease and
the other Operative Documents (defined for purposes hereof as in the Original
Lease Supplement). Notwithstanding the provisions of Section 14.1 and 14.6 of
the Lease that any exercise by the Lessee of the Purchase Option or the
Remarketing Option thereunder must be made with respect to all of the Leased
Properties, the Lessee may exercise the Purchase Option or the Remarketing
Option with respect to the 1999 Land in accordance with the provisions of the
Lease separately from its exercise of either such option with respect to the
other Leased Property or Leased Properties under the Lease and the Lessee may
exercise a different option with respect to the 1999 Land than it exercises
with respect to the other Leased Property or Leased Properties.
4. Except as specifically modified hereby, the terms and provisions of
the Lease and the Lease Supplement are hereby ratified and confirmed and remain
in full force and effect. The terms of the Lease (as amended by the Lease
Supplement and this Amendment) are by this reference incorporated herein and
made a part hereof.
5. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAW OF THE STATE OF GEORGIA.
6. This Amendment may be executed in any number of counterparts and by
each of the parties hereto in separate counterparts, all such counterparts
together constituting but one and the same instrument.
<PAGE> 3
IN WITNESS WHEREOF, each of the parties hereto has caused this
Amendment to be duly executed by an officer thereunto duly authorized as of the
date and year first above written.
Signed, sealed and delivered SUNTRUST BANKS, INC., as the
before me this ______ day of Lessor
_________________ , 1999.
By:
Unofficial Witness Name:
Title:
Notary Public
[NOTARIAL SEAL]
My Commission Expires:
<PAGE> 4
Signed, sealed and delivered CHOICEPOINT INC., as the
before me this ______ day of Lessee
_________________ , 1999.
By:
Name:
Unofficial Witness Title:
Notary Public
[NOTARIAL SEAL]
My Commission Expires:
- ---------------------------------------
<PAGE> 5
EXHIBIT A
ALL THAT TRACT OF LAND lying and being in Land Lots 1046, 1047, 1108 and 1109
of the 2nd District, 1st Section, City of Alpharetta, Fulton County, and being
more particularly described as follows:
Beginning at an iron pin set on the intersection of the northerly right-of-way
of Windward Parkway (135' R/W) and the westerly right-of-way of Alderman Drive
(R/W Varies), THENCE along said right-of-way of Windward Parkway, the following
two (2) courses and distances: South 53 degrees 55 minutes 56 seconds West for
a distance of 559.08 feet to a point, and along a curve to the right having a
radius of 3178.45 feet and an arc length of 322.12 feet, being subtended by a
chord of South 56 degrees 50 minutes 08 seconds West for a distance of 321.92
feet to a point, THENCE leaving said right-of-way and running North 33 degrees
41 minutes 39 seconds West for a distance of 101.93 feet to a point, THENCE
North 44 degrees 10 minutes 01 seconds West for a distance of 137.48 feet to a
point, THENCE North 35 degrees 53 minutes 57 seconds West for a distance of
148.57 feet to a point, THENCE North 38 degrees 42 minutes 59 seconds West for
a distance of 83.51 feet to a point, THENCE North 34 degrees 56 minutes 47
seconds West for a distance of 463.99 feet to a point, THENCE North 26 degrees
26 minutes 34 seconds West for a distance of 218.78 feet to a point set, THENCE
North 14 degrees 29 minutes 25 seconds West for a distance of 114.90 feet to a
point, THENCE North 15 degrees 45 minutes 02 seconds West for a distance of
636.39 feet to a point, THENCE North 21 degrees 22 minutes 20 seconds West for
a distance of 246.03 feet to a point, THENCE North 86 degrees 40 minutes 35
seconds East for a distance of 691.19 feet to an iron pin found on the westerly
right-of-way of Alderman Drive, thence along Alderman Drive the following
courses and distances: Along a curve to the left having a radius of 524.50 feet
and an arc length of 438.64 feet, being subtended by a chord of South 37
degrees 16 minutes 26 seconds East for a distance of 425.97 feet to a point,
THENCE South 61 degrees 13 minutes 57 seconds East for a distance of 186.24
feet to a point, THENCE along a curve to the right having a radius of 475.00
feet and an arc length of 93.22 feet, being subtended by a chord of South 55
degrees 36 minutes 58 seconds East for a distance of 93.07 feet to a point,
THENCE South 50 degrees 00 minutes 00 seconds East for a distance of 195.25
feet to a point, THENCE along a curve to the right having a radius of 475.50
feet and an arc length of 365.79 feet, being subtended by a chord of South 27
degrees 57 minutes 44 seconds East for a distance of 356.83 feet to a point,
THENCE South 05 degrees 55 minutes 28 seconds East for a distance of 117.60
feet to a point, THENCE along a curve to the left having a radius of 524.50
feet and an arc length of 275.95 feet, being subtended by a chord of South 20
degrees 59 minutes 46 seconds East for a distance of 272.78 feet to a point,
THENCE South 36 degrees 04 minutes 04 seconds East for a distance of 104.10
feet to an iron pin set, THENCE along a curve to the right having a radius of
39.50 feet and an arc length of 62.05 feet, being subtended by a chord of South
08 degrees 55 minutes 56 seconds West for a distance of 55.85 feet to an iron
pin set and the Point of Beginning.
Together with and subject to covenants, easements, and restrictions of record.
Said property contains 40.8247 acres more or less.
<PAGE> 6
The above-described property is shown on and described according to that
certain ALTA/ACSM Survey prepared by Bailey Engineering Associates, Inc. dated
June 26, 1997, last revised July 29, 1997.
<PAGE> 1
EXHIBIT 13
Contents
a more intelligent way 1
letter to shareholders 8
operational review 12
financial results 17
shareholder information 39
Financial Highlights
ChoicePoint
<TABLE>
<CAPTION>
(dollars in thousands) 1999 1998 1997 1996 1995
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Operating revenue* $430,143 $406,475 $417,321 $366,481 $328,990
Operating income
before unusual items and
restructuring provision 79,671 65,166 52,286 47,611 41,078
Operating income 78,088 61,408 46,077 47,611 31,928
Net income 39,389 35,419 28,944 23,280 14,865
- -------------------------------------------------------------------------------------------------
Total assets $532,872 $534,199 $359,971 $301,824 $200,779
Long-term debt
less current maturities 187,195 191,697 95,457 1,051 --
Total shareholders' equity 202,911 159,572 127,745 196,327 104,641
EBITDA** 118,514 101,247 87,753 66,265 45,249
Employees (FTE) 3,600 3,500 3,700 4,600 4,400
=================================================================================================
</TABLE>
*Consolidated operating revenue is impacted by divestitures in 1997 and 1998
and by acquisitions. See Management's Discussion and Analysis of Financial
Results for further detail.
**EBITDA represents earnings before interest, taxes, depreciation and
amortization.
ChoicePoint is a leading provider of decision-making intelligence to
businesses, individuals and government agencies.
The company serves customers in two primary markets - Insurance Services and
Business & Government Services.
ChoicePoint is headquartered in metro Atlanta and trades on NYSE under the
symbol CPS.
<PAGE> 2
Management's Discussion and Analysis
ChoicePoint
Introduction
ChoicePoint Inc., a Georgia corporation ("ChoicePoint" or the "Company"), is a
leading provider of decision-making intelligence to businesses, individuals and
government agencies. ChoicePoint's businesses are focused on two primary
markets - Insurance Services and Business & Government Services.
The Insurance Services group provides information products and services
used in the underwriting and marketing processes by property and casualty and
life insurers. Major offerings to the personal lines property and casualty
market include claims history data, motor vehicle records, credit information,
and modeling services. Additionally, ChoicePoint provides customized policy
rating and issuance software and property inspections and audits to the
commercial insurance market, and laboratory testing services and related
technology solutions to the life and health insurance market.
The Business & Government Services group provides direct marketing and
information products and services to Fortune 1000 corporations, consumer
finance companies, asset-based lenders, legal and professional service
providers, health care service providers and federal, state and local
government agencies. Major offerings include pre-employment background and drug
screenings, public record searches, credential verification, due diligence
information, uniform commercial code searches and filings, database marketing
services and people and shareholder locator searches.
Results of Operations
Revenue and operating income for the years ended December 31, 1999, 1998 and
1997 were as follows:
<TABLE>
<CAPTION>
(In thousands)
Year Ended December 31 1999 1998 1997
- --------------------------------------------------------------------------
<S> <C> <C> <C>
Operating revenue:
Insurance Services $ 264,834 $ 246,463 $ 214,386
Business &
Government Services 164,958 103,488 80,193
Divested and discontinued
product lines 351 56,524 122,742
- --------------------------------------------------------------------------
Operating revenue $ 430,143 406,475 $ 417,321
- --------------------------------------------------------------------------
Operating income:
Insurance Services $ 100,475 $ 86,092 $ 72,908
Business &
Government Services 13,670 5,486 5,555
Divested and discontinued
product lines (855) 1,199 6,410
Corporate Expenses (33,619) (27,611) (32,587)
- --------------------------------------------------------------------------
Operating income
before unusual items 79,671 65,166 52,286
Unusual items (1,583) (3,758) (6,209)
- --------------------------------------------------------------------------
Operating income $ 78,088 $ 61,408 $ 46,077
==========================================================================
</TABLE>
Year Ended December 31, 1999
Compared to Year Ended December 31, 1998
CONSOLIDATED REVENUE FROM OPERATIONS, excluding divested and discontinued
product lines, increased $79.8 million, or 22.8%, to $429.8 million in 1999
from $350.0 million in 1998 primarily as a result of strong revenue performance
in automated products, laboratory services, and acquisitions. CONSOLIDATED
OPERATING INCOME before unusual items increased $14.5 million, or 22.2%, to
$79.7 million in 1999 from $65.2 million in 1998. ACQUISITION AMORTIZATION,
which includes goodwill and other intangible amortization related to
acquisitions, increased to $15.4 million in 1999 from $11.4 million in 1998.
OPERATING MARGINS (excluding the effects of unusual items) increased to 18.5%
in 1999 from 16.0% in 1998 as a result of the strong revenue performance
discussed above. Consolidated operating income after unusual items increased
$16.7 million, or 27.2%, to $78.1 million in 1999 from $61.4 million in 1998.
REVENUE FROM INSURANCE SERVICES, excluding $10.8 million of revenue from a
significant systems development project in 1998, grew $29.1 million, or 12.3%,
to $264.8 million in 1999 from $235.7 million in 1998, driven by strong unit
performance in personal lines products and laboratory services. OPERATING
INCOME increased $14.4 million, or 16.7%, to $100.5 million in 1999 from $86.1
million in 1998, primarily as a result of revenue growth noted above.
ACQUISITION AMORTIZATION increased to $3.0 million in 1999 from $2.7 million in
1998 due to an acquisition made in 1998. OPERATING MARGINS for Insurance
Services increased to 37.9% in 1999 from 34.9% in 1998. Excluding acquisition
amortization, the operating margin in Insurance Services for 1999 was
39.1% compared to 36.0% in 1998. See Note 12 to the Consolidated Financial
Statements.
REVENUE FROM BUSINESS & GOVERNMENT SERVICES increased $61.5 million, or
59.4%, to $165.0 million in 1999 from $103.5 million in 1998, primarily as a
result of acquisitions. Comparable internal revenue growth for Business &
Government Services was 8.8% over the prior year. OPERATING INCOME increased
$8.2 million to $13.7 million in 1999 from $5.5 million in 1998, primarily as a
result of acquisitions. ACQUISITION AMORTIZATION increased to $12.4 million in
1999 from $8.7 million in 1998 due to acquisitions made in 1998 and 1999.
OPERATING MARGINS for Business & Government Services increased to 8.3% in 1999
from 5.3% in 1998. Excluding acquisition amortization, the operating margin in
Business & Government Services for 1999 was 15.8% compared to 13.7% in 1998
(Note 12).
18
<PAGE> 3
Management's Discussion and Analysis
ChoicePoint
DIVESTED AND DISCONTINUED PRODUCT LINES include the operating results from
the life and health insurance field underwriting services and insurance claim
investigative services (collectively the "field businesses") sold in
December 1998, the payroll verification business sold in May 1999, the
discontinued medical device registry business and from the shutdown of certain
remaining business and government field offices where revenue did not justify
continued physical presence (Note 4).
CORPORATE EXPENSES represent costs of support functions, incentives and
profit sharing that benefit both segments. The increase to $33.6 million in
1999 from $27.6 million in 1998 is primarily due to the increase in
compensation expense recognized under employee stock plans and incentives and
additional research and development costs for e-commerce initiatives.
UNUSUAL ITEMS of $1.6 million in 1999 relate primarily to fixed asset
impairments ($732,000), severance costs ($451,000) and other one-time costs
($400,000).
In the first quarter of 1999, an additional pretax gain on the December
1998 sale of certain field businesses of $2.5 million was recorded in
connection with the prepayment of a note receivable and repurchase of warrants
issued by PMSI Services, Inc. in the transaction (Note 4).
INTEREST EXPENSE was $11.1 million and $7.7 million in 1999 and 1998,
respectively. Interest expense for 1999 is net of $431,000 of interest income
from the PMSI Services, Inc. note receivable and warrants prior to the
prepayment and repurchase made in March 1999 (Note 4).
NET INCOME increased $4.0 million, or 11.2%, to $39.4 million in 1999 from
$35.4 million in 1998. The effective tax rate remained unchanged at 43.3%.
Year Ended December 31, 1998
Compared to Year Ended December 31, 1997
CONSOLIDATED REVENUE FROM OPERATIONS, excluding divested and discontinued
product lines, increased $55.4 million, or 18.8%, to $350.0 million in 1998
from $294.6 million in 1997 primarily as a result of strong revenue performance
in automated products and acquisitions. CONSOLIDATED OPERATING INCOME before
unusual items increased $12.9 million, or 24.6%, to $65.2 million in 1998 from
$52.3 million in 1997. ACQUISITION AMORTIZATION increased to $11.4 million in
1998 from $10.5 million in 1997. OPERATING MARGINS (excluding the effects of
unusual items) increased to 16.0% in 1998 from 12.5% in 1997. Consolidated
operating income after unusual items increased $15.3 million, or 33.3%, to
$61.4 million in 1998 from $46.1 million in 1997.
REVENUE FROM INSURANCE SERVICES, excluding $10.8 million of revenue from a
significant systems development project in 1998, grew $21.3 million, or 9.9%,
to $235.7 million in 1998 from $214.4 million in 1997, driven by strong unit
performance in personal lines products and laboratory services. OPERATING
INCOME increased $13.2 million, or 18.1%, to $86.1 million in 1998 from $72.9
million in 1997, primarily as a result of the revenue growth noted above.
ACQUISITION AMORTIZATION decreased to $2.7 million in 1998 from $3.8 million in
1997 due to the write-off of certain intangible assets in 1997 (Note 11).
OPERATING MARGINS for Insurance Services increased to 34.9% in 1998 from 34.0%
in 1997. Excluding acquisition amortization, the operating margin in Insurance
Services for 1998 was 36.0% compared to 35.8% in 1997 (Note 12).
REVENUE FROM BUSINESS & GOVERNMENT SERVICES increased $23.3 million, or
29.0%, to $103.5 million in 1998 from $80.2 million in 1997, primarily as a
result of acquisitions. Comparable internal revenue growth for Business &
Government Services was 10.0% over the prior year. OPERATING INCOME decreased
$0.1 million to $5.5 million in 1998 from $5.6 million in 1997. ACQUISITION
AMORTIZATION increased to $8.7 million in 1998 from $6.8 million in 1997 due to
acquisitions made in 1998. OPERATING MARGINS for Business & Government Services
decreased to 5.3% in 1998 from 6.9% in 1997. Excluding acquisition
amortization, the operating margin in Business & Government Services for 1998
was 13.7% compared to 15.4% in 1997 (Note 12).
DIVESTED AND DISCONTINUED PRODUCT LINES include the operating results from
ChoicePoint's paramedical examination business sold in December 1997, field
businessess sold in December 1998, payroll verification business sold in May
1999, discontinued medical device registry business and from the shutdown of
certain remaining business and government field offices where revenue did not
justify continued physical presence.
CORPORATE EXPENSES represent costs of support functions, incentives and
profit sharing benefiting both segments. The decrease to $27.6 million in 1998
from $32.6 million in 1997 is primarily due to allocations of corporate costs
from Equifax and transition services expense paid to Equifax in 1997 as a
result of the spinoff on August 7, 1997 (the "Spinoff") (Note 2).
UNUSUAL ITEMS of $3.8 million in 1998 include $2.0 million for the
write-down of a noncompete agreement and $1.8 million for write-downs of
certain software and database assets and severance expenses.
19
<PAGE> 4
Management's Discussion and Analysis
ChoicePoint
ChoicePoint recognized a pretax gain of $8.8 million as a result of the
sale of its field businesses to PMSI Services, Inc., an affiliate of
Examination Management Services, Inc. and the planned sale of its payroll
verification business. The Company sold the field businesses in December
1998 for approximately $23.0 million in a combination of cash, a note
receivable, and warrants. In addition, the Company retained certain net assets,
primarily accounts receivable (Note 4).
INTEREST EXPENSE was $7.7 million and $6.6 million in 1998 and 1997,
respectively.
NET INCOME increased $6.5 million, or 22.4%, to $35.4 million in 1998 from
$28.9 million in 1997. The effective tax rate was 43.3% in 1998 and 45.9% in
1997.
Income Taxes
ChoicePoint's overall EFFECTIVE TAX RATES were 43.3% in 1999 and 1998, and
45.9% in 1997. The decrease in effective tax rates from 1997 to 1998 is
primarily due to a reduction in the state income tax rate due to ChoicePoint no
longer being part of Equifax's consolidated group for unitary tax purposes
after the Spinoff.
Financial Condition and Liquidity
CASH PROVIDED BY OPERATIONS increased from $70.8 million in 1998 to $78.9
million in 1999. This increase was primarily attributable to the increase in
net income, as adjusted for depreciation and amortization, and decreased
accounts receivable. During 1999, ChoicePoint used $49.3 million for investing
activities, including $17.5 million for acquisitions, $17.4 million for other
assets, primarily software developed for internal use, purchased data files,
software and software developed for external use, and $13.7 million for
additions to property and equipment. In 1998, ChoicePoint used $168.1 million
for investing activities, including $138.6 million for acquisitions and $16.9
million for other assets, primarily software developed for internal use,
purchased data files, purchased software and software developed for external
use. In addition, in 1998, $13.6 million was used for additions to property and
equipment, primarily for system upgrades. During 1999, net cash used by
financing activities was $8.4 million, primarily for paydowns of short-term
borrowings. Net cash provided by financing activities was $89.3 million in
1998, as the proceeds from a credit facility were used to pay for acquisitions
and to purchase stock held by employee benefit trusts.
The Company's SHORT-TERM AND LONG-TERM LIQUIDITY depends primarily upon
its level of net income and working capital management (accounts receivable,
accounts payable, accrued expenses) and long-term debt. In August 1997,
ChoicePoint entered into a $250.0 million unsecured revolving credit facility
(the "Credit Facility") with a group of banks (Note 6). Borrowings under the
Credit Facility increased from $95.0 million at December 31, 1997 to $184.0
million at December 31, 1999 due primarily to acquisitions. In December 1999,
ChoicePoint entered into a $100.0 million unsecured revolving credit facility
with a group of banks. This facility has a termination date of one year, at
which time the Company has the option to convert the outstanding balance to a
one-year term obligation (Note 6). ChoicePoint may use additional borrowings
under the two credit facilities to finance acquisitions and for general
corporate cash requirements. ChoicePoint may also utilize lines of credit with
two banks for overnight borrowings; however, no borrowings were outstanding at
December 31, 1999.
EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION ("EBITDA")
increased $17.3 million, or 17.1%, to $118.5 million for 1999 from $101.2
million for 1998. 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. EBITDA is not presented as a substitute
for income from operations, net income or cash flows from operating activities.
INTEREST EXPENSE was $11.1 million in 1999, $7.7 million in 1998, and $6.6
million in 1997. Prior to the Spinoff, ChoicePoint was charged corporate
interest expense from Equifax based on the relationship of its net assets to
total Equifax net assets, excluding corporate debt. After the Spinoff, interest
expense also includes interest on the revolving Credit Facility discussed
above. ChoicePoint has entered into six interest rate swap agreements to reduce
the impact of changes in interest rates on its floating rate long-term
obligation (Note 6).
The Company anticipates CAPITAL EXPENDITURES in the range of $27.0 million
to $30.0 million in 2000, which will be used primarily for system upgrades and
other assets, including capitalized software development, purchased data files
and software.
20
<PAGE> 5
Management's Discussion and Analysis
ChoicePoint
ECONOMIC VALUE ADDED ("EVA") declined slightly to $7.1 million in 1999 from
$7.7 million in 1998 due to significant acquisition activity over the last
several years.
The Company uses cash generated to invest in growing the business and to
fund acquisitions and operations. Therefore, no cash dividends have been paid
and the Company does not anticipate paying any cash dividends on its common
stock in the near future.
Subsequent Events
In January 2000, the Company acquired Statewide Data Services, Inc. and
National Safety Alliance, Incorporated for a total purchase price of
approximately $76.0 million, plus acquisition costs and working capital
adjustments. In February 2000, the Company entered into a definitive agreement
with DBT Online, Inc. ("DBT") to acquire all of the outstanding capital stock
of DBT with newly issued shares of ChoicePoint common stock in a transaction to
be accounted for as a pooling of interest (Note 15).
Year 2000
All applications were certified as Year 2000 compliant prior to December 31,
1999. During the rollover, only minor problems were encountered, none of which
resulted in any downtime or lost revenue. Future risk of Year 2000-related
problems still exist; however, based on the Company's experience to date,
management does not anticipate any significant impact on ChoicePoint's
production environment. Included in operating results for 1999, 1998 and 1997
were $7.1 million, $6.2 million and $1.3 million, respectively, of expenses
incurred to modify existing computer systems and applications to address the
Year 2000 compliance issues.
New Accounting Pronouncement
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities." In 1999, FASB issued SFAS No.
137, "Accounting for Derivative Instruments and Hedging Activities - Deferral
of the Effective Date of FASB Statement No. 133." SFAS No. 133 is effective for
the Company's fiscal year ending December 31, 2001. Management does not expect
SFAS No. 133 to have a significant impact on the Company's consolidated
financial statements.
Forward-Looking Statements
This report contains certain information that constitutes forward-looking
statements as that term is defined in the Private Securities Litigation Reform
Act of 1995. Forward-looking statements include information concerning the
possible or assumed future results of operations of Choicepoint, as well as
statements preceded by or that include words such as "believes," "expects,"
"anticipates," "intends," "plans," "estimates" or similar expression. Other
statements, to the extent they are not historical facts, should also be
considered forward-looking. These statements are subject to various risks and
uncertainties. Such forward-looking statements are made based on management's
assessments of various risks and uncertainties, as well as assumptions made in
accordance with the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995. The Company's actual results could differ
materially from the results anticipated in these forward-looking statements as a
result of important factors, including such risks and uncertainties. Risks and
uncertainties include those identified in the Company's Annual Report on Form
10-K for the fiscal year ending December 31, 1999 and the other filings made by
the Company from time to time with the Securities and Exchange Commission. The
Company undertakes no obligation to publicly release any revisions to any
forward-looking statement contained herein to reflect events or circumstances
occurring after the date hereof or to reflect the occurrence of unanticipated
events.
21
<PAGE> 6
Report of Independent Public Accountants
ChoicePoint
To ChoicePoint Inc.:
We have audited the accompanying consolidated balance sheets of ChoicePoint
Inc. (a Georgia corporation) and subsidiaries (as defined in Note 2) as of
December 31, 1999 and 1998 and the related consolidated statements of income,
shareholders' equity and cash flows for each of the three years in the period
ended December 31, 1999. 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 ChoicePoint Inc. and
subsidiaries as of December 31, 1999 and 1998 and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1999 in conformity with generally accepted accounting principles.
Arthur Andersen LLP
Atlanta, Georgia
February 18, 2000
Report of Management
ChoicePoint
The management of ChoicePoint Inc. has the responsibility for preparing the
accompanying financial statements and for their integrity and objectivity. The
financial statements have been prepared in accordance with generally accepted
accounting principles and, as such, include amounts based on management's best
estimates and judgments.
Management is further responsible for maintaining a system of internal
control and related policies and procedures designed to provide reasonable
assurance that assets are adequately safeguarded and that the accounting
records reflect transactions executed in accordance with management's
authorization.
An independent assessment of the system of internal control is performed
by the Company's internal audit staff in order to confirm that the system is
adequate and operating effectively. The Company's independent public
accountants also consider certain elements of the internal control system in
order to determine their auditing procedures for purposes of expressing an
opinion on the financial statements.
The audit committee of the board of directors, consisting solely of
outside directors, meets periodically with financial management, internal
audit, and the independent public accountants to review internal accounting
controls and accounting, auditing, and financial reporting matters.
/s/ Doug C. Curling /s/ David E. Trine
Doug Curling David E. Trine
Chief Operating Officer and Treasurer Vice President, Corporate Controller
22
<PAGE> 7
Consolidated Statements of Income
ChoicePoint
<TABLE>
<CAPTION>
(In thousands, except per share data)
Year Ended December 31, 1999 1998 1997
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating revenue $430,143 $406,475 $417,321
- --------------------------------------------------------------------------------------------------
Costs and expenses:
Cost of services 269,685 268,108 280,765
Selling, general and administrative 80,787 73,201 84,270
Unusual items 1,583 3,758 6,209
- --------------------------------------------------------------------------------------------------
Total costs and expenses 352,055 345,067 371,244
- --------------------------------------------------------------------------------------------------
Operating income 78,088 61,408 46,077
Gain on sale of businesses, net 2,513 8,807 14,038
Interest expense 11,142 7,748 6,649
- --------------------------------------------------------------------------------------------------
Income before income taxes 69,459 62,467 53,466
Provision for income taxes 30,070 27,048 24,522
- --------------------------------------------------------------------------------------------------
Net income $ 39,389 $ 35,419 $ 28,944
==================================================================================================
Earnings per share - basic (Notes 3 and 8) $ 1.36 $ 1.22 $ --
Weighted average shares - basic 28,973 29,084 --
Earnings per share - diluted (Notes 3 and 8) $ 1.30 $ 1.18 $ --
Weighted average shares - diluted 30,191 30,012 --
==================================================================================================
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
23
<PAGE> 8
Consolidated Balance Sheets
ChoicePoint
<TABLE>
<CAPTION>
(In thousands, except par values)
December 31, 1999 1998
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 40,085 $ 18,883
Accounts receivable, net of allowance for doubtful accounts
of $3,831 in 1999 and $3,286 in 1998 98,784 103,191
Deferred income tax assets 7,177 8,372
Other current assets 9,795 13,160
- -----------------------------------------------------------------------------------------------------------
Total current assets 155,841 143,606
- -----------------------------------------------------------------------------------------------------------
Property and equipment, net 52,559 55,279
Goodwill, net 255,182 253,140
Deferred income tax assets 16,580 19,010
Other 52,710 63,164
- -----------------------------------------------------------------------------------------------------------
Total Assets $ 532,872 $ 534,199
- -----------------------------------------------------------------------------------------------------------
Liabilities and Shareholders' Equity
Current liabilities:
Short-term debt and current maturities of long-term debt $ 595 $ 5,623
Notes payable for acquisitions -- 22,701
Accounts payable 24,515 24,645
Accrued salaries and bonuses 19,036 17,537
Other current liabilities 44,216 54,454
- -----------------------------------------------------------------------------------------------------------
Total current liabilities 88,362 124,960
Long-term debt, less current maturities 187,195 191,697
Postretirement benefit obligations 47,782 53,251
Other long-term liabilities 6,622 4,719
- -----------------------------------------------------------------------------------------------------------
Total liabilities 329,961 374,627
- -----------------------------------------------------------------------------------------------------------
Commitments and contingencies (Note 10)
Shareholders' equity:
Preferred stock, $.01 par value; 10,000 shares authorized,
no shares issued or outstanding -- --
Common stock, $.10 par value; shares authorized -
100,000; issued - 29,539 in 1999 and 29,320 in 1998 2,954 2,932
Paid-in capital 123,044 117,571
Retained earnings 88,552 49,163
Cumulative translation adjustments (221) (176)
Stock held by employee benefit trusts, at cost, 468 shares in 1999
and 406 shares in 1998 (11,418) (9,918)
- -----------------------------------------------------------------------------------------------------------
Total shareholders' equity 202,911 159,572
- -----------------------------------------------------------------------------------------------------------
Total Liabilities and Shareholders' Equity $ 532,872 $ 534,199
===========================================================================================================
</TABLE>
The accompanying notes are an integral part of these consolidated
balance sheets.
24
<PAGE> 9
Consolidated Statements of Shareholders' Equity
ChoicePoint
<TABLE>
<CAPTION>
Equifax Cumulative Stock Held
Comprehensive Equity Common Paid-in Retained Translation by Benefit
Income Investment Stock Capital Earnings Adjustments Trusts Total
(In thousands)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31,1996 $ -- $ 196,414 $ -- $ -- $ -- $ (87) -- $ 196,327
Net income
(from January 1, 1997
through July 31, 1997) 15,200 15,200 -- -- -- -- -- 15,200
Intercompany transactions
with Equifax -- 1,609 -- -- -- -- 1,609
Repayment of Equifax
intercompany debt -- (72,602) -- -- -- -- -- (72,602)
Debt assumed from Equifax -- (29,000) -- -- -- -- -- (29,000)
Distribution of common
stock -- (111,621) 2,914 108,707 -- -- -- --
Restricted stock plans, net -- -- 12 1,636 -- -- -- 1,648
Stock options exercised -- -- 2 265 -- -- -- 267
Other -- -- -- 583 -- -- -- 583
Net income
(from August 1, 1997
to December 31,1997) 13,744 -- -- -- 13,744 -- -- 13,744
Translation adjustments (31) -- -- -- -- (31) -- (31)
- --------------------------------------------------------------------------------------------------------------------------------
Comprehensive income 28,913 -- -- -- -- -- -- --
Balance, December 31,1997 -- 2,928 111,191 13,744 (118) -- 127,745
Net income 35,419 -- -- -- 35,419 -- -- 35,419
Restricted stock plans, net -- -- (4) 2,552 -- -- -- 2,548
Stock options exercised -- -- 8 597 -- -- -- 605
Cost of shares repurchased -- -- -- -- -- -- (9,918) (9,918)
Other -- -- -- 3,231 -- -- -- 3,231
Translation adjustments (58) -- -- -- -- (58) -- (58)
- --------------------------------------------------------------------------------------------------------------------------------
Comprehensive income 35,361 -- -- -- -- -- -- --
Balance, December 31, 1998 -- 2,932 117,571 49,163 (176) (9,918) 159,572
Net income 39,389 -- -- -- 39,389 -- -- 39,389
Restricted stock plans, net -- -- 2 1,173 -- -- -- 1,175
Stock options exercised -- -- 20 2,619 -- -- -- 2,639
Cost of shares repurchased -- -- -- -- -- -- (1,500) (1,500)
Other -- -- -- 1,681 -- -- -- 1,681
Translation adjustments (45) -- -- -- -- (45) -- (45)
- --------------------------------------------------------------------------------------------------------------------------------
COMPREHENSIVE INCOME $ 39,344 -- -- -- -- -- -- --
BALANCE, DECEMBER 31, 1999 $ -- $ 2,954 $ 123,044 $ 88,552 $ (221) $ (11,418) $ 202,911
================================================================================================================================
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
25
<PAGE> 10
Consolidated Statements of Cash Flows
ChoicePoint
<TABLE>
<CAPTION>
(In thousands)
December 31, 1999 1998 1997
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 39,389 $ 35,419 $ 28,944
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 37,913 31,032 27,638
Provision for unusual items 1,583 3,758 6,209
Gain on sale of business, net (2,513) (8,807) (14,038)
Compensation recognized under employee stock plans 4,244 3,059 1,892
Payment on employee stock plans (3,378) -- --
Changes in assets and liabilities,
excluding effects of acquisitions and divestitures:
Marketable securities and other current assets 2,671 10,864 (1,213)
Accounts receivable, net 6,109 1,297 (11,483)
Deferred income taxes 5,227 (1,473) (6,883)
Current liabilities, excluding debt (8,750) (5,003) 24,850
Other long-term liabilities, excluding debt (3,560) 683 (496)
- -------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 78,935 70,829 55,420
Cash flows from investing activities:
Acquisitions, net of cash acquired (17,479) (138,630) (10,778)
Payment of notes payable for acquisitions (22,701) -- --
Cash proceeds from sale of businesses 22,000 1,000 11,707
Additions to property and equipment (13,712) (13,625) (19,997)
Additions to other assets, net (17,371) (16,878) (6,351)
- -------------------------------------------------------------------------------------------------------------------
Net cash used by investing activities (49,263) (168,133) (25,419)
Cash flows from financing activities:
Proceeds from long-term debt 30,000 115,042 112,000
Payments on long-term debt (34,502) (21,551) (17,928)
Net short-term borrowings (5,028) 5,104 --
Payment of debt assumed from Equifax -- -- (29,000)
Payment of Equifax intercompany debt -- -- (72,602)
Net transactions with Equifax -- -- 1,609
Purchases of stock held by employee benefit trusts (1,500) (9,918) --
Proceeds from exercise of stock options 2,639 605 267
Other -- -- 583
- -------------------------------------------------------------------------------------------------------------------
Net cash (used) provided by financing activities (8,391) 89,282 (5,071)
- -------------------------------------------------------------------------------------------------------------------
Effect of foreign currency exchange rates on cash (79) 47 202
- -------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents 21,202 (7,975) 25,132
Cash and cash equivalents, beginning of year 18,883 26,858 1,726
- -------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of year $ 40,085 $ 18,883 $ 26,858
===================================================================================================================
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
26
<PAGE> 11
Notes to Consolidated Financial Statements
ChoicePoint
note 1 Nature Of Operations
ChoicePoint Inc., a Georgia corporation ("ChoicePoint" or the "Company"), is a
leading provider of decision-making intelligence to businesses, individuals and
government agencies. ChoicePoint's businesses are focused on two primary markets
- -- Insurance Services and Business & Government Services.
The Insurance Services group provides information products and services
used in the underwriting and marketing processes by property and casualty and
life insurers. Major offerings to the personal lines property and casualty
market include claims history data, motor vehicle records, credit information,
and modeling services. Additionally, ChoicePoint provides customized policy
rating and issuance software and property inspections and audits to the
commercial insurance market, and laboratory testing services and related
technology solutions to the life and health insurance market.
The Business & Government Services group provides direct marketing and
information products and services to Fortune 1000 corporations, consumer finance
companies, asset-based lenders, legal and professional service providers, health
care service providers and federal, state and local government agencies. Major
offerings include pre-employment background and drug screenings, public record
searches, credential verification, due diligence information, uniform commercial
code searches and filings, database marketing services and people and
shareholder locator searches.
note 2 Spinoff And Basis Of Presentation
ChoicePoint Inc. was established through the combination of the businesses that
comprised the Insurance Services Group of Equifax Inc. ("Equifax") within a
separate company and the subsequent spinoff in 1997 (the "Spinoff") of the
Company's outstanding stock by Equifax as a stock dividend to the shareholders
of Equifax. In the Spinoff, each shareholder of Equifax received one share of
the Company's common stock, par value $.10 per share, for every ten shares of
Equifax common stock owned. The effective date of the Spinoff was July 31, 1997,
and the common stock began regular trading on the New York Stock Exchange on
August 8, 1997. References to 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.
Prior to the Spinoff, 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.
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 where applicable.
note 3 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 and Cost of Services Presentation - Motor vehicle records registry
revenue, the fee charged by states for motor vehicle records which is passed on
by ChoicePoint to its customers, is excluded from revenue and is recorded as a
reduction to cost of services in the consolidated financial statements. Registry
revenue was $351.1 million in 1999, $309.8 million in 1998 and $258.0 million in
1997.
ChoicePoint Direct (formerly Customer Development Corporation) passes
on material, shipping and postage charges to its customers. These charges are
excluded from revenue and are recorded as a reduction to cost of services in the
consolidated financial statements. Charges passed through to customers were
$40.6 million in 1999 and $6.4 million from the date of acquisition until
December 31, 1998.
Property and Equipment - Property and equipment at December 31, 1999 and 1998
consisted of the following:
<TABLE>
<CAPTION>
(In thousands)
December 31, 1999 1998
- ------------------------------------------------------------------
<S> <C> <C>
Land, buildings, and
improvements $ 21,696 $ 21,561
Data processing equipment
and furniture 90,335 96,963
Less accumulated depreciation (59,472) (63,245)
- ------------------------------------------------------------------
$ 52,559 $ 55,279
==================================================================
</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 - Except for a strategic investment accounted for
under the cost method, the Company accounts for all acquisitions using the
purchase method of accounting. As a result, goodwill and other acquisition
intangibles are recorded at the time of purchase. Goodwill is amortized on a
straight-line basis over 20 to 40 years. As of December 31, 1999 and 1998,
accumulated amortization was $31.2 million and $21.6 million, respectively.
27
<PAGE> 12
Notes to Consolidated Financial Statements
ChoicePoint
Other assets at December 31, 1999 and 1998 consisted of the following:
<TABLE>
<CAPTION>
(In thousands)
December 31, 1999 1998
- ------------------------------------------------------------------------
<S> <C> <C>
Other acquisition intangibles, net $17,418 $21,304
System development and
other deferred costs, net 30,083 20,811
Note receivable and warrants
due to divestiture (Note 4) -- 17,426
Investment in affiliate 5,209 3,623
- ------------------------------------------------------------------------
$52,710 $63,164
========================================================================
</TABLE>
Other acquisition intangibles include software, data files, technology,
workforce and noncompete agreements and are being amortized on a straight-line
basis over five to ten years. As of December 31, 1999 and 1998, accumulated
amortization was $23.7 million and $17.9 million, respectively.
For the years ended December 31, 1999 and 1998, approximately $11.4
million and $8.4 million, respectively, of costs of software developed for
internal use were capitalized and are included in software development and other
deferred costs above. The amounts capitalized include certain direct costs,
including external, payroll and interest costs. System development and other
deferred costs are being amortized on a straight-line basis primarily over three
to five years. As of December 31, 1999 and 1998, accumulated amortization was
$24.8 million and $20.2 million, respectively.
Depreciation and Amortization Expense - Depreciation and amortization expense
for 1999, 1998 and 1997 consisted of the following:
<TABLE>
<CAPTION>
(In thousands)
Year Ended December 31, 1999 1998 1997
- -----------------------------------------------------------------------
<S> <C> <C> <C>
Property and
equipment $14,960 $14,498 $12,403
Goodwill 9,695 6,519 4,616
Other acquisition
intangibles 5,753 4,890 5,914
System development
and other deferred
costs 7,505 5,125 4,705
- -----------------------------------------------------------------------
$37,913 $31,032 $27,638
=======================================================================
</TABLE>
Impairment of Goodwill and Long-Lived Assets - The Company regularly evaluates
whether events and circumstances have occurred that indicate the carrying amount
of goodwill or other long-lived 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. If the carrying amount exceeds undiscounted cash flows, an
impairment loss would be recognized for the difference between the carrying
amount and its estimated fair value.
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 shareholders'
equity. Although the Company does not have significant revenue from foreign
subsidiaries, 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.
Prior to the Spinoff, tax provisions were settled through the
intercompany account and Equifax made income tax payments on behalf of the
Company. The tax payments made subsequent to the Spinoff by ChoicePoint and the
tax payments made prior to the Spinoff by Equifax on behalf of ChoicePoint were
approximately $23.5 million in 1999, $25.0 million in 1998, and $22.0 million in
1997.
Interest paid on long-term debt, excluding amounts charged by Equifax
prior to the Spinoff, totaled $11.5 million in 1999, $6.0 million in 1998, and
$2.3 million in 1997.
In 1999, 1998, and 1997, the Company acquired various businesses that
were accounted for as purchases (Note 4). In conjunction with these
transactions, liabilities were assumed as follows:
<TABLE>
<CAPTION>
(In thousands)
Year Ended December 31, 1999 1998 1997
- -----------------------------------------------------------------------
<S> <C> <C> <C>
Fair value of
assets acquired $18,376 $162,154 $10,986
Cash paid for
acquisitions 17,787 137,384 10,778
- -----------------------------------------------------------------------
Liabilities assumed $ 589 $ 24,770 $ 208
=======================================================================
</TABLE>
Included in the liabilities assumed above in 1998 were $22.7 million of
short-term notes payable for acquisitions which were paid in January 1999.
Financial Instruments - The Company's financial instruments recorded on the
balance sheets consist primarily of cash and cash equivalents, accounts
receivable, accounts payable and debt. The carrying amounts approximate their
fair values because of the short maturity of these instruments, or in the case
of debt, because it bears interest at current market rates. In addition, the
Company received a note receivable and warrants in conjunction with a 1998
divestiture (Note 4).
Off-balance sheet derivative financial instruments at December 31, 1999 and 1998
consist of interest rate swap agreements (Note 6) entered into to limit the
effect
28
<PAGE> 13
of changes in interest rates on the Company's floating rate long-term
obligation. Amounts currently due to or from interest rate swap counterparties
are recorded in interest expense in the period in which they accrue. The Company
does not enter into financial instruments for trading or speculative purposes.
The fair value of the interest rate swap agreements, estimated by each bank
based on its internal valuation models, was $2.5 million at December 31, 1999.
Earnings Per Share- Historical earnings per share for 1997 are not presented
since the companies that comprise ChoicePoint were majority-owned subsidiaries
of Equifax or one of its affiliates and were recapitalized as part of the
Spinoff. See Note 13 for pro forma earnings per share for 1997. Earnings per
share - diluted includes the dilutive effect of stock options.
Reclassifications- Certain prior year amounts have been reclassified to conform
with the current year presentation.
note 4 Acquisitions And Divestitures
Acquisitions- During 1999, 1998, and 1997, the Company acquired the following
businesses:
<TABLE>
<CAPTION>
Cumulative
Date Percentage
Business Acquired Ownership
- ------------------------------------------------------------------------
<S> <C> <C>
DataMart, Inc. Nov. 1999 100.0%
Data Tracks Technology, Inc. July 1999 100.0
Washington Document
Service, Inc. May 1999 100.0
DATEQ Information
Network, Inc. Dec. 1998 100.0
EquiSearch Services, Inc. Nov. 1998 100.0
Tyler-McLennon, Inc. Nov. 1998 100.0
Customer Development
Corporation Oct. 1998 100.0
Informus Corporation Oct. 1998 100.0
Application Profiles, Inc. June 1998 100.0
Attest National Drug
Testing, Inc. April 1998 100.0
CDB Infotek (additional purchase) Mar. 1998 100.0
Drug Free, Inc. Nov. 1997 100.0
Medical Information
Network, LLC Oct. 1997 100.0
CDB Infotek (additional purchase) Sept. 1997 72.6
Advanced HR Solutions, Inc. June 1997 100.0
======================================================================
</TABLE>
The acquisitions above were accounted for as purchases. In addition,
the company purchased shares of Intertech Information Management Inc. in 1998
and 1999, which are accounted for under the cost method.
The 1999 acquisitions had an aggregate purchase price of $17.8 million,
with $13.3 million allocated to goodwill, and $1.9 million to intangible assets
(primarily data files and software). Goodwill from the 1999 acquisitions is
amortized on a straight-line basis over 25 to 30 years and other intangible
assets over five years. The pro forma effect of acquisitions made in 1999 are
not material to the consolidated financial statements.
The 1998 acquisitions had an aggregate purchase price of $162.2
million, with $133.3 million allocated to goodwill, and $10.1 million to other
intangible assets (primarily technology, workforce, software, and noncompete
agreements). Goodwill from the 1998 acquisitions is amortized on a straight-line
basis over 25 to 30 years and other intangible assets over five to ten years.
The following unaudited pro forma information has been prepared as if
the 1998 acquisitions had occurred on January 1, 1997. 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 and interest expense
resulting from these transactions. The pro forma information also includes $14.6
million ($8.6 million after tax) of one-time expenses recorded in 1998 by
Customer Development Corporation for equity participation plans which were paid
as a result of the sale. The expense was recorded prior to the acquisition and
is not included in ChoicePoint's historical financial statements.
<TABLE>
<CAPTION>
(In thousands, except per share data)
December 31, 1998 1997
- ----------------------------------------------------------------
<S> <C> <C>
Revenue $455,437 $476,784
Net income 24,198 24,359
Earnings per share - basic .83 .84
Earnings per share - diluted .81 .82
================================================================
</TABLE>
The 1997 acquisitions had an aggregate purchase price of $10.8 million,
with $10.0 million allocated to goodwill, and $50,000 to other intangible assets
(noncompete agreement).
Results of operations have been included in the consolidated statements
of income from the dates of acquisition for all acquisitions accounted for under
the purchase method.
Divestitures- In November 1998, the Company entered into a strategic partnership
with Experian Limited (U.K.) leading to the sale of ChoicePoint Limited, the
Company's United Kingdom-based insurance services division. The sale was
completed in January 2000 with no material gain on the sale of the business.
In December 1998, the Company sold its life and health insurance field
underwriting services and insurance claim investigation services (collectively
the "field businesses") to PMSI Services, Inc. ("PMSI"). The field businesses
were sold for approximately $23.0 million in a combination of cash - $1.0
million, a note receivable - $10.0 million
29
<PAGE> 14
Notes to Consolidated Financial Statements
ChoicePoint
and warrants - $12.0 million. In addition, the Company retained certain net
assets, primarily accounts receivable. The warrants were discounted by $4.6
million at December 31, 1998. In December 1998, the Company recognized a pre-tax
gain of $8.8 million on the sale of the field businesses and on the planned sale
of its payroll verification business. The pretax gain was net of
transaction-related costs, including lease termination and personnel-related
costs of $5.9 million that were accrued at the time of the divestiture. The loss
related to the sale of its payroll verification business that was netted against
the gain was $2.3 million.
In March 1999, ChoicePoint received $22.0 million plus interest from
PMSI for the prepayment of the note receivable and the repurchase of the
warrants. As a result, ChoicePoint recognized an additional net pretax gain on
the sale of $2.5 million. The net pretax gain includes the unamortized discount
of $4.3 million less transaction-related costs including lease termination,
additional asset write-offs and personnel-related costs of $1.8 million. As of
December 31, 1999, approximately $5.3 million has been charged against the total
$7.7 million accrued transaction-related costs. The remaining accrual will
primarily be used for future lease terminations.
In December 1997, the Company sold its paramedical examinations
business to PSA. The business unit was sold for approximately $21.7 million in a
combination of cash - $11.7 million, and PSA stock - $10.0 million. In addition,
the Company retained certain net assets, primarily accounts receivable. In
December 1997, the Company transferred approximately $1.0 million of the PSA
common stock to ChoicePoint's newly established charitable foundation. During
the third quarter of 1998, PSA repurchased the PSA stock from ChoicePoint at the
original stock price under an agreement protecting ChoicePoint from a decrease
in PSA's stock price.
Note 5 Transactions With Equifax
Prior to the Spinoff, under Equifax's centralized cash management system,
short-term advances from Equifax and excess cash sent to Equifax were reflected
as inter-company debt and were included in Equifax's equity investment account
through July 31, 1997 (Note 8). As a result of the Spinoff, the net intercompany
debt at July 31, 1997, totaling $72.6 million, was repaid in the third quarter
of 1997. ChoicePoint was charged corporate costs through July 31, 1997. The
amount of corporate costs included in the accompanying consolidated statements
of income was $6.0 million in 1997. 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 through July
31, 1997 based on the relationship of its net assets to total Equifax net
assets, excluding corporate debt, in the amount of $3.6 million in 1997. This
amount was included in interest expense.
Note 6 Debt
Long-term debt at December 31, 1999 and 1998 was as follows:
<TABLE>
<CAPTION>
(In thousands)
December 31, 1999 1998
- ------------------------------------------------------------
<S> <C> <C>
Credit facilities $184,000 $189,000
Other long-term debt 2,475 2,600
Capital leases 1,315 617
- ------------------------------------------------------------
187,790 192,217
Less current maturities (595) (520)
- ------------------------------------------------------------
$187,195 $191,697
============================================================
</TABLE>
In August 1997, ChoicePoint entered into a $250.0 million unsecured
revolving credit facility (the "Credit Facility") with a group of banks. The
Credit Facility is a revolving facility expandable to $300.0 million, subject to
approval of the lenders. The commitment termination date and final maturity of
the Credit Facility will occur in August 2002.
Revolving loans under the Credit Facility 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 margins
range from .16% to .45% per annum based on ChoicePoint's leverage ratio. The
average interest rate based on the terms of the Credit Facility at December 31,
1999 and 1998 was 6.11% and 5.44%, respectively.
The Credit Facility contains 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.
In December 1999, ChoicePoint entered into a $100.0 million unsecured
revolving credit facility with a group of banks. This facility has a termination
date of one year, at which time the Company has the option to convert the
outstanding balance to a one-year term obligation. The Company may select from
several pricing options for borrowings under this facility, including the
lender's base rate, LIBOR plus the applicable margin, or the lender's cost of
funds plus the applicable margin. This facility is subject to the same covenants
as is the $250.0 million Credit Facility.
30
<PAGE> 15
ChoicePoint has entered into six interest rate swap agreements (the
"swap agreements") to reduce the impact of changes in interest rates on its
floating rate long-term obligation. The swap agreements have a combined notional
amount of $175.0 million at December 31, 1999 and 1998, and mature at various
dates from 2000 to 2007. These swap agreements involve the exchange of variable
rate for fixed rate payments and effectively change the Company's interest rate
exposure to a weighted average fixed rate of 5.43% plus a credit spread. The
Company is exposed to credit loss in the event of nonperformance by the other
parties to the swap agreements. However, the Company does not anticipate
nonperformance by the counterparties.
Scheduled maturities of long-term debt subsequent to December 31, 1999
are as follows: $595,000 in 2000, $511,000 in 2001, $184.5 million in 2002,
$130,000 in 2003 and $2.1 million thereafter.
Short-term borrowings at December 31, 1998 include $5.1 million from a
line of credit with a bank. There were no short-term borrowings outstanding at
December 31, 1999.
note 7 Income Taxes
Prior to the Spinoff, the Company was 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 through July 31, 1997, the effective date of the
Spinoff.
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. The
provision for income taxes consists of the following:
<TABLE>
<CAPTION>
(In thousands)
Year Ended December 31, 1999 1998 1997
- ------------------------------------------------------------------------
<S> <C> <C> <C>
Current:
Federal $19,123 $22,604 $18,997
State 3,305 4,392 5,463
Foreign 1,889 1,743 1,277
- ------------------------------------------------------------------------
24,317 28,739 25,737
- ------------------------------------------------------------------------
Deferred:
Federal 4,993 (1,731) (722)
State 772 326 (419)
Foreign (12) (286) (74)
- ------------------------------------------------------------------------
5,753 (1,691) (1,215)
- ------------------------------------------------------------------------
Total $30,070 $27,048 $24,522
========================================================================
</TABLE>
The provision for income taxes is based upon income before income taxes
as follows:
<TABLE>
<CAPTION>
(In thousands)
Year Ended December 31, 1999 1998 1997
- --------------------------------------------------------------------------
<S> <C> <C> <C>
United States $63,830 $58,043 $49,917
Foreign 5,629 4,424 3,549
- --------------------------------------------------------------------------
$69,459 $62,467 $53,466
==========================================================================
</TABLE>
The provision for income taxes is reconciled with the federal statutory
rate as follows:
<TABLE>
<CAPTION>
Year Ended December 31, 1999 1998 1997
- ---------------------------------------------------------------------------------
<S> <C> <C> <C>
Federal statutory rate 35.0% 35.0% 35.0%
State and local taxes,
net of federal tax benefit 3.8 4.9 6.1
Tax effect resulting from
foreign activities (.1) (.2) (.1)
Goodwill amortization 2.8 2.4 2.7
Other 1.8 1.2 2.2
- ---------------------------------------------------------------------------------
Overall effective rate 43.3% 43.3% 45.9%
=================================================================================
</TABLE>
Components of the Company's deferred income tax assets and liabilities
at December 31, 1999 and 1998 are as follows:
<TABLE>
<CAPTION>
(In thousands)
December 31, 1999 1998
- -----------------------------------------------------------------------------
<S> <C> <C>
Deferred income tax assets:
Postretirement benefits $ 19,984 $ 22,086
Reserves and accrued expenses 7,177 8,372
Employee compensation
programs 4,038 3,279
Other 4,175 3,080
- -----------------------------------------------------------------------------
35,374 36,817
- -----------------------------------------------------------------------------
Deferred income tax liabilities:
Purchased software, data files,
technology, and other assets (3,368) (3,391)
Depreciation (1,049) (1,494)
Deferred expenses (5,019) (3,358)
Other (2,181) (1,192)
- -----------------------------------------------------------------------------
(11,617) (9,435)
- -----------------------------------------------------------------------------
Net deferred income tax assets $ 23,757 $ 27,382
=============================================================================
</TABLE>
31
<PAGE> 16
Notes to Consolidated Financial Statements
ChoicePoint
Note 8 Shareholders' Equity
Stock Split - On November 24, 1999, ChoicePoint effected a two-for-one stock
split in the form of a stock dividend. Shareholders of record as of November
10, 1999 received one additional share of common stock for each share they held
on the record date. Share and per share data for all periods presented have
been adjusted to reflect the split.
Equifax Equity Investment- Prior to July 31, 1997, Equifax's equity investment
included the original investment in ChoicePoint, accumulated income of
ChoicePoint, and the net intercompany payable due to Equifax reflecting
transactions described in Note 5. The July 31, 1997 net intercompany debt
balance of $72.6 million was repaid to Equifax in the third quarter of 1997. The
$72.6 million included actual intercompany debt of $85.6 million reduced by
$13.0 million for an employee benefit obligation assumed by ChoicePoint (Note
9).
Stock Options - Prior to the Spinoff, the ChoicePoint Inc. 1997 Omnibus Stock
Incentive Plan (the "Omnibus Plan") was approved for ChoicePoint and ratified
by the shareholders in 1999. The Omnibus Plan authorizes grants of stock
options, stock appreciation rights, restricted stock, deferred shares,
performance shares and performance units for an aggregate of eight million
shares of ChoicePoint common stock. The Omnibus Plan requires options be granted
at fair market value except the options granted as replacement options under
the prior Equifax equity-based plans. In 1999, options for 1,528,967 shares
were granted at fair market value under the Omnibus Plan with a weighted average
option price of $28.27.
A summary of changes in all outstanding options and the related weighted
average exercise price per share is as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1999 December 31, 1998 December 31, 1997
-------------------------------------------------------------------------------------------------
SHARES AVG. PRICE Shares Avg. Price Shares Avg. Price
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance, beginning of year 3,696,172 $ 16.64 2,916,830 $ 14.23 -- --
Replacement -- -- -- -- 1,426,304 $ 8.55
Granted 1,528,967 $ 28.27 1,251,500 $ 22.03 1,523,804 $ 19.38
Canceled (256,973) $ 22.73 (398,812) $ 18.51 (11,670) $ 6.90
Exercised (189,748) $ 14.91 (73,346) $ 10.26 (21,608) $ 7.08
- -------------------------------------------------------------------------------------------------------------------------------
Balance, end of year 4,778,418 $ 20.09 3,696,172 $ 16.64 2,916,830 $ 14.23
- -------------------------------------------------------------------------------------------------------------------------------
Exercisable at end of year 1,794,973 $ 13.48 1,219,390 $ 11.36 652,768 $ 8.49
===============================================================================================================================
</TABLE>
The following table summarizes information about stock options outstanding at
December 31, 1999:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
-------------------------------------------------------------------------------------------
Weighted Average
Remaining Contractual Weighted Average Weighted Average
Range of Exercise Prices Shares Life in Years Exercise Price Shares Exercise Price
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 4.11 - $14.12 1,131,454 4.94 $ 8.76 1,028,442 $ 8.60
$19.38 - $19.38 1,206,577 7.76 $19.38 581,861 $19.38
$21.88 - $27.41 1,060,487 8.13 $22.33 184,670 $22.10
$27.88 - $32.63 1,379,900 9.12 $28.29 -- --
------------------------------------------------------------------------------------------
4,778,418 7.57 $20.09 1,794,973 $13.48
==========================================================================================
</TABLE>
Prior to the Spinoff, certain key officers of ChoicePoint were part of
an Equifax deferred bonus plan. As of the Spinoff, the ChoicePoint officers
were granted ChoicePoint restricted stock which preserved the economic benefit
of the Equifax plans. Approximately 302,000 shares of restricted stock were
granted, of which 180,000 shares are performance-based. Since the Spinoff,
additional restricted shares have been granted and as of December 31, 1999,
456,400 restricted shares were outstanding under the Omnibus Plan. The
compensation cost charged against income for restricted stock was $4.2 million
in 1999, $3.1 million in 1998, and $1.9 million in 1997.
32
<PAGE> 17
Pro Forma Information - During 1997 the Company adopted SFAS No. 123,
"Accounting for Stock-Based Compensation." In accordance with the provisions of
SFAS No. 123, the Company elected to apply APB Opinion No. 25 and related
interpretations in accounting for its stock option plans. Accordingly, the
Company does not recognize compensation cost in connection with its stock
option plans. If the Company had elected to recognize compensation cost for
these plans based on the fair value at grant date as prescribed by SFAS No. 123,
net income and net income per share would have been reduced to the pro forma
amounts indicated in the following table:
<TABLE>
<CAPTION>
(In thousands, except per share data)
Year Ended December 31, 1999 1998 1997
- --------------------------------------------------------------------------------------------------------------------------
SFAS NO. 123 SFAS No. 123 SFAS No. 123
REPORTED PRO FORMA Reported Pro Forma Reported Pro Forma
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net income $ 39,389 $ 34,110 $ 35,419 $ 30,901 $ 28,944 $ 27,832
Pro forma net income (Note 13) -- -- -- -- 28,520 27,408
Earnings per share - basic 1.36 1.18 1.22 1.06 -- --
Earnings per share - diluted 1.30 1.13 1.18 1.03 --
Pro forma earnings per share - basic -- -- -- -- .98 .94
Pro forma earnings per share - diluted -- -- -- -- .96 .92
==========================================================================================================================
</TABLE>
The weighted average grant date fair value per share of options
granted in 1999 and 1998 was $11.69 and $8.48, respectively.
The fair value of each option granted is estimated on the date of
grant using the Black-Scholes option pricing model with the following
assumptions:
<TABLE>
<CAPTION>
Year Ended December 31, 1999 1998 1997
- -------------------------------------------------------------------
<S> <C> <C> <C>
Dividend yield 0% 0% 0%
Expected volatility 30% 32% 30%
Risk-free interest rate 6.7% 5.6% 5.8%
Expected life in years 5.6 5.3 4.5
- -------------------------------------------------------------------
</TABLE>
Shareholder Rights Plan - On October 29, 1997, the Company's board of directors
adopted a Shareholder Rights Plan (the "Rights Plan"). The Rights Plan contains
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 fully represent shareholders'
interests. Pursuant to the Rights Plan, the ChoicePoint board of directors
declared a dividend of one Share Purchase Right (a "Right") for each
outstanding share of the Company's common stock as of November 14, 1997. The
Rights will be represented by, and trade together with, the Company's common
stock. The Rights will separate upon passage of time in certain events
including the acquisition of 15% or more of the Company's common stock by a
person or group of affiliated or associated persons ("Associated Persons"). The
Rights 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 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. 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
negotiation with the board of directors.
Grantor Trusts - ChoicePoint has established two grantor trusts totaling $11.4
million plus accumulated interest earnings. The funds in the grantor trusts
are used to purchase ChoicePoint common stock in the open market as previ-
ously approved by the board of directors for distribution under its various
compensation and benefit plans. Funds from the grantor trusts totaling $11.4
million have been used to purchase 467,600 shares of ChoicePoint common stock,
which are reflected as stock held by employee benefit trusts, at cost, in the
December 31, 1999 balance sheet. Approximately $587,000 of cash remains in the
grantor trusts at December 31, 1999 and is included in cash and cash
equivalents in the accompanying consolidated balance sheets.
33
<PAGE> 18
Notes to Consolidated Financial Statements
ChoicePoint
note 9 Employee Benefits
Equifax Plans - Historically, the Company had participated in the Equifax United
States Retirement Income Plan, a non-contributory defined benefit qualified
retirement plan and in Equifax's retirement savings plan, a plan that provided
for annual contributions at the discretion of the board of directors. Total
expense allocated to ChoicePoint for these plans through the Spinoff and
included in the Company's financial results was $1.5 million in 1997.
ChoicePoint has not adopted a defined benefit plan for its employees but has
instead adopted a profit sharing plan, as described below, prior to the Spinoff.
401(k) Profit Sharing Plan - ChoicePoint adopted a 401(k) profit sharing plan,
under which eligible Company employees may contribute up to 16% of their
compensation. ChoicePoint intends to make matching contributions in the form of
ChoicePoint common stock equal to a minimum of 25% of employee contributions up
to the first 6% of an employee's contributions. The match made on eligible
employee contributions for 1999 and 1998 was 55% in each year. Employee
contributions will be invested in one of the available investment funds, as
selected by the employee. Matching contributions will be invested in the
ChoicePoint stock fund. ChoicePoint may make additional contributions based on
achievement of targeted performance levels. The expense for the 401(k) profit
sharing plan was $2.7 million in 1999, $3.1 million in 1998 and $1.9 million in
1997.
As a result of the Spinoff, ChoicePoint assumed an obligation 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 and represent the present
value of the estimated future contributions. In exchange for this obligation,
Equifax made a capital contribution to ChoicePoint in the amount of $13.0
million and ChoicePoint's intercompany liability to Equifax was reduced
accordingly. In 1999, 1998 and 1997, $1.8 million, $2.0 million and $0,
respectively, was included in the Company's financial results and contributed
to the 401(k) profit sharing plan to offset the adverse impact of transitioning
out of the defined benefit plan.
Postretirement Benefits - The Company provides certain health care and life
insurance benefits for eligible retired employees. Health care 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 changes in the
plan's benefit obligations and fair value of assets at December 31, 1999 and
1998:
<TABLE>
<CAPTION>
(in thousands)
December 31, 1999 1998
- ------------------------------------------------------------------------------
<S> <C> <C>
Change in benefit obligation:
Obligation at beginning of year $ 52,829 $ 56,191
Service cost 728 807
Interest cost 3,308 3,886
Actuarial gain (9,742) (2,867)
Benefit payments (4,726) (5,188)
- ------------------------------------------------------------------------------
Obligation at end of year 42,397 52,829
- ------------------------------------------------------------------------------
Change in plan assets:
Fair value of plan assets at
beginning of year 0 0
Employer contributions 4,726 5,188
Benefit payments (4,726) (5,188)
- ------------------------------------------------------------------------------
Fair value of plan assets
at end of year 0 0
- ------------------------------------------------------------------------------
Funded status:
Funded status at end of year
and net amount recognized (42,397) (52,829)
Unrecognized prior service cost (8,084) (12,958)
Unrecognized (gain) loss (901) 8,936
- ------------------------------------------------------------------------------
Net amount recognized (51,382) (56,851)
Less current portion (3,600) (3,600)
- ------------------------------------------------------------------------------
Accrued benefit cost $ (47,782) $ (53,251)
==============================================================================
</TABLE>
The current portion is included in other current liabilities in the
accompanying consolidated balance sheets.
Net periodic postretirement benefit expense includes the following
components:
<TABLE>
<CAPTION>
(In thousands)
Year Ended December 31, 1999 1998 1997
- ------------------------------------------------------------------
<S> <C> <C> <C>
Service cost $ 728 $ 807 $ 907
Interest cost on
accumulated
benefit obligation 3,308 3,886 4,008
Amortization of prior
service cost (2,728) (1,879) (2,308)
Amortization of losses 262 0 28
Curtailment gain (2,146) 0 0
- ------------------------------------------------------------------
Net periodic post-
retirement benefit
(income) expense $ (576) $ 2,814 $ 2,635
==================================================================
</TABLE>
Due to the divesture of the field businesses in December 1998 (Note 4), a
curtailment gain was recognized effective January 1, 1999 after participant
benefit elections had been made.
34
<PAGE> 19
The following are weighted average assumptions used in the computation
of postretirement benefit expense and the related obligation:
<TABLE>
<CAPTION>
Year Ended December 31, 1999 1998 1997
- -----------------------------------------------------------------------
<S> <C> <C> <C>
Discount rate used to
determine accumulated
postretirement benefit
obligation at December 31 8.00% 6.75% 7.25%
Initial health care cost
trend rate 9.0% 9.5% 10.0%
Ultimate health care cost
trend rate 6.00% 6.00% 6.00%
Year ultimate health care
cost trend rate reached 2005 2005 2005
=======================================================================
</TABLE>
If the health care cost trend rate were increased 1% for all future
years, the accumulated postretirement benefit obligation as of December 31, 1999
would have increased 7.0%. The effect of such a change on the aggregate of
service and interest cost for 1999 would have been an increase of 6.9%. If the
health care cost trend rate were decreased 1% for all future years, the
accumulated post-retirement benefit obligation as of December 31, 1999 would
have decreased 6.0%. The effect of such a change on the aggregate of service and
interest cost for 1999 would have been a decrease of 6.0%.
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.
note 10 Commitments And Contingencies
Leases - The Company's operating leases involve principally office space and
office equipment. Rental expense relating to these leases was $11.2 million in
1999, $12.8 million in 1998, and $14.8 million in 1997.
Future minimum payment obligations for noncancelable operating leases
exceeding one year, net of subleases, are as follows as of December 31, 1999:
<TABLE>
<CAPTION>
(In thousands)
Year Amount
- ------------------------------------------------
<S> <C>
2000 $ 8,231
2001 7,344
2002 5,140
2003 3,905
2004 3,004
Thereafter 3,749
- ------------------------------------------------
$31,373
================================================
</TABLE>
Lease Agreement - The Company has entered into a $26.7 million operating lease
agreement for an office facility in Alpharetta, Georgia. The initial term of the
lease is ten years at which time the Company has the following three options: to
renew for an additional five years, to purchase at original cost, or to remarket
the property.
Change in Control Provisions in Employment Agreements - The Company has entered
into employment agreements with certain executive officers which provide
severance pay and benefits in the event of a "change in control" of ChoicePoint.
At December 31, 1999, the maximum contingent liability under the agreements or
plans was approximately $30.4 million. In addition, the Company's restricted
stock and stock option plans provide that all outstanding grants under the
Omnibus Plan shall become fully vested.
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, 1999 and 1998 was $1.9 million
and $2.8 million respectively, and is included in other current liabilities in
the accompanying consolidated balance sheets.
note 11 Unusual Items
Unusual items of $1.6 million in 1999 relate primarily to asset impairments of
$732,000, severance costs of $451,000, and other one-time costs of $400,000.
Unusual items of $3.8 million in 1998 include $2.1 million for the write-down of
a noncompete agreement and $1.7 million for the write-down of certain software
and database assets and severance expenses. Unusual items of $6.2 million in
1997 include approximately $1.8 million of charges related to Spinoff expenses
and approximately $4.4 million for write-downs of certain assets in the
Company's labor intensive field business and its commercial P&C software
company. All accruals associated with unusual items have been utilized as of
December 31, 1999.
35
<PAGE> 20
Notes to Consolidated Financial Statements
ChoicePoint
note 12 Segment Disclosures
ChoicePoint operates in two reportable segments: Insurance Services
("Insurance") and Business & Government Services ("B&G"). See Note 1 for a
description of each service group. The accounting policies of the segments are
the same as those described in Note 3. Revenue and operating income for the
years ended December 31, 1999, 1998, and 1997 for the two service groups were
as follows:
<TABLE>
<CAPTION>
December 31, 1999 December 31, 1998 December 31, 1997
------------------------------------ ----------------------------------- -----------------------------------
Operating Operating Operating
Income Income Income
Before Before Before
Operating Acquisition Operating Acquisition Operating Acquisition
(In thousands) Revenue Income Amortization Revenue Income Amortization Revenue Income Amortization
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Insurance $264,834 $ 100,475 $ 103,500 $246,463 $ 86,092 $ 88,817 $214,386 $ 72,908 $ 76,660
B&G 164,958 13,670 26,093 103,488 5,486 14,170 80,193 5,555 12,333
Divested and
Discontinued 351 (855) (855) 56,524 1,199 1,199 122,742 6,410 6,410
Corporate -- (33,619) (33,619) -- (27,611) (27,611) -- (32,587) (32,587)
Unusual items
(Note 11) -- (1,583) (1,583) -- (3,758) (3,758) -- (6,209) (6,209)
- -----------------------------------------------------------------------------------------------------------------------------------
Total $430,143 $ 78,088 $ 93,536 $406,475 $ 61,408 $ 72,817 $417,321 $ 46,077 $ 56,607
===================================================================================================================================
</TABLE>
Corporate expenses represent costs of support functions, incentives,
and profit sharing that benefit both segments. Acquisition amortization includes
goodwill and other intangible amortization related to acquisitions.
Depreciation and amortization for the years ended December 31, 1999,
1998, and 1997 were as follows:
<TABLE>
<CAPTION>
(In thousands)
December 31, 1999 1998 1997
- -----------------------------------------------------
<S> <C> <C> <C>
Insurance $15,260 $14,046 $13,592
B&G 20,217 14,247 12,525
Divested and
Discontinued 45 804 1,521
Corporate 2,391 1,935 --
- -----------------------------------------------------
Total $37,913 $31,032 $27,638
=====================================================
</TABLE>
ChoicePoint's balance sheets are generally managed on a consolidated
basis and therefore it is impracticable to report assets by segment.
Substantially all of the Company's operations are located in the United States
and no one customer represents more than 10% of total operating revenue.
note 13 Pro Forma Consolidated
Financial Data (Unaudited)
The following unaudited pro forma consolidated net income and pro forma earnings
per share present the consolidated results of operations of ChoicePoint assuming
that the Spinoff had been completed as of the beginning of 1997. Historical
earnings per share prior to 1997 are not presented since the companies that
comprise ChoicePoint were majority owned subsidiaries of Equifax or one of its
affiliates, and were recapitalized as part of the Spinoff.
The information presented below is not necessarily indicative of the
results that could have been achieved by ChoicePoint as an independent company
or of results which may occur in the future.
<TABLE>
<CAPTION>
(In thousands, except per share data) 1997
- ------------------------------------------------------------
<S> <C>
Historical net income $ 28,944
Pro forma adjustments - net of taxes:
Reversal of interest expense from Equifax(a) 2,165
Incremental interest expense(b) (2,589)
- ------------------------------------------------------------
Pro forma net income $ 28,520
- ------------------------------------------------------------
Pro forma weighted average shares - basic(c) 29,190
- ------------------------------------------------------------
Pro forma earnings per share - basic $ .98
- ------------------------------------------------------------
Pro forma weighted average shares - diluted(c) 29,782
- ------------------------------------------------------------
Pro forma earnings per share - diluted $ .96
============================================================
</TABLE>
Following are the pro forma adjustments to the accompanying pro forma
consolidated net income:
(a) To eliminate the $3.6 million ($2.2 million net of tax) corporate
interest expense for the year ended December 31, 1997 charged to
ChoicePoint. Equifax charged interest expense through the effective
date of the Spinoff - July 31, 1997.
(b) To record $4.3 million ($2.6 million net of tax) for the year ended
December 31, 1997 of interest expense on borrowings to fund the
repayment of net intercompany debt owed to Equifax, the repayment of
$29.0 million of Equifax debt assumed by ChoicePoint, and interest on
borrowings to fund $10.0 million for two ChoicePoint grantor trusts.
The interest expense also includes interest for borrowings for the CDB
Infotek acquisition. An interest rate of 6.5% is assumed on the
borrowings.
(c) Pro forma weighted average shares outstanding prior to the Spinoff is
based on the number of ChoicePoint shares issued and outstanding,
including restricted stock, on the date of the Spinoff (August 7, 1997)
adjusted for the 1999 stock split (Note 8). The pro forma weighted
average shares - diluted also include the dilutive effect of stock
options.
36
<PAGE> 21
note 14 Quarterly Financial Summary (Unaudited)
Following is a summary of the unaudited interim results of operations for each
quarter in the years ended December 31, 1999 and 1998:
<TABLE>
<CAPTION>
(In thousands, except per share data) First Quarter Second Quarter Third Quarter Fourth Quarter Total
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1999
REVENUE $ 99,684 $ 107,979 $ 110,513 $ 111,967 $ 430,143
OPERATING INCOME 15,837 19,136 21,163 21,952 78,088
NET INCOME 8,955 9,204 10,316 10,914 39,389
EARNINGS PER SHARE - DILUTED .30 .31 .34 .36 1.30
Year Ended December 31, 1998
Revenue $ 94,550 $ 106,702 $ 101,887 $ 103,336 $ 406,475
Operating income 15,010 16,484 16,242 13,672 61,408
Net income 7,578 8,312 8,188 11,341 35,419
Earnings per share - diluted .25 .27 .28 .38 1.18
==================================================================================================================================
</TABLE>
Operating income in the first quarter of 1999 was reduced by $1.6
million of charges for unusual items (Note 11). The gain on sale of the
business unit (Note 4), largely offset by the unusual items discussed above,
positively impacted net income in the first quarter of 1999. The net effect of
these two items on the 1999 first quarter net income was $549,000 or $.02 per
share. Operating income decreased in the fourth quarter of 1998 due to $3.8
million of charges for unusual items (Note 11). The gain on the sale of a
business unit (Note 4), largely offset by the unusual items discussed above,
positively impacted net income in the fourth quarter of 1998. The net effect of
these two items on the 1998 fourth quarter net income was $3.0 million or $.10
per share.
note 15 Subsequent Events
In January 2000, the Company acquired Statewide Data Services, Inc., a
provider of direct marketing services to the property and casualty insurance
market, and National Safety Alliance, Incorporated, a third-party administrator
of drug tests. Total purchase price of the acquisitions was approximately $76.0
million plus acquisition costs and working capital adjustments. The
acquisitions will be accounted for as purchases.
In February 2000, the Company entered into a definitive purchase
agreement with DBT Online, Inc. ("DBT") to acquire all of the outstanding
capital stock of DBT with newly issued shares of ChoicePoint common stock in a
transaction to be accounted for as a pooling-of-interests. Per the agreement,
DBT shareholders will receive 0.525 shares of ChoicePoint stock for every share
of DBT. The Company estimates that approximately 11 million shares of new
ChoicePoint stock will be issued. The agreement, which is subject to
shareholder approval and regulatory reviews, is expected to be effective
sometime in the second quarter of 2000.
37
<PAGE> 22
Shareholder Information
ChoicePoint
General Information
For more information about ChoicePoint, our products
and services, employment opportunities, and current
events at the Company, call us at 770-752-6000 or visit
our website at: http://www.choicepoint.net
Investor Information
To obtain copies of the Company's Form 10-K, Form 10-Q or quarterly earnings
releases, please contact:
Kelly McLoughlin
Investor Relations
[email protected]
ChoicePoint Inc.
1000 Alderman Drive
Alpharetta, Georgia 30005
or call 770-752-4050
Financial reports can also be accessed on our website at
http://www.choicepoint.net
Analyst Coverage
ABN-Amro Incorporated; CIBC World Markets Corp.;
Cochran Caronia Securities, Inc.; Raymond James &
Associates, Inc.; SunTrust Equitable Securities; The
Robinson-Humphrey Company, LLC; Tucker Anthony
Cleary Gull; U.S. Bancorp Piper Jaffray Inc.; Warburg Dillon
Read LLC
Market Information
ChoicePoint shares began regular trading on the New York Stock Exchange on
August 8, 1997 under the symbol CPS. As of March 1, 2000, the approximate
number of shareholders of record was 4,947 for common stock. No cash dividends
have been paid. The Company does not anticipate paying any cash dividends on
its common stock in the near future.
Quarterly Activity
ChoicePoint opened trading on August 8, 1997 at $17.88. High and low sales
prices for each quarter since trading began follow.
Stock prices have been adjusted for a two-for-one stock split effective in
November 1999.
<TABLE>
<CAPTION>
1997 High Low
- --------------------------------------------------------------------------------------------
<S> <C> <C>
Third quarter(*) $19.31 $15.38
Fourth quarter 24.06 17.50
(*)Includes third quarter since the Spinoff
1998 High Low
- --------------------------------------------------------------------------------------------
First quarter $28.25 $20.88
Second quarter 29.38 23.66
Third quarter 25.25 18.69
Fourth quarter 32.25 20.50
1999 High Low
- --------------------------------------------------------------------------------------------
First quarter $32.09 $22.69
Second quarter 34.13 24.00
Third quarter 35.63 29.50
Fourth quarter 41.94 30.19
</TABLE>
Independent Public Accountants
Arthur Andersen LLP
Atlanta, Georgia
Transfer Agent and Registrar
SunTrust Bank, Atlanta
P.O. Box 4625
Atlanta, Georgia 30302
Trademarks
ChoicePoint, its logo, ChoicePoint Link, Vendor Screen, Qualifier.net,
SearchPointe, IntroScan, ChoiceDocs, and Intellisys are trademarks of
ChoicePoint Inc.
39
<PAGE> 1
SUBSIDIARIES OF Exhibit 21
CHOICEPOINT INC.
ChoicePoint Services Inc.
PRC Corporation
Professional Test Administrators, Inc.
Intellisys, Inc.
CDB Infotek
Applied BioConcepts Inc.
Innovative Data Services, Inc.
ChoicePoint Business and Government Services Inc.
Osborn Group Inc.
ChoicePoint Health Systems Inc.
Application Profiles Inc.
Osborn Laboratories (Canada) Inc.
Statewide Data Services, Inc.
ChoicePoint Direct Inc.
National Credit Audit Corporation
Optimum Graphics Printing, Inc.
Public Records Online Inc.
EquiSearch Services Inc.
ChoicePoint Asset Company
ChoicePoint Capital Corporation
ChoicePoint Licensing Company
SearchPointe Inc.
DataMart Acquisition Company, Inc.
NSA Resources, Inc.
National Safety Alliance, Incorporated
<PAGE> 1
EXHIBIT 23
[ARTHUR ANDERSEN LOGO]
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of
our reports incorporated by reference in this Form 10-K, into the Company's
previously filed Registration Statement File No. 333-32453.
ARTHUR ANDERSEN LLP
Atlanta, Georgia
March 10, 2000
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<EXCHANGE-RATE> 1
<CASH> 40,085
<SECURITIES> 0
<RECEIVABLES> 102,615
<ALLOWANCES> 3,831
<INVENTORY> 98,784
<CURRENT-ASSETS> 155,841
<PP&E> 112,031
<DEPRECIATION> 59,472
<TOTAL-ASSETS> 532,872
<CURRENT-LIABILITIES> 88,362
<BONDS> 0
0
0
<COMMON> 2,954
<OTHER-SE> 199,957
<TOTAL-LIABILITY-AND-EQUITY> 532,872
<SALES> 430,143
<TOTAL-REVENUES> 430,143
<CGS> 269,685
<TOTAL-COSTS> 269,685
<OTHER-EXPENSES> 82,370
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 11,142
<INCOME-PRETAX> 69,459
<INCOME-TAX> 30,070
<INCOME-CONTINUING> 39,389
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 39,389
<EPS-BASIC> 1.36
<EPS-DILUTED> 1.30
</TABLE>
